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Macro Thoughts

Conclusions

A Very precise response to Trump's next level Gaming

President Trump is highly tuned to the markets and in fact something
of a c21st artiste. His positive ‘’Trade War’’ tweets are timed around
the US Market hours and designed to soothe, massage and finesse US
asset prices and he turns more ne- gative in Chinese trading hours.

And if this all turns ballistic as is my baseline scenario then this
is going to fly through 7.00 like a hot knife through butter and the
Chinese will surely use the value as currency as Push-Back. If they do
they will be pushing at an open door. Its clear that directionally
money wants to leave China and a great deal of the 2019 surge in
Bitcoin is surely correlated to Chinese Flight Capital. Therefore, my
prediction is when the currency slides its going to slide real quick
and Dollar Call Options are an interesting risk adjusted trade.

Home Thoughts

Astronomers have presented a twist on how we see our galaxy, the Milky
Way, with a new three-dimensional map.
Our galaxy was generally thought to be a flat disc consisting of some
250 billion stars. The new map suggests the disc isn’t flat but
instead is twisted into a S-shape.

Off the Anguilla mainland is a spectacular speck of sand with just
enough room for a restaurant shack, a few dozen lounge chairs, and a
beach (the size of which depends on the tide). You’ll quickly discover
that Sandy Island’s eponymous beach shack serves up the best barbecue
crayfish in Anguilla—and a killer rum punch to wash it down. Arrive by
private boat or the island’s daily water shuttle, all subject to a
(sometimes very) wet landing.

Political Reflections

Indian-administered Kashmir remains in a state of lockdown a day after
it was stripped of special status that gave it significant autonomy.
Landlines, mobiles and internet, which were cut off on Sunday evening,
are yet to be restored even as tens of thousands of troops patrol the
streets.
The revocation of special status was expected to trigger widespread
protests, but there is no word on how people have reacted to the news.
Local leaders have also been detained.
The BBC's Aamir Peerzada in Srinagar who managed to speak to
correspondents in Delhi on Monday said "No-one knows what is happening
in other parts of the state - we can't talk to anyone else. People are
concerned - they don't know what is happening, they don't know what is
going to happen."

Conclusions

This sits closer to Gaza and Xinjiang in the continuum.

US-China trade war, hottest July ever, Hong Kong on the edge, odds of
US-Iran, Turkish-Kurdish conflicts mounting, new India-Pakistan
Kashmir crisis, Japan-S Korea diplo/eco confrontation, looming Brexit:
the word “disarray” too restrained to capture the world’s
deterioration.

He called it the “heartland”, and whoever controlled it, he argued,
controlled the world.

Cloudflare still offers its protective services to 8chan. “We’re the
Fedex of the internet, passing messages on, not looking inside the
boxes,” Cloudflare’s head of policy told Forbes in March

a “Chickie Run.” Both race stolen cars towards the edge of a cliff.
The first to eject out of his car is branded a “chickie.”

International Markets

''What's your road, man? - holyboy road, madman road, rainbow road,
guppy road, any road. It's an anywhere road for anybody anyhow. Where
body how?" -

Jack Kerouac's On the Road is an iconic Novel and is considered a
defining work of the postwar Beat and Counterculture generations, with
its protagonists living life against a backdrop of jazz, poetry, and
drug use. When I re-read these books, I cannot help feeling that the
World has lost its wide-eyedness and innocence. I am also tempted to
get myself an open-topped Car and just take off and find out what
exactly is going on. Jim Rogers who was the co-founder of the Quantum
Fund and Soros Fund Management in fact did precisely that on a motor
bike and called his book ''Investment Biker''

Of course it was George Soros and his subsequent Partner Stanley
Druckenmiller who forced the Pound Sterling out of the Exchange Rate
Mechanism on Black Wednesday 16 September 1992. I recall that day in
slow motion and as if it were a news reel. I was then on the Trading
Floor at Credit Suisse First Boston and the Speed of thought and
Execution I witnessed that day, I never witnessed again ever. Permit
me the indulgence of dwelling on that day for a moment. At 10:30 AM on
16 September, the British government announced a rise in the base
interest rate from an already high 10 to 12 percent to tempt
speculators to buy pounds. Despite this and a promise later the same
day to raise base rates again to 15 percent, dealers kept selling
pounds. On my left was the Proprietary Trading Desk and he lent
billions and billions of Pounds at 15%.

I asked ''What are you doing?'' because the Desk was at that moment
the only desk in the entire City of London on that side everyone
desperately was trying to hedge their Books.

He responded ''Aly-Khan Its not possible for Mortgage rates to be at 15%.''

That was his insight and that day he did not make as much as Soros but
must have been close. By the evening, Norman Lamont the Chancellor had
capitulated the Pound was gone in a Puff of Smoke and interest rates
were back in single digits.

