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Satchu's Rich Wrap-Up
Monday 23rd of December 2019

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The Latest Daily PodCast can be found here on the Front Page of the site

Macro Thoughts

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"We call it a grand cru, which in wine terms means a very good vintage," said Dirk Thiels, the Brussels-based head of investment management at KBC Asset Management NV.

The scorecard tells the story: America’s equity benchmark has climbed
28%. A global stocks gauge is up 23%.
A worldwide credit index rose 10%. Emerging-market sovereign dollar
bonds added 12%.
Even Treasuries and gold, those classic safe havens, advanced about 7%
and 15%, respectively.
Staying on the sidelines was about the only way to lose -- the
greenback has gone nowhere in 12 months.

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These are the world's best performing currencies this year @business.

1⃣Ukraine’s hryvnia
2⃣Russian Ruble
3⃣Egyptian Pound

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2019 was the year of No Normalization. Central Banks injected more liquidity and kept rates at dangerously low levels @dlacalle_IA

2019 was the year of No Normalization. Central Banks injected more
liquidity and kept rates at dangerously low levels on the questionable
excuse of "downside risks", thus running out of tools to address a
real downturn in the meantime.

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11-NOV-2019 :: This is a House of Cards of simply monstrous proportions and has been bulked up with the steroids of Free money, negative interest rates and QE.

Here we go round the prickly pear.
Here we go round the prickly pear at five o’clock in the morning.
This is the way the world ends.
This is the way the world ends.

Home Thoughts

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The winter solstice, hiemal solstice or hibernal solstice, also known as midwinter, occurs when one of the Earth's poles has its maximum tilt away from the Sun.

It happens twice yearly, once in each hemisphere (Northern and
Southern). For that hemisphere, the winter solstice is the day with
the shortest period of daylight and longest night of the year, when
the Sun is at its lowest daily maximum elevation in the sky.[1]
At the pole, there is continuous darkness or twilight around the
winter solstice. Its opposite is the summer solstice.
The winter solstice occurs during the hemisphere's winter. In the
Northern Hemisphere, this is the December solstice (usually 21 or 22
December) and in the Southern Hemisphere, this is the June solstice
(usually 20 or 21 June).
Although the winter solstice itself lasts only a moment, the term
sometimes refers to the day on which it occurs. Other names are
"midwinter", the "extreme of winter" (Dongzhi), or the "shortest day".
Traditionally, in many temperate regions, the winter solstice is seen
as the middle of winter, but today in some countries and calendars, it
is seen as the beginning of winter. In meteorology, winter is reckoned
as beginning about three weeks before the winter solstice.[2]
Since prehistory, the winter solstice has been seen as a significant
time of year in many cultures, and has been marked by festivals and
It marked the symbolic death and rebirth of the Sun.[4][5][6] The
seasonal significance of the winter solstice is in the reversal of the
gradual lengthening of nights and shortening of days.

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Warm wishes for the Winter Solstice, which falls this year today, 22 Dec; the sun at its lowest ebb in the sky, the year's tide's turn. @RobGMacfarlane

This is the megalithic tomb at Newgrange, Ireland, c. 5000 yrs old,
its main passage oriented to the solstial winter sun.

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I believe all 7 billion human beings alive today are part of one human family. We are born and die in the same way @DalaiLama

And what is most precious in our relations with others is
warm-heartedness. It yields the peace of mind and inner strength that
are fundamental to a happy community

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The evangelical magazine Christianity Today has called for President Trump's removal in an op-ed, criticizing the president for being immoral. Editor-in-chief Mark Galli @MorningEdition

Editor-in-chief Mark Galli tells  @NPRinskeep the president's Twitter
feed is a perfect example of a person with serious immoral habits.

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Samawati House, Msambweni Beach @nomadmagafrica

Located on the stunning Msambweni Beach, Samawati is a four bedroom,
double storey coastal home in which all the bedrooms are upstairs and
sea facing. With four friendly staff to look after your every need,
this Lamu-style villa is all about chilling out by the pool, enjoying
a game of table tennis, meeting the local fishermen on the quiet beach
and indulging in fresh seafood. The house is surrounded by indigenous
trees – a paradise for birds and cheeky sykes monkeys.

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In Memoriam, [Ring out, wild bells] Alfred Lord Tennyson

Ring out, wild bells, to the wild sky,
   The flying cloud, the frosty light:
   The year is dying in the night;
Ring out, wild bells, and let him die.

Ring out the old, ring in the new,
   Ring, happy bells, across the snow:
   The year is going, let him go;
Ring out the false, ring in the true.

Ring out the grief that saps the mind
   For those that here we see no more;
   Ring out the feud of rich and poor,
Ring in redress to all mankind.

Ring out a slowly dying cause,
   And ancient forms of party strife;
   Ring in the nobler modes of life,
With sweeter manners, purer laws.

Ring out the want, the care, the sin,
   The faithless coldness of the times;
   Ring out, ring out my mournful rhymes
But ring the fuller minstrel in.

Ring out false pride in place and blood,
   The civic slander and the spite;
   Ring in the love of truth and right,
Ring in the common love of good.

Ring out old shapes of foul disease;
   Ring out the narrowing lust of gold;
   Ring out the thousand wars of old,
Ring in the thousand years of peace.

Ring in the valiant man and free,
   The larger heart, the kindlier hand;
   Ring out the darkness of the land,
Ring in the Christ that is to be.

Political Reflections

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"To be GOVERNED is to be kept in sight, inspected, spied upon, directed, law-driven, numbered, enrolled, indoctrinated, preached at, controlled by creatures who have neither the right, nor the wisdom, nor the virtue to do so." Proudhon
Law & Politics

“To be GOVERNED is to be kept in sight, inspected, spied upon,
directed, law-driven, numbered, enrolled, indoctrinated, preached at,
controlled, estimated, valued, censured, commanded, by creatures who
have neither the right, nor the wisdom, nor the virtue to do so.”

