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Satchu's Rich Wrap-Up
Monday 02nd of September 2019

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Macro Thoughts

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The @federalreserve Shouldn't Enable @realDonaldTrump @economics

U.S. President Donald Trump’s trade war with China keeps undermining
the confidence of businesses and consumers, worsening the economic
This manufactured disaster-in-the-making presents the Federal Reserve
with a dilemma: Should it mitigate the damage by providing offsetting
stimulus, or refuse to play along?
If the ultimate goal is a healthy economy, the Fed should seriously
consider the latter approach.
The Fed’s monetary policy makers typically take what happens outside
their realm as a given, and then make the adjustments needed to pursue
their goals of stable prices and maximum employment.
They place little weight on how their actions will affect decisions in
other areas, such as government spending or trade policy.
The Fed, for example, wouldn’t hold back on interest-rate cuts to
compel Congress to provide fiscal stimulus instead. Staying above the
political fray helps the central bank maintain its independence.
So, according to conventional wisdom, if Trump’s trade war with China
hurts the U.S. economic outlook, the Fed should respond by adjusting
monetary policy accordingly — in this case by cutting interest rates.
But what if the Fed’s accommodation encourages the president to
escalate the trade war further, increasing the risk of a recession?
The central bank’s efforts to cushion the blow might not be merely
ineffectual. They might actually make things worse.
Fed Chairman Jerome Powell has hinted that he is aware of the problem.
At the central bank’s annual conference in Jackson Hole last week, he
noted that monetary policy cannot “provide a settled rulebook for
international trade.”
I see this as a veiled reference to the trade war, and a warning that
the Fed’s tools are not well suited to mitigate the damage.
Yet the Fed could go much further. Officials could state explicitly
that the central bank won’t bail out an administration that keeps
making bad choices on trade policy, making it abundantly clear that
Trump will own the consequences of his actions.
Such a harder line could benefit the Fed and the economy in three ways.
First, it would discourage further escalation of the trade war, by
increasing the costs to the Trump administration.
Second, it would reassert the Fed’s independence by distancing it from
the administration’s policies.
Third, it would conserve much-needed ammunition, allowing the Fed to
avoid further interest-rate cuts at a time when rates are already very
low by historical standards.
I understand and support Fed officials’ desire to remain apolitical.
But Trump’s ongoing attacks on Powell and on the institution have made
that untenable.
Central bank officials face a choice: enable the Trump administration
to continue down a disastrous path of trade war escalation, or send a
clear signal that if the administration does so, the president, not
the Fed, will bear the risks — including the risk of losing the next
There’s even an argument that the election itself falls within the
Fed’s purview. After all, Trump’s reelection arguably presents a
threat to the U.S. and global economy, to the Fed’s independence and
its ability to achieve its employment and inflation objectives.
If the goal of monetary policy is to achieve the best long-term
economic outcome, then Fed officials should consider how their
decisions will affect the political outcome in 2020.

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15-JUL-2019 :: President Trump has been bashing the Federal Reserve Chairman and at least did not summarily dismiss him like Reccip Tayyip Erdogan summarily dismissed his Central Bank Chief

President Trump has been bashing the Federal Reserve Chairman and at
least did not summarily dismiss him like Reccip Tayyip Erdogan
summarily dismissed his Central Bank Chief a few short days ago but
the net effect is the same.

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15-JUL-2019 :: Stoking up the Fire with rate cuts is a very dangerous situation because according to my calculations, the FED will need to be raising rates into the Election, something that will turn Trump apoplectic I am sure.

Specifically, with respect to the United States, stoking up the Fire
with rate cuts is a very dangerous situation because according to my
calculations, the FED will need to be raising rates into the Election,
something that will turn Trump apoplectic I am sure.

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24-JUN-2019 :: Wizard of Oz World

This is ‘’Voodoo Economics’’

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The specialist is monitoring data on his mission console when a voice breaks in

The specialist is monitoring data on his mission console when a voice
breaks in, “a voice that carried with it a strange and unspecifiable
He checks in with his flight-dynamics and conceptual- paradigm
officers at Colorado Command:
“We have a deviate, Tomahawk.”
“We copy. There’s a voice.”
“We have gross oscillation here.”
“There’s some interference. I have gone redundant but I’m not sure
it’s helping.”
“We are clearing an outframe to locate source.”
“Thank you, Colorado.”
“It is probably just selective noise. You are negative red on the
step-function quad.”
“It was a voice,” I told them.
“We have just received an affirm on selective noise... We will
correct, Tomahawk. In the meantime, advise you to stay redundant.”
The voice, in contrast to Colorado’s metallic pidgin, is a melange of
repartee, laughter, and song, with a “quality of purest, sweetest
“Somehow we are picking up signals from radio programmes of 40, 50, 60
years ago.”

