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Saturday 28th May #Mindspeak will host the @cbkkenya Governor Patrick
Njoroge @Njorogep @InterConNairobi

Macro Thoughts

Home Thoughts

I was looking at my wedding Photographs and we looked so much younger.

“There is enough mystery in the facts as we know them, enough of
conspiracy, coincidence, loose ends, dead ends, multiple
interpretations. There is no need […] to invent the grand and
masterful scheme, the plot that reaches flawlessly in a dozen
directions. - Agent Branch (58)” ― Don DeLillo, Libra

“We lead more interesting lives than we think. We are characters in
plots, without the compression and numinous sheen. Our lives, examined
carefully in all their affinities and links, abound with suggestive
meaning, with themes and involute turnings we have not allowed
ourselves to see completely.” ― Don DeLillo, Libra

Venezuelan President Nicolas Maduro announced undefined “military
exercises” for the embattled nation, just a day after pledging to
prolong his government’s special emergency powers.

Speaking in Caracas’s Ibarra Square after a march Saturday by several
hundred supporters, Maduro said his opponents are orchestrating
foreign military intervention in Venezuela. Exercises by the army and
militia groups would prepare “for any scenario,” Maduro said.

“The oligarchy’s plan is to disturb the peace so they can justify
foreign intervention in Venezuela,” Maduro said in televised remarks
at the rally. “I’m not an extremist for saying this, but they’re
extremists for wanting to carry this out.”

Conclusions

Headed for an implosion.

Oil based economies are going to contract, currencies which have
already collapsed are going to be routed and Greek- style austerity
will be the order of the day. The melt-down is coming.

The oil warfare specialist, US President Barack Obama, has
successfully wrestled crude price to below $50 a barrel, and with that
effected a choke-hold on Vladimir Putin's Russia, Venezuela and others
as far afield as Nigeria and Angola.

If “we continue to build up the eastern flank of NATO, with more
battalions, more exercises, and more ships and more platforms,” he
told an audience at the Atlantic Council, “the Russians will respond.
I’m not sure where that takes you.”

Nobody knows where it takes us, and that’s the problem. It could take
us all too easily from small provocations to a series of escalations
by each side to show they mean business. And given the trip-wire
effect of nuclear weapons stored on NATO’s soil, the danger of
escalation to nuclear war is entirely real.

This lowly farce should serve as a wake-up call not only to the BRICS
but to the whole Global South. Who needs NATO, R2P (“responsibility to
protect”) or “moderate rebels” when you can get your regime change
just by tweaking a nation’s political/judicial system?

And that’s the beauty of a regime change-light/color revolution of
Hybrid War when staged in such a dynamically creative nation such as
Brazil. The hall of mirrors yields a political simulacrum that would
have driven deconstructionists Jean Baudrillard and Umberto Eco, if
alive, green with envy; a Congress crammed with
fools/patsies/traitors/crooks, some of whom are already being
investigated for corruption, has conspired to depose a president who
is not under any formal corruption investigation – and has not
committed any“crime of responsibility”.

Still, without a popular vote, the massively rejected tropical Brutus
twins, Temer and Cunha, will find it impossible to govern, even though
they would perfectly incarnate the project of the immensely arrogant
and ignorant Brazilian elites; a neoliberal triumph, with Brazilian
“democracy” trampled down six feet under.

Euro 1.1315
Dollar Index 94.48 edged down 0.1 percent to 94.450 .DXY, inching away
from a three-week high of 94.845 hit on Friday.
Japan Yen 109.22
Swiss Franc 0.9784
Pound 1.4473 The British pound added 0.7 percent to $1.4488 GBP=D4
after dropping to a three-week low of $1.4333 in the previous session
ahead of Britain's June 23 referendum
Aussie 0.7344 Minutes of the Reserve Bank of Australia's (RBA) May
policy meeting, at which policymakers reduced the cash rate by a
quarter point to a record low 1.75 percent, were less dovish than some
had anticipated.
The Aussie was up 0.8 percent at $0.7349 AUD=D4 after rising as high
as $0.7368, pulling decisively away from a two-and-a-half month low of
$0.7236 plumbed in the previous session.
India Rupee 66.685
South Korea Won 1173.88
Brazil Real 3.4987
Egypt Pound 8.8794
South Africa Rand 15.5852