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How @RudyGiuliani Giuliani is Helping Putin & Trump Conquer Cyberspace @PortlusGlam
Law & Politics

RUDY GIULIANI may seem like a buffoon, the court jester in the opera
buffa that is Trumpland, but what he’s been doing for the last three
years could not be more serious.
After falling off the radar following his aborted attempt to land the
Secretary of State gig in late 2016, Giuliani has re-emerged as the
key figure in the Ukraine scandal that this week led to the
president’s impeachment.
But at no point in the last three years did he ever actually go away.
And context is everything. The Zelensky quid pro quo was but a still
shot from an epic motion picture that has gone on for more than three
years—and it’s absolutely a horror movie.
From the hour he vanished from the scene almost exactly three years
ago to the present day, Rudy Giuliani has been operating as Trump’s
“informal cybersecurity advisor,”
GO: Weinergate. That was when Giuliani colluded with the
“Trumplandia”—the FBI’s New York Field Office—to basically resurrect
the Hillary Clinton email investigation. It was more or less an active
measure, and when it compelled Jim Comey to write his fateful memo, it
absolutely cost HRC the election.

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30-SEP-2019 :: The End is Nigh. @TheStarKenya
Law & Politics

feedback loop and the risks of die back where we enter a phase of
‘’cascading system collapse’’

International Markets

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Trump-Xi phone call on trade deal is lead story on China's 12/21 7pm news @CarlMinzner
International Trade

Beijing must be getting more comfortable with both content &
likelihood of deal to tie Xi to it personally in such a public manner
for domestic Chinese audience.

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Had a very good talk with President Xi of China concerning our giant Trade Deal @realDonaldTrump
International Trade

China has already started large scale purchaes of agricultural product
& more. Formal signing being arranged. Also talked about North Korea,
where we are working with China, & Hong Kong (progress!).

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Currency Markets at a Glance WSJ
World Currencies

Euro 1.1082
Dollar Index 97.662
Japan Yen 109.43
Swiss Franc 0.9819
Pound 1.3013
Aussie 0.6905
India Rupee 71.1638
South Korea Won 1161.97
Brazil Real 4.10235
Egypt Pound 16.0375
South Africa Rand 14.2709

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No Mercy / No Malice Logo FckdEx @FedEx @profgalloway
World Currencies

