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Satchu's Rich Wrap-Up
Thursday 03rd of February 2022

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Has the Fed ‘put’ been put to bed? @FT @LizAnnSonders
World Of Finance

Don’t fight the Fed. The saying was popularised by the late Marty Zweig, this author’s first boss and mentor on Wall Street in the 1980s and 1990s. Zweig also coined the phrase: “Don’t fight the tape”.
The tape — the record of stocks transactions through the day — is decidedly not fighting the US Federal Reserve, with the prospect of monetary policy normalisation clearly behind a very rocky start to the year for US shares. 

It is typically a pothole-riddled path that is created when central banks begin to normalise policy — even more so during this anything-but-normal pandemicycle (there’s a new word for you).
Conceding that inflation is not quite a transitory phenomenon, the Fed is now on a mission. 

The launch point for the Covid-19 tightening cycle is unusual, in part due to what appears to be a much later phase in the cycle for the economy than the calendar might suggest. 

The post-2020 recession expansion is only 21 months new but the inflation, labour market and asset valuation backdrop is decidedly later-cycle.
Much recent analysis of past tightening cycles have been limited to just the prior three rounds of Fed rate rises, but those only date back to 1999 — an era characterised by secular disinflation and the attendant positive correlation between bond yields and stock prices. It is different this time.
The inflation cat is out of the bag; and arguably, the Fed opened the bag on purpose when, in August 2020, it implemented a more flexible monetary policy strategy. 

In, short, the Fed has been actively pursuing higher inflation. The aim is to let inflation run hot to compensate for the lengthy era of disinflation.
Another key difference between the current path towards policy normalisation and past episodes is the Fed’s $9tn balance sheet. 

Markets are perhaps keenly aware of the perceived implications of its quantitative easing programme of bond buying on yields and asset prices; but they have much less experience with pending quantitative tightening.
The plumbing system that connects QE (or QT) to asset prices is indirect and complex. 

But the psychological system connecting them tends to be more direct. 

Signals from the Fed about balance sheet plans have been important market drivers — highlighting the power of the Fed’s words, aka jawboning.
Fed officials are now explicitly stating their desire for tighter financial conditions in the interest of moving away from hyper-stimulative policies, squeezing aggregate demand and bringing inflation down. 

No, imminent rate rises do nothing to solve the semiconductor backlog problem, nor do they bring down the number of container ships sitting off the ports of Long Beach. 

However, coupled with the Fed’s jawboning, they can arguably change the trajectory of inflation expectations and/or aggregate demand via consumers’ behaviour.
The hope is that both the economy and financial markets can adjust to monetary policy normalisation in an orderly fashion. But here is where things might get tricky. 

The notion of a “Fed put” has been in and out of play since the Alan Greenspan era; with many market participants believing the central bank will step in if markets begin to riot. Do not count on that in this era.
For now, financial markets are volatile, but functioning properly. The volatility and weakness are occurring alongside the repricing of risk assets — not being driven by any serious deterioration in liquidity conditions or financial system functionality. 

In fact, the equity market is a component of most indices measuring financial conditions. 

As such, equity market volatility-induced tightening of financial conditions could arguably be a feature, not a bug, as it relates to prospective Fed decisions.
Back in 2018, Fed chair Jay Powell spoke about the crucial difference between financial market volatility and financial system instability. They are not one and the same.
The Fed’s job is to try to bring about policies — and often create new tools — to ease instability in the financial system. 

There are times that market volatility can lead to financial system instability. 

However, if market volatility occurs in a vacuum, it is not the Fed’s job to contain it — unless it actually threatens the stability of the financial system.
This year’s increased volatility and correction in stocks is indicative of a less friendly monetary policy. 

For all the benefits having accrued to the economy and investors’ portfolios of asset appreciation, the Fed is keenly aware that it is time to begin reining in some of the excess liquidity. 

Absent the renewal of the Fed put, not fighting the Fed remains the market’s modus operandi.