Commodity Markets YTD


Gold 6 month INO 1278.94 [feels strong Get Long with a 1225.00 STOP]
http://quotes.ino.com/charting/index.html?s=FOREX_XAUUSDO&t=c&a=50&w=1&v=d6

"The oil market has gone from nearing storage saturation to being in
deficit much earlier than we expected," @GoldmanSachs said.
http://www.reuters.com/article/us-global-oil-idUSKCN0Y703M

Bloomberg Markets Brent crude climbs to a six-month high


Brent Crude breaks $49, do we see $50 oil this Tuesday? David Ingles ‏


Emerging Markets

Frontier Markets

I am left thinking, this dead Gaddafi business is one powerful
message. And today Marshall McLuhan’s prediction in The Gutenberg
Galaxy (1962) that ‘The new electronic interdependence recreates the
world in the image of a global village’ has come to pass. The image of
a bloodied Gaddafi, then of a dead Gaddafi in a meat locker have
flashed around the world via the mobile, YouTube and Twitter.

Who is in charge of the messaging? Through the fog of real time and
raw footage, I note a very powerful message. The essence of that
message being;

‘Don’t Fxxk with us! Be- cause you will end up dead and a trophy
souvenir in a fridge.’

That same person is probably repeating Muammar’s comment, “I tell the
coward crusaders: I live in a place where you can’t get me. I live in
the hearts of millions.”

And asking ‘Really? Are You? Or are you now very dead and in a meat locker?’

The economy is expected to expand 6.6 percent this year, the most in
sub-Saharan Africa after Ivory Coast and Tanzania, the International
Monetary Fund said last month. Growth has averaged 4.7 percent since
Sall, 54, a geological engineer, wrested the presidency from Abdoulaye
Wade in 2012 elections

Peanut production reached a record 1.1 million metric tons last year
and may be even higher this year if good rains materialize as
expected, the president said. Rice output has doubled to 900,000 tons
since 2012 and Sall is targeting 1.7 million tons by 2017, which would
make the country self-sufficient as it strives to be less exposed to
international market prices. Senegal also produces corn and millet.

Senegal’s dollar-denominated bonds have returned 8.2 percent this
year., compared with an average of 7.6 percent for 17 sub-Saharan
African securities. Yields on the $500 million of debt due in July
2024 rose 2 basis points to 7.1 percent on Monday.

“The revolutionary contingent attains its ideal form not in the place
of production, but in the street, where for a moment it stops being a
cog in the technical machine and itself becomes a motor (machine of
attack), in other words a producer of speed.’’

As we look around the world today, we can see a battle for the
‘street’ from the streets of Bujumbura to the streets of Baltimore. In
November last year, I wrote about Ouagadougou’s signal to sub-Saharan
Africa and concluded that: We need to ask ourselves how many people
can incumbent shoot stone cold dead in such a situation – 100, 1000,
10000?

This is another point: there is a threshold beyond which the incumbent
cannot go. Where that threshold lies will be discov- ered in the
throes of the even

Tanzania’s president John Magafuli has shifted the centre of gravity
for East African oil and gas, South, in one fell swoop.

In my humble opinion, Magafuli has moved with speed and precision and
pared price of brokerage charges. He’s winning. Its time for some
serious soul- searching folks.

Pres #Magufuli makes impromptu airport visit, shocked that
screening machines don’t function

South African Finance Minister Pravin Gordhan’s efforts to restore
investor confidence in Africa’s most-industrialized economy and ward
off a junk credit rating are being frustrated by the very man who
appointed him to his post.

President Jacob Zuma has spent the past five months lurching from one
scandal to the next and has repeatedly undermined Gordhan’s authority.
According to the Sunday Times newspaper, Gordhan is now at risk of
being charged with espionage, and fired -- speculation that drove the
rand to a two-month low despite a denial by the presidency

Zuma’s actions have repeatedly damaged the economy. In December, he
named little-known lawmaker David van Rooyen as finance minister,
sending the rand and the nation’s bonds into a nosedive before
reappointing Gordhan to a post he held from 2009 to 2014. He
backtracked only after coming under pressure from business leaders and
senior ruling party officials. The central bank has cut its forecast
for economic expansion this year to 0.8 percent, predicting the
slowest growth since a recession in 2009.

