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The Latest Daily PodCast can be found here on the Front Page of the site
https://rich.co.ke

Looking forward to #Mindspeak this Saturday at the @InterConNairobi
with @NjorogeP

He holds a PhD degree in Economics from Yale University (1993), a
Master of Arts degree in Economics (1985) and a Bachelor of Arts
degree in Economics (1983) from the University of Nairobi.

Dr. Njoroge joined the Central Bank from a varied career at the
International Monetary Fund (IMF) spanning 20 years based in
Washington DC. Prior to his appointment as Governor, Dr. Njoroge was
Advisor to the IMF Deputy Managing Director from December 2012, where
his responsibilities included assisting in overseeing the IMF’s
engagement with a large swath of IMF members.

He also served as Deputy Division Chief in the IMF’s Finance
Department (2006-2012), IMF’s Mission Chief for the Commonwealth of
Dominica (2005-2006) and in other capacities since 1995. Prior to
joining the IMF, Dr. Njoroge worked as an Economist at the Ministry of
Finance (1993-1994) and as a Planning Officer at the Ministry of
Planning (1985 -1987). Dr. Njoroge’s professional and research
interests lie in Macroeconomics, Economic Policy, International
Finance, Development Economics, Econometrics and Monetary Policy.

Macro Thoughts

Yellen speaks

Home Thoughts

“If they can get you asking the wrong questions, they don't have to
worry about answers.” ― Thomas Pynchon, Gravity's Rainbow

“But it is a curve each of them feels, unmistakably. It is the
parabola. They must have guessed, once or twice -- guessed and refused
to believe -- that everything, always, collectively, had been moving
toward that purified shape latent in the sky, that shape of no
surprise, no second chance, no return. Yet they do move forever under
it, reserved for its own black-and-white bad news certainly as if it
were the rainbow, and they its children. . . .” ― Thomas Pynchon,
Gravity's Rainbow

“I dream that I have found us both again,
With spring so many strangers' lives away,
And we, so free,
Out walking by the sea,
With someone else's paper words to say....

They took us at the gates of green return,
Too lost by then to stop, and ask them why-
Do children meet again?
Does any trace remain,
Along the superhighways of July?”
― Thomas Pynchon, Gravity's Rainbow

“the one Word that rips apart the day...”
― Thomas Pynchon, Gravity's Rainbow

Tsutomu Yamaguchi was late for work. It was August 1945, and he'd just
finished designing a 5,000-ton tanker for his company, Mitsubishi. He
was heading to the office to finish up, clear out and head home, and
that's when he saw the plane, high up in the sky over Hiroshima. He
watched it drop a silvery speck into the air, and instinctively, says
science writer Sam Kean, "he dove to the ground and covered his eyes
and plugged his ears with his thumbs."

A president who’s never shied away from moral complexity steps onto
his most challenging stage yet.

Americans have not always relished scrutiny of the atomic blast that
decimated Hiroshima, Japan, on August 6, 1945. No sitting president
has ever visited the city, and in 1996, the United States and China
rejected a Japanese proposal that Hiroshima become a World Heritage
site. But on Friday, Barack Obama’s motorcade will pull up to the
Hiroshima Peace Memorial, and the world will pause for a few moments
to contemplate what happened here

“We do, absolutely, have to go with what we’ve got,” according to
General Vogel. And I couldn’t agree more. What that means is that the
“Assad has got to go” routine is changing. We haven’t heard many
Americans saying that recently, and we’ve hardly noticed it.

I suspect that the Assad-must-go campaign is going to be gently
dropped – thanks to Isis, of course, which is even more hateful for
the Americans than the Syrian government in Damascus.

And what do we have? Turkey threatens Isis, and Nusra and Isis remains
a threat right across the Middle East. Saudis support Isis and Qatar
supports Nusra, and Hezbollah supports the regime.

