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Tuesday 07th of November 2017 |
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Macro Thoughts |
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Oil Pierces Two-Year High as Saudi Roundup Rattles Markets Africa |
Oil prices have climbed by $15 from their nadir this year to breach $57 a barrel on Monday, spurred by a cascade of events that began with widespread arrests among Saudi Arabia’s elite.
The arrests raise “the specter of instability in the kingdom,” said John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund, by telephone. “It’s another round of jawboning here to get this nervous market higher.”
Futures rallied 3.1 percent in New York to levels last seen in June 2015. Dozens of princes, government ministers and billionaires were arrested in a sweeping anti-corruption probe, including high-ranking officials involved with state oil producer Saudi Aramco. Though the shake-up involving the world’s biggest crude exporter underpinned crude’s rally, a promise by Nigeria’s oil minister to cap production joined with the dollar’s drop added upward momentum as the session progressed.
“The geopolitical supply risk premium is starting to bear its head in the market right now because OPEC supply cuts have made it relevant,” Michael Loewen, a commodities strategist at Scotiabank in Toronto, said by telephone. Now that OPEC “has capped supply and demand has continued to grow higher over time, we are near balanced and that means supply risk is more important.”
The low point for oil prices in New York this year was 42.05 a barrel in June. Monday’s gain also kicked up company shares with the Standard & Poor’s 500 Energy Index advancing as much as 2 percent, led by increases from driller Chesapeake Energy Corp. and the oilfield services company Baker Hughes.
West Texas Intermediate for December delivery jumped $1.71 to settle at $57.35 a barrel on the New York Mercantile Exchange. That’s the biggest gain since Sept. 25 on a percentage basis. Total volume traded was about 27 percent above the 100-day average.
Brent for January settlement surged $2.20 to settle at $64.27 on the London-based ICE Futures Europe exchange, the largest rise since July. The premium at which Brent traded to January WTI was $6.70.
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Africa |
The Trump character is named Gary “Green” Gwynplaine, a wealthy vulgarian, born with green hair, who likes to refer to himself as the Joker. About this Joker, and about the threat he poses to an America this writer loves, it’s a treat to watch Rushdie let fly.
The Joker runs for president and packs arenas, the ghouls onstage behind him “swaying like doo-wop backing singers.” Suddenly “lying was funny, and hatred was funny, and bigotry was funny,” and the entire country becomes “a lurid graphic novel.”
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The inside story of the Saudi night of long knives Pepe Escobar @asiatimesonline Law & Politics |
The House of Saud’s King Salman devises an high-powered “anti-corruption” commission and appoints his son, Crown Prince Mohammad Bin Salman, a.k.a. MBS, as chairman.
Right on cue, the commission detains 11 House of Saud princes, four current ministers and dozens of former princes/cabinet secretaries – all charged with corruption. Hefty bank accounts are frozen, private jets are grounded. The high-profile accused lot is “jailed” at the Riyadh Ritz-Carlton.
War breaks out within the House of Saud, as Asia Times had anticipated back in July. Rumors have been swirling for months about a coup against MBS in the making. Instead, what just happened is yet another MBS pre-emptive coup.
“This is more serious than it appears. The arrest of the two sons of previous King Abdullah, Princes Miteb and Turki, was a fatal mistake. This now endangers the King himself. It was only the regard for the King that protected MBS. There are many left in the army against MBS and they are enraged at the arrest of their commanders.”
To say the Saudi Arabian Army is in uproar is an understatement. “He’d have to arrest the whole army before he could feel secure.”
And, in practice, blunders also followed. The House of Saud lost its lethal regime-change drive in Syria and is bogged down in an unwinnable war on Yemen, which on top of it prevents MBS from exploiting the Empty Quarter – the desert straddling both nations.
The Saudi Treasury was forced to borrow on the international markets. Austerity ruled – with news of MBS buying a yacht for almost half a billion dollars while lazing about the Cote d’Azur not going down particularly well. Hardcore political repression is epitomized by the decapitation of Shi’ite leader Sheikh Al-Nimr. Not only the Shi’ites in the Eastern province are rebelling but also Sunni provinces in the west.
According to the source, “he might have gotten away with the arrest of CIA favorite Mohammed bin Nayef if he smoothed it over but MBS has now crossed the Rubicon though he is no Caesar. The CIA regards him as totally worthless.”
Meanwhile, a pile-up of purges, coups and countercoups shall be the norm.
Conclusions
This is a perilous moment for the House of Saud. Overextended abroad. Paranoid about Iranians under the bed. And a Crown Prince being coached by Jared Kushner, Bibi Netanyahu and MBZ.
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"China is more confident today than anytime in its modern history," notes Tom Donilon @BV Law & Politics |
There are favorable elements. Trump seems to have a genuinely good relationship with Prime Minister Shinzo Abe of Japan. In Beijing, the Chinese will roll out the red carpet, with parades, ceremonies and rhetorical flourishes proclaiming seminal successes. They know Trump loves flattery.
