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Satchu's Rich Wrap-Up
Thursday 17th of March 2022

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Energy traders call for ‘emergency’ central bank intervention @FT
World Of Finance

Europe’s largest energy traders have called on governments and central banks to provide “emergency” assistance to avert a cash crunch as sharp price moves triggered by the Ukraine crisis strain commodity markets.
In a letter seen by the Financial Times, the European Federation of Energy Traders — a trade body that counts BP, Shell and commodity traders Vitol and Trafigura as members — said the industry needed “time-limited emergency liquidity support to ensure that wholesale gas and power markets continued to function”.
The plea follows severe disruptions in commodity markets initially sparked by the pandemic, but significantly worsened in recent weeks by Russia’s invasion of Ukraine.
“Since the end of February 2022, an already challenging situation has worsened and more [European] energy participants are in [a] position where their ability to source additional liquidity is severely reduced or, in some cases, exhausted,” EFET said in its letter, dated March 8 and sent to market participants and regulators.
It was “not infeasible to foresee . . . generally sound and healthy energy companies . . . unable to access cash”, the letter warned. 

People familiar with the matter said EFET members had raised the issue with central banks.
Ructions in commodity markets stemming from the invasion of Ukraine are starkest in nickel, an important Russian export. 

Global markets for the metal were shut for a week after prices shot higher and left those with bearish bets struggling to meet banks’ demands for cash to cover derivatives positions, known as margin calls.
But prices for oil and gas, where Russia plays a central role, have also rocketed since the war began.

 Futures linked to TTF, Europe’s wholesale gas price, surged almost 200 per cent over four days earlier this month. In some cases, margin calls in the gas market have increased 10 times from one day to another.
EFET wants state entities such as the European Investment Bank or central banks, such as the European Central Bank or the Bank of England, to provide support through lenders, to soften the impact of margin calls.
“The overriding objective is to keep an orderly market for futures and other derivative energy contracts open,” said Peter Styles, executive vice-chair of the EFET board, in an interview. 

“Gas producers, European gas importers and power suppliers must retain the opportunity to hedge their positions.”
Styles said it was possible to hedge risk without exchanges, but added that market participants needed the “liquidity, depth and visible price signals which futures exchanges with central clearing provide”.
Central banks provide emergency liquidity during times of market stress to stem cash flow problems at solvent institutions. 

Generally, lenders pledge collateral in exchange for emergency loans. It is unclear exactly how any assistance for commodity market participants would work.
The existence of the EFET letter was first reported by Risk magazine.
Europe’s central bankers do not comment on specific requests for assistance. Some may be reluctant to help trading firms that often make large profits from shifts in commodity prices.
However, senior ECB officials are keeping a close eye on global commodity markets. 

ECB vice-president Luis de Guindos said last week that derivatives, including commodity derivatives, were a “very specific market that we are looking at very carefully”. 
Speaking at a conference on Wednesday, Rostin Behnam, chair of the Commodity Futures Trading Commission, the top US derivatives regulator, said appropriate margins must “unfailingly” be maintained.
“We must hold fast to our regulatory structures and resist the urge to make ad hoc decisions to avoid the natural outcomes of market forces,” he said.
The clearing banks that provide services to trading platforms such as ICE Endex, based in the Netherlands, the UK-based ICE Futures and the European Energy Exchange, based in Germany, can access liquidity from their national central banks.
Exchanges play a vital role in global commodity markets by providing trading houses with futures contracts to manage risk. 

Without these instruments, most traders would not be able to move physical commodities. 

That makes margin requirements and clearing limits on commodity futures critical to global flows of oil and gas.
One senior trader said the initial margin for a wholesale European gas contract plus the extra cushion demanded by clearing banks was now getting close to the value of the contract. He said it was not a “functioning market”.
In its annual report, published on Wednesday, Glencore, one of the world’s biggest commodity traders, highlighted the “ability to finance margin payments” as one of the risks facing the industry.
Already, hedging activity has shrunk according to traders in the oil market. The amount of outstanding futures linked to oil has dropped to multiyear lows in recent weeks.
As a result, refiners are receiving fewer offers in their tenders for crude oil. Uruguay’s state oil company received just four offers in a recent crude tender. It typically receives 15, according to traders.