The Americans seem to have left the air bombing to the Russians (after
complaining about it) and Putin is not afraid to say the obvious: that
the government in Damascus is a better bet than Isis.

We shall see who wins. “We do, absolutely, have to go with what we’ve
got.”  That pretty much sums it up.

We took the corpus of Trump tweets since the inception of his
@realDonaldTrump account, and examined what’s distinctive about
Trump’s Twitter behavior. After some filtering and data loss, this
amounted to about 15,000 tweets. Some of our findings—including about
some of Trump’s favorite and most distinctive words—appear in these
graphics. But we wanted to parse the data further: Just how much
attention has Trump received on Twitter as a candidate, we wondered?
And what is linguistically distinctive about how he tweets and what he
tweets about?

Trump, it turns out, has a really unusual way of talking about his
opponents in the race and elsewhere. If “lying Ted” and “lightweight
Jeb” sound familiar, it’s because nobody else uses language quite like
Trump does. And whatever else his candidacy has accomplished, it shows
that running for president is amazing for your Twitter presence:
Although @realDonaldTrump’s following has grown predictably, his
social-media influence has absolutely exploded.

Consider that in January 2015, the average number of retweets one of
Trump’s tweets received was 79. But by January 2016, the retweet
average had shot up to 2,201. So while @realDonaldTrump’s capacity to
reach people directly—i.e., his number of followers—has “only”
doubled, the dissemination of his average tweet increased by a factor
of 28 over that time period.

Linguistically, how do those tweets look different from other
candidates’? Based on our analysis of Trump’s syntax and that of the
other four remaining candidates, we found that Trump leans toward
adjectives more than anyone except Bernie Sanders. But what’s truly
distinctive is how he uses adjectives: He combines an adjective
followed by someone’s name a stunning 10 times more than any other
candidate. This is primarily because of his proclivity for using
Twitter to launch personal attacks on specific individuals, like
“lightweight” Megyn Kelly, “little” Marco Rubio, “low-energy” Jeb
Bush, “dopey” Bill Kristol, etc.

“Nasty,” for example, is reserved for Hillary Clinton, Ted Cruz and
Marco Rubio, with Cruz being the primary target. “Weak,” on the other
hand, is shared among Jeb Bush, Clinton, Carly Fiorina and Rubio.
“Lightweight,” while aimed at multiple targets, was especially used
against Rubio. Megyn Kelly and Jon Stewart are “overrated.” Pollster
Frank Luntz is “wonderful” and “great” (alluding to some good numbers
Luntz predicted for Trump)

It’s clear Trump’s Twitter feed offers him a tool for direct access to
voters, who then amplify that access by retweeting him at remarkable
rates. Trump’s use of Twitter is likely to be studied in future years
by political strategists, but the data we have so far suggests there’s
something sui generis about @realDonaldTrump that likely isn’t
replicable. There may just be a remarkable coincidence in 2016 of man,
medium and message.

Euro 1.1175
Dollar Index 95.24
Japan Yen 109.78
Swiss Franc 0.9906
Pound 1.4669
Aussie 0.7222
India Rupee 67.075
South Korea Won 1179.85
Brazil Real 3.5826
Egypt Pound 8.8820
South Africa Rand 15.5180

Dollar Index 1 Year Chart INO 95.24 [93.00 still Key for the Bulls]
http://quotes.ino.com/charting/index.html?s=NYBOT_DX&t=c&a=50&w=1&v=d12

Euro versus the Dollar 1 Year Chart 1.1175
http://quotes.ino.com/charting/index.html?s=FOREX_EURUSD&t=c&a=50&w=1&v=d12

Bullion for immediate delivery fell as much as 0.7 percent to
$1,211.68 an ounce, the lowest price since April 1, and was at
$1,221.30 at 3:25 p.m. in Singapore, according to Bloomberg generic
pricing. It’s down 2.5 percent this week, set for a fourth weekly drop
that’s the longest run since November.