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"Water is fluid, soft, and yielding. But water will wear away rock, which is rigid and cannot yield"

“Water is fluid, soft, and yielding. But water will wear away rock,
which is rigid and cannot yield. As a rule, whatever is fluid, soft,
and yielding will overcome whatever is rigid and hard. This is another
paradox: What is soft is strong,” Lao Tzu

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Like Lao Tzu has said: "Men are born soft and supple; dead they are stiff and hard"

Like Lao Tzu has said:“Men are born soft and supple; dead they are
stiff and hard. Plants are born tender and pliant; dead, they are
brittle and dry. Thus whoever is stiff and inflexible is a disciple of
death. Whoever is soft and yielding is a disciple of life.  The hard
and stiff will be broken. The soft and supple will prevail.”

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"Ours is the most cryptic of Centuries, it's true Nature a Dark Secret" P 206 Imaginary Homelands @SalmanRushdie

“Meaning is a shaky edifice we build out of scraps, dogmas, childhood
injuries, newspaper articles, chance remarks, old fillms, small
victories, people hated, people loved; perhaps it is because our sense
of what is the case is constructed from such inadequate materials that
we defend it so fiercely, even to death.”
― Salman Rushdie, Imaginary Homelands: Essays and Criticism 1981-1991

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05-AUG-2019 :: @10DowningStreet @BorisJohnson has elected to take quite properly an "Impossible is nothing" and "can-do" political posture but the bottom line is can he swing it?
Law & Politics

‘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 October 31’ said the Telegraph’s Daniel J Hannan.

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So here's where we are: @MatthewdAncona
Law & Politics

1. So here’s where we are: Johnson’s authority is made of balsa. He
depends upon the taxpayer-purchased votes of the DUP and the support
of his own parliamentary party, many of whom want much more than the
backstop excised from May’s deal....
2. He is only in office at all because of the decision taken by the
tiny selectorate of Tory members. His mandate is constitutionally
sound but politically frangible. BUT...

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By adopting the kinetic energy of a campaign rather than the governing ethos of a serious administration- by colonising the centre of Whitehall with the 2016 Vote Leave team - he has achieved momentum and focus.....@MatthewdAncona
Law & Politics

4. The entire apparatus of the British state is now being deployed in
the service of a single goal: the implementation of a single (dubious)
interpretation of the 2016 referendum: namely, that the public
understood that the UK might leave without a deal and..
5....is more than willing to pay the price of no deal, as long as we
leave on October 31, ‘do or die’. The govt simultaneously
congratulates itself for preparing for no deal, and then condemns
those who report these preparations as agents of ‘Project Fear’...
6. So absolute is this focus that the PM thinks nothing of threatening
Parliament with prorogation: an astonishing moment in the historic
post-1688 relationship between executive and legislature. It is a
mafia-style warning that he will not blink...

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Which begs the question: will Parliament? All normal conventions and norms are out of the window. This is total political warfare now. Johnson and Cummings will go to any lengths to get the UK out on October 31....@MatthewdAncona
Law & Politics

8. Across London, as the political and media class returns in batches
from holiday, you can hear a feeble murmuring sound: it is the
Establishment wondering if the PM means it and longing quietly for a
good old-fashioned British fudge..

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Currency Markets at a Glance WSJ
World Currencies

Euro 1.0972
Dollar Index 99.02
Japan Yen 106.34
Swiss Franc 0.9907
Pound 1.2094
Aussie 0.6717
India Rupee 71.7700
South Korea Won 1,212.20
Brazil Real 4.1453
Egypt Pound 16.5855
South Africa Rand 15.2268

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Americans' View of the Current Economy Is the Highest in 19 Years @markets
International Trade

U.S. consumer confidence declined in August by less than forecast as
Americans’ assessment of current conditions climbed to the highest
level in almost 19 years, helped by a job market that remains robust.
The Conference Board’s index eased to 135.1 this month from a revised
135.8, according to data from the New York-based group Tuesday that
exceeded all estimates in a Bloomberg survey of economists.
The gauge of views on the present situation jumped to 177.2, the
highest since November 2000, the expectations index decreased.
“While other parts of the economy may show some weakening, consumers
have remained confident and willing to spend,” Lynn Franco, senior
director of economic indicators at the Conference Board, said in a
“However, if the recent escalation in trade and tariff tensions
persists, it could potentially dampen consumers’ optimism regarding
the short-term economic outlook.”

