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Macro Thoughts

Home Thoughts

Between the idea
And the reality
Between the motion
And the act
Falls the Shadow
For Thine is the Kingdom.

This image shows one of the Black Rock Pride males guarding a killed
zebra from being eating by other predators or scavengers." 'Sleeping
with the enemy' taken by Jose Fragozo in aid of The Angama Foundation

Political Reflections

’ What’s your road, man? - holy- boy road, madman road, rainbow road,
guppy road, any road. It’s an anywhere road for anybody anyhow. Where
body how?” -
The Key question is this. Can Prime Minister Johnson self-eject
Britain? Can he be stopped? This is a political calculation.
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.

UK PM #borisjohnson knows he can keep on asking for a general
election. #Labour and #Corbyn know they don’t want a general election.
#johnson knows this too. The PM’s endgame is the UK flops out of the
EU, #corbyn’s endgame is #Brexiteer or not you vote #Labour. Can’t be
done.

Of course, there are many other Frontiers, the Mediterranean Sea, the
Sahara desert, Islands because of the EEZ's they control.

International Markets

“I think the trade war has significantly impacted economic growth
prospects in China and therefore import demand from China has fallen
significantly and so demand for products and raw materials from Africa
will only fall even further,” he said.
“It will also have another effect with regard to China’s own
outward-bound investments on the continent,” he added.
The US China Trade War continues to intensify notwithstanding the Fact
that Aides have now admitted Trump Made Up “High Level Phone Calls”
With China To Boost Markets.

Euro 1.0924
Dollar Index 99.227
Japan Yen 107.88
Swiss Franc 0.9937
Pound 1.2292
Aussie 0.6760
India Rupee 70.7903
South Korea Won 1199.29
Brazil Real 4.1689 next to pop big
Egypt Pound 16.309
South Africa Rand 15.1195

Commodities

Gold has attracted a lot of hot money. Price action a few days back
confused many as the break out higher looked realistic, but gold
reversed lower abruptly. The yellow metal is currently breaking below
the 1500 level and the big trend line. Watch the close carefully
today, as below 1500/1490 is a lot of vacuum.

“No matter how the official narrative of this turns out, these are the
places we should be looking, not in newspapers or television but at
the margins, graffiti, uncontrolled utterances, bad dreamers who sleep
in public and scream in their sleep.”
The Edge “There is no honest way to explain it because the only people
who really know where it is are the ones who have gone over''

On a Fundamental analysis I am supremely bullish Crude Oil See Here

Emerging Markets

China has exerted the Power of Pull over a vast swathe of the World
over the last two decades. We can call it the the China, Asia, EM and
Frontier markets Feedback loop. This Feedback Loop has been largely a
positive one for the last two decades. With the Yuan now in retreat
[and in a precise response to Trump], this will surely exert serious
downside pressure on those countries in the Feedback Loop.

Which is correct

Wikipedia has an article on: halcyon days and it reads thus,

From Latin Alcyone, daughter of Aeolus and wife of Ceyx. When her
husband died in a shipwreck, Alcyone threw herself into the sea
whereupon the gods transformed them both into halcyon birds
(kingfishers). When Alcyone made her nest on the beach, waves
threatened to destroy it. Aeolus restrained his winds and kept them
calm during seven days in each year, so she could lay her eggs. These
became known as the “halcyon days,” when storms do not occur. Today,
the term is used to denote a past period that is being remembered for
being happy and/or successfuL

Emerging and Frontier Markets Borrowers surely need to get their
skates on and pull the trigger real quick on any borrowing they had
been considering for this year.

After all

Frontier Markets

Sub Saharan Africa

Economic difficulties have continued throughout 2019, exacerbated by
severe weather shocks. GDP growth in 2019 is expected to be steeply
negative as the effects of drought on agricultural production and
electricity generation, impact of cyclone Idai, and the significant
fiscal consolidation to correct past excesses serve to drag on growth.
Social conditions have deteriorated sharply, with more than half of
Zimbabwe’s population (8.5 million people) estimated by the UN to be
food insecure in 2019/2020. Weakening confidence, policy uncertainty,
a continuation of FX market distortions, and a recent expansionary
monetary stance has increased pressure on the exchange rate. Since the
February currency reform, the exchange rate has depreciated from USD
1:1 ZWL to USD 1:16.5 ZWL (as of September 23), fostering high
inflation, which reached almost 300 percent (year-over-year) in
August.

“Policy actions are urgently needed to tackle the root causes of
economic instability and enable private-sector led growth. The key
challenge is to contain fiscal spending consistent with
non-inflationary financing and tighten monetary policy to stabilize
the exchange rate and start rebuilding confidence in the national
currency. Risks to budget execution are high as demands for further
public sector wage increases, quasi-fiscal activities of the RBZ that
will need to be absorbed by the central government, and pressure to
finance agriculture could push the deficit back into an unsustainable
stance. There is also a need to strengthen FX market operations and
improve transparency on monetary statistics. These adjustment
challenges are magnified by slow progress on international
reengagement. Efforts will need to be intensified on both economic and
political fronts to drive Zimbabwe forward.