"In the short term, the rally is looking technically strong and may
have a couple more bucks in it," said Clayton Rogers, an energy
derivative broker at SCS Commodities Corp. in New Jersey. "On a longer
horizon, however, I think there are some fundamental headwinds which
could cause a pullback into the mid $40s."

West Texas Intermediate for July delivery touched as high as $50.21
Thursday before settling at $49.48 a barrel on the New York Mercantile
Exchange. Brent for July settlement closed at $49.59 on the
London-based ICE Futures Europe after earlier touching as high as
$50.51.

Riyal forwards for the next 12 months rose to 590 points, the highest
since Feb. 19, according to data compiled by Bloomberg, signifying
increased speculation of a devaluation.

SAMA is asking banks to explain the rationale and relevance of the
structured products for the economy and explain why they’ve entered
into the products without informing the central bank, according to the
people. It also wants transaction details of the derivatives since
Jan. 18.

It’s also seeking to understand the impact of the products on Saudi
banks’ U.S. dollar buy positions from the central bank as well as the
risks to customers and banks, they said. The central bank warned any
future structured derivative product should be submitted to SAMA for
review and approval before they’re launched.

Frontier Markets

With a white shawl draped across his shoulders, former oil minister
Chakib Khelil wandered through one of Algeria’s Sufi monasteries
smiling and quietly chatting with clerics. Yet when photos of last
month’s low-key visit emerged, they created a stir.

The shrines are a favorite stop for Algerian politicians preparing for
high office, and the images from Djelfa province fueled already
fevered speculation that President Abdelaziz Bouteflika’s friend since
childhood had ended a three-year exile in the U.S. to eventually
succeed him as leader.

A police officer was killed by stone-throwing protesters and a
protester wass shot dead in the city of Goma in eastern Democratic
Republic of Congo on Thursday at anti-government demonstrations, a
United Nations human rights official said.

Police fired teargas in the Democratic Republic of Congo’s capital to
disperse opposition supporters calling for President Joseph Kabila to
leave office this year.

“We occupied two main roads and the police are now trying to disperse
us with tear gas,” Jean Lucien Bussa, leader of the opposition Party
of Democrats and Reformists, said by phone from Kinshasa.

Police blocking protests with teargas & force across #Congo today,
including firing at them in some towns


South Africa passes land expropriations bill @AJENews
http://aje.io/mvqp

Conclusions

@sapresident might go nuclear on this issue - Populism

South Africa's President Zuma spent £370,000 of state cash on 11
cars for his four wives


City Press President Jacob Zuma has in recent weeks hit the ground running


South Africa All Share Bloomberg +7.03% 2016
http://www.bloomberg.com/quote/JALSH:IND

Dollar versus Rand 6 Month Chart INO 15.5268
http://quotes.ino.com/charting/index.html?s=FOREX_USDZAR&v=d6&t=c&a=50&w=1

Egypt EGX30 Bloomberg +7.50% 2016
http://www.bloomberg.com/quote/CASE:IND

Undaunted, he will use the opportunity to extol the government's
success in driving Boko Haram Islamist fighters from the north-east
and to celebrate some successes in his anti-corruption campaign. He
will also detail how much the government has retrieved from Western
banks of the billions of dollars stolen under General Sani Abacha's
regime and its successors, and how those recovered funds will be spent
for the public good.

Some of this year's rising tide of economic woes, such as crashing oil
and gas prices, China's slowdown and rising international rates, are
not the government's fault. They have nevertheless eclipsed much of
the enthusiasm for Buhari and the All Progressives Congress since they
won power a year ago

President Buhari ‏@NGRPresident  Apr 3 "We're determined to get
things done properly." - President Buhari (02 April, 2016)

United Airlines will stop flying to Nigeria next month, ending the
carrier’s only route to Africa because of weakness in the energy
sector and difficulties in collecting money from tickets sold in that
country.