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The Tape is your Telescope Edwin Lefevre said in one one of the finest books about trading and economics Reminiscences of a Stock Operator
World Of Finance

29-NOV-2021 ::  Regime Change

There is no training – classroom or otherwise.. that can prepare for trading the last third of a move, whether it's the end of a bull market or the end of a bear market. 
There's typically no logic to it; irrationality reigns supreme, and no class can teach what to do during that brief, volatile reign. Paul Tudor-Jones

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Zeitgeist comes from the outside, but works on the inside. It affects everyone, but not everyone is affected in the same way. Karl Ove Knausgard
World Of Finance

The ‘’Zeitgeist’’ of a time is its defining spirit or its mood. Capturing the ‘’zeitgeist’’ of the Now is not an easy thing because we are living in a dizzyingly fluid moment.

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29-NOV-2021 : The ‘Bukeleists’ are going to be tested @nayibbukele #BTC
World Currencies

The Fed is too late to remove the punchbowl @FT @martinwolf_ 


In 1955, chairman William McChesney Martin remarked that the Fed “is in the position of the chaperone who has ordered the punch bowl removed just when the party was really warming up”. 

It was sound advice, as the monetary turmoil of some two decades later demonstrated. 

Losing control over inflation is politically and economically damaging: restoring control usually requires a deep recession. 

Yet the Fed has been running this risk lately, because it has not even started to remove a highly alcoholic punch bowl.
Whether inflation is indeed transitory is not mainly determined by what is going on in markets for specific products. It depends more on the environment in which such shocks emerge. 

The risk is that in a highly supportive policy environment, such as today’s, a price shock can too easily ripple across the economy as workers and other producers struggle to recoup their losses
In this context, the Fed board’s December forecasts are bewildering. The median view is that core consumer price inflation will fall to 2.7 per cent this year and 2.3 per cent in 2023, as the unemployment rate stabilises at 3.5 per cent. 

Meanwhile, the forecast is for the Fed funds rate to be between 0.6 and 0.9 per cent this year, and 1.4 per cent and 1.9 per cent in 2023 (if we leave out the three highest and lowest). 

These forecasts are, we must note, below the Fed’s own estimate of the neutral rate of interest, which is 2.5 per cent. 

Moreover, the assumed real interest rates are also negative. Perhaps board members believe that aggressive asset sales will deliver the needed tightening via higher long-term rates. 

Alternatively, they have to believe that the economy and inflation will stabilise smoothly even though monetary policy stays expansionary throughout. This would be immaculate stabilisation. 

It is conceivable that the policy settings chosen during the worst of the Covid crisis still make sense today. 

It is conceivable too that the forecast tightening will deliver robust growth and smooth disinflation. 

Both are less unlikely than that the moon is made of green cheese. But likely? Not so much.

The Music has been playing for Eternity and its about to stop


Love Fellini. So brave, with that whiff of insanity. @DiAmatoStyle Federico Fellini's 8 1/2 @tcm

Mirrors on the ceiling, The Pink champagne on ice

Last thing I remember, I was Running for the door

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@georgesoros on China, Xi Jinping, and the Threat from Within: Delivered at the @HooverInst
Law & Politics

[the most insightful critique I have heard full stop] I disagree with the Regime change prospect, His point about demography incisive and the Vaccine issue]

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Another classic story when Druckenmiller decided I'm going to bet like Soros and pitches Soros on it @iancassel
World Of Finance

O'Shea on Soros: "He has no emotional attachment to an idea. When a trade is wrong, he will just cut it and move on..." @LMT978

29-SEP-2014 Stanley Druckenmiller, who with George Soros bet the bank against the Bank of England on September 16, 1992 and made off with a billion pounds

“As a macro investor, my job for 30 years was to anticipate changes in the economic trends that were not expected by others – and therefore not yet reflected in securities prices”.

