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Macro Thoughts

correct anything else is craven

Home Thoughts

9 days after his capture, speaking to a rally of more than one million
people in Havana, Fidel Castro declared 8 October the 'Day of the
Heroic Guerrilla'.

''she told me I had a purpose to bring Laughter and Joy to the World''

ESO’s Very Large Telescope captured this shell of glowing ionised gas
— the last breath of the dying star whose simmering remains are
visible at the heart of this image

2 Vanity[a] of vanities, says the Preacher,
    vanity of vanities! All is vanity.
3 What does man gain by all the toil
    at which he toils under the sun?
4 A generation goes, and a generation comes,
    but the earth remains forever.
5 The sun rises, and the sun goes down,
    and hastens[b] to the place where it rises.
6 The wind blows to the south
    and goes around to the north;
around and around goes the wind,
    and on its circuits the wind returns.
7 All streams run to the sea,
    but the sea is not full;
to the place where the streams flow,
    there they flow again.
8 All things are full of weariness;
    a man cannot utter it;
the eye is not satisfied with seeing,
    nor the ear filled with hearing.
9 What has been is what will be,
    and what has been done is what will be done,
    and there is nothing new under the sun.
10 Is there a thing of which it is said,
    “See, this is new”?
It has been already
    in the ages before us.
11 There is no remembrance of former things,[c]
    nor will there be any remembrance
of later things[d] yet to be
    among those who come after.

Political Reflections

Now that the celebrations marking the 70th anniversary of the founding
of the People’s Republic of China are over, it is time to direct
attention back to the Sino-American trade war. That conflict may well
be about to enter its endgame.
Indeed, the next round of negotiations could be the last real chance
to find a way through the trade, technology and wider economic
imbroglio that has been engulfing both countries.
Failing that, the world should start preparing for its rockiest
economic ride since the 2008 global financial crisis.
There is a real risk that America will slide into recession, and that
the global economy will experience a broader decoupling that will
poison the well for Sino-American relations far into the future.
Thus far, the trade war has gone through four phases. Phase one began
last March, when US President Donald Trump announced the first round
of import tariffs on Chinese goods.
Phase two arrived with the “Argentine reset” at the G20 summit in
Buenos Aires last December, when Trump and Chinese President Xi
Jinping announced that they would conclude an agreement within 90
days.
That truce imploded in early May of this year, with each side accusing
the other of demanding major last-minute changes to the draft
agreement.
For starters, the US and Chinese economies are both in trouble. In the
US, recent poor manufacturing and private-sector employment figures
have reinforced pessimism about the economy’s prospects. If conditions
were to deteriorate further, Trump’s bid for re-election in November
2020 would be endangered.
Likewise, Xi would be weakened by any significant slowdown on the eve
of the Communist Party of China’s centenary celebrations in 2021,
which will be a prelude to his bid for an already controversial third
term starting in 2022.

Late last year, the view was “This is all on Xi’s shoulders,” said
Trey McArver, co-founder of Beijing-based research firm Trivium China.
“Xi has personally said that he would handle relations with the United
States and at this point, he has failed. Those relations are
spiralling out of control.” [Bloomberg]
and this past week’s Yuan Price Action was a message delivered with
finesse and subtlety and whose import cannot be ignored.

The point being in the trade war Trump is no longer the decider. In
the US, there is clearly a consensus baseline for a full-on toe to toe
slugfest as it were. In China, however, there is only one decider who
was pronounced as much by Xinhua in a historical announcement in March
2018.
Xi reckons he can direct a suc- cessful, society-wide struggle in the
trade dispute’’ Notwithstanding all the hyperbole and very partisan
commentary, the following are the plain Truths.
The Markets are still pricing in a benign [but much less benign than a
month ago] Outcome. We need to consider what a non-benign or even
maximum non-benign outcome looks like.

