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Macro Thoughts

Home Thoughts

There was a time we went to Finch Hattons in the Tsavo and it was dusk
and I was driving too fast on a murram track and the car rolled and
everything went into slow motion and to be frank it was as if I was
outside looking in and then I remember Nishet putting out her hand and
literally dragging me back to Life. Thats my Nishet. She literally
gave me my life.

Political Reflections

Hong Kong martial arts guru Bruce Lee urged followers to “empty your
mind, be formless, shapeless like water.”
That philosophy has driven months of anti-government unrest in Hong
Kong. And it applies to protest movements elsewhere that are operating
with quick-changing tactics and without clear leadership.
Mass demonstrations are not new. Anti-war and anti-nuclear protests
swept the globe decades ago, as did the Occupy movement of 2011-2012
directed against globalization and inequality.
But from Iraq to Chile, it feels like protests are everywhere right
now. Huge street rallies, violent clashes with police, tires and
buildings burning, shops smashed. Songs, chants, dances and
flash-mobs. Crowds that gather and vanish in unexpected places,
organized via encrypted messaging apps where people use pseudonyms.
In some cases the protests are driven by a backlash against austerity,
as global growth slows and becomes even more unequal.
But not all movements have the same spark, even if their form is similar.
Leaderless protests can be hard for governments to deal with because
they can’t work out who to deal with. Such activity may start from a
single issue, then morph into a many-headed hydra.
A lack of central leadership can prevent infighting, but also pull
movements in many directions, sapping momentum. Leaderless protests
can be nimble but also turn rudderless and chaotic, hostage to violent
fringe elements.
History tells us that keeping leaderless movements going at a high
level for a long period is hard. That’s perhaps even more so as
countries fret less about the risk of international blow back
including sanctions.
“We perceive a more competitive geopolitical environment in which
traditional values-based foreign policy objectives have fallen by the
wayside,” says Jonathan Wood, director of global risk analysis at
Control Risks in Washington.
 “The default response of many governments is likely to be to try and
ride these out as much as possible and hope they begin to dissipate
before the economic costs get too high.”
Hong Kong
Hong Kong’s protesters have sustained demonstrations against China’s
increasing grip over the city since June—all without a clear leader.
That’s by design: During pro-democracy protests in 2014, the
government arrested key leaders and threw them in jail.
Now the groups guard their anonymity and organize in online platforms
like LIHKG, a Hong Kong-based forum that lets users endorse posts, and
Telegram, where anonymous users broadcast messages, photos and videos
to hundreds of thousands of people.
The lack of a figurehead has frustrated the government. At the same
time, no-one has enough clout to call off the demonstrations, cut a
deal or even tell fellow protesters what to do next.
Lebanon
Protestors in Lebanon achieved at least one of their aims as Prime
Minister Saad Hariri announced his resignation Tuesday following
nearly two weeks of anti-government unrest.
Demonstrators have called on the government to resign, but also want
the ouster of an entire political elite they blame for corruption and
cronyism that has hit living standards and dragged the economy toward
collapse.
The demonstrations have drawn hundreds of thousands of people right
across Lebanon, and have attracted people from different religious
sects and social classes.
People first took to the streets to reject a proposed levy on calls
made via WhatsApp. The government quickly withdrew the plan.
But protesters say they have no confidence that warlords who emerged
to lead Lebanon at the end of the 1975-1990 civil war can change. “I
won’t hide that I reached a road block,” Hariri said.
France
The grassroots Yellow Vest movement in France has lost much of its
momentum in the year since it began as opposition to higher fuel
taxes—and morphed into broader grievances against the government.
Several thousand protesters still gather on some Saturdays, even
though what remains of the movement has been marred by violence and
extremism.
The angst behind the initial rallies remains, however: Inequality,
cuts in public services, and unpopular pension reforms are set to
bring protesters back out in strikes and marches from December.
President Emmanuel Macron says he understands how his push to reform
the economy came across as harsh and sometimes unfair. But he has
vowed to press on.
Russia
The biggest anti-Kremlin protests for seven years erupted in Moscow
this summer, defying crackdowns by riot police and efforts to
decapitate the movement by preemptively detaining veteran Russian
opposition leaders.
A new young generation of activists, encouraged by leading musicians
and social media stars, turned out to protest civil rights abuses,
declining living standards and graft.
The unlikely catalyst was the refusal of officials to register
opposition candidates for elections to the largely toothless city
council. It’s all a prelude to the battle over Russian parliamentary
elections in 2021.
Algeria
Algerians have been taking to the streets since February, initially to
protest the re-election bid of Abdelaziz Bouteflika, one of North
Africa’s longest-serving leaders, who eventually resigned in April and
is not contesting the December election.
The public discontent has transformed into demands for root-and-branch
change from the coterie of elite army officers, businessmen and party
officials who’ve dominated politics in the OPEC member for decades.
Algerians, the majority of whom are under 30, continue to block the
boulevards of Algiers and other cities with fiery Friday protests.
Attempts to broker talks have foundered over who exactly represents
the dissatisfied masses in the country of over 40 million people.
Iraq
Thousands of Iraqis have challenged a government crackdown that has
left more than 200 people dead since the start of the month to protest
over jobs and public services.
While Iraq has enjoyed relative stability since 2017, many Iraqis
suffer power cuts and lack access to clean water and good health care.
Decades of war, sanctions and foreign occupation beginning in the
early 1980s and ending with the battle to defeat Islamic State have
ravaged Iraq’s infrastructure. Protesters say corrupt politicians have
pillaged state coffers.
The protests have put Prime Minister Adil Abdul-Mahdi under pressure.
Prominent Shiite cleric Moqtada al-Sadr, who leads a key bloc in
parliament and campaigned on a nationalist platform, has called on the
government to step down, but the protests are otherwise largely
leaderless.
Chile
Chile’s social unrest has followed a pattern similar to Brazil in
2013. Both were triggered by a seemingly banal reason—a small hike in
public transport fares—and turned into massive protests against an
ever-growing list of grievances: Soaring living costs, inequality,
deteriorating health and education systems and, particularly in
Brazil’s case, corruption.
The amorphous nature of the protests mean there’s no single leader to
negotiate with, or a clear manifesto. Calls for protests in Chile are
often made by student groups on social media, then heeded by Chileans
of all ages and social classes.
In Santiago, 1 million people —more than 15% of the city’s
population—took to the streets on Friday.
Ecuador
Ecuador’s unrest started after President Lenin Moreno ended fuel
subsidies as part of a credit deal with the International Monetary
Fund. The protests attract a wide variety of supporters including the
indigenous community, students and labor unions.
Amid a national strike that paralyzed the country and with Quito
overrun, Moreno—who describes the movement against him as a
coup—temporarily relocated his government to the coastal city of
Guayaquil. He has now reinstated subsidies.