Most of Zimbabwe’s citizens are ‘’born free’’ the fight for
independence was real but is no longer relevant is it?
We are grateful to all those iconic leaders who liberated our
continent of which Mugabe is one but at what price? Fighting for
independence is not the same as building an economy which provides
opportunity for all its citizens.
As some African leaders laud Mugabe today, @PastorEvanLive argues:
“There can be no mixed feelings, misconceptions or complications about
Robert Mugabe’s legacy. He presided over the destruction of millions
of people’s lives over a span of 37 years.”
Emmerson Mnangagwa who was eulogising Mugabe as a Revolutionary Icon
has failed and is frankly as untenable as his erstwhile Mentor.

“Money is accordingly a system of mutual trust, and not just any
system of mutual trust: money is the most universal and most efficient
system of mutual trust ever devised.”
“Cowry shells and dollars have value only in our common imagination.
Their worth is not inherent in the chemical structure of the shells
and paper, or their colour, or their shape. In other words, money
isn’t a material reality – it is a psychological construct. It works
by converting matter into mind.”
The Point I am seeking to make is that There is a correlation between
high Inflation and revolutionary conditions, Zimbabwe is a classic
example where there are $9.3 billion of Zollars in banks compared to
$200 million in reserves, official data showed.
The Mind Game that ZANU-PF played on its citizens has evaporated in a
puff of smoke.
‘’The choice of that moment is the greatest riddle of history’’ and
also said “If the crowd disperses, goes home, does not reassemble, we
say the revolution is over.”
What is clear to me is that Zimbabwe is at a Tipping Point moment.

Zimbabwe finally overhauled its dysfunctional,''whack'' and even
Voodoo FX regime.  Zimbabwe’s government dropped its insistence that a
quasi-currency known as bond notes are at par with the dollar as it
overhauled foreign-exchange trading and effectively devalued the
securities. While the government has previously insisted that bond
notes and RTGS dollars are worth the same as U.S. dollars, the units
currently trade at between 3.66 and 3.8 to the dollar respectively on
the black market [Bloomberg] “The introduction of a Zim dollar will be
just in name, but the RTGS$ is essentially the Zim dollar.” Tendai
Biti is predicting a 6-8 range whilst the Government is looking for it
to appreciate to 2.5 which is best characterised as ''Hail-Mary''
economics. This is the right move but I would definitely be short at
2.5, if it ever gets there which is entirely unlikely.

Under pressure from falling revenues, mounting debt and high
expectations, the President pledges radical change
With sweeping promises of a multi-billion-dollar privatisation
programme, including the state oil company Sonangol, President João
Lourenço attracted top diplomats and business people to the Council on
Foreign Relations (CFR) in New York on 23 September.
With Lourenço speaking at the UN General Assembly the next day, it was
one of the most high-profile attempts to relaunch Angola's economy,
one of the five biggest in Africa.

Accusations of corruption against the President’s appointees are
weakening him in his fight with Kabila

'I am not a puppet', President Félix Tshisekedi keeps insisting, most
recently to the Belgian government and the Congolese diaspora in
Brussels during a recent state visit to the former colonial power.
Tshisekedi points, as evidence, to the closure of the notorious
cachots (dungeons) of the Agence Nationale de Renseignements, the
secret police, under his presidency, the freeing of all the political
prisoners who were immured there and in the crumbling prisons, and the
firing of the ANR's head, Kalev Mutond, a close associate of former
President Joseph Kabila.

“When I heard the news, I nearly collapsed,” said Jallow, who employs
a dozen people at her restaurant in Kololi, a seaside resort town on
the Atlantic coast, just outside the capital Banjul.
“Tourism is my life.”
Tourism accounts for 30% of GDP in the former British colony, which
has been a popular destination for Europeans since the 1960s.
The industry has been a key driver behind Gambia’s recovery from an
economic slump in 2016-17 and the economy had been forecast to grow
5.4% this year.