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In a nutshell @colar_me_black
World Of Finance

The Issue with Sanction warfare is this. Russia is not Libya is not Iraq and is not Yemen. Imposing extreme sanction warfare on Russia puts everyone else on notice. Counterintuitively, therefore I expect the $ to surge higher - [This is a logical move by the Biden Administration making international assets cheaper] but over time I expect other powerful economies to look for cover and hedge their $ exposure. 

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#Zoltan Night time sneak attack. via @TheBondFreak
World Of Finance

We are witnessing the birth of Bretton Woods III – a new world (monetary) order centered around commodity-based currencies in the East that will likely weaken the Eurodollar system and also contribute to inflationary forces in the West.
A crisis is unfolding. A crisis of commodities. Commodities are collateral, and collateral is money, and this crisis is about the rising allure of outside money over inside money. 

Bretton Woods II was built on inside money, and its foundations crumbled a week ago when the G7 seized Russia’s FX reserves...
The beautiful paradox of linear rates (the stuff you trade and I write about) is that you need to think linear to find relative value most of the time, but you have to think non-linear to recognize and survive regime shifts

We are seeing a regime shift unfold in funding markets currently (which, as always, will pass), and a sea change in inflation dynamics and FX reserve management practices.
We have two convictions today. First, June FRA-OIS spreads can widen more, to at least 50 bps, both due to funding premiums driven by commodity prices and the market taking out Fed hikes, 

and second, it’s a good time to get long... ...shipping freight rates. Yes, freight rates, which, at the current juncture are linked to “geo-monetary” dynamics. 

Freight rates are the price of balance sheet for “commodity RV traders” (the commodity trading houses) and for sovereigns that can take the risk of moving and storing subprime, sanctioned commodities.
First, funding. Since the start of the conflict in Ukraine, spot U.S. dollar Libor, FRA-OIS, and FX swaps have been showing signs of stress. 

Not much, but we hear two things from funding desks: cash is bid, and term cash is hard to come by

Normally, where o/n points trade in the FX swap market determines how the rest of the curve trades (low premia in o/n space mean low premia in term space). But these aren’t normal times. 

We have a crisis of sorts unfolding, and in a crisis, like in 2008, everyone lends at short maturities and the collapse in o/n premia is at the expense of term premia – 

in a crisis, term funding premia increase on the back of compressed o/n premia, as opposed to decline as they normally would.
Who drives the bid for cash, i.e. whose bid is driving term funding premia in this environment where lenders are less willing to lend cash for longer tenors? 

The commodities world, for three reasons. 

First, non-Russian commodities are more expensive due to the sanctions-driven supply shock that basically took Russian commodities “offline”. 

If you are a (leveraged) commodities trader, you need to borrow more from banks to buy commodities to move and sell them.
Second, if you are long non-Russian commodities and short the related futures, you are likely having margin calls that need to be funded. 

Anyone in the commodities world is experiencing a perfect storm as correlations suddenly shot to 1, which is never a good thing. 

But that’s precisely what happens when the West sanctions the single-largest commodity producer of the world, which sells virtually everything. 

What we are seeing at the 50-year anniversary of the 1973 OPEC supply shock is something similar but substantially worse – the 2022 Russia supply shock, which isn’t driven by the supplier but the consumer.
Third, if you are short Russian commodities and long the related futures, then you are likely having margin calls too that also need to be funded like above.
The aggressor in the geopolitical arena is being punished by sanctions, and sanctions-driven commodity price moves threaten financial stability in the West. 