But the most unacceptable outcome for Xi is a regime collapse, a unified Korea. The Chinese won't sit still for that. Earlier this year, in a session at Mar-a-Lago, Xi explained the complexities of the Korean Peninsula to the U.S. president. This time he might offer another history lesson, reminding Trump that in 1950 General Douglas MacArthur assured Washington that a war with China over Korea was "inconceivable."
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28-AUG-2017 :: China Rising Law & Politics |
China’s parabolic rise has been simply breath-taking. Millions of Chinese have been lifted out of poverty and China continues to expand at a pace that other big economies can only dream about. Xi Jinping’s One Belt One Road [OBOR] program binds the world to Beijing because all the roads and railways have but one destination and that is China. Washington has metastized into an epicentre of risk [Donald Trump refers] and talk of a unipolar US-dominated world have largely evaporated. President Putin refused to be rolled over by a Victoria Nuland inspired ‘’Colour Revolution’’ in the Ukraine and drew a line in the sand and one of the collateral consequences of that was to send President Putin into the ready embrace of Xi Jinping. In fact, far from being a unipolar world, we have entered a bipolar or even a Tripolar world [US, China and Russia].
Apart from a few half-hearted and timid FONOPs [freedom of navigation operations], China has established control over the South China Sea. It has created artificial Islands and then militarised those artificial islands across the South China Sea. It is a mind-boggling geopolitical advance any which way you care to cut it. China has advanced its footprint in Pakistan, where it has leased the Gwadar Port [giving China and Central Asia access to the Gulf region and the Middle East] for 43 years. Sri Lanka, which gorged on Chinese debt, has had to disgorge the Hambantota Port to its creditor. And recently, we saw China formally open a miitary facility in Djibouti. ese moves taken together speak to a material Chinese advance. e pivot to Asia which was supposed to contain China is dead in the water and China has sprung that trap.
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#UPDATE 2017 is on track to be the hottest year on record except for two warmed by El Nino phenomena, the UN says Law & Politics |
2017 is on track to be the hottest year on record except for two warmed by El Nino phenomena, the UN's World Meteorological Organization said Monday.
Even if the cyclical weather events -- which bump up global temperatures every three to seven years -- are included, this year will still be one of the three warmest ever, the WMO said as it issued its annual State of the Global Climate report at talks in Bonn.
Average temperatures from 2013 through 2017 are also likely to be the highest since accurate measuring began more than a century ago, constituting strong evidence of a long-term trend.
Some 30 percent of the world's population now experience "extreme hot temperatures" for at least several days each year, the UN agency said.
Meanwhile the number of vulnerable people exposed to potentially lethal heatwaves has increased by 125 million just since 2000.
"The past three years have all been in the top three years in terms of temperature records," said WMO Secretary-General Petteri Taalas.
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The Great Bond Bull Market May Be Coming to an End @business International Trade |
An obscure charting signal that went off just as the three-decade bull run in bonds started is close to reversing.
The yearly MACD chart -- moving average convergence and divergence -- for 10-year Treasury yields is getting very close to crossing the nine-year signal line. The two have met just once before, back in 1986 when the MACD’s slide below the signal indicated momentum was there for the sort of declines in yield that the current long-term bond rally has delivered. If the two cross in the other direction it would indicate the potential for sustained increases in yields.
The annual MACD is just 0.0203 below the nine-year signal line, with the gap shrinking from a 0.6401 chasm back in 1993. Yes, the lines on this chart move at a glacial pace, their current rate of change means they may not meet until some time next year or perhaps later. However, when this chart turns it tends to run a while.
Treasuries traders may need to get ready for the Halley’s Comet of chart points to appear. If it comes, it may be signal the end of the market as they and their forbears have known it.
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12-SEP-2016 :: Mirrors on the ceiling, The pink champagne on ice International Trade |
A lot of risk calculations are based on Value at Risk (VAR). Essentially, you overlay a volatility measure over the portfolio, and you calculate how much money is on the line. Central banks have suppressed volatility therefore in real terms; investors are now holding bigger positions at these current artificially suppressed levels. If volatility spikes, positions are going to be reduced en masse. Or to put it another way and to borrow the lyrics from the Eagles Hotel California: Mirrors on the ceiling, The pink champagne on ice And she said “We are all just prisoners here, of our own device” Last thing I remember, I was Running for the door I had to find the passage back To the place I was before “Relax,” said the night man, “We are programmed to receive. You can check-out any time you like, But you can never leave! “ What is clear is that we are at the fag-end of this party.
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Africa |
“There is no doubt that Mugabe is on his way out and his attempts to shape the future of Zanu-PF according to his will are facing resistance,” Rashweat Mukundu, an analyst with the Harare-based Zimbabwe Democracy Institute, said by phone. But Mugabe will probably still be able to dictate who his successor is because he has “both political and state power on his side,” he said.