In the next 24 months, FedEx will either be acquired or lose an
additional 40%+ in value. The likely acquirer is Walmart. The gangster
move: a merger with Shopify.
In July 2017 we predicted, “If Bezos tomorrow said, ‘We see overnight
delivery as a huge opportunity,’ the $150 billion of market cap of
DHL, FedEx, and UPS would begin leaking to Amazon.”
This has happened. Since the launch of Amazon’s delivery service in
February 2018, FedEx has lost $25 billion (39%) in value, despite the
S&P’s 24% gain. Amazon has added $240 billion (33%).
In less than two years, Amazon captured nearly one-fifth of the market
for e-commerce deliveries in the U.S.
Since 2014, U.S. e-commerce has increased 84%, creating a massive
opportunity for the delivery industry. But instead, there has been a
transfer of wealth from FedEx, UPS, and the U.S. government to Amazon.
Amazon enters high-friction, low-margin businesses as a means of
differentiating low-friction, high-margin businesses (AWS and AMG).
How We Got Here — Featurizing
Network effects, cheap capital, idolatry of innovators, and a feckless
DOJ/FTC have resulted in a monopoly era where a wildly profitable
business (phones, digital marketing, loyalty programs, cloud, Yoda
dolls) can generate such staggering value (“antimatter”) that entire
industries become loss leaders (“features”) to differentiate and
protect the antimatter.
Netscape, the fastest-growing software firm in history, went from
antimatter to feature when Microsoft began bundling Internet Explorer
with Office.
I served on the board of a visual commerce SaaS firm (Olapic) until we
sold for $130 million in 2016. There was a great deal of discussion on
whether to sell. I urged the founders, naturally optimistic about the
firm’s prospects, to sell.
The difference between $1 million and $10 million in wealth is
meaningful (go big), but the difference between 0 and $1 million is
profound (sell). Every entrepreneur should bank enough money to
provide economic security for their family … at any opportunity.
For every CNBC story on Spiegel and Zuck turning down offers and going
on to capture billions, there are dozens of founders who should have
Pro tip: your VCs will encourage you to “be in it to win it,” and to
keep going, as they are already rich. Assume you are not Mark
Speaking of Zuck, I think he’d be happier if he’d sold to Microsoft (I
don’t know him, so this is pure speculation). A powerful algorithm for
happiness is to be wealthy but anonymous.
Perhaps as a coping mechanism for realizing the significant damage he
levies on the world, Zuck has developed the attributes of a sociopath.
At some point, he’ll likely be criminally charged.
Instead, he could have worked in Seattle for 27 months, retired to
Hawaii, invested in rockets, owned a football team, and produced Cats
for the big screen.
With any software start-up, there is a non-zero probability that you
wake up the next day and find that a better-resourced firm (Microsoft,
Oracle, Salesforce, Adobe) has deployed 200 engineers to copy your
product, bundle it with their stack for free, or near free, and ...
welcome to zero.
I believe this is happening to Slack, but more slowly than Netscape,
as Microsoft’s General Counsel has likely coached Satya to charge a
nominal fee for Teams and let Slack bleed out, instead of putting a
bullet in its head and stirring the DOJ from a 3-Ambien slumber.
FedEx is in the midst of being featurized by Amazon, who can make
investments across their vertical stack that FedEx can’t match, as
Amazon has antimatter (Prime, AWS, AMG).
The Memphis firm’s most recent earnings were a sh*t-show with top- and
bottom-line misses, drivel about a slowdown in air freight, and (my
favorite) an unfavorable calendar — a Kabuki dance attempting to
distract investors from the fact they’re being featurized by Amazon.
FedEx shareholders have woken up in an M. Night Shyamalan nightmare.
Instead of seeing dead people, investors are haunted by Mercedes-Benz
Sprinter vans with an arrow the shape of a smile on their side.
They might as well be German Panzer tanks fighting a white-and-purple
cavalry of FedEx trucks. There will be a lot of macho battle cries
from FedEx, some heroism, and an increasing stench of death. (Can’t
help it, I love WWII war metaphors.)
The Monopoly Algorithm: Innovation, Obfuscation, Exploitation
To be fair, Amazon is a better-run company than FedEx, who has stuck
their chin out with an offering that, from a consumer standpoint,
feels 1995.
In addition, Fred Smith spent a great deal of time lobbying the
president to lower corporate taxes so he could free up capital to buy
back shares, instead of fighting Amazon.
The clean-sheet, technology-driven innovation at Amazon, coupled with
cheaper capital, has caught FedEx flatfooted. Amazon:
Has the most on-time deliveries the week following Black Friday: FedEx
90%; UPS 93%; Amazon 94%.
Charges $80 for 600 pounds of boxes from a seller's warehouse vs. $104
at FedEx and $160 at UPS.
In Q4, Amazon will invest $1.5 billion in its one-day shipping initiative.
As Amazon is vertical, the return process is nearly frictionless. I
have an Amazon 4-star store on the street level of my office.
I can take a product downstairs, hand it to them, and they handle the
rest. A return via FedEx involves printers, labels, and additional
costs to have them package.
Despite what feels like an invading army of Amazon vans, the reality
is the Seattle firm is doing more with less — better service with less
Evading regulators, tax avoidance, a 1,000-person communications
department, exploiting our culture’s idolatry of innovators — these
weapons have rendered CNBC Amazon’s bitch.
The result is a firm that throws its weight around like no other.
Amazon banned merchants from using FedEx right before the holidays.
That’s like staging a mock homecoming queen ceremony so you can pour
pig’s blood on your competitor in front of the senior class.
“Deliver with Amazon. Be your own boss. Great earnings. Flexible
hours. Make more time for whatever drives you.”
Amazon has taken a page from Uber and is leveraging the
romanticization of entrepreneurship, the need for flexibility, and the
decreasing options of non-degreed workers in rural areas.
There are already stories depicting breakneck delivery schedules that
obviate luxuries such as bathroom breaks. FedEx drivers get paternity
leave and (gasp) health insurance.
What’s a Tennessee Girl to Do?
Sell or merge. FedEx stock is cheap and will get cheaper. EBITDA will
decline as management will be forced to make incremental investments
in a futile game of catch-up.
But the real virus infecting the stock has already taken hold of the
delivery firm’s corpus. Amazon did a Jedi mind trick last week.
Banning merchants from using FedEx convinced the markets, with a
single press release, that FedEx has regressed from “growth” to
“mature” to a declining firm.
A Walmart acquisition would mean the retail giant goes (more) vertical
for an 11% dilution ($38 billion vs. $340 billion market caps).
Walmart would recognize economies of scale (accretive), buttress their
grocery offering (the gangster unlock of the last five years in
business), burnish their data set, and go Yoda on Amazon’s a$$ — old,
but not to be trifled with.
FedEx solves their succession problem (CEO is 75), gets 5,000
well-staffed distribution centers (stores), and sells at a high. Time
is not on their side. The stock price today will seem overvalued
A more interesting and bolder tie-up would be with Shopify. The pride
of Canada boasts a $45 billion market cap vs. FedEx’s $38 billion
(think about that).
The combined firm would be a viable option to Amazon (the anti-Amazon)
— increasingly attractive positioning to a growing cohort of
merchants. Retail is an enormous and fragmented business that wants
out of the Amazon gulag.
Shopify-Ex would offer retailers something they don’t get from Amazon:
partnership. Newco would provide merchants a lot of the great taste of
Amazon (robust e-commerce tools and fulfillment) without the calories
(merchants keep their data, control the customer, branding, no private
label launches on backs of merchant data).
The much larger firm would have a combined market cap of $83 billion,
high single-digit revenue growth, and likely register multiple
expansion as the complexion of the business would move to recurring
It would captivate the markets (see above: CNBC’s bitch). This could
be the biggest thing since Tim Hortons.
Everything Everywhere Ends
In 24 months, FedEx will not exist in its current form. A lack of
innovation, and a competitor who can overwhelm enemies with cheap
capital and Jedi mind tricks, has featurized one of the great success
stories of modern business.
The resulting firm, post acquisition of FedEx, will offer an increase
in shareholder value, superior customer experience, fewer jobs, less
tax revenue, and no paternity leave.
We are barrelling toward a country with 350 million serfs serving 3
million lords. We attempt to pacify the serfs with more powerful
phones, bigger TVs, great original scripted television, and
Mandalorian action figures delivered to your doorstep within the hour.
The delivery guy might be forced to relieve himself in your bushes if
not for the cameras his boss installed on every porch.
Life is so rich,
P.S. Two weeks ago I wrote a letter to Omid Kordestani, chairman of
Twitter, expressing my concerns about a part-time CEO relocating to
I haven’t heard back. Maybe they are busy looking at Nigerian crypto charts

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Argentina Fifteen "exchange rates" in capital controls, an economy destruction machine... @dlacalle_IA
Emerging Markets

The demolition of the purchasing power of the currency to maintain a
bloated public sector through an extractive fiscal and monetary policy

Frontier Markets

Sub Saharan Africa

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J'ai souhaite engager la France dans une reforme historique et ambitieuse de la cooperation entre l'union economique et monetaire ouest africaine et notre pays. Nous le faisons pour la jeunesse africaine. @EmmanuelMacron

I wanted to engage France in a historic and ambitious reform of
cooperation between the West African economic and monetary union and
our country. We do it for African youth.

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Ayons le courage d'avancer, de batir un partenariat decomplexe avec nos partenaires. Avec la reforme du Franc CFA, nous faisons un grand pas pour ecrire une page nouvelle de notre relation avec l'Afrique. @EmmanuelMacron

Let us have the courage to move forward, to build an uninhibited
partnership with our partners. With the reform of the CFA Franc, we
are taking a big step to write a new page in our relationship with

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West Africa renames CFA franc but keeps it pegged to euro @Reuters