Kenya

A bid to build alliances across the country’s ethnic divides owes more
to political ambition than to altruism
Due for release in early October, the wide-ranging report of the
Building Bridges Initiative looks likely to deepen political conflict
despite its lofty aims of lessening ethnic and regional rivalries.
The BBI was set up to bring together the country's competing ethnic
groups under a new national ideology and better system of government.
At least, that was the idea agreed between President Uhuru Kenyatta
and his new ally Raila Odinga in the historic 'handshake' of March
2018 (AC Vol 59 No 8, Believe the handshake).
The report will force Kenyatta to choose between Odinga's position on
it – largely favourable – and Deputy President William Ruto's, who
opposes the report in its entirety.
The BBI report will also widen the rift within the ruling Jubilee
Party between Ruto and Kenyatta followers. And it may splinter what
remains of the Odinga-led National Super Alliance (Nasa), the nominal
opposition.
What Kenyatta and Odinga intended to be a manifesto for national unity
may cause more rancour among rival political factions (AC Vol 60 No
15, A killing joke).
The draft BBI report tries to summarise the views of voters, recorded
in public meetings in Kenya's 47 counties, on the nine main governance
issues that were identified by Kenyatta and Odinga in the March 2018
concord.
It gives equal prominence to all nine areas: ending ethnic antagonism;
creating a patriotic ethos; ethnic inclusiveness; ending the pattern
of polarising elections; strengthening devolution; strengthening
public security; fighting corruption; promoting shared prosperity; and
respect for human rights.
Kenyans want to see progress in all these areas, the report says. They
said the same to the Constitution of Kenya Review Commission when it
took evidence from different parts of Kenya under Professor Yash Pal
Ghai between 2000 and 2005.
It was those soundings that were incorporated in the reformed
constitution in 2010 in the wake of the devastating violence after the
2007 elections. But those constitutional reforms didn't work as
Professor Ghai reminded the BBI panel when he appeared before it on 8
May this year.
Civil society and religious groups raised these concerns before the
new constitution was inaugurated in 2010 and continue to do so.
The report's proposals to represent rival factions and ethnic groups
more fairly look set to split opinion:
The most contentious part of the report will recommend a parliamentary
system of government, with more positions at the top of government
distributed reflecting Kenya's ethnic diversity: a president with a
deputy, and a prime minister with two deputies.
This will divide the ruling Jubilee alliance as Ruto has twice
campaigned for Kenyatta on the promise that he would inherit a unified
and powerful presidential system. He has pronounced himself opposed to
any changes.
The report was commissioned by and for Kenyatta and Odinga, so other
leaders in the Nasa opposition alliance say that its recommendations
are of little interest to them and their supporters.
These include Musalia Mudavadi (Luhya), Stephen Kalonzo Musyoka
(Kamba) and Moses Simiyu Wetangula (Bukusu); their supporters say the
report has no legal or constitutional basis.
The most delicate relationship is with Ruto, who was excluded by
Kenyatta from the two-way negotiations which led to the BBI and this
new report. The gap between the two has grown apace.
Kenyatta insists that all Jubilee activists must stop campaigning for
the 2022 elections 'and concentrate on development' and service to the
public, a warning aimed at Ruto's relentless politicking (AC Vol 60 No
3, The President's anger & Vol 60 No 18, Spending on the hoof).
Ruto tours the country inaugurating public projects, using the
stopovers to consolidate his base and giving large sums to build
churches. Kenyatta sees this as insubordination.
Using the opaque security budget, the permanent secretary in the
Ministry of Interior, Karanja Kibicho, has under Kenyatta's orders
sponsored an anti-Ruto movement in the Mount Kenya region – the
Kieleweke group.The aim is to undercut Ruto's initiatives, supported
by the rival Tanga Tanga group of MPs.
The rupture has been papered over but it cannot remain so for long.
Kenyatta has spoken vaguely in the past about the need for
ethnic-political inclusiveness and the need to reform the
winner-takes-all election system.
This has been taken up most vocally by his close advisor and supporter
Anne Waiguru, Governor of Kirinyaga. Although she is Kikuyu, Waiguru
defends parliamentary government with more ethnically distributed
seats at the top and she also told Kenyatta's Kikuyu and Ruto's
Kalenjin followers 'to forget running for the presidency and give
other tribes a chance'.
This was seen as a pitch by Waiguru for an Odinga presidency and few
doubt that her statement could have been issued without the
President's permission.
It has polarised Kikuyu political opinion and leaders as never before.
And the division will continue, we hear, since Waiguru will spearhead
the campaign to sell the BBI proposals in the Mount Kenya region.
The Mount Kenya groups (Kikuyu, Embu, Meru) seem split on the
Uhuru/Raila reform pact but the larger proportion resents Jubilee's
all but formal betrayal of Ruto, after he campaigned for two
successive election victories for Kenyatta and the Kikuyu.
Ruto retains broad support among his Kalenjin people although he is
challenged for supremacy from Gideon Moi and Joshua Kutuny. The Kikuyu
in the Rift Valley, who live cheek by jowl with the Kalenjin, largely
side with Ruto, giving him credit for the peace they enjoyed during
and after the 2013 and 2017 general elections, in contrast to the
bloody polls of 2007.
Ruto is working hard to bring under his wing the disenchanted Odinga
supporters among the Luhya, Bukusu and Kamba, and from the Coast. The
ethnic and ideological line-up behind the Deputy President is
changing.
Odinga's support among Luhya in western Kenya, Kamba and the coastal
communities is falling. He has angered his leftist brains trust,
including the likes of David Ndii and Maina Kiai, by forming his new
alliance with the wealthy Kenyatta family.
Nobody can tell where the dice will land.
Against the backdrop of the shifting ethnic-based political factions,
one of the few certainties is the constancy of Odinga's support base
among the Luo.
Kenyatta has to make a critical choice: whether to throw his weight,
his family's fortunes and his substantial Kikuyu following behind
Odinga or should he back his deputy.
On the basis of this report, and in the eyes of many Kenyans, Kenyatta
has decided for now to back Odinga and sideline Ruto.