The daily route from Houston to Lagos had underachieved for years but
was kept alive because of its importance to Texas-based customers,
United Continental Holdings Inc. said in a note to employees on
Wednesday. The last flight will be June 30, after which Delta Air
Lines Inc. will be the only major U.S. carrier flying to Africa.

“Repatriation has been a significant issue, as has been the downturn
in the energy sector,” said United spokesman Jonathan Guerin, who
confirmed the note’s authenticity.

28,877.47 +616.86 +2.18%

Ghana Stock Exchange Composite Index Bloomberg -11.25% 2016
http://www.bloomberg.com/quote/GGSECI:IND

Mozambique is hours away from defaulting on its debt as talks about
rescheduling a loan from Russia’s VTB Bank PJSC to a state-owned
company falter, according to a person familiar with the situation.

A grace period for a state-guaranteed loan given to Mozambique Asset
Management after it missed a May 23 deadline to make a $178 million
interest payment will end Thursday, said the person, who asked not to
be identified because they’re not authorized to discuss the matter
publicly. The company has about five hours left before the grace
period expires, the person said at 11.37 a.m. Maputo time.

A person who answered the phone at Mozambique’s Finance Ministry
referred questions to a phone number that didn’t connect, while a
second call was cut off when Bloomberg called four times seeking
comment. Finance Ministry spokesman Rogerio Nkomo didn’t immediately
respond to an e-mailed request for comment.

A government official said on May 24 the government is unwilling to
convert the loan extended to MAM into sovereign debt to avoid a
default. A failure by MAM to reschedule the loan by the end of the day
may trigger a sovereign default by Mozambique on its other
obligations, including its $727 million Eurobond due in January 2023
and a $622 million loan made to state-owned Proindicus, the person
said.

The yield on Mozambique’s Eurobond rose 33 basis points to 17.1
percent by 1:38 p.m. in London.

An investigation by Finance Uncovered has exposed a little-known
offshore business registry that has created tens of thousands of
anonymous companies and registered them to a non-existent address in
Monrovia, Liberia’s capital city.

Although these companies are technically a creation of Liberian law,
management of the registry is based in the United States and appears
to have the support of the US government.

The companies, which can be purchased online, offer near-total
anonymity to their clients, allowing them to hide assets without fear
of being caught by law enforcement or revenue authorities.

Among other things, Finance Uncovered’s investigation, discovered over
half a billion pounds of high-value London property registered to
Liberian offshore companies.

WHEN opening parliament after his election last year, Tanzania’s
president, John Magufuli, repeated a campaign promise: parents would
no longer have to pay for secondary education. “And when I say free
education, I indeed mean free,” he assured MPs. This year the
government started expelling foreign workers without proper permits,
including thousands of Kenyan teachers. Schools that were already
straining to cope with a huge influx of new pupils are now at breaking
point.

The president, nicknamed “the Bulldozer”, has delighted Tanzanians
with an anti-corruption drive and public displays of austerity. Within
weeks of taking office last November he had banned all but the most
urgent foreign travel for government officials. He spent Tanzania’s
Independence Day picking up litter by hand. He has fired officials
suspected of incompetence or dishonesty and purged 10,000 “ghost
workers” from the public payroll. However, he has a worrying tendency
not to think things through.

Take, for example, his efforts to extract more tax from people using
the port at Dar es Salaam, a gateway for the region. He has enforced
VAT on the costs of moving goods that arrive at the port overland to
neighbouring countries such as Zambia and Malawi. Shipping firms have
immediately switched routes and now unload in Kenya, Mozambique or
South Africa, leaving a once bustling harbour almost empty.

Mr Magufuli remains popular with ordinary Tanzanians. Twitter users at
#WhatWouldMagufuliDo celebrate his thriftiness by suggesting amusing
things he might approve of, such as wearing a curtain instead of
buying new clothes and heating showers with a candle. The president
has mended fences with neighbours, too. In April Uganda decided that a
$4 billion oil pipeline would go through Tanzania, scrapping a
previous agreement with Kenya. A month later Rwanda decided to build a
railway to Dar es Salaam instead of the Kenyan port of Mombasa.