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Congo sets presidential election for December 2018 Africa |
KINSHASA, (Reuters) - Congo’s electoral commission announced on Sunday that long-awaited presidential elections to replace President Joseph Kabila would take place on December 23, 2018.
Around 43 million voters have been registered for the vote so far, Corneille Nangaa told a news conference in Democratic Republic of Congo’s capital, Kinshasa.
The election will be held on December 23, 2018, with the results to be published on January 9, 2019, and the president to be sworn in on January 13, another official from the Independent Electoral Commission (CENI), Jean Pierre Kalamba, told the same news conference.
The election, originally scheduled for late 2016, has been repeatedly delayed.
Those delays have triggered unrest and raised fears the central African nation could slip back into the conflicts that killed millions around the turn of the century, mostly from hunger and disease.
The electoral commission had said last month that the presidential vote could not take place until April 2019 at the earliest, and the opposition had warned that the population would “take matters into its own hands”.
Opposition leaders reacted furiously to the new date.
“The predatory regime wants to prolong the instability and misery of the people. We do not accept this fantasy calendar,” exiled opposition leader Moise Katumbi tweeted.
Kabila has ruled Congo since his father was assassinated in 2001. He says delays are owing to problems registering millions of voters across the vast, forested country.
Opponents say he is using them to eventually remove term limits that prevent him from standing again, as presidents in neighboring Rwanda and Congo Republic have done. He denies that, but has not categorically said he will step aside.
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N.S.E Today |
Brent Crude Futures rallied 3.1 percent in New York yesterday to levels last seen in June 2015. The kristallnacht in the Kingdom of Saudi Arabia refers. Low Oil Prices have been a significant Tailwind for East African Economies. The Japanese Nikkei 225 Index closed at a 21 year High. The South African All Share which is +18.40% Year to date is also at a record high, President Zuma might consider trumpeting that fact to counter what is an overwhelmingly negative turn. I think the Rand is poised for an exponential asymmetric downside move. Renaissance Capital's Yvonne Mhango downgraded Kenya GDP for 2017 to 4.4% and 2018 to 4.6% The Cabinet Secretary Treasury talked up the Economy and forecast GDP would rise to more than 6 percent next year. The FT's John Aglionby tweeted CS Rotich in no hurry to review interest rate cap. “We’re still monitoring the situation.” The Nairobi All Share corrected 1.75 points lower to close at 161.34. The Nairobi NSE20 Index edged -9.13 points lower at 3788.84 Equity Turnover crossed a billion to register 1.109b most of which was transacted in Safaricom.
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N.S.E Equities - Commercial & Services |
Safaricom saw heavy duty volume action with 34.976m shares worth 847.246m changing hands as the share price corrected -2.00% lower to close at 24.50. Safaricom [with Danone/Brookside and Bidco - not listed] are caught in the cross hairs of NASA'S Resist Boycott strategy. The correction will be short-lived. Safaricom is a Need not a Want.
The news that Former Kenya Airways (KQ) Finance director Alex Mbugua has won a case against his former employer challenging his ‘irregular’ dismissal and that Justice Monica Mbaru has at the same time reinstated Mr Mbugua to his former post and directed that the national carrier give him access from Wednesday, was not well received. This is an activist Judicial decision and it is unconscionable that a Court should instruct a Company as who it should hire. Kenya Airways corrected -2.54% lower to close at 5.75 and traded 652,000 shares.
Standard Group which issued a FY Profits Warning yesterday rebounded +4.48% to close at 35.00. Standard Group is up an eye-popping +112% Year To Date.
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N.S.E Equities - Finance & Investment |
The Banks were unchanged to soft today and the lack urgency around the repeal of the rate cap surely weighed on prices. Equity Bank closed unchanged at 40.00 and traded 2.993m shares worth 119.814m. Equity Bank is +10.344% since releasing its Q3 2017 Earnings at the end of last month. COOP Bank eased -0.61% to close at 16.40 and traded 2.176m shares. KCB corrected -1.21% to close at 40.75 and traded 798,700 shares.
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N.S.E Equities - Industrial & Allied |
E.A. Portland Cement Co reported a FY 2017 Loss of 16.35 a share versus a Profit of 46.06 shillings previously. FY Revenue clocked a -21.903% decline and these were a poor set of results. The Company said the following in their commentary; current excess capacity which exceeds demand, downward pressure on cement prices is projected to prevail in the short to medium term. ''Shareholders have come together and are agreeable to a recapitalisation plan with one earmarked option being phased or instant cash injection from the sale of assets including idle and fully mined land which is subject to Government approval'' EAPCC's net asset value is some ways North of the share price and clearly they are looking to unlock some of that value in order to replenish the balance sheet.
KenGen eased -0.56% to close at 8.90 and traded 139,500 shares. KenGen is well supported here at +53.44% Year To Date.
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