Is there enough collateral for margin? Is there enough credit for margin? What happens to commodities futures exchanges if players fail? Are CCPs bulletproof?
I haven’t seen these topics in the wide offering of Financial Stability Reports, have you? 

Is the OTC commodity derivatives market the gorilla in the room? 

The commodities market is much more financialized and leveraged today than it was during the 1973 OPEC supply crisis, and today’s Russian supply crisis is much bigger, much more broad-based, and much more correlated. It’s scarier.
The higher non-Russian commodity prices get and the lower Russian commodity prices fall, the wider FRA-OIS will get, and if you want to express all this in the credit space, look at what CDS spreads on some bigger commodity traders have done since we published our Dispatch on commodity derivatives on Friday.
Spot on! Next, let’s move on to the freight rates and Bretton Woods III angles.
Regular readers of this publication know of Perry Mehrling: my “Keynes” and father of the money view. 

As Perry Mehrling taught me, money has four prices:
(1) Par – which is the price of different types of money and which means that cash, deposits, and money fund shares should always trade 1:1.
(2) Interest – which is the price of future money and which refers to OIS and spreads around OIS across all possible money market segments.
(3) Exchangerate–thepriceofforeignmoney,i.e.U.S.dollarsvs.therest.
(4) Price level – which is the price of commodities (all of the Russian, non-Russian stuff) and, via commodities, the price of everything else.
Recall our conversation in Friday’s Dispatch about the parallels between the currently unfolding crisis and the crises of 1997, 1998, 2008, and 2020, and the conclusions that we drew from the review of these crises. 

These were that every crisis occurs at the intersection of funding and collateral markets and that, in the presently unfolding crisis, commodities are collateral, and more precisely, Russian commodities are like subprime collateral and all other stuff is prime. 

Now, back to the four prices of money and how they link up with these themes:
(1) Par – this is what broke in 2008 when money funds broke the buck and funding markets froze from fearing subprime mortgage collateral.
(2) Interest – this is what broke in 2020 when bond RV trades crashed as the drawdown of credit lines pulled funding away from good collateral.
(3) Exchangerate–this is what broke in 1997 when collateral (FXreserves) went missing and U.S. dollar funding staged a sudden stop in Asia.
(4) Price level – this is what’s in play as we speak...
Bretton Woods III 2 7 March 2022
...and if you see the pattern I see, you should be concerned. Commodities used to trade at tight spreads until now. 

There was one global market across all commodities that the large commodities traders arbitraged, much like a bond RV hedge funds arbitrage the cash-futures basis. 

Mortgages were like that too before 2008 – public or private, prime or subprime, they all traded at par......until they didn’t.
Commodities no longer trade at par. There are Russian commodities that are collapsing in price and there are non-Russian commodities that are rallying – this rally is due to the 2022 Russia supply shock that we referred to above, which, once again, is driven by present and future sanctions-related stigma.
It’s a buyers’ strike. Not a seller’s strike, to make things all the more absurd...
Russian commodities today are like subprime CDOs were in 2008. Conversely, non-Russian commodities are like U.S. Treasury securities were back in 2008. 

One collapsing in price, and the other one surging in price, with margin calls on both regardless of which side you are on. The “commodities basis” is soaring!
Commodity correlations are also at 1, which, to stress, is never a good thing.
From the 1997, 2008, and 2020 crises, we also learned that...
...every crisis is about the core vs. the periphery (large New York banks refusing to roll U.S. dollar funding in Southeast Asia in 1997; secured funding against subprime collateral to SIVs, 

Bear Stearns, and Lehman Brothers in 2008; and secured funding against good collateral to RV hedge funds during 2020).
And from these crises we also learned that...
...someone, somehow must always provide a backstop – or as Perry Mehrling would say, an “outside spread” (the IMF in Southeast Asia in 1997 in exchange for Washington consensus-type structural reforms; the Fed backstopping the shadow banking system with a range of facilities in 2008 in exchange for Basel III; and the Fed backstopping RV funds with QE and the SRF in March 2020, in exchange for “we don’t yet know what,” but history says there will be a price).
Which brings us back to today – the present – and shipping freight rates.
If we are right, and if this is a “crisis of commodities” – a 2008 of sorts thematically, if not in terms of size or severity – who will provide the backstop?
We see but only one entity: the PBoC!