I recall President Obama describing the Presidency thus. He said it
was like being a train driver. The rails are laid and the direction
set and the President can speed up or slow down but nothing more. In
Dec 2013, I wrote a piece headlined, ‘’The Pivot to Asia bares its
Fangs’’ in which article I said:
‘’I see the pivot to Asia as the encirclement of China, then the
shrinking of its operating theatre and then lighting the tinderbox
that is the periphery and Xinjiang might well morph into China’s
Afghanistan’’
[China has been stuffing the residents of Xinjiang with pork, locking
them up in internment camps and brainwashing them in order to prevent
that outcome].
The Pivot to Asia was the signature name for President Obama’s pivot,
which entailed a repositioning of US Assets into Asia and which China
saw as a US attempt to contain it and bottle it up.
If one is to criticise Barack Obama one would criticise him for being
incredibly supine in the teeth of China’s ‘’salami slicing’’ [Ronak
Gopaldas in the ISS].
This geopolitical contest will likely escalate dangerously. Powerful
forces on both sides are driving the world’s two strongest countries
toward full-fledged confrontation’’ [The writer is the Douglas Dillon
professor of government at the Harvard Kennedy School and author of
‘Destined for War’ in the FT]
The incident with the USS Decatur where a Chinese warship came within
45 yards of the USS Decatur in South China Sea is surely a precursor.

James Dean was an iconic American actor, who tapped into the universal
yearning and angst of nearly every adolescent human being with a raw
connection that has surely not been surpassed since. In one of his
most consequential films, Rebel without a Cause, two players (read,
teenage boys) decide to settle a dispute (read, teenage girl) by way
of near-death experiences.
Each speeds an automobile towards a cliff. A simple rule governs the
challenge: the first to jump out of his automobile is the chicken and,
by univer- sally accepted social convention, concedes the object in
dispute. The second to jump is victorious, and, depending on context,
becomes gang leader, prom king, etc.
Buzz, the leader of a local gang, agrees to 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.” Seconds into the race, Buzz discovers that
his jacket is stuck on the door handle, making jumping out of the car
somewhat difficult. Jimmie jumps out an instant before the cars reach
the edge of the cliff.
Buzz, still unable to free his jacket from the door handle, fails to
escape. While he won’t be branded a “chic- kie,” he suffers a worse
fate.

„Before mass leaders seize the power to fit reality to their lies,
their propaganda is marked by its extreme contempt for facts as such,
for in their opinion fact depends entirely on the power of man who can
fabricate it.“ Hannah Arendt, The Origins of Totalitarianism

He blusters and then leaves our allies exposed when adversaries call
his bluff or he confronts a hard phone call.

President Donald Trump late Sunday night decided to pull U.S. troops
out of northern Syria – opening the area to an invasion by Turkey
against the Kurds, who have helped the U.S. in the war against ISIS.
According to multiple reports Trump talked to Turkish President
Erdogan Sunday night, then immediately had the White House issue the
statement that he had called for the withdrawal.
Other reports say the Pentagon was “blindsided,” and learned of the
decision news reports. Even Fox News is reporting the Pentagon was
“blindsided.”
And yet, Monday afternoon, asked by a reporter if he had consulted
with anyone, Trump lied.
“I consulted with everybody. I always consult with everybody,” he
claimed. That claim is also false. Trump has a record of making
decisions based on the last person he talked to and making the
announcement himself, surprising everyone.
In fact, in February Trump announced he was pulling out of Syria, but
had consulted with no one, not even his top military commander in the
Middle East.

But nobody who fought ISIS in Syria in one vicious battle after
another has forgotten that the huge Turkish army stood by and did
nothing against the Islamic State as its killers carried out genocidal
campaigns against Yazidis and Shiites, while abducting, torturing,
ransoming or beheading Americans, Europeans, and Japanese, among
others. Through all that, NATO ally Turkey was not interested in
intervention. Far from it.