“Soros has taught me that when you have tremendous conviction on a trade, you have to go for the jugular. It takes courage to be a pig .... As far as Soros is concerned

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Putin accuses U.S. of trying to lure Russia into war @Reuters
Law & Politics

Russian President Vladimir Putin accused the West on Tuesday of deliberately creating a scenario designed to lure it into war and ignoring Russia's security concerns over Ukraine.
The Kremlin wants the West to respect a 1999 agreement that no country can strengthen its own security at the expense of others, which it considers at the heart of the crisis, Foreign Minister Sergei Lavrov said.
Putin had not spoken publicly about the Ukraine crisis since Dec. 23, leaving ambiguity about his personal position while diplomats from Russia and the West have been engaged in repeated rounds of talks.
His remarks on Tuesday reflected a world view in which Russia needs to defend itself from an aggressive and hostile United States. Washington is not primarily concerned with Ukraine's security, but with containing Russia, Putin said.
"In this sense, Ukraine itself is just an instrument to achieve this goal," he said.

"This can be done in different ways, by drawing us into some kind of armed conflict and, with the help of their allies in Europe, forcing the introduction against us of those harsh sanctions they are talking about now in the U.S."
As Western countries rush to show solidarity with Ukraine, the U.S. urged Brazilian President Jair Bolsonaro to cancel a visit with Putin in Russia, a source told Reuters.
On Tuesday, British Prime Minister Boris Johnson met President Volodymyr Zelenskiy in Kyiv and accused Putin of holding a gun to Ukraine's head to demand changes to the security architecture in Europe.
"It is vital that Russia steps back and chooses a path of diplomacy," Johnson said. "And I believe that is still possible. We are keen to engage in dialogue, of course we are, but we have the sanctions ready, we're providing military support and we will also intensify our economic cooperation."
Johnson said any Russian invasion of Ukraine would lead to a military and humanitarian disaster.
"There are 200,000 men and women under arms in Ukraine, they will put up a very, very fierce and bloody resistance," he said. 

"I think that parents, mothers in Russia should reflect on that fact and I hope very much that President Putin steps back from the path of conflict and that we engage in dialogue."
Polish Prime Minister Mateusz Morawiecki, also visiting Kyiv, said Poland would help Ukraine with gas and arms supplies, as well as humanitarian and economic aid.
"Living close to a neighbour like Russia, we have the feeling of living at the foot of a volcano," said Morawiecki.
Zelenskiy, who has repeatedly played down the prospect of an imminent invasion, signed a decree to boost his armed forces by 100,000 troops over three years. He urged lawmakers to stay calm and avoid panic.
The troop increase was "not because we will soon have a war ... but so that soon and in the future there will be peace in Ukraine," Zelenskiy said.

The Charge of the Light Brigade

Returning to ''geopolitical'' scenario, it is clear that looking through the deluge of hashtags, Russia has largely triangulated Europe. The Gas dependency is real and the asymmetry of military forces very real

@JoeBiden is in a Pincer with Xi & Vladimir holding the console & ratcheting up the pressure & they own the timing on the Ukraine Taiwan Two Step

Putin sees this optimal window of opportunity to test the readiness of US for bilateral talks with Moscow but also the red line for future concessions if Washington really intends to get Russia out of China’s orbit in the long term. Moscow has put its conditions on the table. tweeted @vtchakarova.

and added ''Amid bifurcation of the global system, think of Machiavelli: „There’s nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, then to take the lead in the introduction of a new order of things.“ Because this is what Russia’s doing now''
Will the West deal? Anyone who follows international affairs and who appreciates that outside the Yemen its no longer a Unipolar World has to understand ''The Great Balancer'' has to be accommodated.

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Moscow has waged what Ukraine calls hybrid warfare against it for years. @BuzzFeedNews
Law & Politics

A mix of conventional military action, cyberattacks, economic pressure, and disinformation, it keeps its targets anxious and guessing.