Western central banks cannot close the gaping “commodities basis” because their respective sovereigns are the ones driving the sanctions. 

They will have to deal with the inflationary impacts of the “commodities basis” and try to cool them with rate hikes, but they will not be able to provide the outside spreads and won’t be able to provide balance sheet to close “Russia-non-Russia” spreads.
Commodity traders won’t be able to either. Remember that Glencore rose from the ashes of Marc Rich + Co, and with Switzerland along with the sanctions, Swiss-based commodity traders will think twice about arbitraging the spreads.
But the PBoC can... ..as it banks for a sovereign who can dance to its own tune. To make things more complicated, China is probably thinking deep and hard about the value of the inside money claims in its FX reserves, now that the G7 seized Russia’s.
The PBoC has two “geo-strategic” = “geo-financial” options...

Bretton Woods III 3 7 March 2022
...sell Treasuries to fund the leasing and filling of vessels to clean up subprime Russian commodities. 

That would hurt long-term Treasury yields and stabilize the commodities basis and would give the PBoC control over inflation in China, while the West would suffer commodity shortages, a recession, and higher yields.
That can’t be good for long-term Treasury yields.
The PBoC’s second option is to do its own version of QE – printing renminbi to buy Russian commodities. 

If so, that’s the birth of the Eurorenminbi market and China’s first real step to break the hegemony of the Eurodollar market. 

That is also inflationary for the West and means less demand for long-term Treasuries.
That can’t be good for long-term Treasury yields either.
The idea behind going long shipping freight rates is simple: the price the PBoC will be paying to lease ships to fill them up with Russian commodities can in theory rise as much as the collapse in the price of Russian commodities: a lot. 

Renting boats is like renting balance sheet at a dealer to fund inventory, and if China does not have enough storage capacity on the mainland, it will store Russian commodities on vessels floating on the seas, encumbering not balance sheet (the PBoC is funding all this by printing money) but shipping capacity, which, for the rest of the world, will also be inflationary. Once again:
if you believe that the West can craft sanctions that maximize pain for Russia while minimizing financial stability risks and price stability risks in the West, you could also believe in unicorns. What G-SIBs are for financial stability...
...Glencore is for price stability.
In this instance, price instability (surging and collapsing commodity prices) feeds financial instability: margin calls may trigger the failure of some smaller commodity traders and maybe even some CCPs – the commodity exchanges.
Again, commodity correlations are at 1, which is never a good thing...
The Fed and other central banks will be able to provide liquidity backstops...
...but those will be Band-Aid solutions. The true problem here is not liquidity per se. Liquidity is just a manifestation of a larger problem, which is the Russian-non-Russian commodities basis, which only China will be able to close.
Do you see what I see?
Do you see inflation in the West written all over this like I do?
This crisis is not like anything we have seen since President Nixon took the U.S. dollar off gold in 1971 – the end of the era of commodity-based money.
When this crisis (and war) is over, the U.S. dollar should be much weaker and, on the flipside, the renminbi much stronger, backed by a basket of commodities.
From the Bretton Woods era backed by gold bullion, to Bretton Woods II backed by inside money (Treasuries with un-hedgeable confiscation risks), to Bretton Woods III backed by outside money (gold bullion and other commodities).
After this war is over, “money” will never be the same again... ...and Bitcoin (if it still exists then) will probably benefit from all this.