Over the span of just a few hours, U.S. President Donald Trump upended
his own policy on Syria with a chaotic series of pronouncements,
blindsiding foreign allies, catching senior Republican supporters off
guard and sending aides scrambling to control the damage.
Trump’s decision on Sunday to remove some U.S. forces from
northeastern Syria, opening the door to a Turkish offensive against
U.S.-allied Kurdish fighters in the region, provides a vivid example
of how, with traditional White House structures largely shunted aside
and few aides willing to challenge him, he feels freer than ever to
make foreign policy on impulse.
While Trump’s erratic ways are nothing new, some people inside and
outside of his administration worry that the risk of dangerous
miscalculation from his seat-of-the-pants approach may only increase
as he moves into re-election campaign mode facing a number of
unresolved, volatile international issues, including Iran, North Korea
and Afghanistan.
He also made clear on Monday that he was determined to make good on
his 2016 campaign promise to extract the United States from “these
endless wars,” although his plans for doing so are clouded by
uncertainty.
It comes as Trump is under growing pressure from a Democratic-led
impeachment inquiry over his efforts to get Ukraine to investigate one
of his political opponents, former Vice President Joe Biden.
“There’s a real sense that nobody is going to stop Trump from being
Trump at this stage, so everybody should buckle up,” said one U.S.
national security official, who cited Trump’s firing last month of
national security adviser John Bolton as a sign of the president being
less restrained than ever by his top advisers.
Trump’s policy whiplash on Syria started shortly after a phone call
with Turkish President Tayyip Erdogan on Sunday in which he sought
U.S. support for Ankara’s planned incursion.
Afterward, the White House said that U.S. forces “will no longer be in
the immediate area,” suggesting that Turkey could be given free rein
to strike Kurdish forces long aligned with Washington in the fight
against Islamic State.
“He makes impulsive decisions with no knowledge or deliberation,”
tweeted Brett McGurk, who served as Trump’s envoy for the
international coalition to combat Islamic State and quit after the
December Syria policy uproar.

Arranging a phone call with the president of the United States used to
be seen as a diplomatic win. But increasingly it comes with serious
risks, from transcript leaks to domestic political blowback, and
advisers are growing wary.
The fallout from Trump’s July 25th call with Ukrainian President
Volodymyr Zelenskiy is still reverberating in Kiev and has led to the
opening of an impeachment inquiry in Washington.
U.S. lawmakers leading the inquiry now want access to Trump’s calls
with Russian President Vladimir Putin and some other world leaders,
with the chairman of the U.S. House Intelligence Committee citing
concerns that Trump may have jeopardized national security.
“People have to adjust to the fact that a phone call with Trump is not
the same as a phone call with any normal leader,” said Gerard Araud,
the French ambassador in Washington until last June, who helped
organize a number of calls between President Emmanuel Macron and the
White House.
For any world leader who has spoken to Trump, the idea that verbatim
transcripts could be released is a worrying prospect and likely to
alter how such calls — a lifeblood of international diplomacy — play
out in the future.
“My advice to Macron, on Twitter at least, was not to react, because
Trump will double down and you will lose.”

Many prisoners tell us of Turkish complicity with their journey into ISIS-land."

“She’s is absolutely crazy. She is obsessed with her photos and how
she looks,” the casino mogul reportedly told police. “She told us,
‘I’m the first lady. I’m a psychologist and teach children about
psychology!'”
“She screamed that I was sucking her blood. It was awful. She totally
lost it. I hugged her and said to her, ‘Saraleh, it’ll be okay,'”
Adelson recalled, according to the transcripts.
Responding to the Channel 13 report, a spokesman for the prime
minister called it another “criminal” leak punishable by up to three
years in prison.