“The revolutionary contingent attains its ideal form not in the place
of production, but in the street, where for a moment it stops being a
cog in the technical machine and itself becomes a motor (machine of
attack), in other words, a producer of speed.’’
Iraq is on a Knife Edge. Millions of Algerians sent the whe-
elchair-bound Bouteflika home not too long ago.
Hong Kong remains in open rebellion and trying to shake off the
‘’Crusher of Bones’’ Xi Jinping and his Algorithmic Control.
The Phenomenon is spreading like wildfire in large part because of the
tinder dry conditions underfoot.
Prolonged stand-offs eviscerate economies, reducing opportunities and
accelerate the negative feed- back loop.
Ryszard Kapuściński wrote:-
“Revolution must be distingui- shed from revolt, coup d’état, palace
takeover. A coup or a palace takeo- ver may be planned, but a revolu-
tion—never. Its outbreak, the hour of that outbreak, takes everyone,
even those who have been striving for it, unawares. They stand amazed
at the spontaneity that appears suddenly and destroys everything in
its path. It demolishes so ruthlessly that in the end, it may
annihilate the ideals that called it into being.”
This is a Revolution and it is a Global Phenomenon.
Ryszard Kapucinski also said: “If the crowd disperses, goes home, does
not reassemble, we say the revolution is over.”
It is not over. More and more people are gathering in the Streets.
Unless we are now going to Xinjiang the Whole World [A Million People
Are Jailed at China’s Gulags. I managed to escape.
Here’s what really goes on inside @haaretzcom “children are being
taken from their parents, who are confined in concentration camps, and
being put in Chinese orphana- ges,” he says. “Women in the camps are
receiving inoculations that make them infertile’’], the current modus
operandi is running on empty.

Najaf (Iraq) (AFP) - Populist Iraqi cleric Moqtada Sadr joined
thousands of demonstrators in the holy city of Najaf on Tuesday amid a
spiralling political crisis sparked by deadly anti-government
protests.
At least 240 people have died and 8,000 been wounded since
demonstrations broke out on October 1 over unemployment and
corruption, before evolving into calls for the government to quit.
Sadr, an ex-militiaman with a cult-like following in swathes of Iraq,
has spearheaded demands for Prime Minister Adel Abdel Mahdi's
resignation and early parliamentary elections.
On Tuesday, he was spotted by an AFP correspondent amid thousands of
anti-government demonstrators in his native Najaf, a holy city in
southern Iraq.
He was seen in a white car in the city just after airport sources told
AFP he had landed from neighbouring Iran.
Sadr himself is one of the current government's two main sponsors,
after his Saeroon bloc won the largest share of parliament's 329 seats
in a vote last year.
But he tweeted in support of an initial six-day wave of protests that
rocked the country early this month and resumed last week.
- 'At once!' -
Several Hashed offices have been torched in recent days in southern
Iraq in what observers say is likely an escalation of the rivalry
between Sadr and the Hashed.
Abdel Mahdi has urged Sadr to agree with Fatah chief Hadi al-Ameri on
a way forward.
"If the goal of elections is to change the government, then there is a
shorter way: for you to agree with Mr. Ameri to form a new
government," the premier wrote in a public letter to the cleric on
Tuesday.

مقتدى السيد محمد الصدر @Mu_AlSadr
https://twitter.com/Mu_AlSadr/status/1185915881798492160

مقتدى السيد محمد الصدر
@Mu_AlSadr
لمحة
لقد ولجت في بحر لجي.. ومخرت بسفينتي عباب البحر واستخرجت بعض جواهره..
حتى وصلت لساحل كنت ارومه ولشاطئ امان كنت اتمناه
فشيدت فنار الاصلاح ليشع ضوءه فينير درب الثوار.. فشقوا عباب البحر
وخوضوا في موجه.. بسم الله مجريها ومرسيها
مقتدى الصدر

A glimpse I have entered in the sea of Jiji .. And went through my
ship Abab sea and extracted some of his jewels .. So I reached the
coast I was Aromh and beach Aman I wish I constructed a lighthouse of
reform to radiate light Vener revolutionaries ..

lingering question following the Sunday morning raid by US special
forces resulting in the death of ISIS founder Abu Bakr al-Baghdadi, is
how he was able to be positively identified so quickly after he
detonated a suicide vest - killing himself and three of his children.
According to President Trump, "His body was mutilated by the blast.
The tunnel had caved in on it. But test results gave certain immediate
and totally positive identification. It was him."
The White House confirmed, saying that a combination of DNA analysis
and facial-recognition technology was used (Baghdadi's head reportedly
remained intact following the blast.
That, and what was left of him, were reportedly buried at sea
according to Islamic custom, according to Reuters).
According to Engel, a match was confirmed months ago.
In closing, it was a combination of cutting edge forensic technology,
including facial recognition, and months-old DNA samples which allowed
the US military to quickly ID Baghdadi - and then quickly chuck his
remains into the ocean.