“What Africa needs is strong institutions, not strong men or women,”
says Zitto Kabwe, an opposition leader.

Instead of addressing these deeper structural issues Mr Magufuli has
continued to live up to his nickname of “Bulldozer”: one foreign firm
was given seven days to settle a $5m bill, says its boss. The
country’s revenue authority then took the money directly from its bank
account. By contrast, the government is painfully slow to pay its own
bills: it still owes the same company $30m. Acacia Mining, a gold
producer, is owed $98m in VAT rebates—effectively an interest-free
loan to the government. “The country has become totally uninvestable,”
says a bigwig at a private-equity firm with holdings across Africa.
“You pay your taxes for five years and have the returns to prove it
and then some guy arrives with his own calculation and says you
haven’t paid your tax.”

Mr Magufuli’s zeal may be admired, but his party, which has ruled
Tanzania since independence, is thuggish and undemocratic: it
suppressed dissent during the elections last year and then cancelled a
vote held in Zanzibar after the opposition probably won it.
Frustrated, America suspended $472m of aid. The Bulldozer merely
harrumphed that Tanzania would soon no longer need aid and told the
revenue authority to squeeze even harder.

Conclusions

President Magufuli has shifted the EAC centre of Gravity South - with
his big Wins with the Pipeline [to Tanga] and the Railway. This is a
big-time geopolitical success. Regarding his Modus Operandi, I think
you miss the point. If he damps down corruption, there will be no
stopping FDI.
Aly-Khan Satchu
Nairobi

Given that Uganda’s decision to export its crude oil to world markets
via the port of Tanga is now a ‘’done deal’’, it is worth analysing
what has happened and appreciating that this is the equivalent of a
blow to the solar plexus of our regional ambitions and that these
ambitions are gasping for breath. Recall that Ethiopia has already
dialled up the Djibouti route and that LAPPSET is in essence, a
Kenyan-South Sudan gig and that South Sudan is back at around zero and
is not in a position to finance its own recovery let alone a pipeline.
If the reknowned short-seller Mr. Chanos could short LAPPSET, I am
sure he would be limit short.

The widely read Africa Confidential said this: ‘’Uganda’s decision to
export oil through Tanzania undermines Kenya’s status as regional
kingpin’’. ‘’ Thee move alters the political balance of the whole
region and has left Kenya with some catching up to do.  thee preferred
route until the second half of last year, Kenya now has a considerably
less viable oil field and a damaged reputation as the heartbeat of
East African integration’’. Chatham House in an earlier report said:
‘’Uganda’s foreign affairs minister also highlighted the issue of
relative costs of the rival routes.  The projected cost of the
Tanzania route is approximately $4 billion, up to $1 billion less than
going via Kenya. Kenya’s proposed tariff was almost $17 per barrel,
compared to Tanzania’s $12 per barrel. Uganda’s energy minister has
also reported that Tanzania has waived land fees, transit charges and
taxes associated with the pipeline”.

When you look at the numbers, our pipeline build was 25 per cent more
expensive and our price per barrel 29.411 per cent more costly, you
realise that we were never in the pipeline game.

Frame the question as a national interest, one for Uganda and its a
no-brainer.  en you have to ask, where was our intelligence? How could
we be so far away from the winning bid? When I worked in the city and
missed a big trade, I would always call back and ask how far I had
missed by. Differentials of 25 per cent and 29.411 per cent would be
terminal to the relationship.

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.