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24-JUN-2019 :: such a forecast is absurd. The economy has some soft spots but unemployment is at multi-decade lows and consumer spending holding up
International Trade

If you were to look at the US economy in isolation, you’d have to say
such a forecast is absurd. The economy has some soft spots but
unemployment is at multi-decade lows and consumer spending holding up.
The US two year note which is at around 1.75% is the financial
instrument which is the purest signal. We are in ‘’nose-bleed’’
territory. This is ‘’Voodoo Economics’’

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South Africa All Share Bloomberg +4.78% YTD

Dollar versus Rand 6 Month Chart INO


Egypt Pound versus The Dollar 3 Month Chart INO


Egypt EGX30 Bloomberg +14.54% YTD


Nigeria All Share Bloomberg -12.42% YTD


Ghana Stock Exchange Composite Index Bloomberg -7.82% YTD


Management told investors it intends to “carve out Jumia Pay as a
standalone entity.”  @qzafrica


15 APR 19 ::  The Platform Economy


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@KenyaAirways reports H1 2019 Earnings here
Kenyan Economy

Par Value:                  5/-
Closing Price:           2.65
Total Shares Issued:          5681616931.00
Market Capitalization:        15,056,284,867
EPS:             -1.01
PE:                 -2.624

Kenya Airways PLC H1 2019 results through 30th June 2019 vs. 30th June 2018
H1 Total income 58.550b vs. 52.193b +12.180%
H1 Total operating costs [61.454b] vs. [53.218b] -15.476%
H1 Operating Loss [2.904b] vs. [1.025b] -183.317%
H1 Other costs [5.684b] vs. [2.990b] -90.100%
H1 Loss before income tax [8.562b] vs. [3.992b] -114.479%
H1 Income tax [expenses]/ credit [1m] vs. [43m] -97.674%
H1 Loss for the period [8.563b] vs. [4.035b] -112.218%
Basic loss per share [1.47] vs. [0.69] -113.043%
Diluted loss per share [1.14] vs. [0.54] -111.111%
Total Equity [16.184b]
Cash and cash equivalents at the end of the period 4.229b vs. 5.964b -29.091%
On behalf of the board of Directors, I hereby present the Kenya
Airways PLC financial results for the six months period ended 30 June
I would like to point out that in turning around Kenya Airways, a
deliberate decision was taken not to shrink the business but instead
improve financial performance through strategic investments on growth
Some of these investments may deny KQ and its shareholders an
immediate return but are expected to yield positive results in the
In cognisance of these long-term investments, the Group has recorded a
loss before tax of Kshs 8,562 million compared to Kshs 3,992 million
reported in the same period in 2018. Some of these losses can be
attributed to the return in to KQ service of two Boeing 787's that
were on sub-lease to Oman Air, investment in new routes and adoption
of the new International Financial Reporting Standard (IFRS 16).
IFRS 16 which came into effect in January 2019, replacing IAS 17,
recognises operating leases as assets in financial statements and
enables comparability between companies that lease assets and those
that outrightly purchase assets.
The Group's total revenues increased by 12% to Kshs. 58,550 million.
The growth was due to improved passenger, cargo and other revenue
streams that were mainly driven by the positive performance of
recently introduced routes
These results include revenues from routes such as New York,
Libreville, Mogadishu which were opened in the second half on 2018. As
a result, the Airline recorded a 6.6% increase in passenger numbers to
hit 2.4 million. Passenger revenue grew 5.8% to Kshs. 42,597 million.
Despite the increase in revenues, we continue to register lower yields
attributed increased competitive environment, major currency
fluctuations as well as a tough local macro-economic environment.
The Group saw a 15.9 % rise in operating costs. The increase was
mainly attributed to the return of two Boeing 787s that had been
sub-leased to Oman Air and fuel costs which marginally increased by 5%
due to increased flying. The airline, however benefitted from its fuel
hedging program.
Based on the above revenue and cost dynamics, the Group recorded an
Operating loss Margin of 5.6%.
Other operating highlights:
During the first half, KQ continued its network expansion drive,
opening the key strategic routes - Rome, Geneva and Malindi and
increasing frequencies to other key destinations. The New York City
Route which was launched in October 2013 has shown a positive
passenger uptake. The growth in passenger numbers is highly attributed
to codeshare agreements that enable passengers to connect to other
destinations in the US.
The global economic and geopolitical context remains uncertain, while
Kenya Airways continues to operate in a highly competitive
environment. The Group continues to invest in improvement of
operations, efficient network growth and improvement of service
quality and delivery.
In the next half year, the Board and Management are working on a fleet
refinancing program, which once completed will improve the Group's
cashflow. The impact of this program on the Group's financials will be
announced to the public once the program is approved for
On behalf of the Board of Directors, I take this opportunity to
express my sincere appreciation to our customers, the Government of
Kenya, shareholders, management, staff, suppliers and other
stakeholders for their continued support.
Michael Joseph

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Kenya Shilling versus The Dollar Live ForexPros
Kenyan Economy

Nairobi All Share Bloomberg +5.09% YTD


Nairobi ^NSE20 Bloomberg -12.92% YTD


Every Listed Share can be interrogated here


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

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