Another: “It all feels very hubristic, very Theresa May circa 2017.”

’ 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?” -

“Late to the party: Russia’s return to Africa.” tweeted @pstronski.
“Our African agenda is positive and future-oriented''
Putin’s linguistics is an art form and I imagine he buttressed the
above points by discreetly showing his visitors a photo of a dead
Gaddafi and maybe he dwelled a little on the bottle and then a Photo
of a spritely Bashar Assad and would surely not even have had to ask
the question; what’s the difference?
Between 2006 and 2018 Russia’s trade with Africa increased by 335 per
cent, more than both China’s and India’s according to the Espresso
Economist.
Russia is now Africa’s leading supplier of arms. According to the
Swedish think tank SIPRI, between 2012 and 2016 Russia had become the
largest supplier of arms to Africa, accounting for 35 percent of arms
exports to the region
“Russia regards Africa as an important and active participant in the
emerging polycentric archi- tecture of the world order and an ally in
protecting international law against attempts to undermine it,”
 the story of a brave but beleaguered Central African lion, who was
fighting a losing battle against a pack of hungry hyenas. Luckily the
lion had a friend who came to the rescue — the strong Russian bear
 I would argue Putin’s timing is exquisite and optimal and his Model
has an exponential ROI.
Russia’s “political tech- nologists” have reportedly devised bespoke
solutions for confronting in- cipient and ongoing color revolutions
Once we look through the Optics of two nuclear-capable supersonic
bombers belonging to the Russian Air Force landing in Pretoria for the
aircraft’s first-ever landing on the African continent and, according
to an embassy official, only the second country in which it has made a
public appearance outside of Russia.
The first was Venezuela. Then we need to see this move for what it is.
It is meaningful.
Where Xi is fed up and speaks about the ‘’The End of Vanity’’ becau-se
the ROI [outside commodities and telecoms for China] is negative,
Putin has created a hybrid model with an exponential ROI. I would
imagine he is on speed dial.

International Markets

Euro 1.1114
Dollar Index 97.665
Japan Yen 108.845
Swiss Franc 0.9929
Pound 1.2875
Aussie 0.6868
India Rupee 71.0075
South Korea Won 1167.34
Brazil Real 3.9981
Egypt Pound 16.1497
South Africa Rand 14.6436

China’s Communist Party (CPC) is taking its leader’s support for
blockchain to heart.
Following Xi Jinping’s bombshell speech last week urging his
countrymen to “seize the opportunity” created by the technology, the
CPC released a decentralized app (dapp) for members to attest their
loyalty on a blockchain.
According to a post from the CCP’s propaganda office on Saturday, the
dapp, in literal translation called “Original Intentions Onchain,”
allows members to pledge their allegiance to the party and store it on
a blockchain, which can be shared and seen by others.
The term “Original Intentions” is a specific phrase mentioned by Xi
during his remarks at the 19th National Congress of the CPC in 2017,
after which it became a significant propaganda and educational
campaign for party members to stay committed to their party.
According to the post, the technology behind the dapp was developed by
a Beijing-based company called Lingzhu Technology, which says it’s a
blockchain developer without much detail on its tech or the team
behind it.
The company’s registration data shows it has received investment from
state-owned capital tied to China’s Tsinghua University and claims it
has developed a blockchain called OF.
In fact, this company issued a little-known cryptocurrency dubbed
OFCoin and got it listed on exchanges like OKEx and CoinMex early in
2018, months after China cracked down on initial coin offerings and
fiat-to-crypto trading.
OFCoin’s price jumped by as much as 90 percent to $0.000326 on
Saturday just hours after the CPC released the dapp and said that
Lingzhu Technology is behind it. As of writing, the coin has fallen by
35 percent from that peak with just a few million dollars in daily
trading volume.

Xi’s model is one of technocratic authoritarianism and a recent
addition to his book shelf include The Master Algorithm by Pedro
Domingos.

Dissent is measured and snuffed out very quickly in China. China has
unveiled a Digital Panopticon in Xinjiang where a combination of data
from video surveillance, face and license plate recognition, mobile
device locations, and official records to identify targets for
detention. Xinjiang is surely a precursor for how the CCCP will manage
dissent. The actions in Xinjiang are part of the regional authorities’
ongoing “strike-hard” campaign, and
of Xi’s “stability maintenance” and “enduring peace” drive in the
region. Authorities say the campaign targets “terrorist elements,” but
it is in practice far broader, and encompasses anyone suspected of
political disloyalty.

