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Satchu's Rich Wrap-Up
Wednesday 24th of July 2019

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Macro Thoughts

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31-DEC-2018 :: The direction of the Dollar is therefore pivotal.

I am increasingly in a minority but I expect the Dollar to strengthen
about 10% through 2019.

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Home Thoughts

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"A person isn't who they are during the last conversation you had with them - they're who they've been throughout your whole relationship." - Rainer Maria Rilke

“You who never arrived
in my arms, Beloved, who were lost
from the start,
I don't even know what songs
would please you. I have given up trying
to recognize you in the surging wave of
the next moment. All the immense
images in me -- the far-off, deeply-felt landscape,
cities, towers, and bridges, and un-
suspected turns in the path,
and those powerful lands that were once
pulsing with the life of the gods--
all rise within me to mean
you, who forever elude me.

You, Beloved, who are all
the gardens I have ever gazed at,
longing. An open window
in a country house-- , and you almost
stepped out, pensive, to meet me. Streets that I chanced
you had just walked down them and vanished.
And sometimes, in a shop, the mirrors
were still dizzy with your presence and, startled, gave back
my too-sudden image. Who knows? Perhaps the same
bird echoed through both of us
yesterday, separate, in the evening... ”
― rainer maria rilke

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Russia-China 'joint air patrol' sees Japan and South Korea scramble jets @BBCWorld
Law & Politics

Russia says it has carried out its first ever joint air patrol with
China, prompting both South Korea and Japan to send jets in response.
The defence ministry says four bombers, supported by fighter jets,
patrolled a pre-planned route over the Sea of Japan and the East China
South Korea says its jets fired flares and machine-gun warning shots
when Russian planes intruded.
Japan has protested both to Russia and South Korea over the incident.
The alleged incursion happened over the disputed Dokdo/Takeshima
islands, which are occupied by South Korea but also claimed by Japan.
Russian and Chinese bombers and reconnaissance planes have
occasionally entered the zone in recent years, but this is the first
incident of its kind between Russia and South Korea.
The defence ministry said two of its Tu-95MS strategic
missile-carriers had joined two Chinese Hong-6K strategic bombers on
the pre-planned route over "neutral waters".
They were supported by fighters and A-50 and Kongjing-2000 airborne
early warning and control aircraft.
At one point the patrol became a "single airborne formation consisting
of a line of pairs of planes flying within 3-4km [around two miles] of
each other", Lt-Gen Sergei Kobylash said in a televised statement.
While performing their task, he said, they were followed by foreign
fighters 11 times.
He accused South Korean pilots of performing "dangerous manoeuvres" in
the vicinity of disputed islands, "crossing paths with the aviation
group and creating danger for the safety of the flight".
He confirmed the South Korean jets had fired decoy flares.
The patrol, he said, had been more than 25km away from the
Dokdo/Takeshima islands, and he accused South Korean pilots of
"hooliganism in the air".
He said Russia had complained to the South Korean military about its
crews' "illegal and dangerous actions".
This first "joint air patrol" involving Russian and Chinese long-range
aircraft in the Asia Pacific region, sends a powerful signal of the
developing military relationship between Moscow and Beijing.
This still falls short of a formal alliance but their joint exercises
are larger and more sophisticated.
In turn this is a reflection of the ever closer economic and
diplomatic ties between the two countries who, though they still have
points of tension, are drawing ever closer together.
They broadly share a similar world view, hostile to Western liberal
democracy, eager to promote an alternative model, protective of their
own national sovereignty, and often willing to ride rough-shod over
that of others.
This poses a huge challenge for US strategy. The nightmare in
Washington is an ever closer relationship between an assertive, but
declining Russia, and a rising China, which looks set to overtake the
US as a technological and economic power in the years ahead.
South Korea's military said five aircraft had entered the Korea Air
Defense Identification Zone (KADIZ) at around 09:00 local time (00:00
GMT) on Tuesday.
The military said it had fired 10 flares and 80 machine-gun rounds
during the alleged first violation.
It said a Russian A-50 plane had left and then re-entered the KADIZ -
to be met by 10 more South Korean flares and 280 machine-gun rounds.
The head of South Korea's National Security Office, Chung Eui-yong,
has lodged a strong objection with the Security Council of Russia, and
asked the council to take appropriate action.
"We take a very grave view of this situation and, if it is repeated,
we will take even stronger action," the South Korean president's
office quoted Mr Chung as saying.
South Korea has also protested to China. Beijing has insisted South
Korea's air defence identification zone is not territorial airspace
and so all countries can move within it.
The government in Tokyo has lodged a complaint against both Russia and
South Korea.
Because it claims sovereignty over the islands, Japan's government
said that Russia had violated its airspace. It also said that South
Korea's response had been extremely regrettable.
Chief Cabinet Secretary Yoshihide Suga said: "In light of Japan's
stance regarding sovereignty over Takeshima, the South Korean military
aircraft's having carried out warning shots is totally unacceptable
and extremely regrettable."