Mr President, Your Excellencies, Ladies and Gentlemen, faithful late
night audience.
But no-one can ignore a gathering force that is reshaping the future
of every member of this Assembly.
When I think of the great scientific revolutions of the past - print,
the steam engine, aviation, the atomic age - I think of new tools that
we acquired but over which we - the human race - had the advantage,
You may keep secrets from your friends, from your parents, your
children, your doctor – even your personal trainer – but it takes real
effort to conceal your thoughts from Google.
Smart cities will pullulate with sensors, all joined together by the
“internet of things”, bollards communing invisibly with lamp posts
But this technology could also be used to keep every citizen under
round-the-clock surveillance.
A future Alexa will pretend to take orders.
But this Alexa will be watching you,
Clucking her tongue and stamping her foot
your mattress will monitor your nightmares; your fridge will beep for
more cheese,
And every one of them minutely transcribing your every habit in tiny
electronic shorthand,
Stored not in their chips or their innards - nowhere you can find it,
But in some great cloud of data that lours ever more oppressively over
the human race
We not only leave our indelible spoor in the ether
But we are ourselves becoming a resource
Click by click, tap by tap.
Just as the carboniferous period created the indescribable wealth -
leaf by decaying leaf - of hydrocarbons.
Data is the crude oil of the modern economy
We don’t know who should own these new oil fields
We don’t always know who should have the rights or the title to these
gushers of cash
Can these algorithms be trusted with our lives and hopes?
Should the machines - and only the machines - decide whether or not we
are eligible for a mortgage or insurance
Or what surgery or medicines we should receive?
Are we doomed to a cold and heartless future in which computer says
yes - or computer says no
With the grim finality of an emperor in the arena?
how do you plead with an algorithm? How do you get it to see the
extenuating circumstances
And how do we know that the machines have not been insidiously
programmed to fool us or even to cheat us?
The same programmes, platforms, could also be designed for real-time
censorship of every conversation, with offending words automatically
deleted, indeed in some countries this happens today.
Digital authoritarianism is not, alas, the stuff of dystopian fantasy
but of an emerging reality.
Helpful robots washing and caring for an ageing population?
or pink eyed terminators sent back from the future to cull the human race?
What will synthetic biology stand for - restoring our livers and our
eyes with miracle regeneration of the tissues, like some fantastic
hangover cure?
Or will it bring terrifying limbless chickens to our tables.
In a tube of fennel, as you may remember, that Zeus punished him by
chaining him to a tartarean crag while his liver was pecked out by an
eagle
And every time his liver regrew the eagle came back and pecked it again
The discovery of the very essence of life itself
The secret genetic code that animates the spirit of every living being.
So far, we have discovered the secrets of less than 0.3 percent of
complex life on the planet,

Xi’s model is one of technocratic authoritarianism and a recent
addition to his book shelf include The Master Algorithm by Pedro
Domingos. Xi is building an Algorithmic Society.
The Folks in Hong Kong [whom Xi is seeking to unmask so he can
exercise algorithmic control over them] are in open rebellion. Joshua
Wong told German Media "Hongkong ist das neue Berlin" referencing the
"Ich bin ein Berliner"  speech given by United States President John
F. Kennedy given on June 26, 1963, in West Berlin. I am sure Xi sees
Hong Kong and Taiwan like a Virus and he is looking to impose a
quarantine just like he has imposed on Xinjiang. The Chinese Dream has
become a nightmare at the boundaries of the Han Empire. The World in
the c21st exhibits viral, wildfire and exponential characteristics and
Feedback Loops which only become obvious in hindsight.I would venture
that Xi's high water mark is behind him. Shorting the renminbi is a
bit of a No-Brainer. The Pork Apocalypse speaks to a very fragile Food
situation. The Periphery requires a lot more finesse than more blunt
force. But he can rely on a US President whose dereliction of his
international duty is now in plain sight “China will not interfere in
the internal affairs of the US, and we trust that the American people
will be able to sort out their own problems," China's very subtle
Foreign Minister Wang Yi said in response to questions around Trump's
pursuit of Biden and his personal political agenda at the price of the
US' international Agenda.

International Markets

Euro 1,0957
Dollar Index 99.142
Japan Yen 107.19
Swiss Franc 0.9943
Pound 1.2203
Aussie 0.6737
India Rupee 71.2275
South Korea Won 1198.82
Brazil Real 4.0828
Egypt Pound 16.2887
South Africa Rand 15.2777

