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Macro Thoughts

Home Thoughts

Mistah Kurtz - he dead.

A penny for the Old Guy

I

We are the hollow men
We are the stuffed men
Leaning together
Headpiece filled with straw. Alas!
Our dried voices, when
We whisper together
Are quiet and meaningless
As wind in dry grass
or rats' feet over broken glass
In our dry cellar

Shape without form, shade without colour,
Paralysed force, gesture without motion;

Those who have crossed
With direct eyes, to death's other kingdom
Remember us - if at all - not as lost
Violent souls, but only
As the hollow men
The stuffed men.

II

Eyes I dare not meet in dreams
In death's dream kingdom
These do not appear:
There, the eyes are
Sunlight on a broken column
There, is a tree swinging
And voices are
In the wind's singing
More distant and more solemn
Than a fading star.

Let me be no nearer
In death's dream kingdom
Let me also wear
Such deliberate disguises
Rat's coat, crowskin, crossed staves
In a field
Behaving as the wind behaves
No nearer -

Not that final meeting
In the twilight kingdom

III

This is the dead land
This is cactus land
Here the stone images
Are raised, here they receive
The supplication of a dead man's hand
Under the twinkle of a fading star.

Is it like this
In death's other kingdom
Waking alone
At the hour when we are
Trembling with tenderness
Lips that would kiss
Form prayers to broken stone.

IV

The eyes are not here
There are no eyes here
In this valley of dying stars
In this hollow valley
This broken jaw of our lost kingdoms

In this last of meeting places
We grope together
And avoid speech
Gathered on this beach of this tumid river

Sightless, unless
The eyes reappear
As the perpetual star
Multifoliate rose
Of death's twilight kingdom
The hope only
Of empty men.

V

Here we go round the prickly pear
Prickly pear prickly pear
Here we go round the prickly pear
At five o'clock in the morning.

Between the idea
And the reality
Between the motion
And the act
Falls the Shadow

For Thine is the Kingdom

Between the conception
And the creation
Between the emotion
And the response
Falls the Shadow

Life is very long

Between the desire
And the spasm
Between the potency
And the existence
Between the essence
And the descent
Falls the Shadow

For Thine is the Kingdom

For Thine is
Life is
For Thine is the

This is the way the world ends
This is the way the world ends
This is the way the world ends
Not with a bang but with a whimper.

''Extraordinary Popular Delusions and the Madness of Crowds'' is an
early study of crowd psychology by Charles Mackay, first published in
1841.

"Men, it has been well said, think in herds; it will be seen that they
go mad in herds, while they only recover their senses slowly, and one
by one."

Populism, Populists, Populist policy making and extraordinary popular
delusions have in fact been around a very long time. Among the bubbles
or financial manias described by Mackay are the South Sea Company
bubble of 1711–1720, the Mississippi Company bubble of 1719–1720, and
the Dutch tulip mania of the early seventeenth century. According to
Mackay, during this bubble, speculators from all walks of life bought
and sold tulip bulbs and even futures contracts on them. Allegedly,
some tulip bulb varieties briefly became the most expensive objects in
the world during 1637.

A wave of Populism has criss-crossed the World. As we scan the World
today, we can confirm a Populist has captured the White House. In the
United Kingdom, Populism saw BREXIT win its referendum and was best
described by David Osler thus

''I'm going to cancel Netflix and negotiate with each film producer
separately, to get the best deal for me and my family #Brexit''

President Putin is of course the arch Populist but Erdogan, Duterte,
Narendra Modi are all Mini-Mes to Vladimir. Populist Policy-Making
reminded me of a Passage from T.S Eliot's The Hollow Men

Between the idea
And the reality
Between the motion
And the act
Falls the Shadow

For Thine is the Kingdom

Between the conception
And the creation
Between the emotion
And the response
Falls the Shadow

Life is very long

Between the desire
And the spasm
Between the potency
And the existence
Between the essence
And the descent
Falls the Shadow

For Thine is the Kingdom

The Shadow to which T.S Eliot is referring is this; President Trump's
Tax Cut is presented as good for the average American Tax Payer but it
patently is skewed in favour of the 1%. Narendra Modi's attempt to
cleanse the black-market Economy via the extinguishing of Bank Notes
was an abject failure. Duterte's ''red in tooth and claw''
assassination program against Drug Dealing has trampled over any human
rights. The King of Saudi Arabia has generously allowed Women to drive
themselves around from 2018. 2018 just let that sink in.

