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Satchu's Rich Wrap-Up
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

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

“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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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

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.


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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Facing defeat in the proxy war in Syria, the Israeli-Saudi tandem is planning a new front against Hezbollah,
Law & Politics

The danger is a “black swan.” What happens if Israel goes on attacking
the Syrian army and industrial premises in Syria (which is happening
almost daily) – and Syria does shoot down an Israeli jet?

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Law & Politics






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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

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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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23-NOV 2015 I cannot help feeling we are like frogs in boiling water
Law & Politics

We have created massive interference in the "cosmic tuning" phenomenon

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State of the UK Govt right now: @juliamacfarlane
Law & Politics

Foreign Sec gaffe may cost UK citizen extra 5 years in Iran jail

Minister under fire for meeting w Netanyahu brokered by lobbyist
without telling FCO

Deputy PM under investigation for extreme porn

Defence Sec quit amid sex misconduct claims

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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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Currency Markets at a Glance WSJ
World Currencies

Euro 1.1608
Dollar Index 94.72
Japan Yen 113.98
Swiss Franc 0.9982
Pound 1.3172
Aussie 0.7681
India Rupee 64.645
South Korea Won 1111.42
Brazil Real 3.2496
Egypt Pound 17.6417
South Africa Rand 14.1055

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New Zealand Dollar via @business 0.6932 [BELOW 0.6900]
World Currencies

New Zealand’s government said that the independence of the Reserve
Bank won’t change and that it will retain the existing 1-3 percent
inflation goal. The new administration also confirmed it’s considering
a dual mandate for the central bank of targeting full employment as
well as price stability.

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Australia's 10-year bonds yielded 2.58 percent on Tuesday, 26 basis points above similar-maturity U.S. Treasuries
International Trade

Australia’s 10-year bonds yielded 2.58 percent on Tuesday, 26 basis
points above similar-maturity U.S. Treasuries. The premium has shrunk
from more than 60 basis points in September, and more than 1
percentage point in late 2014.

The Aussie tumbled 2.3 percent in October, the worst month since
December, and dropped to a three-month low of 76.25 cents on Oct. 27.

For now, a decline to 74 cents in the near term is a “reasonable
target,” Aberdeen’s Athey said, adding he’s also betting on gains in
Aussie bonds and losses in Treasuries.

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“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

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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South Africa All Share Bloomberg +18.40% 2017 (record high)

Dollar versus Rand 6 Month Chart INO 14.1052 [14.40 and above]


Egypt Pound versus The Dollar 3 Month Chart INO 17.6417


Egypt EGX30 Bloomberg


Nigeria All Share Bloomberg +37.42% 2017


Ghana Stock Exchange Composite Index Bloomberg +41.11% 2017


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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.

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.

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.

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.


by Aly Khan Satchu (www.rich.co.ke)
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November 2017

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