It was the first non-linear war, writes Surkov in a short story, Without Sky,


Putin's system was also ripe for export, Mr Surkov added. Foreign governments were already paying close attention, since the Russian "political algorithm" had long predicted the volatility now seen in western democracies.
The underlying aim, Surkov says, is not to win the war, but to use the conflict to create a constant state of destabilised perception, in order to manage and control

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You’re a mutant virus, I’m the immune system and it’s my job to expel you from the organism. OCTOBER 30, 2014 BY @Dominic2306 The Hollow Men II

In terms of a method to ‘manage’ government, it is not far from tribal elders howling incantations around the camp fire after inspecting the entrails of slaughtered animals.

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So. . . you spent years being a clown on television and then they put you in charge of the country? Wild. @andrew_mueller

T.S Eliot said in The Hollow Men

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

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Since Omicron was first identified 10 weeks ago, almost 90 million #COVID19 cases have been reported to @WHO @DrTedros

We are now starting to see a very worrying increase in deaths, in most regions of the world. It’s premature for any country either to surrender, or to declare victory.

The transmissibility of #Omicron is not in question, it clearly has a spectacular advantage.

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Currency Markets at a Glance WSJ
World Currencies

Euro 1.128975
Dollar Index 96.115
Japan Yen 114.6010
Swiss Franc 0.920770
Pound 1.354980
Aussie 0.712305
India Rupee 74.8495
South Korea Won 1205.41
Brazil Real 5.2625000
Egypt Pound 15.737500
South Africa Rand 15.38970

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Looking at the West African map puts things in perspective for us in SeneGambia. The trend of coups in West Africa is worrying. Guinea Conakry, Mali, Burkina Faso and Guinea Bissau. Not a good thing for the ECOWAS region. @troopergalKAT

The military men are once again emboldened to power grab.


Gladwellian and metastatic 

Turning To Africa

Democracy has been shredded.
We are getting closer and closer to the Virilian Tipping Point
“The revolutionary contingent attains its ideal form not in the place of production, but in the street''
Political leadership in most cases completely gerontocratic will use violence to cling onto Power but any Early Warning System would be warning a Tsunami is coming

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Coups cheered in West Africa as Islamist insurgencies sap faith in democracy @Reuters

OUAGADOUGOU, Feb 1 (Reuters) - The last time rebellious soldiers attempted to overthrow Burkina Faso's government in 2015, Marcel Tankoano was among thousands of protesters who took to the streets to oust the junta. Within days, loyalist forces had restored the president to power.
Last week, Tankoano was on the streets again, this time celebrating the military coup that toppled the country's elected president, Roch Kabore.

"Since the 1990s there has been a wave of democracy across West Africa. But that democracy has failed the people," said Tankoano, a civil society leader, at his home outside the capital Ouagadougou. 