President Trump in his mind-boggling speech said this of Venezuela

''The problem in Venezuela is not that socialism has been poorly
implemented, but that socialism has been faithfully implemented''
Change the Word ''socialism'' for ''Populism'' and in fact Caracas is
the Harbinger of the direction in which the World is headed.

I will leave the last words to Charles Mackay

"Of all the offspring of Time, Error is the most ancient, and is so
old and familiar an acquaintance, that Truth, when discovered, comes
upon most of us like an intruder, and meets the intruder's welcome."

The disclosure by U.S. Secretary of State Rex Tillerson during a trip
to China represented the first time he has spoken to such an extent
about U.S. outreach to North Korea over its pursuit of a
nuclear-tipped intercontinental ballistic missile.

“We are probing so stay tuned,” Tillerson told a group of reporters in Beijing.

“We ask: ‘Would you like to talk?’ We have lines of communications to
Pyongyang. We’re not in a dark situation, a blackout.”

He said that communication was happening directly and cited two or
three U.S. channels open to Pyongyang.

“We can talk to them. We do talk to them,” he said, without
elaborating about which Americans were involved in those contacts or
how frequent or substantive they were.

Conclusions

Catalan separatist leaders signaled they may be moving toward a
unilateral declaration of independence as early as this week after
hundreds of activists were injured on Sunday as they sought to stop
Spanish police from shutting down an illegal referendum.

Catalan President Carles Puigdemont appealed to the European Union for
support as he pledged to inform the regional parliament of the result
of the vote in the coming days. The assembly will then act in line
with the referendum law, Puigdemont said -- and that could lead to a
unilateral declaration of independence within 48 hours of the
notification.

“The citizens of Catalonia have won the right to have an independent
state,” Puigdemont said in a televised statement, flanked by members
of his regional administration.

As chief executive officer of one of the world’s largest hedge funds,
Luke Ellis prides himself on a healthy appetite for risk. “My job,” he
says, “is to not blink.” About five years ago, he did, though—in a big
way. What spooked him was an experiment at his firm, Man Group Plc.
Engineers at the company’s technology-centric AHL unit had been
dabbling with artificial intelligence—a buzzy, albeit not widely used,
technology at the time. The system they built evolved autonomously,
finding moneymaking strategies humans had missed. The results were
startlingly good, and now Ellis and fellow executives needed to figure
out their next move.

Man Group, which has about $96 billion under management, typically
takes its most promising ideas from testing to trading real money
within weeks. In the fast-moving world of modern finance, an edge
today can be gone tomorrow. The catch here was that, even as the new
software produced encouraging returns in simulations, the engineers
couldn’t explain why the AI was executing the trades it was making.
The creation was such a black box that even its creators didn’t fully
understand how it worked.

For the uninitiated—most of us—watching an artificial intelligence
system at work is like trying to decipher an impenetrable language.
Slavi Marinov, a 31-year-old Bulgarian computer scientist hired by Man
two years ago, is attempting to translate the code into understandable
terms for a pair of visiting journalists. In what he insists is an
elementary demonstration at Man’s London headquarters, Marinov types
commands onto a black screen. The keystrokes tell the machine to find
patterns in futures market returns.

He’s making a bet on whether the market will rise or fall. With a few
more keystrokes, he’s telling the machine to scour millions of data
points, including granular trading information on companies around the
world. He hits enter and a stream of numbers rains down the screen,
like those Hollywood graphics that run behind the opening credits of a
techno-thriller:

0.3426383
0.237250642
0.53534377

The cascading numbers show the computer “thinking,” crunching data at
speeds a human could never achieve. “The element that makes the
decision is these layers of numbers,” says Marinov, who made education
software at a startup before joining Man. As seconds pass, the system
is adjusting what data to give more importance. It’s coming up with a
probability for what’s going to happen next. Once the machine
determines an optimal position to hold based on that information, it
takes stock of broader market trends and the cost of making a trade
before deciding whether to go forward. All in a few moments.

An estimated 90 percent of all the data in existence today were
created in the past two years. Man Group stores thousands of terabytes
of data, equivalent to more than 10,000 standard office PCs—from stock
ticker information to weather forecasts to the movements of container
ships. Meanwhile, the price of stockpiling information has plummeted—a
gigabyte of storage cost $300,000 in 1981, compared with 10¢ today.
“The data is cheaper than it used to be, the availability of data is
enormous, the cost of storage is essentially irrelevant,” says Sandy
Rattray, Man Group’s chief investment officer. “How to use it? That’s
hard.”