They were the “golden crumbs,” those bits of money that fall off as
bonds get traded around the world.
Those crumbs were enough to make bond traders the Masters of the
Universe in Tom Wolfe’s 1987 novel “The Bonfire of the Vanities.” But
those days are long gone.
AllianceBernstein Holding LP has introduced a robot to execute
corporate-bond trades directly with bots at dealer counterparties.
The $587 billion asset manager used the system in August to complete
three trades with similar digital assistants at Citigroup Inc., Morgan
Stanley and Royal Bank of Canada.
“We’ve taken a traditional human-to-human interaction and augmented it
to allow a machine to meet another machine,” said Maryanne Richter,
global head of credit electronic trading strategy at Morgan Stanley in
New York.
While computers have already transformed equities trading, the
corporate bond market has been one of the last holdouts in finance’s
digital revolution.
Firms are slowly stepping up their use of artificial intelligence and
crunching reams of data to get ahead as electronic bond trading
becomes more prevalent.
Automation is making inroads on trading desks, such as at UBS Group AG
and HSBC Holdings Plc, where robots are making bond  sales more
efficient.
More than 40% of capital market participants that took part in a
Greenwich Associates survey earlier this year said that their firms
are using AI for trading. Another 17% said they will introduce it
within the next two years.
Still, this is the first time that bots have traded with other bots in
corporate bonds, according to AllianceBernstein.
The robot is an extension of the asset manager’s virtual assistant,
named  Abbie, which pores through data and identifies for traders the
best bonds to buy or sell. AllianceBernstein gathers about 4 million
data points a day to work out the best ways to trade including bid and
offer prices from dealers and electronic trading venues.
“Right now they aren’t replacing traders, they’re really just helping us trade”
Executing trades involves a number of manual steps. Currently it can
take traders up to 20 minutes to negotiate the size, price and precise
maturity of a trade with a counterparty on the other end of the phone
or instant message.
With bots that could become almost instantaneous.
“Machines are helping us to make smarter decisions and be more
efficient,” said James Switzer, global head of fixed-income trading at
AllianceBerstein.
“I guess we could look out 5 or 10 years and start anticipating what
would happen, but right now they aren’t replacing traders, they’re
really just helping us trade.”
The robot is designed to save traders time and beat competitors, a
meaningful edge in a secondary market starved of liquidity.
It could also be developed using AI to remember the best
counterparties for certain trades and target them first in future, a
system known as smart order routing, according to Switzer.
In the test cases, AllianceBernstein made three separate trades in
investment-grade U.S. corporate bonds with each of the three banks and
the firm expects to expand that to more dealers in the coming months.
The bots agreed to the transactions on the signal of a human trader.
“The master is telling the dog to fetch and bring the stick back,” said Switzer.
In the future, AllianceBernstein expects the bot to spot the best
prices within parameters previously set by a trader and execute
automatically.
That would mean it would no longer need a human to give the execute
command, although to be sure, the firm will still have human checks
and balances including compliance.
Citi and Morgan Stanley both expect their trading algorithms to be
able to directly handle requests to trade and execute without human
command, depending on the nature of the transaction. A
 spokesman for RBC Capital Markets declined to comment on the trade
with AllianceBernstein.
“We’re automating parts of a very manual process,” said Kevin Foley,
head of markets electronification at Citi in New York. “Phase two is
fully-automated straight-through processing.”
It’s surely a world Bonfire’s bond trader Sherman McCoy would have no
place in as the crumbs disintegrate.
“Just imagine that a bond is a slice of cake, and you didn’t bake the
cake, but every time you hand somebody a slice of the cake a tiny
little bit comes off, like a little crumb, and you can keep that,”
Wolfe wrote in his novel.