"We must be clear, we need a military regime."
His change of heart reflects disenchantment across West Africa's Sahel region, where elected governments have failed to contain growing militant violence over the last decade that has killed thousands of people and displaced millions more.
Emboldened by popular anger, militaries in Mali, Guinea and Burkina Faso have taken matters into their own hands, staging four coups in 18 months and reversing democratic gains that had seen the region shed its tag as Africa's "coup belt".
Poverty and corruption have further undermined faith in civilian rulers, worrying international partners including France and the United States who have troops in the region fighting Islamist insurgents and fear greater instability.
On Monday, authorities in Mali, where there have been two coups since August 2020, ordered the French ambassador to leave the country as disagreement with the junta escalated - another blow to the international fight against militancy.
"People are not against democracy as a principle, but they are very disenchanted with elected leaders," said Maggie Dwyer, a lecturer at the University of Edinburgh who has studied military coups in West Africa.
"There is more leniency for military leadership now during the insurgency than in peacetime."
Tankoano's change of mind was gradual.
The militant threat first came to West Africa in Mali in 2012, when Islamist fighters, some with links to al Qaeda, hijacked an ethnic Tuareg uprising.
The French military initially pushed the militants back, but they regrouped and in 2015 unleashed a wave of deadly attacks that later spread to Burkina Faso and Niger.
One of the first signs of trouble in Burkina Faso came in January 2016; al Qaeda claimed an attack on a restaurant and cafe in Ouagadougou that killed 30 people.
Since then, the insurgency has grown, especially in rural areas that have borne the brunt of violence in the Sahel, a vast belt of mostly arid land south of the Sahara desert.
Underequipped armies have struggled to fight back, and the blame has largely fallen on civilian administrations who have also been tarnished by public perceptions of corruption.
Thousands of people protested in Burkina Faso in November after 49 military police officers and four civilians were killed by militants near a gold mine in the remote north - the worst attack on security forces in recent memory.
Personnel stationed at the gendarmerie post had run out of food and were forced to slaughter animals in the vicinity, according to a memo sent by the post's commander to his superiors and seen by Reuters.
During demonstrations that followed, Tankoano was arrested and spent 25 days in jail. He came out convinced Kabore must go.
Days later, soldiers led by Lieutenant Colonel Paul-Henri Damiba, frustrated by the rising death toll, meagre pay and poor living conditions, staged a coup.
"You can't just have one meal a day and talk about democracy," Tankoano said.
It is not clear what the junta will do differently to the government it ousted, given limited resources at its disposal. 

Reuters has not been able to reach the Burkinabe military for comment on its plans since it took power.
Across the border in Mali, security has not noticeably improved under the military-led government, which said last month it was not ready to hold elections and would stay in power until 2025.
The 15-member Economic Community of West African States (ECOWAS) imposed strict sanctions. In response, thousands of people protested in support of the junta.
Moussa Diallo, an electrician in Bamako, the Malian capital, said he voted for former president Ibrahim Boubacar Keita when he came to power in 2013.
Then came the violence. Attacks on civilians and the military have continued since 2015, leaving many destitute and under the control of groups linked to global jihadist networks including Islamic State.
Meanwhile, Keita bought a $40 million presidential jet, causing an uproar at home. His son Karim came under fire in the local press for partying on the Spanish island of Ibiza.
Diallo was fed up. He joined mass protests in 2020 calling for Keita's ouster. By August, Keita was gone.
"The (military-led government) asked for five years. Of course it's a long time, but what does that represent in the life of a nation?" Diallo told Reuters.
"We have not moved forward in 30 years of democracy. They are our only hope of recovering."
Across the Sahel, thousands of people have been killed in Islamist violence, which, while not producing a parallel state as it did in parts of Syria and Iraq, has left Mali, Niger and Burkina Faso in crisis.
Millions have been forced to leave their villages, creating a burden for urban centres and families who support them.

In some rural areas, local government has vanished.
In Dori, a small town in northeast Burkina Faso, violence has decimated the livestock trade that once drove the local economy. 

The number of residents has trebled to 80,000 as people flee attacks in nearby villages, said mayor Ahmed Aziz Diallo.
Schools are jammed with kids, 150 to a room; residents must walk many kilometres to get water.
Because of death threats and insecurity, Diallo spends most of his time in Ouagadougou, 260 km (160 miles) to the south. 

When he does make the journey home, he no longer drives the pitted road from the capital but takes a plane instead.
He said residents felt abandoned by the state. It makes sense that they would support a military takeover, he added.

"When in times of despair you see a light somewhere, nature would have you cling to that glow."
Residents caught in the middle shrug at the mention of democracy.
Boureima Dicko, a 70-year-old herder, said he fled the commune of Tin-Akoff in northern Burkina Faso 10 days ago after gunmen killed seven civilians in a raid. 

He walked for two days through the bush with his 14-year-old daughter to the nearest town before taking a bus to Ouagadougou.
Dicko is staying in a community of displaced people in a warren of alleyways and mud brick huts that abuts the runway of the capital's main airport. 