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World Of Finance

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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Abate notes that the latest concern among markets is that trading companies that are long the physical commodity and short derivatives as a hedge are experiencing steep margin calls from their exchanges
World Of Finance

Several studies have looked at the connection between margin calls and market stress, and most have focused on a margin call "doom loop" in which higher margin requirements force fire sales into an already illiquid market where prices were gapping lower, which in turn triggered more margin calls, and so on.

Absent a central bank liquidity injection "circuit breaker", such a self-reinforcing doom loop could have catastrophic results.

Meanwhile, from a geopolitical standpoint, one can argue that it is precisely this margin call "doom loop" that Putin hopes to spark and propagate across the financial system now that virtually everything - from food, to energy, to finance, to economics - has been weaponized... not to mention that China is now also hoping to usher in the petroyuan as it seeks to eventually displace the petrodollar from global circulation. And since we are now in a state of financial warfare, absent a ceasefire in Ukraine, expect much more commodity volatility, and many more multi-bilion margin calls, until eventually the big one is triggered, one which leads to a near default not of the LME but of a far bigger clearinghouse, a topic which none other than the world's (formerly) biggest hedge fund bear, Russell Clark has been spending night and day discussing on his blog in recent weeks.

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September 1, 1939 by W. H. Auden comes to mind

Waves of anger and fear
Circulate over the bright
And darkened lands of the earth,
Obsessing our private lives;
The unmentionable odour of death

Into this neutral air
Where blind skyscrapers use
Their full height to proclaim
The strength of Collective Man,
Each language pours its vain
Competitive excuse:
But who can live for long
In an euphoric dream;
Out of the mirror they stare,

Faces along the bar
Cling to their average day:
The lights must never go out,
The music must always play,

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Biden signed an order for the transfer of $800 million in military aid to Ukraine, including:
Law & Politics

800 Stinger anti-aircraft systems
2,000 of the now famously deadly Javelin rockets
100 "tactical" drones
20 million rounds of small arms ammunition
25,000 sets of helmets and body armor

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Something definitely up in Belarus tonight, let’s hope for a coup against the repulsive Lukashenko. Lavrov’s plane flying Moscow to China appears to have turned around. So much news, too much to take in @clarescastle
Law & Politics

A former ambassador + minister here, recognised by Twitter as Govt official. Something definitely up in Belarus tonight, let’s hope for a coup against the repulsive Lukashenko. Lavrov’s plane flying Moscow to China appears to have turned around. So much news, too much to take in

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Currency Markets at a Glance WSJ
World Currencies

Euro 1.105955 
Dollar Index 98.213
Japan Yen 118.7285 
Swiss Franc 0.9400300 
Pound 1.318845
Aussie 0.732965 
India Rupee 75.8425 
South Korea Won 1208.800 
Brazil Real 5.0776000
Egypt Pound 15.7112 
South Africa Rand 14.914500

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#Russia's major point of contact in #Africa (source: @TheEIU): @PatrickHeinisc1

▶️#Ethiopia: arms sales, food supplies
▶️#Kenya: food supplies
▶️#Somalia: food supplies
▶️#South_Sudan: arms sales
▶️#Sudan: arms sales, security support, naval base, mining ventures, food supplies

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From Russia with Love

Africa increasingly becomes a continent of opportunities.
‘’These opportunities include natural resources, infrastructure de- velopment and increasing consumer demand from a growing population, Putin specified.
But, he said, Russia was going to be a different kind of superpower, one that does not engage in “pressure, intimidation and blackmail” to “exploit” sovereign African governments.
“Our African agenda is positive and future-oriented. We do not ally with someone against someone else, and we strongly oppose any geopolitical games involving Africa.”

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, way ahead of China (17 per cent), the United States (9.6 per cent), and France (6.9 per cent).Exports of Russian-made weapons and military hardware to Africa amount currently to $4.6 billion annually, with a contract portfolio worth over $50 billion. 