West Africa’s monetary union has agreed with France to rename its CFA
franc the Eco and cut some of the financial links with Paris that have
underpinned the region’s common currency since its creation soon World
War Two.
Under the deal, the Eco will remain pegged to the euro but the African
countries in the bloc won’t have to keep 50% of their reserves in the
French Treasury and there will no longer be a French representative on
the currency union’s board.
Critics of the CFA have long seen it as a relic from colonial times
while proponents of the currency say it has provided financial
stability in a sometimes turbulent region.
“This is a historic day for West Africa,” Ivory Coast’s President
Alassane Ouattara said during a news conference with French President
Emmanuel Macron in the country’s main city Abidjan.
In 2017, Macron highlighted the stabilizing benefits of the CFA but
said it was up to African governments to determine the future of the
“Yes, it’s the end of certain relics of the past. Yes it’s progress
... I do not want influence through guardianship, I do not want
influence through intrusion. That’s not the century that’s being built
today,” said Macron.
The CFA is used in 14 African countries with a combined population of
about 150 million and $235 billion of gross domestic product.
However, the changes will only affect the West African form of the
currency used by Benin, Burkina Faso, Guinea Bissau, Ivory Coast,
Mali, Niger, Senegal and Togo - all former French colonies except
Guinea Bissau.
The six countries using the Central African CFA are Cameroon, Chad,
Central African Republic, Congo Republic, Equatorial Guinea and Gabon,
- all former French colonies with the exception of Equatorial Guinea.
The CFA’s value relative to the French franc remained unchanged from
1948 through to 1994 when it was devalued by 50% to boost exports from
the region.
After the devaluation, 1 French franc was worth 100 CFA and when the
French currency joined the euro zone, the fixed rate became 1 euro to
656 CFA francs.
The agreement follows talks in Nigeria’s capital Abuja on Saturday
between West African leaders. Countries in the CFA bloc and other West
African nations such as Nigeria and Ghana have for decades debated
creating their own currency to promote regional trade and investment.
The CFA franc was born in 1945 and at the time stood for “Colonies
Francaises d’Afrique” (French Colonies in Africa).
It now stands for “Communaute Financiere Africaine” (African Financial
Community) in West Africa and in Central Africa it means “Cooperation
Financiere en Afrique Centrale” (Financial Cooperation in Central

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How Putin Got a New Best Friend Forever in Africa @business

Alpha Conde of Guinea had a favor to ask Vladimir Putin when the two
presidents met at the inaugural Russia-Africa summit in the Black Sea
resort of Sochi in October.
“I would like, if possible, to spend most of our meeting in a
one-in-one format because I have things to say to you that are not
worth discussing in such a large group,” the 81-year-old West African
leader said.
“My pleasure,” Putin, 67, replied as aides began to herd the several
dozen officials and reporters in attendance out of the room, leaving
him and Conde alone with their respective translators.
While neither side has revealed exactly what was said, Conde has made
no secret of his interest in finding a way to stay in power after his
second -- and legally last -- term ends next October.
This week, he unveiled a proposed new constitution that could allow
him to extend his rule.
Both the U.S. and France, Guinea’s former colonial ruler, are urging
Conde to avoid risking civil unrest by changing the landmark
constitution that allowed the former academic and long-time opposition
leader to become the country’s first democratically elected head of
state in 2010.
Russia, on the other hand, is throwing its weight behind Conde’s
undeclared campaign. That makes Guinea, holder of the world’s largest
deposits of bauxite, a key raw material for making aluminum, the
latest focus in a renewed tug-of-war among global powers for influence
and profit across resource-rich Africa.
The U.S., western Europe and China have advantages over Russia in
other areas of the continent. But in Guinea, the Kremlin is leveraging
a mix of old Soviet ties, new capitalist might in the form of aluminum
giant United Co. Rusal and Putin’s popularity among other leaders.
Putin is widely viewed as a kind of “guru” in Africa, Viktor Boyarkin,
a former diplomat and ex-Rusal security chief who’s known Conde for a
decade, said in an interview in Moscow. “People come to him for
Initially hailed when he came to power for ushering in democratic
rule, Conde has cracked down in recent years as opposition has grown.
In August, the International Monetary Fund called the poor, mainly
Muslim nation of 13 million “a fragile country with heightened risks
of social and political instability.”
The same day Putin discussed possible constitutional changes in
Moscow, fueling speculation that he was seeking ways to remain in
power beyond the end of his term in 2024, Conde unveiled plans for a
new version of Guinea’s basic law that would lengthen the presidential
He said the new document would need to be approved in a national referendum.
“A new constitution would allow him to seek a third mandate if he
wishes,” said Aboubacar Sylla, a government spokesman.
“The president has never spoken about a third mandate and before a
referendum can be held it’s not even an issue.”
But opponents said the plan is proof their fears that Conde plans to
stay in power are justified. “This confirms his intentions,” Sidya
Toure, the president of opposition group Union of Republican Forces
and a former prime minister, told Guineenews.
Back in January, Putin’s envoy to Guinea had stunned local opposition
groups and foreign governments alike by backing constitutional changes
to extend Conde’s rule.
In a speech broadcast on state television, then-Ambassador Alexander
Bregadze called Conde “legendary” and argued that constitutions
shouldn’t be considered immutable works akin to “The Bible or Koran.”
Four months later, Rusal hired the ambassador as its country chief in
Guinea. Rusal, which was run by billionaire Oleg Deripaska until U.S.
sanctions imposed over his ties to Putin forced him to step down in
2018, sources about 40% of its bauxite from Guinean mines.
Boyarkin is consulting Conde’s administration ahead of the possible
extension to his rule, according to three people with direct knowledge
of the efforts.
Boyarkin denied being an “adviser” to Conde. That may have something
to do with being blacklisted by the U.S. a year ago over his ties to
Deripaska, which prompted him to give up ownership of Bureau Legint, a
Russian consultancy working in Guinea.
Boyarkin said his only activity in Guinea now is offering advice and
his “high-level” contacts to foreign companies pursuing investment
opportunities, including hydroelectric and mining projects.
Sylla, the government spokesman, declined to comment on any
connections to Conde.
Kremlin spokesman Dmitry Peskov said Russia isn’t involved in anything
to do with Guinea’s “internal affairs.”
Still, Russia’s embrace of Conde has put it at odds with the U.S. and
France, both of which have mounted public and private diplomatic
campaigns to get him to step down at the end of his term.
In August, during a tense exchange in southern France, French
President Emmanuel Macron told Conde he was concerned about the
tensions that a possible third term could cause in Guinea and warned
he’d be watching closely, according to two people familiar with the
Conde replied tersely that he’ll rely on his own counsel, the people
said. Sylla, the Guinean government spokesman, said Conde hasn’t
discussed the possibility of a third term either with Macron or Putin.
A spokeswoman for the French president didn’t respond to requests for
comment on the meeting.
France has also been working with countries bordering Guinea to
“safeguard the spirit” of the Guinean constitution and ensure the next
elections are “free, peaceful and transparent,” French Foreign
Minister Jean-Yves Le Drian said earlier this year.
U.S. Secretary of State Michael Pompeo delivered a similar message
during Conde’s trip to Washington in September, stressing the
importance of “regular, democratic transitions of power,” according to
the State Department.
A few weeks later, just before Conde met with Putin, mass
demonstrations against changing Guinea’s constitution erupted in
At least 14 protesters and one policeman have been killed in clashes
since, according to Human Rights Watch.
Opposition leaders say Guineans are growing increasingly suspicious of
Russia’s role because it’s starting to look like the Kremlin is
blatantly interfering in their politics.
“We originally thought Bregadze’s comment on the constitution was the
personal position of an ambassador close to Conde,” said Cellou Dalein
Diallo, who lost the 2015 presidential election but refused to
recognize the results over what he called massive vote-rigging.
“But now we don’t know because Russia hasn’t denied this position.”
Boyarkin blames the protests mainly on “outside forces” and has
nothing but praise for Conde. “I consider him a savior for Guinea.”
Boyarkin also has influential ties elsewhere. The U.S. Treasury,
imposing sanctions on him a year ago, described Boyarkin as a former
military-intelligence officer, something he would neither confirm nor
In 2008, he worked with Paul Manafort, a former chairman of U.S.
President Donald Trump’s election campaign who was later jailed for
financial crimes, on African political-consulting projects Boyarkin
declined to elaborate on.
Boyarkin said he joined Rusal in 2008 and stopped working for Deripaska in 2016.
Boyarkin’s relationship with Conde -- he says they met in 2008 -- has
been good for the Russian aluminum company. After Conde came to power,
Boyarkin says he helped resolve a dispute with the government,
successfully averting a $1 billion claim filed by the military junta
that preceded him.
In the public part of his meeting with Putin, Conde praised Russia for
“always being a friendly country.”
“Since the days of the Soviet Union, you have been alongside us,
protecting us,” he told Putin.