This is in fact a significant Geopolitical development

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Why Strait of Hormuz is World's Oil Flashpoint @business
Law & Politics

Once again, the Strait of Hormuz is at the center of global tensions.
The Middle East’s crude oil and natural gas flow through the narrow
sea conduit to international markets, making it the world’s most
critical transportation “chokepoint.” Incidents there – such as Iran’s
seizure of a British tanker, attacks on ships and confrontations
involving drones – can whipsaw energy prices and send shipping and
insurance rates rocketing.  The U.S. and U.K. have stepped up their
military presence in the region amid calls to ensure the waterway
remains open.

1. Where is the Strait of Hormuz?

Shaped like an inverted V, the waterway connects the Persian Gulf to
the Indian Ocean, with Iran to its north and the United Arab Emirates
and Oman to the south. It’s about 96 miles (154 kilometers) long and
21 miles wide at its narrowest point, with the shipping lanes in each
direction just two miles wide. Its shallow depth makes ships
vulnerable to mines, and the proximity to land – Iran, in particular –
 leaves large tankers open to attack from shore-based missiles or
interception by fast patrol boats and helicopters.

2. What’s the strait’s role in global shipping?

It’s essential to the global oil trade. Tankers hauled about one third
of the oil moved at sea through the strait – 20.7 million barrels a
day of crude, condensate and refined fuels last year, according to the
U.S. Energy Information Administration. The strait is also crucial for
liquefied natural gas, with more than a quarter of the world’s supply,
mostly from Qatar, passing through it annually, according to the EIA.

Oil Tanker Chokepoints
3. Why would Iran disrupt the strait?

U.S. sanctions, particularly those aimed at stopping oil sales, have
pushed Iran’s economy into recession, prompting President Hassan
Rouhani to accuse the U.S. of waging “economic war” against his
country. Disrupting the strait demonstrates that Iran, which is
seeking relief from the sanctions, has the power to inflict pain in
return on the U.S. and its allies by restricting the flow of energy
and driving up prices. In the meantime, any boost in the price of oil
can help make up for the revenue Iran is losing from lower sales due
to sanctions. Iranian officials have made threats to close the
waterway in the past. “We certainly have the ability to do it,”
Foreign Minister Javad Zarif said July 17, adding that Iran wouldn’t
want to do so “because the Strait of Hormuz and the Persian Gulf are
our lifeline.”

4. Could Iran really close the waterway?

Closing the waterway entirely would be self-defeating for Iran,
preventing its own exports of petroleum and starving it of revenue.
Oil traders doubt the country would ever go that far. Iran’s navy also
is no match for the U.S. Fifth Fleet and other forces in the region.
Iran is still capable of considerable disruption. In July, its
Revolutionary Guard, which is charged with maintaining the security of
the Persian Gulf for the country, escalated tensions when it seized a
U.K.-registered tanker, owned by Sweden’s Stena AB, in the strait.
Iran said the ship had violated maritime rules. It also suggested the
move was in retaliation for the U.K.’s seizure of an Iranian tanker
near Gibraltar on suspicion of violating sanctions against Syria.
Earlier in July, the British Navy intervened to prevent a tanker
operated by BP Plc from being blocked by Iranian vessels as it passed
through the strait.