“Russia regards Africa as an important and active participant in the emerging polycentric architecture of the world order and an ally in protecting international law against attempts to undermine it,” said Russian deputy foreign minister Mikhail Bogdanov 

Andrew Korybko writes Moscow invaluably fills the much-needed niche of providing its partners there with “Democratic Security”, or in other words, the cost-effective and low-commitment capabilities needed to thwart colour revolutions and resolve unconventional Wars (collectively referred to as Hybrid War).

To simplify, Russia’s “political technologists” have reportedly devised bespoke solutions for confronting incipient and ongoing color revolutions, just like its private military contrac- tors (PMCs) have supposedly done the same when it comes to ending insurgencies.

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Far from the global spotlight: as many as 500,000 people in Tigray have died from war-related causes since Nov 2020, researchers estimate. @globeandmail @geoffreyyork

They died from violence, hunger, lack of health care after hospitals were destroyed. Does the world care?

The estimate, by experts who have closely monitored the Tigray conflict since its beginning, is a rare attempt to calculate the war-related death toll in a region that has been largely cut off from the outside world.
The estimate includes 50,000 to 100,000 victims of direct killings, 150,000 to 200,000 starvation deaths, and more than 100,000 additional deaths caused by a lack of health care, according to researchers led by Jan Nyssen of Ghent University in Belgium.
The war began when Ethiopia sent its military into Tigray in an attempt to subdue the rebellious regional government in November, 2020. 

The neighbouring country of Eritrea also sent troops into Tigray, and the war has led to massacres of civilians, destruction of hospitals and clinics, an exodus of refugees and the emergence of famine. 

Ethiopia has blocked most food aid to the region for months.
Despite the huge death toll, there are growing fears that Russia’s invasion of Ukraine will overshadow the Tigray war and other long-running conflicts in Africa and the Middle East, reducing global attention and humanitarian aid for those crises.
Many of the most horrific crises, from Mozambique to Yemen, are in remote regions or countries where access is difficult. 

The war in Ukraine could further damage the flow of assistance by diverting humanitarian funds and increasing the cost of food and fuel. 

Some relief agencies are already reporting a decline in funding for their Africa operations as donors switch to Ukraine.
“We are seeing clear evidence of this war draining resources and attention from other trouble spots in desperate need,” United Nations Secretary-General Antonio Guterres told journalists on Monday.
In Ethiopia, authorities have blocked communications and flights into Tigray since the war began, while heavily restricting media access. 

“The Ethiopian government has been very efficient in shielding Tigray from outside eyes,” Prof. Nyssen said in an interview.
The death toll in Tigray is poorly documented because humanitarian workers were banned from bringing cameras into the region and continue to be threatened with expulsion if they speak out, he said.
Prof. Nyssen and his team have maintained a database of confirmed deaths in Tigray since the war began, in which they recorded 289 incidents causing the deaths of up to 12,478 civilians. 

But the true number of deaths from violence is far higher, they believe.

Starvation is an even bigger threat. The vast majority of Tigray is considered “hard to reach” or “highly restricted” in the latest UN humanitarian report. 

Malnutrition is increasing, and humanitarian agencies say their supplies of food and fuel are almost exhausted. Most have been forced to suspend or drastically reduce their operations.

Because of the lack of food aid, lack of income and dysfunctional markets, the majority of Tigray’s families have resorted to begging, cutting meals or selling their harvest to pay off their debts, the UN report said.
Unlike the Ukraine war, however, the Tigray conflict has not led to any international sanctions or votes of condemnation in the UN General Assembly, analysts have noted.
In the Sahel region of West Africa, struggling with armed violence and food shortages, there are growing worries about a diversion of aid to Ukraine. 