“There’s a huge amount of respect for Pravin,” Barton said in an
interview in Kigali. “South Africa isn’t on a good path, there’s no
question about that.”

Jacob Zuma, South Africa's president. Photographer: Waldo Swiegers/Bloomberg
http://www.bloomberg.com/news/articles/2016-05-16/zuma-factor-stymies-gordhan-s-bid-to-rescue-south-africa-economy

South Africa All Share Bloomberg +3.39% 2016 [rallied +1.57% yesterday]
http://www.bloomberg.com/quote/JALSH:IND

Dollar versus Rand 6 Month Chart INO 15.5852 [Zuma machinations refer]
http://quotes.ino.com/charting/index.html?s=FOREX_USDZAR&v=d6&t=c&a=50&w=1

Egypt EGX30 Bloomberg +5.76% 2016
http://www.bloomberg.com/quote/CASE:IND

Nigerian inflation has soared to its highest level in six years @FT
http://www.ft.com/fastft/2016/05/16/nigerian-inflation-soars-to-six-year-high-at-13-7/?ft_site=falcon&desktop=true

Three-month naira non-deliverable forwards rose by 14 percent, the
most on a closing basis since the contracts began trading in March
2011, to a record 267 against the dollar at 4:06 p.m. in London.
One-month forwards jumped 11 percent to 238, bringing their implied
yield -- the annualized amount that investors would get if they bought
the contract and there was no change in the spot price at the end of
the period -- to 217 percent, also a record. Contracts maturing in a
year climbed 5.7 percent to 314, suggesting a 58 percent drop in the
naira from the interbank rate of 199.05 per dollar.

While Nigeria has held the naira at 197-199 since March 2015, even as
falling oil prices cause government revenue and export earnings to
plunge, Vice President Yemi Osinbajo announced a review of the
currency regime on May 11 that “may feature” a devaluation. That was a
shift from recent comments by President Muhammadu Buhari and came on
the same day the government allowed fuel importers to buy
foreign-exchange on the black market, rather than just from the
central bank and oil companies. The unofficial rate weakened to about
360 to the dollar on Monday from 320 a week ago.

The move to allow fuel retailers access to the unofficial currency
market “signals greater FX flexibility,” JF Ruhashyankiko, a Goldman
Sachs Group Inc. economist in London, said in an e-mailed note. “This
move is likely to lead to a restoration of partially allotted multiple
exchange rates, but it is less clear whether it will also lead to a
gradual lifting of capital controls. The only way to resume capital
inflows is to lift the capital controls.”

Nigeria All Share Bloomberg -6.35% 2016 [4 month closing High]
http://www.bloomberg.com/quote/NGSEINDX:IND

26,824.35 +383.32 +1.45%

Ghana Stock Exchange Composite Index Bloomberg -10.59% 2016 [3 Year Closing Low]
http://www.bloomberg.com/quote/GGSECI:IND

CCTV Africa ‏Mozambique's President due to meet President Xi
Jinping of China

Finca, a US microfinance organisation, and First Access, a New
York-based data analytics company, have formed a partnership to start
making loans over east Africa using credit scores derived from mobile
phone data.

This kind of uncollateralised lending has already started to transform
Kenya’s micro, small and medium enterprises (MSMEs) sector. Hundreds
of thousands of loans worth more than $150m have been issued since
March 2015 when Kenya Commercial Bank, the country’s largest bank, and
M-Pesa, the mobile money platform of Safaricom, the dominant telecoms
company, began collaborating.

The vast majority of borrowers were previously considered
uncreditworthy because of their lack of credit history and access to
financial services. However, KCB-Mpesa accepts about 80 per cent of
applicants, with an average loan size of Ks4,000 ($40) and a default
rate of just under 2 per cent.

“It’s much more efficient and accurate than the old system and we’re
seeing much earlier repayments,” said Joshua Oigara, KCB chief
executive.

Growth is proving exponential. “Every second a new loan is issued, and
we’re only a year into this service,” said Bob Collymore, chief
executive of Safaricom.

Shivani Siroya, chief executive of InVenture, a US start-up that
launched its Mkopo Rahisi loan service via an Android app in March
2014, said it took 20 seconds to scan someone’s phone and determine
whether they were creditworthy.