Par Value:                  1/-
Closing Price:           39.25
Total Shares Issued:          2984227692.00
Market Capitalization:        117,130,936,911
EPS:             6.086
PE:                 6.449

Q1 Loan and advances to customers (net) 345.943452b vs. 297.031494b +16.467%
Q1 Customer deposits 423.433144b vs. 397.102268b +6.631%
Q1 Total shareholders’ equity 83.959606b vs. 79.408118b +5.732%
Q1 Total operating income 15.484396b vs. 13.888160b +11.494%
Q1 Total other operating income [8.870108b] vs. [7.654866b] +15.875%
Q1 Profit before tax and exceptional items 6.614288b vs. 6.233294b +6.112%
Q1 Profit after tax and exceptional items 4.630002b vs. 4.363306b +6.112%
EPS 6.12 vs. 5.77 +6.066%
Total NPL 26.362349b vs. 20.166660b +30.722%
Loan loss provision 12.603423b vs. 9.108129b +38.376%

KCB Group Ltd., owner of Kenya’s largest bank, posted a 6 percent rise
in first-quarter profit to 4.63 billion shillings ($46 million) and
doubled loan loss provisions as non-performing credit jumped by 43
percent.

The bank with operations in seven African countries said bad loans
increased to 26.4 billion shillings in the three months through March,
from 18.5 billion shillings a year ago. It set aside provisions of
1.37 billion shillings for sour debt, twice what it did previously.

The Central Bank of Kenya says the industry’s non-performing loans
were equal to 8.2 percent of total loans in April. Governor Patrick
Njoroge, who was appointed in June 2015, has told lenders that they
have been provisioning insufficiently for poor debt in East Africa’s
biggest economy.

Par Value:                  4/-
Closing Price:           202.00
Total Shares Issued:          242110105.00
Market Capitalization:        48,906,241,210
EPS:             24.42
PE:                 8.272

Q1 Loans and advances to customers (net) 179.769225b vs. 144.871228b +24.089%
Q1 Customer deposits 205.969037b vs. 163.260843b +26.159%
Q1 Total shareholders’ equity 35.162362b vs. 30.106682b +16.793%
Q1 Total operating expenses [3.287014b] vs. [2.229493b] +47.433%
Q1 Profit before tax 2.473654b vs. 2.271781b +8.886%
Q1 Profit for the period 1.608472b vs. 1.500039b +7.229%
EPS 6.09 vs. 5.56 +9.532%
Total NPL and advances 6.392206b vs. 1.790320b +257.043%
Loan loss provisions 3.546780b vs. 1.640203b +116.240%

Closing Price:           110.00
Total Shares Issued:          392362035.00
Market Capitalization:        43,159,823,850
EPS:             17.12
PE:                 6.425

From Kestrel Capital
I&M Bank: PAT came in at KES 2.5bn, up 10.3% y/y. Earnings were
largely buoyed by net interest income (+14.9% y/y to KES 2.9bn) over
higher margins at 7.1% (+40bps y/y) and partly by non-funded income
(+5.9% y/y to KES 973.7m). Weighing down the results was increased
provisioning (+52.4% y/y to KES 219.9m). NPL ratio worsened to 4.7%
from 4.2% in FY 15 and 2.2% in 1Q15. IFRS coverage ratio fell to 43.9%
from 55.7% the prior year. Loan book enlarged 11.3% y/y (+2.1% ytd) to
KES 117.4bn while customers deposits build up by 15.7% y/y (+4.6% ytd)
to KES 122.1bn. OpEx rose 5.6% y/y to KES 1.2bn as the cost to income
improved by 190bps y/y to 30.3%. Core capital and total capital to
TRWA stood at 6.30% and 4.23% above the min. requirements of 10.5% and
12.5% respectively, declines from Dec 2015 values of 6.55% and 4.71%.

21-DEC-2015 :: The Teflon Shilling and Other Matters, @TheStarKenya
https://rich.co.ke/media/docs/038NSX2112.pdf

Nairobi All Share Bloomberg +0.05% 2016
http://www.BLOOMBERG.COM/quote/NSEASI:IND

Nairobi ^NSE20 Bloomberg -4.18% 2016
http://j.mp/ajuMHJ

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