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Zimbabwe: Hear the voice of God @TheAfricaReport

Give credit where it is due. The coup orchestrated by Zimbabwean spy
chief Emmerson Mnangagwa and his military comrade General Constantino
Chiwenga two years ago was genius of a kind, a particularly malevolent
Mnangagwa told us that the voice of the people was the voice of God.
Now the chickens are coming home to roost.
Mnangagwa is more excoriated than the man he ousted – his erstwhile
chief Robert Mugabe. As 93-year-old Mugabe was humiliated and harried
from power by greedy politicians and power-hungry soldiers, a worse
fate could await Mnangagwa as popular anger grows towards elite
corruption and repression.
The first test for the post-coup regime was its openness to political freedom.
Under Mugabe, the ruling Zimbabwe African National Union-Patriotic
Front (ZANU-PF) party had shown extreme intolerance.
Witness Gukurahundi in which 20,000 opposition supporters in
Matabeleland were massacred in the mid-1980s.
Two decades later, the ruling elite massacred the opposition after it
lost the first round of elections in 2008.
What did Mnangagwa do to break with this history? He promised to open
up politics. He visited the terminally ill oppositionist Morgan
Tsvangirai and offered state funds to pay for his treatment and a new
For a while, he tolerated criticism in the media and by civil society
on subjects such as Gukurahundi. He, or his handlers, started posting
on social media about the “new Zimbabwe”. Some foreign diplomats,
especially Britain’s ambassador, offered fulsome praise of Mnangagwa’s
Between the putsch and elections in July 2018, there was an outbreak
of liberalism.
Opposition parties made full use of it.
But inside the ruling party complex, Mnangagwa’s people purged all
those associated with their rivals – that is, Grace Mugabe and her G40
Many were arrested and prosecuted on corruption charges. Restrictions
on public meetings and protests remained.
There was a brief feel-good factor after the putsch but it was not
enshrined in law.
Contrary to pledges of free elections, Mnangagwa and his comrades
stuck to their old script. They kept control of the election
commission, with a complement of state security agents monitoring
The commission failed to release the voters’ roll on time. When it was
published, it was plagued with irregularities.
Again, the ruling party used the army to intimidate voters in the
countryside. ZANU-PF dominated the state media, denying equal time to
its opponents. Mugabe-era strictures on access to information and
rights of assembly stayed in place.
The tabulation, transmission and announcement of election results
pointed to interference.
With all that help, Mnangagwa managed only to get 50.8% of the votes.
There were far more protests than celebrations as the reality dawned
on the country.
As Mugabe’s security capo, Mnangagwa struggled to convince the
sceptics he would respect human rights. On 1 August in response to
protests against delays in the election results, Mnangagwa sent in the
Six unarmed civilians were killed and scores more were injured in full
view of election observers and international media.
As the furore grew, Mnangagwa appointed a commission of enquiry led by
Kgalema Motlanthe, a former president of South Africa. It recommended
that the officers be held to account.
Instead, Mnangagwa promoted the commander of the unit responsible for
the killings, and none of the other perpetrators were sanctioned.
In January 2019, citizens, angered by spiralling fuel prices, took to
the streets. Mnangagwa sent in the army again.
After public sector workers mobilised in protest at wage cuts after a
massive devaluation of the currency, the leader of the doctors’ union
Peter Magombeyi was abducted, detained for five days, tortured and
then dumped in the outskirts of Harare.
Under Mugabe, a predatory elite of ZANU-PF officials and their
business allies prioritised personal wealth over public interest.
But Mnangagwa allowed businessmen such as Kudakwashe Tagwirei and his
company Sakunda, in partnership with the Dutch-based Trafigura Group,
to retain a monopoly over fuel imports.
The government’s business cronies have had preferential access to
foreign exchange, which they recycle into Zimbabwean dollars at hugely
profitable rates.
The government hit rock bottom as the worsening regional drought meant
that half of Zimbabwe’s 15 million people would face serious food
It emerged from international agencies that the government had signed
a secret contract to import maize from Tanzania at more than twice the
market price.
Chanting his ‘open for business’ mantra, Mnangagwa pledged to turn
around the economy. He appointed Mthuli Ncube, a former chief
economist at the African Development Bank, as finance minister to
preside over a reform programme.
It includes more swingeing cuts to public spending and the
reintroduction of the Zimbabwe dollar. But Ncube lacked political
muscle. ZANU-PF’s chiefs and their business pals circumvented the
reforms and continued to exploit the system.
The economic tally of Mnangagwa’s rule is a return to hyperinflation.
The reintroduction of the Zimbabwe dollar has been sabotaged by his
business friends, and the health and education services, the best
achievement of the Mugabe years, are in ruins.
Any prospect of the government restructuring its foreign debt and
bringing in new capital have receded into the distance.
Not only has Mnangagwa’s ­regime failed all the tests he set it, but
the situation has now reached breaking point.
The best way out of the crisis would involve inclusive negotiations,
preferably mediated by a credible regional mediator.
Naledi Pandor, South Africa’s foreign minister, says her government,
which is owed ­billions by Mnangagwa’s regime, stands ready to help
Zimbabweans arrive at a ­solution.
Her proviso was that it must include civil society and opposition politicians.
As regionalism and ethnic nationalism gain ground, there has been a
spate of localised violence. There are some in the regime who want to
exploit chaos and cling to power.
The only conceivable beneficiaries would be the people with guns – not
the fat-cat generals, air marshals and spymasters, but the angry young
officers who have seen this predatory elite steal their futures.
Their revenge – for the ruling elite’s crass betrayal of the
liberation cause – could turn into Zimbabwe’s ugliest moment yet.