Conclusions

Clearly

Commodities

China’s room to ease monetary policy to aid the slowing economy is
being limited further by price rises due the ongoing swine fever
epidemic, economists said.
Analysts from Nomura International Ltd. and Changjiang Securities Co.
warned that surging consumer inflation has become a major constraint
on the People’s Bank of China, and the likelihood for major monetary
easing in the coming months has declined. That’s despite increasing
evidence that economic growth will drop below 6% next year.
“With surging pork prices, continued spill-over effects to other food
prices, and the risk of a wage-price spiral, we believe the PBOC may
become more reluctant to deliver any high-profile monetary easing in
the coming quarters,” Lu Ting, chief China economist at Nomura in Hong
Kong, wrote in a note.
Lu said he doesn’t expect any cuts to the interest rate on the
medium-term lending facility or to the amount of money banks hold as
reserves in the remaining months of 2019, revising a previous estimate
that such cuts would take place in the fourth quarter.
Consumer inflation may keep rising as the production of pork will
continue contracting but demand will pick up due to the upcoming
Spring Festival holidays in January. That will make it harder for the
government and central bank to add stimulus to help Chinese factories,
who are facing higher tariffs, falling profits and prices.
The Communist Party’s Central Committee is meeting behind closed doors
this week, and officials will take into account the range of economic
policies available given the long list of challenges besides consumer
price inflation: the downdraft from the trade war with the U.S,
factory-price deflation, and a fragile financial system.
The nation’s already high debt levels and inflated property market
have made policy makers reluctant to cut benchmark interest rates,
though in theory officials have room to respond should the economic
slowdown worsen.
Excluding food and energy prices, China’s core inflation is on a
downward trajectory this year, indicating tepid domestic demand.
However, the overall inflation, not core inflation, is the “most
watched” price index for policy makers, because the former is related
to people’s lives, according to George Wu, chief economist at
Changjiang Securities and also a former official in the PBOC’s
monetary policy department.
“Looking forward, macro policies will tilt toward a pro-growth bias.
However, monetary policy isn’t the only counter-cyclical measure,” Wu
wrote in a note Monday.
“Combined use of fiscal and foreign-exchange policies can be expected.
Historically in China, price shocks combined with monetary stimulus
have been the cause of a price spiral.”

Commodities have always been prone to volatility based on changing
supply and demand fundamentals. But, what we are seeing today in
coffee is a complex interplay of factors that threatens the
sustainability of the industry, the farmers whose livelihoods depend
on it and the diversity of coffees we enjoy.
The feast-to-famine price swings condemn smallholder farmers who make
up the bulk of the world’s millions of growers to misery, abandonment
of farms and, potentially, to illegal immigration. That in itself
should be enough to prick our collective conscience — but it is also
threatening the wide variety of coffee origins available to roasters
and consumers.
While not without complexities, establishing an international price
stabilisation mechanism could remedy extreme price fluctuations and
provide much needed stability to the incomes of smallholder farmers.
The damaging price extremes are driven by three principle factors.
Firstly, the increasing speculation in commodity markets, especially
by quantitative funds that can amplify and extend the periods spent at
extremes. In a downward trending phase, the high financial returns
attract even more capital on bearish bets.
Secondly, we are seeing an increasingly duopolistic market with Brazil
and Vietnam gaining share at the expense of Latin American and African
producers; today these two countries account for more than 55 per cent
of the world’s coffee.
Finally, the impact of climate change is already being felt in
coffee-growing regions. For example, over half of Central America’s
coffee land is estimated to become unsuitable for growing by 2050.
The number of extreme weather events globally is on the rise and such
damaging events, as already seen in Brazil and Vietnam, have an
exponential impact on prices.
With coffee prices at 15-year lows, one proposal has been to put
regulatory limits on total speculative positions. The idea is not
without merit but we must accept that speculators provide essential
liquidity to exchanges and it would be difficult for any regulatory
body to put an aggregate limit on any one category of participants.
Forcing industry to publicly declare volumes that they buy from each
origin and how much is sustainably sourced would mitigate the
duopolistic nature of coffee production, help niche origin producers,
and push the industry towards sustainability; but the small price
premiums on sustainable and certified coffee fails to alleviate the
problems arising from price volatility.
Another proposal is for large coffee companies to subsidise farmers
struggling with low prices. Indeed, some laudably have already
initiated additional payouts for farmers in their supply chains.
But, at best, this provides a minor reprieve to a small number of
growers and, realistically in an industry which is highly competitive,
runs counter to shareholder expectations.
An international price stabilisation mechanism would help reduce large
price fluctuations. The failure of such mechanisms is often because at
low prices they subsidise output and hence delay the decline in supply
that leads to higher prices. This extends the low-price cycle till
finally the fund runs out of money.
There are two keys to avoiding this scenario. Firstly, the fund should
be run on principles designed to align with the economic principles of
demand and supply. So at extremely low prices, the fund would
subsidise farmers to take-out short-term production capacity by
pruning, stumping or replanting newer varieties.
In the mid-range, it would be largely inactive except for low risk investments.
At extreme high prices, it would recoup its subsidies and costs
through a system of levies. Secondly, the fund must be run as an
independent viable enterprise.
The success of the mechanism is underpinned by continued growing
demand. In fact, at Olam we estimate the world needs to produce an
additional 40m (60kg) bags of coffee over the next 10 years.
It will need the participation of multiple stakeholders: the industry,
development funds, commercial banks and governments of producing
countries.
Initial discussions acknowledge the merits of this approach and a task
force set-up by The International Coffee Organization will further
explore this, along with other solutions, to tackle price volatility
and long-term sustainability.
Aside from lifting millions of farmers from the misery caused by low
prices, the fund would have longer-term benefits.
The subsidised replanting initiatives would lead to varieties more
adaptable to climate changes, more predictable income prospects would
encourage next generation farmers, and price stability would be good
both for consumption and industry investment.
Of course, we could choose to do nothing, accept boom and bust prices,
and see millions of farmers lose their livelihoods while we lose the
amazing diversity of coffees that we currently enjoy.
Vivek Verma is the head of Olam International’s coffee operations

