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Satchu's Rich Wrap-Up
 
 
Wednesday 27th of July 2022
 
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Africa

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“Is it safe?”
World Of Finance

“Is it safe?”


In the movie Marathon Man [directed by John Schlesinger] Laurence Olivier who plays Dr. Christian Szell a Nazi war criminal straps Dustin Hoffman into a dentist's chair and without any anaesthetic starts drilling into Hoffman's mouth

“Is it safe?”

“Yes, it’s safe. Very safe. So safe you wouldn’t believe it.”
[long pause]
“Is it safe?”
“No. It’s not safe. It’s very dangerous. Be careful.”
That Snippet from that Film seems to me the perfect accompaniment preferably on an eternal loop to the World and the markets we find ourselves in today.
''We are off to Moscow off to Moscow we go to Regime Change The Wicked Witch of the West [or is it the East?] aka Vladimir Putin''
Nancy Pelosi has pronounced She is going further East all the way to Taiwan because real Men and Women go to China and Nancy fancies a Pop at ''Pooh Bear'' 

and meanwhile Xi has salami sliced his way and snaffled up Hong Kong and Nancy could provide him with the perfect excuse for a Taiwan casus Belli.

“Is it safe?” some of Us ask.
At the end of last week we saw a chink in the ''whatever it takes'' [to bring inflation down] Narrative. 
[The] Hike cycle terminal rate cruised lower to 3.28 (Orange) vs 3.49 last week (Blue) @Fullcarry.

The Dollar index came off the boil @dma_2022

and even the seriously beaten up Frontier Eurobond Index managed a small rebound.
After the #ECB hiked rates by 50bps, German 10y declined from >1.3% to almost 1% in a matter of 24h. German 2y down to 0.4%. @COdendahl

When I was a lot younger we used to play a Game called ''Red Eye'' Everyone gets a card and everyone else's card is visible to you except your own. And you bet on that basis. 

The Question is whether if this were a Game of Red Eye and the market has now seen that Powell and Lagarde are holding the 2 of spades and that this hiking cycle is near done. 

If that is the case, the Yen is a screaming Buy and the Dollar a Big Sell.
I do not expect Inflation to crash, however, which is a Caveat Emptor to this thesis and therefore the risk of Weimarisation is material.


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May 29 Vanity of Vanities! All is vanity
World Of Finance


May 29 Vanity of Vanities! All is vanity

Blofeld: Kronsteen, you are sure this plan is foolproof?

Kronsteen: Yes it is, because I have anticipated every possible variation of counter-move.

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Sunday, April 10, 2022 Apocalypse Now
World Of Finance


Sunday, April 10, 2022 Apocalypse Now

The moment we find ourselves is in is one of extreme stress and complexity. 

The Geopolitical fault line is most visible in Ukraine and therefore at the European periphery, however, fault lines are emerging all over the global landscape and exhibiting multiple feedback loops, which feedback loops all have viral and exponential characteristics.

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Joel Meyerowitz White House Diving Board Palm Tree, 1978
Misc.


Joel Meyerowitz White House Diving Board Palm Tree, 1978 

‘As I went from pool to pool along the Miami coast I came across this old deco diving board and its lone palm tree beneath which a woman sat in the last patch of sunlight while her thoughts may have drifted into a reverie by the sea. Perhaps that’s what made it so poignant and touching to me’

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What is the perfect solution? It is what the West is pursuing in Ukraine — the total withdrawal of Russian forces from Ukraine. No compromise. @asiatimesonline @mahbubani_k
Law & Politics


What is the perfect solution? It is what the West is pursuing in Ukraine — the total withdrawal of Russian forces from Ukraine. No compromise. @asiatimesonline @mahbubani_k 

If the West could accomplish this, it should go for it. But the prospects of achieving this perfect solution in Ukraine are zero. 

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Jul 3 It is now clear that no amount of gaslighting can finesse a Ukrainian military rebound from here.
Law & Politics


Jul 3 It is now clear that no amount of gaslighting can finesse a Ukrainian military rebound from here.

It is now clear that no amount of gaslighting can finesse a Ukrainian military rebound from here. 

Shoigu [who has resurrected himself from the dead You will recall Information Warfare Specialists had informed us that he was on his last legs] has pronounced the Lugansk People's Republic liberated. 