His only possessions are what he took with him: blankets, a mat, a small stove and a plastic water canister.
The 60 goats that he used to shepherd along the riverbanks and through the grasslands of Tin-Akoff are gone, stolen by militants. 

Now each day he walks from his windowless hut to a busy highway to beg.
"Maybe the military will change things," he said, before adding: "I don't know if they will help. I cannot see the future."

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ECOWAS is overwhelmed. It doesn't have the bandwidth to handle so many crises @gyude_moore

Falling like stacked dominoes. One after another to unprofessional soldiers in unconstitutional coups @drmwarsame

"It wasn't just a coup. It was an attempt to kill the president, the prime minister and all the cabinet," @Reuters 


He added that the attack "was well prepared and organised and could also be related to people involved in drug trafficking", giving no further details.

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Zimbabwe Dollar’s Second Death Seen as Only a Matter of Time @bpolitics

When Zimbabwean businessman Nigel Chanakira asked 100 chief executive officers at a seminar in Harare on Jan. 27 if they were willing to use the local currency, only one raised his hand.
That reluctance is a stark demonstration of the government’s failure to win confidence in the Zimbabwe dollar, the reintroduction of which Finance Minister Mthuli Ncube has staked the stagnating economy’s recovery on. 

For the second time in two decades, Zimbabweans are abandoning their local currency.
At restaurants, a simple request for “the rate” sees one’s bill halved if it’s met in hard currency, and supermarkets openly offer discounts for goods purchased in U.S. dollars. 

The government paid public workers their Christmas bonuses in dollars, and the revenue service collects a third of its income in greenbacks.
“We can’t deny the reality,” Chanakira, the founder and former CEO of now-closed bank Kingdom Financial Holdings Ltd., said in an interview. “When you get the Zimbabwe dollar you spend it quickly. No one wants to save in that currency.”

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21-JAN-2019 :: @harari_yuval & money

“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
The Mind Game that ZANU-PF played on its citizens has evaporated in a puff of smoke.

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Zimbabwe Bank Workers Threaten Strike as U.S. Dollar Pay Call Denied @business

Zimbabwean bank workers threatened to go on strike after lenders offered them a once-off 61% annual-pay rise and rejected their demands to be paid in U.S. dollars.
“Workers have rejected that as nuisance and will embark on numerous protest actions,” said Peter Mutasa, the general secretary of the Zimbabwe Banks and Allied Workers Union, which wants staff to earn a minimum of $900 a month. 

Protests are planned at the lenders’ offices, he said.
The call to be paid in greenbacks follows similar demands by government employees and comes as the U.S. currency is mostly being used to pay for food, fuel, medicines and school fees. 

The value of the Zimbabwean dollar. has plunged by more than a third since September, and officially trades at 115 per dollar although the rate is more than double that on the parallel market.
The pay hike will see the lowest-paid bank employee earn Z$41,782 ($362) a month, up from Z$26,000, according to the union. 

That’s far less than the Z$73,000 a family of six needs to survive based on data from the Consumer Council of Zimbabwe, a lobby group, said Mutasa.
The wage rise is for non-managerial employees and is meant to guide the industry on minimum-pay standards, said Ralph Watungwa, the president of the Bankers Association of Zimbabwe.  

“Individual banks are then free to decide on pay,” he said by phone from the capital, Harare.
The increment offered by the banks matches the December inflation rate, which is used to set annual pay raises in line with industry agreements. 

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Vodacom Tanzania reports 13.2% M-Pesa customers decline in period ended Sept 2021 ~984 thousand customers. Additionally a 24.8% decline in transaction value during the 1st quarter of a Mobile Money Levy @drmwarsame

Vodacom Tanzania reports 13.2% M-Pesa customers decline in period ended Sept 2021 ~984 thousand customers. Additionally a 24.8% decline in transaction value during the 1st quarter of a Mobile Money Levy— that 24.8% decline is equivalent to TZS 4.7 TRILLION in transaction value!

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by Aly Khan Satchu (www.rich.co.ke)
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February 2022

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