Emerging Markets

Calls are mounting for Lebanon to impose formal restrictions on the
movement of money to defend the country’s dollar peg and prevent a run
on the banks when they open their doors after nationwide protests.
Banks have been closed since the start of the uprising two weeks ago
and only plan to reopen once the political situation stabilizes.
The longer they remain shut, however, the more a backlog in dollar
demand builds and speculation swirls about the measures the banks will
need to take to avert financial collapse.
In a sign of crumbling confidence, banks have been getting calls from
clients asking to move their money abroad while others are working at
a frantic pace to transfer funds to Swiss accounts as soon as lenders
resume operations, local and foreign bankers said.
As tensions intensify, influential local economists have raised the
alarm -- calling for limits on the transfer of funds outside the
country.
Two senior banking executives, speaking on condition of anonymity due
to the sensitivity of the issue, have said emergency measures were the
logical next step given there is no political solution to the crisis
in sight.
Capital controls are again becoming the weapon of choice for embattled
governments in need of some breathing room, with Argentina tightening
its restrictions late Sunday after a left-leaning populist won the
presidential elections.
Such a step -- even if temporary -- would mark a turning point for
Lebanon since it’s likely to cause a backlash among diaspora
investors, the country’s financial lifeline.
Lebanon’s central bank Governor Riad Salameh told Reuters on Monday
that there would be no capital controls. But a day of violence on
Tuesday, followed by the resignation of Prime Minister Saad Hariri,
has added to the uncertainty among investors.
Lebanon, one of the world’s most indebted countries, has few viable
options. Hundreds of thousands of Lebanese have been on the streets
for two weeks, demanding the resignation of a political class they say
has pillaged state coffers to the verge of bankruptcy whilst leaving
the public with failing public services and daily blackouts.
The worsening sentiment is playing out in the market. The yield on
Lebanon’s dollar bond due 2021 jumped 3.85 percentage points to 33.64%
Tuesday.
The gap between bids and offers for the security widened to the most
since the 2008 financial crisis, reflecting sparse liquidity.
Charbel Cordahi, who advises the largest Christian bloc in parliament
on economic issues, suggested in a tweet a series of emergency
measures including setting limits on transfers outside Lebanon at
$7,500 a week and a reduction in yields to 4.5% on certificates of
deposit held by lenders at the central bank as well as on Treasury
bills.
“This would be a solely technical arrangement until the situation
stabilizes and shouldn’t exceed three months,” he said.
To keep its lenders stable and defend the dollar peg, Lebanon relies
on inflows from the millions of Lebanese living abroad.
 However, capital inflows needed to finance the large current account
and fiscal deficits have slowed as confidence has dwindled. Meanwhile,
outflows have gathered pace.
Importers have complained for months that banks were no longer
allowing them to transfer Lebanese pound holdings into dollars to pay
for shipments.
Instead, businesses were increasingly turning to exchange bureaus for
hard currency, and paying more than the official rate of 1,507 to
pounds to the dollar.
For much of this year, some lenders have placed informal limits on the
dollars they will supply to holders of Lebanese pounds, or charged
additional fees for withdrawals in foreign currency or for transfers
outside of Lebanon.
Those measures have not been ordered by the central bank. Bankers and
economists say a decision to set formal caps on money transfers and
withdrawals -- or to force banks or the central bank to take a
so-called haircut on their investments in government debt -- should
come from the government. Some steps may require parliamentary
approval.
“They might tighten the capital controls that are already in place to
avoid a run on banks, preserve deposits and try to maintain the
stability of the national currency,” said Jihad Hokayem, an economist
and lecturer at Lebanese universities.
Lenders have been replenishing ATM machines to allow people to access
their salaries and meet their day-to-day needs but have set a daily
limit on withdrawals of 1 million Lebanese pounds ($659 million).
Banks are also helping importers fulfill their letters of credit
through the back office to avoid shortages of food or other supplies,
bankers said.
It was a “policy mistake” for banks to close in the face of protests,
according to former Lebanese Economy Minister Nasser Saidi. “This
creates panic & a run on the banks as depositors fear lack of access
to their deposits, further #LBP depreciation, the imposition of
capital controls on transfers & more bank closures.”

Antonio Gramsci wrote, “The crisis consists precisely in the fact that
the old is dying and the new cannot be born; in this interregnum, a
great variety of morbid symptoms appear. now is the time of monsters.”