Last week the Pound traded below $1.2100 and is now in danger of
taking out its post-referendum low [$1.1860 but there is considerable
debate about this number because it happened in the middle of the
night when Gremlins and Goblins stalk the FX markets] after which the
only significant landmarks left would be the low set in 1985, a few
months before finance ministers agreed in the Plaza Accord to limit
the strength of the dollar and then, only a few cents lower, parity
with the dollar. As I watched the Pound fall like a stone, I could not
help wondering if this Sterling moment is precisely like it was in
1992, a No Brainer.

'Boris isn't bluffing. Every action, every appointment, every word
since he entered Number 10 signals the same thing: Britain is leaving
the EU on 31 October' said the Telegraph's Daniel J Hannan.

The Key question is this. Can Prime Minister Johnson self-eject
Britain? Can he be stopped? This is a political calculation. Prime
Minister Johnson has elected to take quite properly an ''Impossible is
Nothing'' and ''Can-Do'' political posture but the bottom line is can
he swing it?

if he can swing it then he has to face down the "whispering death"
[Michael Holding who was thus nicknamed because He was exactly that
when he opened the bowling for the West Indies] that will be the
Foreign Exchange markets. London’s Capital Economics conducted an
exercise for the dollar-sterling exchange rate, and found that for
every 10-percentage-point increase in the chance of “no deal” equates
to the pound losing 3.5 cents on the dollar. So if there is really
still a 65% chance of “no deal,” sterling stands to drop an additional
22 cents or so. [John Authers] Thats Parity right there. We are
currently experiencing the Bow wave of what could metasize into a
shock wave.

The Tariff warfare, sanction and linguistic warfare Specialist slapped
a 10% tariff on the remaining $300b of Chinese imports. US 10-Year
Treasury Yields sank below 1.90%. The entire German Yield curve went
negative. The World’s pile of negative debt jumped  to more than $14tn
for the first time ever. Emerging Market currencies went into a
Tail-Spin. The Market scooped up Gold, the Swiss franc and the Yen.

The most important currency to watch right now is the USDCNH which was
last at 6.9738 on the off shore markets. It could slice through 7.00
like a hot knife through Butter.

"We are sitting in a vehicle whose wheels have fallen off," Derek
Matyszak, a senior researcher at a South African think tank, the
Institute of Security Studies, told AFP about Zimbabwe but that might
well apply to the FX Markets, momentarily.

President Trump keeps talking about weakening the Dollar. I find it
curious that ''such a stable genius''  has yet to calculate that a
strong Dollar is infinitely better and if he is serious about his
warfare strategy he needs to add currency warfare to his Tariff,
sanction and linguistic warfare Arsenal. My Perspective about the
Dollar is this [and note well its just a fraction under its 2019 high
even after a rate cut]; There is very little President Trump can do.
In fact the risk is this that when the market sees he is powerless,
the Dollar might lift off like the proverbial Parabola.

The onshore exchange rate for the renminbi, which is permitted to
trade 2 per cent on either side of a daily midpoint set by the
People's Bank of China, fell past Rmb7 on Monday morning for the first
time since May 2008, dropping as much as 1.3 per cent to Rmb7.0297 per
dollar.

Euro 1.1201
Dollar Index 97.528
Japan Yen 106.545
Swiss Franc 0.9749
Pound 1.2160
Aussie 0.6786
India Rupee 70.65
South Korea Won 1214.40
Brazil Real 3.9746
Egypt Pound 16.5497
South Africa Rand 14.8276

Commodities

Emerging Markets

Frontier Markets

Sub Saharan Africa

Zambia’s development strategy has focused on a rapid-scaling up of
public investment to address the country’s infrastructure needs. While
public investment has increased sharply, economic growth remains well
below levels seen earlier this decade and is estimated at 3.7 percent
in 2018. Inflation averaged 7 percent in 2018, but a depreciation of
the currency late in 2018 and again this spring coupled with food
price rises has pushed inflation above 8 percent. Fiscal revenues
exceeded budget targets in 2018, but the deficit widened above 101⁄2
percent on a commitment basis (over 8 percent of GDP on a cash basis)
due to a rising interest bill and a surge in public investment
reflecting faster than expected execution of public investment
projects. Total public and publicly-guaranteed (PPG) debt including
arrears at end-2018 was 78 percent of GDP. The current account deficit
widened to 2.6 percent of GDP in 2018 due to higher imports and debt
service, while reserves declined from 2.4 months of import cover in
2017 to 1.9 months at end- 2018. The outlook is clouded by the ongoing
drought and heightened debt vulnerabilities. Growth is projected to
slow to 2 percent in 2019, reflecting a decline in mining sector
activity in an uncertain environment for mining companies and the
drought’s impact on hydro power production. Absent significant policy
adjustments, growth is likely to remain subdued over the medium term
as expenditure arrears and an ongoing forced adjustment in response to
increasing debt-related pressures weigh on the private sector.
Inflation is projected to remain above the top of the Bank of Zambia’s
(BoZ) target band in 2019 and 2020. The BoZ increased the policy rate
by 50 bps to 10.25 percent in May. While the central bank has moved to
shore up reserves as market conditions have permitted, reserves are
projected to decline to 1.6 months of import cover by end-2019.