Médecins du Monde, a humanitarian agency working in Burkina Faso, warned last week that some of its donors are planning to cut their funding by 70 per cent and shift the money to new Ukraine operations.
“We are very concerned that this will become a trend, making access to health care and other basic services even scarcer for displaced people,” said a statement by Safia Torche, general director for Médecins du Monde in Burkina Faso, where more than 1.7 million people have left their homes because of violence and hunger.
The Food and Agriculture Organization, a UN agency, predicted on Friday that the war in Ukraine could cause an increase of 8 per cent to 22 per cent in international food and feed prices, which would push as many as 13 million more people into hunger over the next year.
Ukraine and Russia are major exporters of wheat, barley, corn and other food products, but the war is causing a supply gap and forcing prices up.
“The likely disruptions to agricultural activities of these two major exporters of staple commodities could seriously escalate food insecurity globally,” FAO director-general Qu Dongyu said in a statement.
“Wheat is a staple food for over 35 per cent of the world’s population, and the current conflict could result in a sudden and steep reduction in wheat exports from both Russia and Ukraine,” he said.
Mr. Guterres described the war in Ukraine as an “assault” on the world’s most vulnerable people and countries. “We must do everything possible to avert a hurricane of hunger and a meltdown of the global food system,” he said.

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Turning and turning in the widening gyre

Turning and turning in the widening gyre
The falcon cannot hear the falconer;
Things fall apart; the centre cannot hold;
Mere anarchy is loosed upon the world,
The blood-dimmed tide is loosed, and everywhere The ceremony of innocence is drowned;
The best lack all conviction, while the worst Are full of passionate intensity.

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How do you explain it, that a manufacturer has an invoice of $425000 to import materials and all that is allocated to him from CBN is $210. I can't even wrap my brain around it. @Bolaadefila

Never in a million years would I have thought Nigeria will get to this stage. How do you explain it, that a manufacturer has an invoice of $425000 to import materials and all that is allocated to him from CBN is $210. I can't even wrap my brain around it.

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Egg prices rise 25 percent on biting shortage @BD_Africa
Kenyan Economy

A crate of eggs is currently retailing at Sh450 from Sh360 in early February while one egg now sells at Sh15 from Sh12 previously.

Traders attribute the sharp increase to a shortage locally as farmers cut on their stocks due to the high prices of feeds. 

Dwindling supplies from Uganda following tight surveillance at the border that stopped eggs that were being smuggled into the country has made the situation dire.

“We are not getting enough supplies from farmers as we used before and the shortage is what has pushed up the price,” said James Ng’ang’a a trader in Nairobi.

The high cost of feeds is attributed to expensive maize and a shortage of key protein supplements such as sunflower cake and soy, which are hardly found locally.
Kenya normally relies on the supply of these ingredients from Zambia, a key source market, which last year banned exports to protect its market.
The cost of soy has doubled to Sh130 from Sh65 a kilogramme in August last year, while the sunflower meal went up from Sh25 to Sh35.

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KCB Group Ltd reports FY 2021 EPS +74.42% Earnings here
N.S.E Equities - Finance & Investment

Par Value:                  1/-
Closing Price:           45.00
Total Shares Issued:          3087443344.00
Market Capitalization:        138,934,950,480
EPS:              10.64
PE:                 4.2293

KCB reports FY 2021 Earnings versus FY 2020

FY Total Assets 1.139672 trillion versus 987.810b

FY Loans and Advances to Customers 671.819b versus 591.859b 

FY Deposits from Customers 837.141b versus 767.224b

FY Net Interest Income 90.363b versus 75.052b

FY Non Interest revenue 18.960b versus 20.013b 

FY Total Income 109.323b versus 95.065b

FY Credit impairment Losses [13.998b] versus [27.509b]

FY Income after impairment losses 95.609b versus 67.949b

FY Total Operating expenses [48.050b] versus [42.360b]

FY Profit before Tax 47.815b versus 25.719b

FY Profit after Tax 34.173b versus 19.604b

FY EPS 10.64 versus 6.10 +74.42% 

FY DIvidend 3.00 versus 1.00 


PE Ratio is now 4.2293


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KCB Group FY 2021 Results [KES]: @MwangoCapital
N.S.E Equities - Finance & Investment