Frontier Markets

Sub Saharan Africa

African Export-Import Bank postponed its London initial public
offering as volatile markets and uncertainty around Brexit added to a
downturn in listings in the U.K. capital.
“Despite significant interest in the bank from investors, in light of
unfavorable market conditions, it has decided to postpone the proposed
initial public offering at this time,” the Cairo-based lender said in
a statement Tuesday.
“The bank will continue to monitor the markets to find the appropriate
window to launch its offering.”
The sale is the third to be pulled this month in London. Kazakh
fintech company Kaspi.kz, which is backed by Goldman Sachs Group Inc.,
and Interswitch Ltd., a Nigerian-based payments business, both pushed
back their planned floats, also citing difficult market conditions.
The IPO market across Europe is no better, with companies such as
Ferretti SpA, the Italian superyacht maker partially owned by the
Ferrari family, and German computer hardware firm Congatec AG, among
others suspending their planned listings.
Spooked by a widening disconnect between buyers’ and sellers’
expectations and given an abundance of capital in private markets,
fewer companies are going public across the continent.
With Brexit thrown into the mix, the IPO market in the U.K. has been
particularly bleak, even as stock indexes look set to have a decent
year.
About $22.8 billion has been raised on European exchanges by 107
companies this year, roughly half the volume in the same period last
year, according to data compiled by Bloomberg.
In the U.K., the drop is even worse: Only 23 companies have made
trading debuts this year, a third of last year’s tally. Deal value has
held up a little better, falling by more than a quarter to $7.9
billion.
Afreximbank planned to use the funds to help finance rapidly
increasing trade flows on the continent. The lender, which operates in
51 of Africa’s 55 countries, has provided about $69 billion of
trade-financing support since starting in 1993.
JPMorgan Chase & Co. and HSBC Holdings Plc were hired as joint global
coordinators and bookrunners for the issuance of global depositary
receipts, while Exotix Partners LLP was picked as co-lead manager.
While Afreximbank didn’t indicate a post-IPO valuation, the bank
reported total equity of $2.7 billion in an investor update last
month.
The company listed on the Stock Exchange of Mauritius in 2017 via a
private placement of depositary receipts, giving it a market value now
of $2.1 billion.
Afreximbank has four classes of shareholders ranging from African
governments and central banks to lenders such as Standard Chartered
Plc and private investors tied to the continent, according to its
website.