Diageo, the world’s largest spirits maker, is ploughing £180m into
green energy and water recovery solutions at 11 of its breweries
across Africa, in its largest environmental investment in a decade.
The investments in biomass boilers, solar installations and water
recycling facilities across seven countries including Kenya, Uganda
and Nigeria, will reduce the carbon emissions of the group’s Africa
operations and move the company closer to realising fully renewable
production, said Andrew Cowan, chief executive of Diageo’s Kenya-based
East African Breweries business.
“Becoming 100 per cent green is the ultimate goal,” Mr Cowan told the
Financial Times.
Africa is increasingly important to the British alcohol group,
contributing 13 per cent of Diageo’s global turnover and about half of
the company’s beer sales.
In east Africa, where the biggest of Diageo’s environmental
investments will be made, its majority-owned East African Breweries
has operated since 1922 and is Kenya’s biggest brewer.
The investment will include £50m in upfront capital for solar, water
treatment and biomass equipment, followed by £130m in long-term supply
and maintenance contracts, Mr Cowan said.
Biomass boilers will be installed at the company’s breweries in
Nairobi and Kisumu in Kenya and in Kampala in Uganda.
The boilers, which will replace fuel-oil systems used to produce
steam, will burn organic waste materials such as woodchip, bamboo and
rice husks supplied by local farmers, reducing carbon emissions while
creating new local supply contracts, Mr Cowan explained.
“We think this will make us not just more green but more local,” he added.
As the company has ramped up production at its new $150m Kisumu
brewery in western Kenya this year, it has sought to increase the
percentage of materials it sources locally, signing thousands of
contracts with local farmers to supply the white sorghum it uses to
brew its cheapest beer, Senator Keg.
Across its 12 breweries in Africa, Diageo says it sources 78 per cent
of agricultural materials locally and intends to boost that figure to
80 per cent by 2020.
In Kenya that commitment to local sourcing has helped strengthen its
financial performance, said Aly-Khan Satchu, a Nairobi-based
investment adviser.
“They are repositioning the business much closer to the ground and
it’s working,” he said. “The Kisumu investment is tied at the hip with
farmers producing sorghum for the factory, creating a bigger
ecosystem.”
Last week East African Breweries, which controls Diageo’s beer and
spirit businesses in Kenya, Tanzania and Uganda, reported a 52 per
cent jump in pre-tax profits to Ks17.8bn on revenues of Ks82.5bn
($791m).
As part of the initiative, new water systems at the three east African
breweries and two sites in Nigeria will help save more than 2bn cubic
litres of water a year, while solar installations will produce up to
20 per cent of each brewery’s electricity demand, the company said.
At least 20 of Diageo’s production facilities in Africa are in what it
calls “water-stressed locations”.
The investments form part of a group-wide commitment to cut water
usage and greenhouse gas emissions in half by 2020, which started with
the commissioning of a bioenergy plant at its Cameronbridge distillery
in Scotland in 2013, said Diageo chief executive, Ivan Menezes.
“We believe this is one of the biggest single investments in
addressing climate change issues across sub-Saharan countries,” Mr
Menezes said in a statement. “It demonstrates the strength of our
commitment to pioneer grain-to-glass sustainability.”

Kenya

Par Value:                  2/-
Closing Price:           204.00
Total Shares Issued:          790774356.00
Market Capitalization:        161,317,968,624
EPS:             11.23
PE:                 18.166

EABL FY 2019 results through 30th June 2019 vs. 30th June 2018
FY Revenue 82.543b vs. 73.457b +12.369%
FY Cost of sales [44.426b] vs. [41.052b] +8.219%
FY Gross profit 38.117b vs. 32.405b +17.627%
FY Total costs [20.302b] vs. [20.663b] -1.747%
FY PBT 17.815b vs. 11.742b +51.720%
FY Income tax expense [6.300b] vs. [4.486b] +40.437%
FY PAT 11.515b vs. 7.256b +58.696%
Basic EPS 11.23 vs. 7.19 +56.189%
Cash and cash equivalents at the end of year 12.469b vs. 3.187b +291.246%
Total dividend per share 8.50 vs. 7.50 +13.333%

Conclusions

a muscular rebound plain and simple. Headline Revenue Growth +12.369%
sums it up in a nutshell.

The NSE All Share market cap weighted index is +5.63% YTD, trading at
a price-to-earnings ratio of 11.50