As mentioned before, I see Russia moving eventually towards Odesa, landlocking Ukraine and only then coming to the Table.
The inability to read the battlefield, the extraordinary propaganda threads on Twitter, the deplatforming of any voice that countered the Propaganda effort have produced a ''Fairy Tale'' reality and a geoeconomic boomerang effect which is shredding the standard of living in the West and whose consequence will be Regime Change in Western Capitals long before Moscow.
The choice for Western Policy Makers is extraordinarily bleak. 

It is either an ignominious retreat a la Afghanistan [and this creates a risk of a domino effect with Taiwan making it a potential Trifecta of reversals [Afghanistan, Ukraine and Taiwan]. 

The Ukrainian Military is largely extinguished and there will be no insurgency which will bleed Russia. 

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We are sitting in a car with flat tires.Viktor Orban @The_Real_Fly
Law & Politics



“Sanctions will not change the game and the Ukrainians will not emerge victorious. We are sitting in a car with flat tires. [... ] The more weapons the West supplies, the longer the war drags on. We have to negotiate peace. -Viktor Orban

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Jul 3 Double, double toil and trouble; Fire burn, and cauldron bubble.
Law & Politics


Jul 3 Double, double toil and trouble; Fire burn, and cauldron bubble


The inability to read the battlefield, the extraordinary propaganda threads on Twitter, the deplatforming of any voice that countered the Propaganda effort have produced a ''Fairy Tale'' reality and a geoeconomic boomerang effect which is shredding the standard of living in the West and whose consequence will be Regime Change in Western Capitals long before Moscow.


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Fully prepared: I was born in Spain, we weathered a coup d'Etat attempt (in 1981). Several devaluations of the peseta, too. So this is back to normal for me. But for the Germans? @JavierBlas
Law & Politics

Fully prepared: I was born in Spain, before the democratic constitution was approved, and with >25% unemployment. I was very young, but we weathered a coup d'Etat attempt (in 1981). Several devaluations of the peseta, too. So this is back to normal for me. But for the Germans?

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Russia says it wants to end Ukraine’s `unacceptable regime’
Law & Politics

Russia says it wants to end Ukraine’s `unacceptable regime’ 


“We are determined to help the people of eastern Ukraine to liberate themselves from the burden of this absolutely unacceptable regime,” Lavrov said at an Arab League summit in Cairo late Sunday, referring to Ukrainian President Volodymr Zelenskyy’s government.


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For a while regime change was de rigeur
Law & Politics

Muammar Gaddafi was decapitated and the domino effect only stopped when Vladimir Putin decided he was going to put a stop to it and intervened on behalf of Bashar Al-Assad in Syria.

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Here's a graph showing proportions of vx uptake for 187 countries, alongside each country's ~confirmed total infections.... @CharlesRixey
Law & Politics

Here's a graph showing proportions of vx uptake for 187 countries, alongside each country's ~confirmed total infections.... @CharlesRixey

In hindsight, the West paid a heavy price for high uptake

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“Instead of a *wall of immunity* arising from vaccination, we have experienced *wave after wave* of new cases and a rapidly growing burden of long-term disease” Writes Dr Vipin Vasishtha H/T @RajeevJayadevan
Misc.


“Instead of a *wall of immunity* arising from vaccination, we have experienced *wave after wave* of new cases and a rapidly growing burden of long-term disease” Writes Dr Vipin Vasishtha H/T @RajeevJayadevan

The COVID-19 vaccines currently in use were designed to target the virus in its ‘original’ form more than two years ago. 

They confer a high level of protection against severe hospitalisation and death but little protection against mild symptomatic disease and infection, especially against the highly immune-evading omicron family of variants.

But even with boosters, it is highly unlikely that protection against infection and mild to moderate disease will improve significantly, particularly against the current sub-variants of omicron, which are far more transmissible than their parent lineage ever was.
Their immune evasion is also extraordinary. For example, a triply vaccinated individual was found to have had only 5% of the neutralisation titres against the omicron variant that they did against the ancestral strain.

So quite possibly, the unvaccinated may have a better immune response to a ‘scary’ new variant than the vaccinated and boosted. 

Those imprinted with the ancestral strain – through natural or vaccine-induced immunity – may be slower to respond to the new variant than those who haven’t been infected or vaccinated.