When the new president of the Democratic Republic of Congo visited
Washington in April, the mining billionaire Robert Friedland was
waiting in a room at the Willard Intercontinental Hotel to greet him.
Also there were the US ambassador to the DRC and Sun Yufeng, the head
of China’s state-owned Citic Metals, the largest investor in Mr
Friedland’s company Ivanhoe Mines.
Mr Sun and Mr Friedland wanted support for a new copper venture in the
DRC that is set to solidify China’s influence over the resource-rich
country — something that would not have skipped the attention of US
officials taking part in tense trade talks with their Chinese
counterparts across the city on the same day.
Mr Sun told President Felix Tshisekedi about Citic’s ability to build
large infrastructure projects, including roads, railways, ports and
bridges, in the country — something few western mining companies could
match.
Since then Citic has agreed to invest an additional C$612m in the
Toronto-based Ivanhoe.
The importance of the meeting for Mr Friedland was clear. Having
helped discover two of the world’s largest mines, now, off a dusty
unpaved road in the DRC, he believes he may have found a third:
Kamoa-Kakula, a huge untapped copper deposit worth at least $10bn.
A university friend of Steve Jobs, the late Apple founder, and movie
producer whose credits include Crazy Rich Asians, Mr Friedland has
made a career out of securing funding for, and then exploiting, mines
in far-flung corners of the world and selling them for large sums of
money.
“Every time I go and see him I first zip my pocket,” says Pierre
Lassonde, a Canadian mining veteran, of Mr Friedland’s ability to
persuade investors to part with their cash. “He has that magnetic
effect on people.”
But to finance this latest venture, which the 69-year-old calls
“unquestionably the best copper development project in the world”, Mr
Friedland has turned almost exclusively to China.
Chinese companies already own some of the richest deposits of copper
and cobalt in the DRC and beyond, metals that are critical to the
switch away from fossil fuels to renewable energy.
They have invested at least $8bn in Congolese mining assets since
2012, with miner China Molybdenum buying the Tenke copper and cobalt
mine from Freeport-McMoran for $2.65bn in 2016.
The control and dominance over global supply chains that this
potentially gives China has triggered concern in the US. Secretary of
state Mike Pompeo announced in September an initiative to help
governments in resource-rich countries better attract investment from
US companies by improving their regulatory standards.
The state department’s Energy Resource Governance Initiative says it
wants to “encourage a level playing field surrounding the critical
minerals that underpin clean energy technology”, and includes the DRC
as a “participant”.
But fearful of operating in the DRC, one of the world’s poorest and
most corrupt countries — it ranks 161 out of 180 on Transparency
International’s corruption perceptions index — western mining
companies have stayed away from Mr Friedland’s mine.
Investors have also declined to become involved. Instead he has turned
to China’s Zijin Mining and Citic Metal, two of the best-connected
Chinese mining companies, to generate the more than $1bn he needs to
build Kamoa-Kakula.
“There is a reasonable slug of evidence,” says one London-based fund
manager, “that shows to operate there you need to do things western
shareholders do not allow their management teams to do.”
But such queasiness is overdone, says Paul Gait, an analyst at
Bernstein. “The capital markets are closed for mining investment in
the west. [In effect] we have decided that we are conceding control of
industrial production to China.”
Stretched across the south-east of the DRC into Zambia, the copper
belt is one of the world’s richest sources of both that metal and
cobalt. Mined by the Belgians at the beginning of the 20th century,
copper from the city of Kolwezi was used in shells fired in battle
during the first world war in France.
Congo became one of the largest producers in the world in the 1960s,
with output peaking in 1976. But by 1995, production was down by 90
per cent.
The industry had fallen further into disrepair under Congo’s former
dictator Mobutu Sese Seko and in the late 1990s, as his regime
crumbled, miners rushed to sign deals with rebel leader Laurent-Désiré
Kabila, who came to power in 1997.
In the brief interlude before the outbreak of another conflict in
1998, Mr Friedland obtained licences to explore about 14,000 sq km of
land in the Congolese copper belt.
He decided to look further west of Kolwezi, the capital of Lualaba
province, at an area which had never been mined before because it
lacked any surface indications of copper, such as a break in the
vegetation, or the presence of distinctive bright turquoise malachite
rocks that contain the metal.
But in 2008, five years after the end of Congo’s brutal civil war —
which left more than 5m dead — geologists began to drill the deposit.
Rock cores suggested the presence of a large orebody and Mr Friedland
announced the discovery in April 2009.
“The financial crisis had melted everything else down . . . we were
the only company that stayed [in the DRC]. Drilling companies phoned
me up saying: ‘Do you need any drills?’” says David Broughton, the
geologist who helped discover Kamoa-Kakula.
“We were living in tents and mud . . . But when you make a discovery
like that you’re in the clouds for two years.”
The mining camp, about 25km west of Kolwezi, is now a hive of
activity. South African, Congolese and Chinese workers rub shoulders
in the company canteen.
Meeting rooms are decked out with lazy Susans to make Chinese
executives feel at home, while outside members of Mr Broughton’s team
are drilling for new deposits next to small villages where residents
use discarded mining equipment as makeshift doors.
Workers are building a 34km road to the airport and accommodation to
house up to 1,000 workers. Hundreds of metres below ground miners are
rushing to dig in the richest part of the copper deposit, manning
machines in the deep, wet dark at the rock face.
Fifty-tonne trucks carry the copper ore up a winding path to the surface.
Mr Friedland claims the Kamoa-Kakula mine has the potential to produce
up to 700,000 tonnes of copper a year at its peak, if fully developed.
That is almost 6 per cent of China’s annual consumption of the metal
and would make it the second-largest copper mine in the world, after
Escondida in Chile.
Kamoa, which is 20 per cent owned by the DRC government, is set to
begin production in 2021. But doubts remain about whether Mr
Friedland’s target is realistic.
“His business model has always been to find something unbelievably
good, make it look amazing, and sell it for the very, very best
price,” one mining investor in London says.
“No one is sceptical about the resource, but it’s not clear what the
actual economics of getting it out of the ground will be.”
Born in Chicago, to parents who emigrated from Germany, Mr Friedland
achieved a certain early notoriety after he was arrested in 1970 on
charges of selling LSD, spending more than six months in jail — a
conviction that was later expunged from his record.
He went on to attend Reed College in Oregon where he met Jobs. The two
worked together on a farm owned by Mr Friedland’s uncle. It was the
apple orchard that inspired the name of the computer company Jobs’
biographer later claimed.
But farming soon lost its interest for Mr Friedland and by the late
1970s — and with the backing of some Vancouver brokers — he moved on
to gold mining, promoting a series of ventures on the Canadian stock
markets, many of which failed to take off.
One of them earned him the nickname “toxic Bob”, after heavy metals
and effluent from the Summitville gold mine in Colorado leaked into a
nearby river in 1992, leaving the government with a large clean-up
bill.
In 2001 Mr Friedland paid $20.7m as part of a legal settlement with
the US government.
His first big success came after geologists stumbled upon a huge
nickel deposit in Voisey’s Bay in Canada while looking for diamonds.
Mr Friedland played off two corporate suitors against one another to
sell the mine for $3.2bn to the nickel giant Inco in 1996.
From his base in Singapore he then rapidly expanded across the globe,
from Burma, then under a military regime, to Africa, and bought
exploration rights in Mongolia from BHP for just $5m.
The copper and gold mine his company subsequently discovered, Oyu
Tolgoi, is set to be one of the biggest mines in the world and is now
operated by Rio Tinto.
Mr Friedland has maintained close links to China since the 1990s, when
he explored for gold in south-east Fujian province and met Chen
Jinghe, who would go on to become head of Zijin Mining, which is
listed in Hong Kong with a market capitalisation of HK$80bn.
Mr Friedland’s film business, SK Global, is also backed by a private
equity company, China Cultural and Entertainment Fund. Liu Yang, who
is head of the company, previously worked for Citic in Australia.
As copper prices plummeted in 2015, Zijin agreed to invest $412m to
acquire a 50 per cent interest in the Kamoa mine. Zijin also owns
shares in Ivanhoe — which is listed in Toronto and valued at C$4bn.
In October Zijin announced the purchase of an additional 49m shares,
taking its stake in Ivanhoe to 14 per cent and eclipsing Mr
Friedland’s share for the first time.
Citic Metal, a unit of the Chinese state-owned conglomerate that has
$900bn in assets, will own 29.4 per cent of the Canadian-listed
company.
“The Chinese are more than willing to be strategic buyers of these
assets,” says Norman MacDonald, a Canadian fund manager at Invesco.
“The copper market is on sale and they consume half of it. If you are
going to Selfridges, and it’s 50 per cent off, [because investors are
avoiding the DRC] you are going to buy it.”
Many expect Mr Friedland to eventually cede control of Ivanhoe to
Zijin and Citic. China has long coveted the idea of having a large
mining company to rival western groups such as BHP, Anglo American and
Rio Tinto, which they see as controlling the world’s best deposits,
according to Bernstein’s Mr Gait.
“What’s driving him on is his legacy. Can he create for the Chinese a
vehicle to rival BHP?” Mr Gait asks.
“It’s no longer flipping assets but about building something for the
future. He wants to be a partner with the Chinese and that process is
going to make him exceedingly wealthy. You’ve got the synergy of his
ability to operate, own and find mining assets, coupled with the
balance sheet of China.”