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21-JAN-2019 :: What is clear to me is that Zimbabwe is at a Tipping Point moment.

At the time of the Jasmine Revolution in Tunis the crowds chanted “We
are not afraid, we are not afraid, we are afraid only of God.”

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An EGM of Meikles Limited last Friday voted to sell Meikles Hotel, for decades the crown jewel of the empire

Investment firm Albwardy of the UAE, which operates hotel brands such
as the Hyatt and Four Seasons, is to buy the hotel for US$20 million.
John Meikle, quoted in the Rhodesian Genesis, a book on how Rhodesia
was built, details their beginnings:
“We arrive at Fort Victoria on the 7th May 1891. The original site of
Fort Victoria consisted of a few wattle and daub buildings and a
roughly thrown up ground fort surmounted by sacks filled with sand.
Ours was the first consignment of fresh stocks of general merchandise
to arrive in the country since its occupation,” he writes.
“Our plans for the future were very indefinite. We decided, if we
could sell out, that we would do so and return for a further lot of
goods. But things were in a very bad way – there was no money in the
place, very little outside capital having up to then come in to
develop the mines. The pioneers were for the most part scattered over
the country prospecting and pegging farms, earning next to nothing.”
The existing businessmen didn’t take too kindly to these new arrivals,
he says. Soon, the Meikles decided to set up their own store, and it
was with the cheapest materials they could rustle up. Straight away,
they priced the products they had brought in a way to undercut the
“Consequently a very rough shelter was run up, using the whiskey cases
for a wall and buck-sail for a roof. We were soon ready to start
business. Sugar was selling at 1/6d. per lb. and we reduced it to 6d.,
and other things in proportion, the result being that whatever little
business was done came to us. Our fresh stocks were an additional
attraction. Flour was unprocurable until then.”
In 1915, they set up Meikles Hotel, opening it to guests on November
15 that year.

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14-OCT-2019 :: The Canary in the Coal Mine is Zambia.

“Investors have lost faith in government promises to get spending
under control and the government has fallen out with the IMF as well,”
he said. In Zambia, Eurobonds are trading at 60c in the $.

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@FitchRatings Affirms Zambia at CCC Long-term issuer default rating affirmed @ CCC. Long-term local currency issuer default rating affirmed @ CCC @taongaclifford

•Credit Ratings Profile:
*S&P long-term foreign currency debt rating: CCC+, outlook stable
*Moody's foreign issuer rating: Caa2, outlook -

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Lagos Building Luxury Homes in Face of Affordable Housing Crisis @business