Fear of technology is overwrought, Granger says. He thinks back to one
of his favorite books, Robert Harris’s The Fear Index, a beach-read
thriller about a brilliant mathematician who builds an AI-based hedge
fund in Geneva. His system works perfectly. It makes him insanely
rich. Then it tries to kill him.

Euro 1.1742
Dollar Index 93.51
Japan Yen 112.98
Swiss Franc 0.9713
Pound 1.3330
Aussie 0.7803
India Rupee 65.425
South Korea Won 1148.17
Brazil Real 3.1639
Egypt Pound 17.6257
South Africa Rand 13.6380

Money manager Andrew Neville barely blinks when asked to pick his
portfolio’s crown jewel.

Sunny Optical Technology Group Co. has returned about 7,000 percent to
his team at Allianz Global Investors. They’ll soon have to part with
the shares, which they’ve owned since 2010, because the Chinese lens
maker with a $17 billion market capitalization has far outgrown their
small-cap focus, he says.

The next big winner in his view? Deutsche Pfandbriefbank AG, the
German property and public-sector lender that was once part of the
failed Hypo Real Estate Holding AG, bailed out in 2008. He’s betting
it will benefit from increasing demand for credit just as European
bank stocks begin to shed the gloom that depressed valuations in the
aftermath of the financial crisis.

A U.K. legal dispute hanging over Deutsche Pfandbriefbank’s stock
isn’t a deterrent, he says.

“Some people won’t touch it because it’s got binary uncertainty,’’
said Neville, who runs Allianz GI’s $2.1 billion global small-cap
funds from London. “We think that it’s more than in the price. Other
people won’t look at it because it’s a small bank not in their
country.”

The money manager is also keen on “digital derivatives,” stocks he
defines as second and third-tier beneficiaries of the rise of
e-commerce. Examples include Air Transport Services Group Inc., an
aircraft-leasing company that counts Amazon.com Inc. as a customer,
and companies involved in warehouse automation, such as Jungheinrich
AG and Interroll Holding AG.

“They don’t sell you the stuff, you don’t see them online, but they
make the infrastructure work,” Neville said. Each of the three stocks
has climbed at least 25 percent this year.

Allianz GI’s main small-cap fund has returned some 18 percent in 2017,
beating the 10 percent average gain for its peer group, according to
data compiled by Bloomberg.

Frontier Markets

At least eight people were killed during protests in towns across
western Cameroon on Sunday as residents of the mainly English-speaking
regions defied a ban on public gatherings and demanded independence
from the rest of the largely Francophone nation.

The protests in the Southwest and Northwest regions have been called
by a group known as Southern Cameroon/Ambazonia Governing Council.
Four demonstrators were shot dead in the northwestern town of Kumbo as
they marched to government buildings to hoist the blue and white
Ambazonia flag, Mayor Donatus Njong Fonyuy said by phone.

Another three bodies were taken to the mortuary in southwestern Buea,
while a person with gunshot wounds was declared dead at the Kumba
Presbyterian Clinic in the same region, Mercy Ndum, a nurse at the
facility, said by phone.

President Paul Biya, 84, ordered a wave of arrests earlier this year
after lawyers and teachers in English-speaking areas protested the
dominance of the French language in courts and schools throughout the
Northwest and Southwest regions, which border Nigeria.

For years, William Yakutumba did what many militia leaders in eastern
Congo do: he occupied a pocket of territory while running rackets
based on gold smuggling, arms trafficking and taxing civilians
abandoned by an absent state.

Since June, however, his men have engaged in a hit-and-run insurgency
against the army. Last week, in a dramatic escalation, they attacked
the lakeside town of Uvira from surrounding hills and by motorised
pirogue from Lake Tanganyika.

United Nations peacekeepers helped beat them back with heavy
machineguns after some government troops fled, with U.N. helicopters
sinking several rebel boats.

Yakutumba, who fought alongside the army against Rwandan troops in
earlier wars, is spearheading an attempt to unify disparate eastern
rebel factions into a force that can oust President Joseph Kabila, who
refused to step down when his second and final term in office expired
last year.

The deputy commander of the U.N. force was dispatched to Uvira to
rally U.N troops and encourage the army to stand and fight. Congo has
also dispatched its top general, Didier Etumba, to the front.

During a stopover on Thursday in the eastern city of Goma, Etumba
downplayed the rebel threat. “It’s a flash in the pan and we’re going
to put it out,” he told reporters at the airport.