Mr Friedland has turned to China’s Zijin Mining and Citic Metal to
generate the $1bn he needs to build the Kamoa-Kakula copper mine in
the DRC © Reuters

Zambian President Edgar Lungu mentioned climate change 44 times when
he addressed the annual opening of parliament in September.
That’s not surprising. Zambia, along with several of its African
neighbors, ranks among the countries most exposed to climate-driven
disruption. And the havoc has already arrived.
The worst drought in nearly four decades in the southwest of the
country hasn’t just caused crop failures: it also drastically curbed
output at hydropower dams on the Zambezi river and tributaries that
Zambia relies on for about 80% of its electricity generation.
(Neighboring Zimbabwe, which shares the output from some plants, faces
a similar problem.)
Meanwhile in the northeast, agricultural output has been hit by
floods—which also washed away bridges. The government has slashed its
economic growth forecast for this year as a result, and it’s been
pushed into considering some extreme responses.
Energy Minister Matthew Nkhuwa floated the idea of digging canals that
could bring water from the Congo river, more than 100 kilometers away,
to top up the levels at the Kariba dam on the Zambezi, the world’s
biggest man-made freshwater reservoir.
Experts are skeptical. Even if the governments of the three countries
involved could reach an agreement, elementary physics makes the idea a
non-starter, according to Arthur Chapman, an associate at University
of Stellenbosch’s Institute for Futures Research in South Africa.
The Zambezi is more elevated than the Congo, so “there are no places
in which one could get the Congo river to flow downhill,’’ he said.
“Canals are absolutely not feasible.’’
Zambia may be facing a deficit in food as well as power because of
this year’s extreme weather.
It’s likely to be short of the equivalent of 355,000 tons of its
staple crop, corn, according to the finance ministry. The government’s
disaster-management unit has estimated that it will need more than
$100 million to provide aid, including food, to citizens hit by the
drought.
The last time there was a severe drought, in 2016, Lungu tried to
deflect blame—calling for a day of national prayer. This time, he
offered a kind of mea culpa.
“Did successive governments prepare adequately for the people of
Zambia to face this situation? Did we do enough to put in place early
warning systems?’’ the president said in his address to parliament.
“Maybe not,” he concluded.

Hyperinflation is making an unwanted return to Zimbabwe. We don’t know
how bad it is because the government has suspended publishing official
figures until 2020.
But an IMF mission to the country in August put the rate at close to
300 per cent annually. More recent market estimates based on local
currency depreciation imply rates as high as 400 per cent.
This, sadly, is not new for Zimbabwe. Between 2007 and 2009, the
country experienced one of the world’s worst cases of currency
collapse, with inflation rates as high as 90 sextillion per cent
year-on-year in November 2008.
But there’s an important distinction between now and then. This time
hyperinflation is hitting an almost fully digitised monetary economy
due to the proliferation of mobile payments in the country. EcoCash,
Zimbabwe’s equivalent of Kenya’s better-known M-Pesa system, counts as
much as 90 per cent of the adult population as customers.
It is an open question whether that scale of digitisation will act as
a brake or an accelerant on inflationary forces. But so far it is not
looking very beneficial.
Last time, the hyperinflation crisis was eventually tempered by an
official transition to a multicurrency framework. This amounted to an
informal dollarisation of the economy.
By 2016, however, a serious lack of foreign currency in circulation
began to threaten the system’s stability. EcoCash, by facilitating
demonetisation, may have heightened those pressures.
As it was growing in popularity and serving the unbanked, EcoCash’s
nationwide network of agents sucked dollars out of the hands of the
population, turning them into digital balances.
This amounted to the transfer of foreign cash stock from citizens to
the banking system, with the money ending up in the control of the
central bank.
That’s all fine if you trust the core banking system. Not so much if you do not.
The government has also encouraged the demonetisation by paying
salaries in EcoCash. As the dearth of dollars intensified over the
course of 2016, officials began to experiment with local alternatives
to ease pecuniary pressures.
The first step was electronic Zim dollars, known as zollars, backed by
theoretical US dollar credits on a one-to-one basis. A so-called bond
note and bond coin followed. But nobody really trusted the credits
were actually there, putting pressure on the dollar peg.
By 2019, the illusion of a peg was long gone. So the government took
more drastic action, creating a quasi currency called the RTGS dollar
and declaring it official local tender.
It also banned the use of foreign currencies except for special-use
accounts. All government salaries and official contracts were
redenominated immediately.
The exchange rate at that point was set at 8-to-1 to the US dollar.
But the demand for paper US dollars never went away, encouraging a
free-market exchange rate that has since reached as much as 21-to-1 to
the US dollar.
And here EcoCash played another destabilising role. As demand for US
dollars rose, citizens figured out they could offer EcoCash agents
premiums and additional commissions in exchange for hard cash.)
Outages and glitches became more common.
In September, the government moved to prevent “illegal activities
abusing the cash-in, cash-out and cash-back facilities” and the
“buying and selling of cash through mobile money agents at high rates
above approved charges”.
It officially suspended all of EcoCash’s cash-in and cash-out
activities. But the move was hugely unpopular, leading the government
to reinstate a limited cash-out option with a $100 per transaction cap
earlier this month.
Since then, EcoCash’s social media accounts have been inundated with
reports of failed transactions and delays. That implies something
critical.
Mobile money may be a highfalutin fintech innovation, but it’s just as
prone to Gresham’s law — bad money drives out good — as the
old-fashioned sort.

“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.

Kenya

●He DISOWNED the economic policy of H.E Uhuru & Treasury
●He dismissed the GDP growth as FAKE
●He states for the record that JUBILEE has let down Kenyans
●Set up his alibi for the coming CRASH

Par Value:                  0.05/-
Closing Price:           28.85
Total Shares Issued:          40065428000.00
Market Capitalization:        1,155,887,597,800
EPS:             1.58
PE:                 18.259