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There's no free lunch with infection-based immunity New variants nucleate pandemic-like spread @fitterhappierAJ
Misc.


There's no free lunch with infection-based immunity New variants nucleate pandemic-like spread @fitterhappierAJ

There's no free lunch with infection-based immunity
With chicken pox it's shingles
With covid it's mild memory loss, naive t cell loss & effector sloughing
Sars 2 evolves too quickly and is too infectious to exist at a steady state
New variants nucleate pandemic-like spread

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One of the most difficult beliefs to counter is that infections maintain a steady state of protective immunity @fitterhappierAJ
Misc.


One of the most difficult beliefs to counter is that infections maintain a steady state of protective immunity @fitterhappierAJ

It took decades for this to fall in the context of malaria hyperendemicity keeping immunity high- turned out to be a myth that robbed years of life
Same will be of cov2

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The baseline forecast is for growth to slow from 6.1 percent last year to 3.2 percent in 2022, 0.4 percentage point lower than in the April 2022 World Economic Outlook @IMFNews @pogourinchas #WEO
World Of Finance


The baseline forecast is for growth to slow from 6.1 percent last year to 3.2 percent in 2022, 0.4 percentage point lower than in the April 2022 World Economic Outlook @IMFNews @pogourinchas #WEO 


Global inflation has been revised up due to food and energy prices as well as lingering supply-demand imbalances, and is anticipated to reach 6.6 percent in advanced economies and 9.5 percent in emerging market and developing economies this year—upward revisions of 0.9 and 0.8 percentage point, respectively.

The risks to the outlook are overwhelmingly tilted to the downside. 

The war in Ukraine could lead to a sudden stop of European gas imports from Russia; 

inflation could be harder to bring down than anticipated either if labor markets are tighter than expected or inflation expectations unanchor; 

tighter global financial conditions could induce debt distress in emerging market and developing economies; 

renewed COVID-19 outbreaks and lockdowns as well as a further escalation of the property sector crisis might further suppress Chinese growth; 

and geopolitical fragmentation could impede global trade and cooperation. 

A plausible alternative scenario in which risks materialize, inflation rises further, and global growth declines to about 2.6 percent and 2.0 percent in 2022 and 2023, respectively, would put growth in the bottom 10 percent of outcomes since 1970.

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Shallow Recession Calls Are ‘Totally Delusional,’ @Nouriel Roubini Warns @business @YahooFinance
World Of Finance


Shallow Recession Calls Are ‘Totally Delusional,’ @Nouriel Roubini Warns @business @YahooFinance 

Economist Nouriel Roubini said the US is facing a deep recession as interest rates rise and the economy is burdened by high debt loads, calling those expecting a shallow downturn “delusional.”

“There are many reasons why we are going to have a severe recession and a severe debt and financial crisis,” the chairman and chief executive officer of Roubini Macro Associates said on Bloomberg TV Monday. 

“The idea that this is going to be short and shallow is totally delusional.”
Among the reasons Roubini cited was historically high debt ratios in the wake of the pandemic. 

He specifically mentioned the burden for advanced economies, which he said continues to rise, as well as in some sub-sectors.
That differs from the 1970s, he said, when the debt ratio was low despite the combination of stagnant growth and high inflation known as stagflation. 

But the nation’s debt has ballooned since the financial crisis of 2008, which was followed by low inflation or deflation due to a credit crunch and demand shock, he added.
“This time, we have stagflationary negative aggregate supply shocks and debt ratios that are historically high,” said Roubini, who is nicknamed Dr. Doom for some of his dire predictions. “In previous recessions, like the last two, we had massive monetary and fiscal easing. This time around we are going into a recession by tightening monetary policy. We have no fiscal space.”
Concern that rising interest rates will drive the economy into a recession has been escalating as the Fed tightens monetary policy aggressively to bring down the steepest inflation in four decades. 

Fed Chair Jerome Powell has said that failing to restore price stability would be a “bigger mistake” than pushing the US into a recession, which he has continued to maintain the nation can avoid.
Powell and his colleagues are expected to approve another 75-basis-point hike this week after raising rates in June by the most since 1994. 