Like the other providers, InVenture is using increasingly detailed
data to make credit decisions. For example, the Santa Monica-based
company found that if at least 40 per cent of an applicant’s contacts
were organised with both first and second names they were 16 times
more likely to repay on time.

“Those indicators are just about invisible to the financial sector and
the market place,” Ms Siroya said. “Now we’re bringing this data to
life. These people are becoming creditworthy. Our goal is to change
the perception of risk and level the playing field.”

The demand is huge. In 2013 the International Finance Corporation, a
branch of the World Bank Group, estimated that MSMEs in developing
countries face a financing gap of up to $2.6tn and that more than 200m
formal and informal enterprises do not have a loan or overdraft but
are in need of one.

Mobile phone-based lending is likely to expand along with soaring
smartphone use.

Kenya’s average local bond yields have fallen below Nigeria’s for the
first time since early October. Kenyan shilling yields were 464 basis
points higher than naira yields as recently as Nov. 11. Since then the
fortunes of the two countries have shifted as Nigeria, Africa’s
biggest economy, is battered by low oil prices and rising inflation,
while investors are increasingly turning to Kenya, a net energy
importer and more diversified economy.

“The supermarket space has been dominated by local indigenous players
with some small exceptions. The arrival of Groupe Carrefour signals
that this cosy market is set to come under pressure. Carrefour is
surely targeting the top slice spend and in that regard I think they
will be well received,” said the Rich Management CEO Aly Khan Satchu.

Kenya’s formal retail market is dominated by privately-held and
family-owned businesses such as Nakumatt, Tuskys and Naivas with only
one listed supermarket chain Uchumi.

Kenya produced 399.2 million kilograms of tea in 2015 and earned 125.2
billion shillings ($1.24 billion) from exports to destinations such as
Pakistan, Egypt and the U.K.

Large-scale producers are finding it more difficult to remain
competitive because of expensive electricity and multiple taxation,
the chief executive of the Kenya Tea Growers Association, Apollo
Kiarie, said Monday.

“We either break even or change to a different crop,” he said.

Nairobi All Share Bloomberg +0.42% 2016
http://www.BLOOMBERG.COM/quote/NSEASI:IND

146.31 -0.40 -0.27%

Nairobi ^NSE20  -3.31% 2016 [10 week closing Low] @business
http://j.mp/ajuMHJ

3,907.09 -20.60 -0.52%

Every Listed Share can be interrogated here
https://rich.co.ke/rcdata/nsestocks.php

Trading volumes have really thinned out over recent sessions.
Total Turnover clocked 232.167m which is in line with the last few
sessions but considerably below the weighted average for 2016.
The Nairobi All Share retreated 1.00 point to close at 145.31.
The NSE20 broke down through 3,900 and closed 40.12 points lower at 3866.97.

Safaricom was the most actively traded share and ticked -1.15% easier
off a 4 week High to close at 17.15 and traded 4.514m shares.
Safaricom had to hurdle a Business Daily Front Page Story which
questioned Safaricom's tendering processes. Supply remains thin and I
expect the Price to head to 18.00.

WPP-ScanGroup also got a Shout-Out in the Business Daily Story and
fell steeply -6.59% to close at a Fresh 2016 Low of 21.25.
WPP-ScanGroup is -29.16% in 2016.

COOP Bank closed unchanged at 18.45 and traded 2.811m shares worth
51.94m. COOP Bank is +2.5% in 2016 and was an Outlier in FY15 lifting
FY Profit before tax +40.92% to 15.38302b. COOP will release Q1
Earnings Monday.
Barclays Bank firmed +0.96% to close at 10.40 and traded 1.104m
shares. Barclays has been caught in the Barclays Africa Group
divestment cross-fire in 2016 and remains -23.52%  Year to date.
KCB eased -1.204% to close at 41.00 and traded 454,100 shares.

Liberty rebounded +3.46% to close at 14.95 and traded 5,400 shares.

KenGen fell 5.67% to close at 6.65 and just a whisker above the rights
issue price of 6.55. KenGen has retreated -16.875% since announcing
its Rights Issue Time-Table. The Down-Move is now plain exaggerated.

Carbacid rallied +6.00% to close at 15.90 and that marks a +9.655%
surge this month. Carbacid has traded 2% of its issued shares this
month. Carbacid is -2.45% Year to Date.