Strait of Hormuz - A Timeline of Events

5. Has the strait been closed to traffic before?

No, but it has seen its share of conflict. During the 1980-1988
Iran-Iraq War, Iraqi forces attacked Iran’s oil export terminal at
Kharg Island, in the Persian Gulf northwest of the strait, in part to
provoke an Iranian retaliation that would draw the U.S. into the
conflict. Although Iran didn’t try to shut the strait, there followed
a so-called Tanker War during which culprits from both sides attacked
451 vessels, most carrying oil or refined petroleum products. That
significantly raised the cost of insuring vessels, increasing the cost
of oil exports. When sanctions were imposed on Iran in 2011, threats
were again made to close the strait, but these were subsequently
denied by Iran’s foreign ministry.

6. Can the strait be protected?

During the 1980s Tanker War, the U.S. Navy resorted to escorting
vessels through the Gulf. This time, the U.S. has dispatched an
aircraft carrier and B-52 bombers to the Persian Gulf, but repeating
the 1980s operation would tie up large parts of U.S. and allied
fleets. Trump, in a Twitter posting, questioned why American forces
should be responsible for protecting ships from other countries as
they make the “dangerous journey.” Instead, the U.S. has said it is
developing a multinational effort to ensure freedom of navigation in
the Persian Gulf. The U.K. Navy has escorted some tankers out of the
region. Tanker operators must take protective measures of their own,
says industry trade group Intertanko, by performing regular searches
for mines, using spotlights to look for approaching ships and
employing sonar to deter divers. Owners of tankers that ply the Gulf
face spiraling costs. War risk premiums paid every time a ship enters
the region surged from $30,000 in early 2019 to $185,000 in June,
while cargo rates more than doubled in June, to $26,000 per day.

7. Who relies most on the strait?

Iran, Kuwait, Qatar and Bahrain export all their output through the
strait. Ninety percent of Iraq’s exported oil goes through it as well.
The U.A.E. can partly bypass the strait by sending 1.5 million barrels
a day via a pipeline from its oilfields to the port of Fujairah on the
Gulf of Oman. Saudi Arabia has the greatest ability to divert flows
from the risk zone, by using a 746-mile mega-pipeline across the
country to an export terminal on the Red Sea. That link has never been
used to its full capacity of 5 million barrels a day, however, and in
any case it falls short of the 8.5 million barrels of crude and
petroleum products the kingdom ships worldwide each day.

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13-MAY-2019 :: This level of financial and coercive sanction warfare is simply unprecedented
Law & Politics

This level of financial and coercive sanction warfare is simply
unprecedented. President Trump has been a big proponent of coercive,
financial and sanction warfare and its expression vis a vis Iran is
its apogee.

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Iran runs rings around Royal Navy @asiatimesonline
Law & Politics

Drone footage released by Iran’s Fars news agency on Saturday showed a
bird’s-eye view of the UK’s Stena Impero, moored in the port of Bandar
Abbas after its seizure by the Islamic Revolutionary Guard Corps
(IRGC). In the video, a pair of Iranian boats speed in circles around
the tanker to the soundtrack of heavy metal, in a show of force likely
designed for domestic as much as regional and global consumption.

In the past 24 hours, a leaked audio recording laid bare the failed
attempt by the British Royal Navy to avert the impounding.

“Alter your course, do 360 degrees immediately, over,” an Iranian
officer is heard telling the crew of the UK oil tanker Stena Impero on
Friday. “Obey, and you will be safe.”

A British warship, despite being too far away to pose an immediate
threat, then issues a competing directive, telling the commercial ship
it should continue on its path.

“Stena Impero, this is British warship, Foxtrot 236. I reiterate that
you are conducting transit passage in a recognized international
strait. Under international law, your passage must not be impaired,
obstructed or hampered,” the British officer says, before the vessel
is forced to Iranian shores.

The veracity of the recording, released by maritime security risk
consultancy Dryad Global, has not been challenged by the UK or Iran.