- Total Assets +15.3% to 1.1T
- Loan book +13.4% to 675.4B
- Customer Deposits +9.1% to 837.1B
- Total Interest Income +15.1% to 102.1B
- Loan loss provision -52.2% to 12.9B
- PAT +74.3% to 34.1B
- EPS 10.64 [2020: 6.10]
- DPS 3.00 [2020: 1.00]

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Coop Bank reports FY 2021 EPS +43.93% Earnings here
N.S.E Equities - Finance & Investment

Par Value:                  1/-
Closing Price:           12.95
Total Shares Issued:          5867179554.00
Market Capitalization:        75,979,975,224
EPS:             1.98
PE:                 6.540

COOP Bank Group reports FY Earnings through 31st December 2021 versus through 31st December 2020

FY Assets 579.771985b versus 536.945250b

FY Kenya Government Securities Held at amortised cost 76.223893b versus 98.167673b

FY Investment Securities [FVOCI] Kenya Government Securities 107.837175b versus 63.718146b

FY Loans and Advances to Customers [net] 310.195297b versus 286.634192b

FY Customer deposits 407.725765b versus 378.630453b 

FY Total Interest Income 55.648145b versus 48.840645b

FY Total Interest Expenses 14.611231b versus 12.491679b

FY Net Interest Income 41.036913b versus 36.348966b

FY Total Non Interest Income 19.396354b versus 17.480723b

FY Total Operating Income 60.433268b versus 53.829689b

FY Loan Loss provision 7.929256b versus 8.111824b

FY Staff Costs 13.322738b versus 13.421772b

FY Total Other Operating Expenses 38.089985b versus 39.397890b 

FY Profit before Tax 22.648862b versus 14.281861b

FY Profit after Tax 16.543902b versus 10.812876b

FY EPS 2.85 versus 1.98

FY Dividend 1.00 a share unchanged 


A good outcome given they have lagged their Peers in Loan loss provisions in 2020

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Coop Bank [@Coopbankenya] FY 2021 Results [KES]: @MwangoCapital
N.S.E Equities - Finance & Investment

  Total Assets +7.9% to 579.7B
- Loan Book +8.2% to 310.1B
- Customer Deposits +7.6% to 407.7B
- Total Interest Income +13.9% to 55.6B
- PBT +54.8% to 22.6B
- PAT +53% to 16.5B
- EPS 2.85 [2020: 1.98]
- DPS 1.00 [2020: 1.00]

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CIC Insurance Group Limited reports FY PBT 2021 959.712m versus [79.544m] Earnings here
N.S.E Equities - Finance & Investment

Par Value:                  
Closing Price:           2.19
Total Shares Issued:          2615538528.00
Market Capitalization:        5,728,029,376
EPS:             0.23 
PE:               9.52

CIC Insurance Group reports FY 2021 results versus FY 2020

FY Gross written premiums 19.689202b versus 16.988281b

FY Net earned premiums 14.702728b versus 13.938978b

FY Fees & commission income 2.137010b versus 1.459392b

FY Investment Income 1.666407b versus 1.426444b

FY Other gains 263.652m versus [63.606m]

FY Foreign Exchange Gain 398.308m versus 74.491m

FY Total Income 19.168105b versus 16.835699b
FY Total Expenses [18.208393b] versus [16.907931b]

FY Claims and policyholders' benefit expense [10.528550b] versus [9.954608b]

FY Commissions expense [2.480013b] versus [2.159265b]

FY Operating and other expenses [5.199830b] versus [4.794058b]

FY Profit Before Tax 959.712m versus [79.544m]

FY Profit after Tax 668.437m versus [296.832m]

FY EPS 0.23 versus [0.09]

No FY Dividend 

FY Cash and Cash Equivalents 3.642860b versus 2.069302b 

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

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