They come from the countryside, from the villages, from the capital
city or from neighboring countries — energetic, ambitious, full of
hope that they’ll find jobs and a community and better lives. Few find
what they come for. Yet they keep coming.
Not to London or New York, but to Lagos, the Nigerian urban sprawl
that’s an unrivaled magnet for people, in Africa or anywhere.
A city of less than 1.5 million in 1970, Lagos is growing so fast that
population estimates vary by more than 10 million.
The Lagos Bureau of Statistics says it’s 26 million now, the federal
government says it’s 21 million, and international institutions put it
at around 15 to 16 million.
By the end of the century, Lagos will grow to 88 million, making it
the world’s largest city, according to the University of Toronto’s
Global Cities Institute.
Nigeria could be the third-largest country by then.
With a housing deficit of 2.5 million units, more than two-thirds of
Lagos’s residents live in slums that are among the least hospitable on
Earth, according to Leilani Farha, the United Nations Special
Rapporteur on housing.
“People are living in some of the worst, if not the worst, conditions
I’ve seen in the world, and I’ve been to all the big slums in India,
Kenya, South Africa,” Farha said during a visit to the country in
While most government officials agree the affordable housing shortage
is a crisis, they have little idea how to respond.
“The aim of making housing readily available, accessible and
affordable for the low- and middle-income earners who form the bulk of
our citizenry had always been challenged by the ever-growing
population of the state,” Moruf Akinderu-Fatai, the Lagos state
commissioner for housing, said in a Dec. 8 speech.
“We see many people trooping into Lagos in search of economic
opportunities on a daily basis with no intention of going back.”
New apartment towers are rising in Lagos, but they’re intended for
foreign oil workers and the small group of Nigerians who can obtain
mortgages or afford to pay cash, not the families crowded into
crumbling units with seven to a room and limited access to clean water
and sanitation.
Developers’ focus on high-end units amid a shortage of affordable
housing mirrors that of builders in cities around the world — from
Berlin to London to New York and Hong Kong.
The most ambitious project is Eko Atlantic, a city within a city
that’s being built on a Lower Manhattan-sized stretch of land
reclaimed from the Atlantic Ocean.
Its builders plan a boulevard modeled on Paris’s Champs-Élysées and it
will house around 250,000 people in luxury apartments, while the U.S.
will move its Lagos consulate there.
With vast oil and mineral wealth, Nigeria has the 29th-largest economy
in the world, just behind Norway’s.
While Africa’s richest man, Aliko Dangote, mainly lives in Lagos,
Nigeria also has the highest number of people classified as extremely
poor — defined as living on $1.90 or less per day — at about 87
million of the country’s 200 million residents, according to the
Brookings Institution.
Kalu Ndukwe, a water-plant engineer, was desperate to find a new home
for his family. His landlord failed to make repairs and his apartment
was plagued with leaks.
He can earn as much as 580,000 naira ($1,600) per month -- which would
put him in roughly the top third of the population in salary, though
as a freelancer, his pay is inconsistent.
He paid an agent for a three-bedroom flat on the western edge of
Nigeria’s — and Africa’s — biggest city. When he arrived with his wife
and three children, someone else was already living there.
He managed to get a refund, but his troubles continued when the owner
of the next property rejected him because he was from the wrong ethnic
“There were so many challenges,” said Ndukwe, 40.
After two years, Ndukwe found a home he and his family liked and had a
landlord who, like him, was an Igbo.
The rent was 500,000 naira a year. And he had to give the agent a 50%
commission and pay for the whole year in advance, which actually
represents an improvement in Lagos, where landlords used to commonly
demand two or even three years up front.
Lagos is one of the fastest-growing cities in sub-Saharan Africa and
so far the only one of more than 10 million — the threshold for a
megacity — though several others, including Kinshasa in DR Congo,
Luanda in Angola and Johannesburg in South Africa, aren’t far behind.
For proponents of faster economic development, this should be a sign
that Africa is finally getting its chance to catch up to the developed
But even as urbanization accelerates and third-world megacities
proliferate, it’s no longer a direct route to greater prosperity and
the rise of a middle class that it was when industrial revolutions
swept Europe and North America in the 19th century or transformed the
economies of countries such as South Korea and China in the 20th.
To serve as engines of greater productivity and development, cities
need affordable housing, reliable public transportation, public health
services, education and other basic services.
Without those, megacities impede economic growth rather than promote it.
“All of these together help make cities more productive, engines of
economic growth,” said Shlomo Angel, a professor of city planning at
New York University.
“One of the setbacks in Lagos is that the economy is fragmented, it’s
not integrated. People live in small communities” so without decent
transportation or housing, “the number of jobs you can reach is based
on how far they can walk.”
Continued failure to provide adequate housing, sanitation and
transportation robs Nigeria of its greatest resource, its human
“Nigeria has such a vibrant culture,” said Meredith Preston McGhie,
secretary general of the Global Centre for Pluralism. “They are
artists and musicians and entrepreneurs and they are full of energy.
In the right conditions they are a formidable workforce.”
For foreign investors, particularly those wanting to sell consumer
goods, Nigeria’s young, rapidly growing population of 200 million
should be a major attraction. But many are put off by the poor
infrastructure, including the scarcity of housing.
“Investors won’t come if housing isn’t available for their workers —
they’ll just bypass Nigeria,” said Marja Hoek-Smit, the founder of the
International Housing Finance Program at the Wharton School of the
University of Pennsylvania, and who’s worked extensively in Africa.
“Economic growth is very affected by this lack of affordable housing.
It means cities are a mess, inefficient and costly to live in. That,
ultimately, means industrialists have to pay more for labor.”
Most government efforts so far have been designed to help people buy
homes with government mortgages. Few could qualify because a 30% down
payment was required for the 10-year loan, according to
Akinderu-Fatai, in a speech this month.
So the government introduced a rent-to-own program.
“The prospective homeowners make only a 5% down payment, take
possession and pay up the remaining balance with as little interest as
possible as rent towards the ownership of the property over a period
of 10 years,” Akinderu-Fatai said.
Very few Nigerians have access to home loans from banks. There are
only around 50,000 home mortgages in the entire country. And with
Nigerian inflation in double digits, most lenders that do provide home
loans charge at least 20%, according to a Nigerian central bank
“If you don’t have normal access to finance, you won’t get mass
development of housing,” says Wharton’s Hoek-Smit. “Developers are not
going to build if they can’t sell upon finishing buildings.”
The World Bank estimates Nigeria has a deficit of 17 million housing
units, one of the largest globally. It would cost around $363 billion
to build that many homes, according to the Centre for Affordable
Housing Finance in Africa, a Johannesburg-based think tank.
The government should begin with the basics, said the U.N.’s Farha. It
should prioritize improving informal settlements by giving people the
right to live there and upgrading infrastructure, she said.
That way they would lose their fear of being evicted by police, who
regularly raze slums, and invest in their communities.
“They would be quite happy to band together and put up a roof and a
wall and build a drain,” she said.

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Kenya is the top performing SSA stock market, up +16.7% YTD, followed by Egypt at +4.8%. Nigeria is -14.7% YTD. via @genghiscapital H/T @MihrThakar

The cheapest market PE is Zambia at 5.2x & a div. yield of 15.1%.
Kenya trades at 12.3x. Nigeria is at 7x & div. yield of 6.2%, a div.
yield similar to Kenya.


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23-DEC-2019 :: In Memoriam, [Ring out, Wild Bells]

The End of the Year is upon us, and it is that time to Ring out, wild bells

The year is dying in the night;
Ring out, wild bells, and let him die.
Ring out the old, ring in the new,
Ring, happy bells, across the snow:
The year is going, let him go;

In Memoriam, [Ring out, wild bells] Alfred Lord Tennyson -

Against a global backdrop which was hardly conducive, what with the
crossfire of a Trade War [now ebbing well for a few months because
Trump has an election to win and Xi has an economy to rescue] and a
Global Revolution which Bloomberg Opinion's Pankaj Mishra headlined
thus; ''A Global Anarchy Revival Could Outdo the 1960s''  and added
''That acknowledgement of the state’s authority as ultimate arbiter is
now rapidly disappearing, in not only Hong Kong, but also India and
many other countries. It is being replaced by the conviction that the
state has lost its legitimacy through cruel and malign actions''  As
Pierre-Joseph Proudhon, the pioneering thinker of anarchism put it,

“To be GOVERNED is to be kept in sight, inspected, spied upon,
directed, law-driven, numbered, enrolled, indoctrinated, preached at,
controlled, estimated, valued, censured, commanded, by creatures who
have neither the right, nor the wisdom, nor the virtue to do so.”