Commodities

As Taschen republishes Sebastião Salgado’s classic reportage from the
Serra Pelada gold mine, a former Magnum director recalls the day it
first landed on his desk
Salgado called me in October; he had just returned from Brazil where
he had photographed a gold mine known as Serra Pelada.
He believed he had shot a good set of pictures on what was his first
story for Workers, having piggy-backed his trip on a paid assignment.
That had got him to South America, but he had shot the story in his
own time, spending his own money.
The story was the epitome of Salgado’s thesis: that manual employment,
the very thing that defined the proletariat – the ability to sell
one’s labour – was coming to an end, about to be superseded by
mechanisation and computerisation.
Soon after his visit, the 50,000 men digging with picks and spades
were replaced by modern mechanical mining techniques.
Looking back now, we might have paid more attention when we saw the
sociopolitical uncertainties emerging from what we glibly called the
‘post-industrial communities’.
The package of pictures arrived on my desk from Paris one morning and
I pulled out 40 or so beautifully made 24×30cm black-and-white prints.
I knew immediately that I wouldn’t be taking the work to Granta. Here
was a virtuoso of photography. Salgado had used a complex palette of
techniques and approaches: landscape, portraiture, still life,
decisive moments and general views.
He had captured images in the midst of violence and danger, and others
at sensitive moments of quiet and reflection. It was a romantic,
narrative work that engaged with its immediacy, but had not a drop of
sentimentality.
It was astonishing, an epic poem in photographic form. It was my first
year working at Magnum, and I remember thinking, “Imagine if I get
even one story a year as good as this!”. Thirty-odd years on, I
realise how lucky I was to ever receive a story as good as this.
Time again after the publication of Serra Pelada, I heard the same
words and phrases to describe it: “biblical”, “Cecil B DeMille
cinematic”, or “what the building of the Pyramids must have looked
like”. Salgado’s rendition of the scale of the landscape was something
that maybe we had experienced in Ansel Adams’ large- format
photographs of Yosemite National Park, but here the monumental was
delivered via a journalist’s 35mm hand-held camera. I’m not qualified
to talk about advances in optics, or development of film chemistry, or
Salgado’s nine-bath film processing methodology, but I, like everyone
else who looks at Serra Pelada, am awed by the sense of scale that
Salgado captured, in individual images and cumulatively.

Emerging Markets

Frontier Markets

Sub Saharan Africa

For those who are Weather enthusiasts, the current drought conditions
in East Africa is being caused by an ''obscure'' climate Phenomenon
called the the Indian Ocean Dipole (IOD) [an oscillation of sea
surface temperatures in the Indian Ocean]  It wasn’t until the 1990s
that Japanese scientists discovered the Indian Ocean Dipole, a warm
pool of water that migrates between western and eastern “poles” and
affects atmospheric temperatures and rainfall. The phenomenon occurs
in cycles of positive (warmer) and negative (cooler) sea temperatures,
but it has become more extreme in recent years due to climate change.
A negative Indian Ocean Dipole results in less rainfall over East
Africa, and that’s contributing to the current drought that aid
agencies warn could trigger mass famine. The Scientists found that
before 1924, the IOD occurred approximately every 10 years, but since
1960, IOD events have been occurring approximately 18 months to three
years apart.The researchers suggested that global warming effects on
the western Indian Ocean have driven the observed shift in IOD
variability and note that the IOD has replaced the El Nino-Southern
Oscillation as the major driver of climate patterns over the Indian
Ocean region. It is this negative Indian ocean Dipole which has
parched the Country and the region.

I would park myself on the Verandah at the Mombasa Club and search for
the sea breeze. Later I would learn that I was in fact sniffing the
sea breeze for Petrichor [Petrichor (/ˈpɛtrk ɔәr/) is the earthy scent
produced when rain falls on dry soil]. The word is constructed from
Greek πέτρα petra, meaning "stone", and ἰχώρ īchōr, the fluid that
flows in the veins of the gods in Greek mythology Wikipedia].
According to Wikipedia, Some scientists believe that humans appreciate
the rain scent because ancestors may have relied on rainy weather for
survival. I like the idea that my sojourns to that verandah at the
Club, tied me somehow to my ancestors.

Their bosses have been suspended. THIS is a serious - and chilling -
escalation of election violence.