Policy makers are also expected to signal their intention to keep moving higher in the months ahead.
“This time around, we have a confluence of stagflation and of a severe debt crisis,” Roubini said. “So it could be worse than ‘70s and post-GFC.”

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The Question is whether if this were a Game of Red Eye and the market has now seen that Powell and Lagarde are holding the 2 of spades and that this hiking cycle is near done.
World Of Finance

I do not expect Inflation to crash, however, which is a Caveat Emptor to this thesis and therefore the risk of Weimarisation is material.

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Currency Markets at a Glance WSJ
World Currencies


Currency Markets at a Glance WSJ

Euro 1.014010 
Dollar Index 107.067
Japan Yen 136.9520 
Swiss Franc 0.96260 
Pound 1.205070 
Aussie 0.693425
India Rupee 79.87305 
South Korea Won 1313.875 
Brazil Real  5.3514793
Egypt Pound 18.938900 
South Africa Rand 16.891450 

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The Question is whether if this were a Game of Red Eye and the market has now seen that Powell and Lagarde are holding the 2 of spades and that this hiking cycle is near done.
World Currencies


The Question is whether if this were a Game of Red Eye and the market has now seen that Powell and Lagarde are holding the 2 of spades and that this hiking cycle is near done. 

If that is the case, the Yen is a screaming Buy and the Dollar a Big Sell.

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Unlike EM, frontier markets are running large current account deficits and have no market access. And unlike EM, they peg their exchange rates often. @SergiLanauIIF
Emerging Markets


Unlike EM, frontier markets are running large current account deficits and have no market access. And unlike EM, they peg their exchange rates often. @SergiLanauIIF

A problem when external adjustment is needed as real depreciation hardly ever happens in the pegs FMs run.

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Isolate Russia? Nobody Told the Global South @business
Africa


Isolate Russia? Nobody Told the Global South @business

Russian Foreign Minister Sergei Lavrov might have expected a rough ride on his tour of Africa this week. Instead he’s being welcomed with open arms.

The trip by President Vladimir Putin’s chief envoy takes in countries that are among the most vulnerable to disruptions to food imports as a result of Moscow’s invasion of Ukraine. 

But if there have been rebukes, they haven’t been made in public.
In Egypt, one of the world’s largest grain importers, Lavrov was met with warm worlds from President Abdel-Fattah El-Sisi, who singled out state-owned Rosatom’s construction of Egypt’s first nuclear plant as a prime example of bilateral cooperation.
The Russian diplomat meets with Ugandan President Yoweri Museveni today before heading on to Ethiopia — another large grain buyer — and a visit to the African Union headquarters.
Lavrov has made much of Russia’s longstanding economic and political ties to Africa, citing Moscow’s support for national liberation movements and casting western sanctions as the real cause of food insecurity.
It’s a message that resonates, and not just in Africa.

The reality is that despite US and European efforts to isolate the Kremlin for its aggression — including a blockade of Ukrainian ports and attacks on grain warehouses that have pinched the global food supply — Russia and its key ally, China, continue to have friends around the world.
The reasons are many and varied, from economic and educational ties to a sense of selective western intervention in global crises, fueling charges of hypocrisy.
Many governments in Asia, Latin America and Africa are hedging their bets and choosing to remain on good terms with both sides, shunning sanctions on Russia and sitting out the US-led rivalry with China.
The West might think it has right on its side. But that’s not necessarily how it looks to the Global South.  

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From Russia with Love
Africa


From Russia with Love

“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 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 back in November 2018.

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 in- cipient and ongoing color revolutions, just like its private military contractors (PMCs) have supposedly done the same when it comes to ending insurgencies.

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Ugandan leader extols Africa-Russia friendship during visit by Lavrov @Reuters
Africa


Ugandan leader extols Africa-Russia friendship during visit by Lavrov @Reuters
"I am pro-myself. And I deal with other people according to how they relate with my own interest," @KagutaMuseveni said

"We have even forgiven our former enemies, the colonialists, the ones who have colonised us, the ones who had actually taken slaves from here and who did bad things. We have forgiven them and we are working them," @KagutaMuseveni said. 

"If Russia makes mistakes then we tell them," Museveni said, citing his participation in student demonstrations against the crushing of the Prague Spring by the Soviet Union in 1968.
"But when they have not made a mistake we cannot be against them," @KagutaMuseveni said.

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