In such a complex, nonlinear and interdependent World where feedback
loops can start spinning at dizzying speed, it is in fact easier to
look backwards and into the proverbial rear view mirror.

Internationally, Dirk Thiels of KBC Asset Management pronounced  “We
call it a grand cru, which in wine terms means a very good vintage,.”

The scorecard tells the story: America’s equity benchmark has climbed
28%. A global stocks gauge is up 23%. A worldwide credit index rose
10%. Emerging-market sovereign dollar bonds added 12%. Even Treasuries
and gold, those classic safe havens, advanced about 7% and 15%,
respectively. Staying on the sidelines was about the only way to lose.

Turning our gaze closer to home. We must start first with a Currency
overlay because as I am sure you are aware Venezuela and the likes of
Zimbabwe often times top the League in percentage terms but when You
convert its worth its ''tuppence'' in hard currency. Whilst Kenya's
Shilling which is +1.00% in 2019 did not match the Egypt Pound's
+12.00% gain, The Shilling's performance is more than respectable
especially when you consider it against the SSA scorecard. I don't
need to repeat that the Zambia Kwacha is the 3rd worse performing
currency in the World, The Ghana Cedi has fallen 25 Years in a row and
so forth. The Central Bank of Kenya have to be commended for their FX
Operations. Of course, The IMF have previously cited the Shilling as
overvalued and if we do go to that Institution for support [which is
as sure a Thing as the Aga Khan's Shergar was] we will need to be
alert to any Shilling Quid pro Quo scenario. So The Shilling has been
a Performer and has surfed on a rising tide of Remittances $2.4b on a
12 month running basis at the last count. The Governor Dr. Patrick
Njoroge also bounced the Government into touch You will recall

''CBK has warned the National Treasury CBK is of the opinion that
aiding by printing funds to pay debt will be a zero-sum game'' [NTV] -
I don't need to tell you that such an outcome would kneecap the

Our Eurobonds have performed well, in large part because of a benign
international backdrop of extreme low interest rates globally which
lifted EM and Frontier bond prices as an Asset Class unless You are
Zambia where Eurobonds are yielding 20% because No One believes they
will pay you back. The GOK Eurobonds with are all denominated in US$
are as follows; 10 Year Issue [now 9] is at 6.1%, the 30 Year [now 29
Year] is at 7.8% and the 12 Year Issue is at 7.1%. GOK Shilling
denominated bonds were very well supported during the Interest Rate
Cap regime by the Banks. However, Moodys Investor Services [The
Ratings Agency] recently pronounced the following

Kenyan lenders are the second most exposed to the government with
almost 300 per cent of their equity lent out to the State. However,
Egyptian banks are even more exposed on lending Cairo 603 per cent of
their equity.

What this tells me is that an important Source of Buy Side Demand for
GOK Shilling Paper is now ''limit Long'' If You are sitting on the
Credit Committee of a Kenyan Bank and exercising some degree of
oversight I would argue that then you would be demanding a Hard Cap.
Therefore, given the fact that GOK issuance is not going to slow down
but will probably accelerate, I would be keeping a close eye on the
Curve.Staying ahead of the Curve was a remarkable book by the renowned
Investor George Soros. Its worth reading.

The Nairobi All Share Index served up a +15.80% return in 2019 and
that's quite a decent outcome when you consider the volume of Profits
Warnings but essentially the All Share performance speaks to the
increasing bifurcation between the Big Cap Stocks [outperforming] and
the ''zombie'' or ''Penny'' stocks [underperforming woefully] Dr.
Mwangi's Equity Bank led the charge with a +53.52% gain in 2019 and
has further to go. Dr. Mwangi has spread his Wings, diversified the
Banks risk across SSA and his Model is working a treat. I reckon there
is a lot further to go. KCB Group has rallied +41.52%, NCBA Bank
+23.02%, Barclays +19.18%. The Banks were repriced higher on the
removal of the Interest Rate Cap Regime. Safaricom rallied +39.19% and
this rally was driven by another sterling performance of M-PESA, whose
value remains in my opinion undervalued by more than 50% on the
balance sheet. International Investors [I am reliably informed] were
not excited by the proposed Ethiopia JV and clearly the Company has to
do some work around persuading Investors that they have the bandwidth
and an attractively structured vehicle for that. The bottom line is if
Safaricom does well so does the Nairobi Securities Exchange at a
headline level.

I wish you all a very Merry Christmas.

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Forex at risk as imports beat exports to the rest of Africa @BD_Africa

President Uhuru Kenyatta’s policy of boosting trade with Africa states
has become counterproductive, putting pressure on the shilling as
Kenya accumulates a Sh4.22 billion trade deficit in the first nine
months the year.
The cash spent on imports from African markets increased by Sh11.71
billion to Sh168.741 billion against an export earning of Sh164.525
billion, statistics published last week by the Central Bank of Kenya
(CBK) show.
Since he romped to power in 2013, President Uhuru Kenyatta has been
pushing for increased trade with African states. This is the first
time that Nairobi is running a negative trade balance with Africa
since 1999, the earliest such trade records are publicly available.

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Kenya Shilling versus The Dollar Live ForexPros

On a YTD basis, the shilling has appreciated by 1.1% against the dollar

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CBK warns that the NSE is vulnerable to concentration risks. @moneyacademyKE

CBK also cites other risks as dominance by foreign investors, and the
high concentration of Treasury securities in the Bonds market.

As at Dec 2018, the top five companies accounted for 65.82% market Cap —The EAentration of Treasury securities in the Bonds market.

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Top 10 Performing Stocks in 2019 @RichEconomics

1⃣Sameer Africa +81.08%
2⃣@KeEquityBank +53.52%
3⃣@KCBGroup +41.52%
4⃣@SafaricomPLC +39.19%
5⃣Express Kenya +36.00%
6⃣@Lhornpublishers +30.59%
7⃣@NCBABankKenya +23.02%
8⃣@WPPScangroup +19.29%
9⃣@Barclays_Kenya +19.18%
🔟@Kakuzi_Plc +12.90%

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

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