Renaissance Capital, which has correctly predicted eight out of nine
sovereign rating decisions in emerging Europe and the Middle East
since May, is calling a downgrade to junk for South Africa next month.
That view is at odds with the majority in the Bloomberg survey, but
Renaissance Global Chief Economist Charles Robertson says South
Africa’s fundamentals have deteriorated significantly since May, when
Moody’s Investors Service affirmed its Baa3 rating. The next review is
on Nov. 1.
“The macro numbers are not supportive of South African keeping
investment grade,” Robertson said. “Poor growth, tough public
finances, a subdued commodity outlook, tension on the streets as seen
in the anti-Nigerian riots, questions about the president’s ability to
push through his agenda - all these are worrisome.”
President Cyril Ramaphosa’s ability to implement tough economic
reforms is constrained by his tenuous hold on the deeply divided
ruling African National Congress and opposition from its labor union
and Communist Part allies, who oppose privatization, fearing job
losses. The slow pace of action has frustrated investors, driven
business confidence to the lowest level since 1985 and weighed on the
rand.
Since May, Robertson and his team correctly called rating decisions
for Turkey, Pakistan, Abu Dhabi, Qatar, the Czech Republic, Russia,
Hungary and Poland. Its prediction for Saudi Arabia was incorrect.
Still, a majority of respondents in a Bloomberg survey said they
expected South Africa to hold on to its investment-grade rating from
Moody’s, at least for this year.
Moody’s is the only major rating company still to assess South
Africa’s debt at investment grade. S&P Global Ratings and Fitch
Ratings cut their assessments to junk in 2017. Moody’s has South
Africa on a stable outlook, meaning it’s unlikely to change the rating
immediately.
Markets seem to support Robertson’s view. The cost of insuring South
Africa’s debt against default is higher than that for Brazil, which is
rated junk by Moody’s. And the country’s bond yields are the highest
among investment-rated emerging-market sovereigns.
“The best argument that the downgrade does not happen this year is
that Moody’s does not have it on negative watch,” Robertson said.
“It’s unusual to downgrade without having done that first.”

🇿🇦The rand starts the day at
🇺🇸R15.25/$
🇪🇺R16.73/€
🇬🇧R18.63/£

Early investors in Jumia Technologies AG including MTN Group Ltd. and
Goldman Sachs Group Inc. face a stark choice: Cash out or stick with
the Africa-focused e-commerce group after a troubled six months.
MTN, Africa’s biggest wireless carrier, led investors backing the
Berlin-based company ahead of an initial public offering in New York
in April.
German startup incubator Rocket Internet SE, French drinks maker
Pernod Ricard SA, Goldman and Mastercard Inc. also bought stakes.
All are likely to have been prevented from selling stock for 180 days,
according to a lock-in clause that expires on Wednesday.
While investors initially jumped at the chance to back the so-called
Amazon of Africa, a damaging short-seller’s report by Citron Research
turned sentiment.
The shares are now down almost 50% from its listing price.
That means the lockup expiry may not have much of an impact on the
share price, according to Nirgunan Tiruchelvam, an analyst at Tellimer
Markets, who initiated on the stock with a ‘radical sell’ in July this
year.
“The investors are carrying massive losses from the IPO. I don’t see
many of them heading for the door,” he said.
MTN, the biggest investor in Jumia, had planned to sell its stake
after the six-month lock-up in an effort to scale back on e-commerce
investments, people familiar with the matter said in April, before
Citron released its report.
The Johannesburg-based company will give an update alongside a trading
statement on Oct. 31, a spokeswoman said.
The Citron report labeled Jumia “the worst abuse of the IPO system
since the Chinese RTO fraud boom almost a decade ago” and “an obvious
fraud.”
Other concerns include the burning of cash, a high level of failed
deliveries and improper transactions at its Nigeria business, while
co-founder and Chief Executive Officer Sacha Poignonnec has said
losses will continue until 2022.
With the equity lockup expiring, analysts are looking for reassurance.
“We expect the company to deplete its cash balance in about 2-3
years,” said Tiruchelvam.
The company needs to show conviction on corporate governance concerns,
fraud revelations and the pathway to cash flow profitability, he said.
Jumia declined to comment. The shares fell a further 9.3% to $7.58 as
of 11.13 a.m. in New York, in a market spooked by trade tensions
between the U.S. and China.

Kenya

China bought goods worth a record Sh7.48 billion compared with Sh4.30
billion in the same period of 2018, Kenya National Bureau of
Statistics (KNBS) indicates.
Nairobi has been conducting aggressive trade promotion and marketing
campaigns in China, primarily aimed at growing and expanding the
market for Kenyan farm produce.
Coffee, specialty tea, cut flowers and avocados are some of the farm
produce which continue to gain market access to China, Kenya Export
Promotion and Branding Agency chief executive Peter Biwott said.
India is, however, proving hard to crack thus far, with Kenyan exports
falling Sh1.84 billion, or 37.61 percent, to Sh3.05 billion in the
half-year period of 2019 compared with a year earlier.