Dollar versus Rand 6 Month Chart INO 13.6380
http://quotes.ino.com/charting/index.html?s=FOREX_USDZAR&v=d6&t=c&a=50&w=1

Egypt Pound versus The Dollar 3 Month Chart INO 17.6257
http://quotes.ino.com/charting/index.html?s=FOREX_USDEGP&v=d3&t=c&a=50&w=1

Buhari helped mark the country’s 57th independence anniversary with
the troops, Sani Usman, a spokesman for the army, said by phone from
the city.

The Nigerian leader said in a national broadcast earlier Sunday that
his government successfully rolled back the advance of the Islamist
insurgency, now in its eighth year in Africa’s most populous country
with more than 180 million people.

Ghana Stock Exchange Composite Index Bloomberg +37.71% 2017
http://www.bloomberg.com/quote/GGSECI:IND

Under this dollarized regime, Zimbabwe’s fiscal authorities could no
longer demand that the Reserve Bank of Zimbabwe supply the government
with credit (read: print money). This hard budget constraint became
too onerous for the free spending government to abide by. In
consequence, Zimbabwe’s government has employed Harry Houdini’s magic
and circumvented the hard budget constraint imposed by dollarization.
It has done so by creating a new fake dollar, which is referred to as
the “New Zim Dollar.” Not surprisingly, this new Houdini creation is
rapidly becoming worthless. This makes the methodology that I employed
to measure inflation during Zimbabwe’s hyperinflation episode relevant
again. Since Old Mutual’s price on the Zimbabwe Stock Exchange is
denominated in “New Zim Dollars” and Old Mutual’s price on the London
Stock Exchange is denominated in British pound sterling, we can create
a “New Zim Dollar”/sterling implied exchange rate. This exchange rate
can be transformed using PPP to accurately measure Zimbabwe’s
inflation. At present (09/29/17), Zimbabwe’s annual inflation rate has
soared to 242.72%. This makes it the second highest inflation rate in
the world after Venezuela (see chart below).

Tanzania banned a Swahili-language newspaper for three months after
the weekly allegedly fabricated quotes and attributed them to
President John Magufuli, the government said.

The newspaper known as Raia Mwema, which carried the front-page
headline “Presidency Will Overwhelm John Magufuli’’ in its latest
edition, is the third Tanzanian newspaper to be banned since June.

“The government maintains that the newspaper is entitled to fair
comment,” according to a statement on the government spokesman’s
Twitter account. “Unfortunately, and with bad intention, the newspaper
published fake quotes attributed to President John Pombe Magufuli. The
newspaper has been warned before about other mistakes.”

Kenyatta told a campaign rally Friday that the proposed electoral law
changes will guarantee transparency by preventing malpractice. Deputy
President William Ruto, speaking at the same event, said the vote will
go ahead as planned.

“Kenyans will go to polls in October 26 whether Mr. Odinga
participates or not,” he said.

“There is an attempt by Jubilee at changing the rules of the game
midstream,” Samwel Mohochi, executive director at the Kenyan section
of the International Commission of Jurists, said by phone Friday from
Nairobi, the capital. “The effect of this grandstanding is further
polarizing the country which may lead to violent confrontations.”

Kenya’s Eurobonds have lost investors 1.3 percent since the Sept. 1
court decision, making them the worst performers in Africa, according
to data compiled by Bloomberg. The Kenyan shilling has weakened 2
percent against the dollar in that period.

The cost of living measure is down from 8.04 per cent in August.

The rate has slid back to within government’s preferred band of 2.5 to
7.5 per cent.

“Between August and September, food and non-alcoholic drinks’ index
decreased by 1.28 per cent,” the Kenya National Bureau of Statistics
(KNBS) said in a statement.

Carrots dropped by the biggest margin of 32 per cent to an average
price of Sh67 a kilo while a similar quantity of cabbages dipped 13
per cent to Sh46.

Tomatoes, however, continued to rise, crossing the Sh100 level for the
first time this year with a kilo retailing at Sh103.

Par Value:                  0.05/-
Closing Price:           24.75
Total Shares Issued:          40065428000.00
Market Capitalization:        991,619,343,000
EPS:             1.21
PE:                 20.455

Nakumatt Supermarket has closed its Junction branch in Nairobi, even
as the retailer banks on cash injection from a new strategic investor
to address its frequent stock outs at its outlets.

In a public notice released Sunday, the cash-strapped retailer said it
had relinquished its rights over the premises pursuant to a surrender
dated September 15, 2017.

“The premises will be closed to the public from October 1, 2017 and no
trading will be permitted at the premises,” read the notice.