The raid itself – videotaped and published by the Iranian
Revolutionary Guard Corps – shows Balaclava-wearing commandos
descending on the British tanker by helicopter. The seizure appeared
designed to replicate Britain’s impounding of an Iranian tanker
earlier this month.

Asked on Monday what the United States would do to help retrieve the
vessel of its ally, US Secretary of State Mike Pompeo appeared to wash
his hands of the incident.

“The responsibility in the first instance falls to the United Kingdom
to care of their ships,” he told Fox and Friends. The UK – in the
midst of messy talks to leave the European Union – said on Monday it
was looking to its European allies to help secure Persian Gulf

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The United Kingdom is set to expand at 1.3 percent in 2019 and 1.4 percent in 2020 (0.1 percentage point higher in 2019 than forecast in the April WEO). @IMFnews #WEO.
Law & Politics

The upward revision reflects a stronger-than-anticipated first quarter
outturn boosted by pre-Brexit inventory accumulation and stockpiling.

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Downside risks have intensified since the April 2019 WEO. @IMFnews #WEO.
International Trade

They include escalating trade and technology tensions, the possibility
of a protracted risk-off episode that exposes financial
vulnerabilities accumulated over years of low interest rates,
geopolitical tensions, and mounting disinflationary pressures that
make adverse shocks more persistent.

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27-MAY-2019 :: My base-line is the trade war is headed off the charts into territory the market still continues a "tail" risk.
International Trade

My base-line is the trade war is headed off the charts into territory
the market still continues a ‘’tail’’ risk. [the additional risk of an
asset moving more than 3 standard deviations from its current price,
above the risk of a normal distribution].

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Currency Markets at a Glance WSJ
World Currencies

Euro 1.1148
Dollar Index 97.73
Japan Yen 108.13
Swiss Franc 0.9865
Pound 1.2440
Aussie 0.6982
India Rupee 68.9850
South Korea Won 1177.78
Brazil Real 3.7737
Egypt Pound 16.6165
South Africa Rand 13.9153

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In SSA, growth is expected at 3.4% in 2019 and 3.6% in 2020, 0.1% lower for both years than in the April #WEO. @IMFNews

In sub-Saharan Africa, growth is expected at 3.4 percent in 2019 and
3.6 percent in 2020, 0.1 percentage point lower for both years than in
the April WEO, as strong growth in many non-resource-intensive
countries partially offsets the lackluster performance of the region’s
largest economies. Higher, albeit volatile, oil prices have supported
the outlook for Angola, Nigeria, and other oil-exporting countries in
the region. But growth in South Africa is expected at a more subdued
pace in 2019 than projected in the April WEO following a very weak
first quarter, reflecting a larger-than-anticipated impact of strike
activity and energy supply issues in mining and weak agricultural

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South Africa All Share Bloomberg YTD +10.57%

Dollar versus Rand 6 Month Chart INO 13.943


Egypt Pound versus The Dollar 3 Month Chart INO 16.6190


Egypt EGX30 Bloomberg YTD +4.98%


Nigeria All Share Bloomberg YTD -10.45%


Ghana Stock Exchange Composite Index Bloomberg YTD -6.12%


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Lawmakers back plan to nationalise @KenyaAirways @ReutersAfrica
Kenyan Economy

Kenya Airways Chairman Michael Joseph told Reuters the vote was “great news”.
“Nationalisation is what is necessary to compete on a level playing
field. It is not what we want, but what we need,” he said, referring
to competitors such as Ethiopian Airlines which are state-run and

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@KenyaAirways share price data
Kenyan Economy

Closing Price:           4.95
Total Shares Issued:          5681616931.00
Market Capitalization:        28,124,003,808
EPS:             -1.01
PE:                 -4.901

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Kenya Shilling versus The Dollar Live ForexPros
Kenyan Economy

Nairobi All Share Bloomberg YTD +5.42%


Nairobi ^NSE20 Bloomberg YTD -5.59%


Every Listed Share can be interrogated here


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by Aly Khan Satchu (www.rich.co.ke)
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July 2019

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