Conclusions

The Tuskys Nakumatt Merger is Alice in Wonderland.

Nairobi All Share Bloomberg +21.65% 2017
http://www.BLOOMBERG.COM/quote/NSEASI:IND

162.21 +1.17 +0.72%

Nairobi ^NSE20 Bloomberg +17.74% 2017
http://j.mp/ajuMHJ

3,751.46 +34.74 +0.93%

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

Lots going on in the World.
The Catalan government said 90 percent voted to leave Spain and
Puigdemont said in a televised statement “The citizens of Catalonia
have won the right to have an independent state,”
Rumours are now rife that Rajoy will impose direct rule.
The Euro lurched lower as Investors factored in this Fissure. The euro
fell 0.6 percent to $1.1738.
In Spain, the IBEX stocks index fell 1.3 percent in early trade.
The Las Vegas shooting is now the deadliest mass shooting in U.S.
history: More than 50 dead, 200 injured
Nakumatt Supermarket has closed its Junction branch in Nairobi The
Tuskys Nakumatt Merger is Alice in Wonderland.
Kenya’s Eurobonds have lost investors 1.3 percent since the Sept. 1
court decision, making them the worst performers in Africa, according
to data compiled by Bloomberg.
The Nairobi All Share retreated -0.64% and is -6.70% since August 28th.
The Nairobi NSE20 Index eased 19.30 points to close at 3732.16
Trading remained lacklustre at 370.641m.

Communications Authority of Kenya (CA) reported that Safaricom had
80.4 per cent share of voice traffic, up from 75.7 per cent the
previous year. Safaricom was reported as denying market rumours which
started out of Ethiopia that Safaricom was set to buy a 50% stake in
Ethic-Telecom. Safaricom eased -1.01% to close at 24.50 and traded
6.224m shares worth 153.249m which represented 41.32% of the total
volume traded. i expect Safaricom to announce a foray into Ethiopia in
due course.

TPS Serena Hotels corrected -4.672% to close at 25.50 and traded 63,400 shares

Kenyan authorities should take a closer look at the impact of a cap on
lending rates imposed a year ago, to determine if its intended
purposes are being met, the chief executive of Standard Chartered
Kenya Lamin Manjang said. Lamin Manjang, the head of the Kenyan unit
of Standard Chartered, said some borrowers, such as small and medium
enterprises, had been locked out of the credit market, while overall
lending growth had ground to a near halt.

“With the data that we have got over the last 12 months since the rate
cap was implemented, it should give cause for a review,” Manjang told
Reuters in a Friday interview.

He said the government needed to consider issues of credit
availability to borrowers when it carries out a review of the cap.

“What the bank would like to see is a situation where rates are
determined by market forces because that is what is going to be
efficient and sustainable in the long run,” he said.

Jude Njomo, the legislator who sponsored the rate cap bill, has
however warned any move to change the rate cap law will fail, stating
there is no evidence banks would lower rates if not compelled to do
so. Manjang said lenders had closed some branches, laid off staff and
seen their loan book growth slow in response to the cap. The situation
will become tougher under a new accounting standard due to come into
force on January 1 which will require lenders to shift their loss
models from incurred to expected.

“When an asset is booked we will anticipate what the loss would be and
then take it up front. That change will clearly have an impact across
the banking industry,” he said.

StanChart plans to use its reserves for the extra provisions, which
will lower its core capital ratio slightly from the current 21 percent
but the bank will not need to do extra capital raising, he said.

“We will still be comfortably within the limits that have been set,”
Manjang said, referring to the minimum capital requirement of 14.5
percent.

That Interview affords us a deep granular insight into the Banking
Sector. In particular The Rate Cap Bill is now going to be compounded
by IFRS9, which will effectively haircut some limping Balance-sheets
even further. Lamin is of course signalling StanChart's muscle.

StanChart eased -2.6% to close at 225.00 on just 200 shares worth of
business. Shares are well held and this area around 225.00-230.00
looks exhausted from the Supply side.
Equity Bank closed unchanged at 38.75 and traded 1.055m shares.
KCB Group closed unchanged at 41.00 and traded 923,700 shares.

Pan Africa Insurance co was high ticked +5.36% to close at 29.50.

EABL closed unchanged at 250.00 and traded 159,700 shares.

KenGen eased -1.15% to close at 8.60 and traded 60,900 shares. The Low
volume traded is signalling the price correction is complete.

KenolKobil closed unchanged at 16.00 and traded 2.053m shares.