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Macro Thoughts

Home Thoughts

It was the sinister genius of Donald Trump to turn the hallowed ritual
of the daily briefing into his very own reality show. The press, he
learned during his tabloid years in New York, is essentially a
sensationalistic enterprise. On the campaign trail, he took advantage
of the industry’s most self-serving impulses to inject himself hourly
into the national consciousness

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.

“All of the activity has to do with an effort at restructuring the
geopolitics and geo-economics of the region,” says Theodore Karasik,
senior adviser at Gulf State Analytics, a US-based consultancy. “This
Saudi-Emirati programme has been in the works for a couple of years .
. . Their view is that Iran has its Shia pincer around them and they
are going to push back, really hard. It is part of a regional project
that includes Syria, Libya, Yemen and also Palestine.”

“It is not just Saudi Arabia whose actions seem unpredictable; the US
is not predictable either,” said one Beirut-based European diplomat.
“My fear is over what kind of green light Mohammed bin Salman was
given, and that he will go too far.”

Riyadh is expected to hit back at Iran via Lebanon and its ally
Hizbollah. Theories range from the raising of new militias to
instigating a conflict between Hizbollah and Israel, who fought each
other to a standstill in 2006.

Yoel Guzansky, a research fellow at the Institute for National
Security Studies in Israel, says it is still unlikely that Israel or
Hizbollah are looking for a fight but expressed concern that a
destabilised Saudi Arabia could drag the two into conflict. “If this
happens, we will bring Lebanon back to the stone age,” he warns.

“The Yemen war was meant to be a demonstration of Saudi Arabia’s
ability to push back against Iran’s role in the region,” says Peter
Salisbury, a researcher at Chatham House, the think-tank. “The
opposite has happened though — the Iranian role has expanded and the
Houthis have dug in.”

Such assessments may explain why regional allies such as Egypt have
shown little appetite for Saudi Arabia’s new offensive. Abdel Fattah
al-Sisi, Egypt’s president, said in a recent interview with CNBC that
he was not planning any measures against Hizbollah.

“This region can’t take any more turmoil,” he said.

I worry that those urging M.B.S. to be more aggressive in confronting
Iran (whose malign regional influence does need counterbalancing) —
like the U.A.E., Trump, Jared Kushner and Bibi Netanyahu — will push
M.B.S. into a war abroad and at home at the same time, and we could
see Saudi Arabia and the whole region spin out of control at the same
time. As I said, I’m worried.

Conclusions

This in fact the most perilous moment for the House of Saud [or is
Salman?] that I can recall.

This is deluded thinking at a time when things could seriously fall apart:
Turning and turning in the widening gyre
The falcon cannot hear the falconer;
Things fall apart; the centre cannot hold;
Mere anarchy is loosed upon the world,
The blood-dimmed tide is loosed, and everywhere  e ceremony of
innocence is drowned;
The best lack all conviction, while the worst Are full of passionate intensity.
Surely some revelation is at hand;
Surely the Second Coming is at hand
[W.B Yeats  The Second Coming]

The Hezbollah news outlet said the fighters Velayati was addressing
had come to defend the Sayeda Zeinab shrine in Damascus, a magnet for
thousands of Iraqi and Afghan Shi‘ite militia recruits who go there
before being assigned to front lines to fight Sunni rebel groups
opposed to Assad.

Almost every Shi‘ite militiaman bears insignia on his combat fatigues
with the words “For your sake, Sayeda Zeinab”.

The fall of Priti Patel, a rising Tory star, came as no surprise in
Whitehall. Since she moved to the Department for International
Development (DFID) last year, the word among officials has been that
the only development she is really interested in is of her own career.

In May 2016, a Facebook page called Heart of Texas urged its nearly
254,000 followers to rise up against what it considered to be an
urgent cultural menace. A mosque in Houston had opened up a new
library, and Heart of Texas planned to protest. “Stop Islamization of
Texas,” it warned.

Word of the protest spread quickly, but supporters of the mosque were
also ready to mobilize. “Bigots are planning to intimidate through
weaponized fear this Saturday at noon,” one of them wrote on Reddit.
The post linked to a Facebook page for United Muslims of America, a
group that said it was planning a counterprotest for the same time and
place.

By now you might be able to guess the punch line here. Heart of Texas
wasn’t a real group, as Business Insider later reported. United
Muslims of America is a real organization, but the Facebook page
promoting the counterprotest was not run by the actual group, as The
Daily Beast found. Instead, according to documents made public last
week by the Senate Intelligence Committee, both the pro- and
anti-mosque protests had been planned and promoted by Russian trolls.

As I watched these videos recently, I had an epiphany about the Russia
influence campaign. The Houston protest videos depicted a bunch of
Americans duped into fighting one another in public, all at the whim
of an unseen force that, through expert and surreptitious cajoling,
had gotten them to lose control of themselves on camera. I’d seen this
show many times before, and you’ve probably have, too. It’s called
“The Bachelor.”

And not just the “The Bachelor,” but every other show like it. The
Russians are running a reality show through Facebook and Twitter, and
their contestants are all of us.

Over the past few days, I reached out to several reality show
producers, asking them to compare the Russian digital influence
campaign to the world of unscripted TV. The more they told me about
reality shows, the more the metaphor seemed to explain Russia’s
trolling campaign — how it worked, what it aimed to do and why
campaigns like it will be so difficult to fight.

On reality TV, producers can do that because they keep detailed
dossiers on everyone on set. But guess what? Russian trolls had
detailed dossiers too — and they could consult them at scale. Using
Facebook’s exquisitely detailed ad-targeting and viral propagation
systems, trolls could create content that perfectly matched your
fears, passions and ego.

“Facebook pages are veritable instruction manuals for someone who
wants to exploit you,” Ms. Shapiro said. Given these tools, the
Russian plan was simple: “You just poke the bears, put them in a cage
and let them fight.”

This gets to what’s really pernicious about the Russian campaign. It
so deftly blended artifice and reality — for so many people, across so
many issues, in so many places — that it is impossible, now, for any
of us to tell where reality and fakery begin and end.

Is it the trolls’ world, or is it ours?

Euro 1.1597 The euro was little changed at $1.1594 EUR= and in sight
of a 3-1/2-month low of $1.1553 set at the week's start
Dollar Index 94.90 The dollar index against a basket of six major
currencies was steady at 94.899 .DXY, staying below a three-month high
of 95.150 set in late October.
Japan Yen 113.70
Swiss Franc 0.9995
Pound 1.3121
Aussie 0.7681
India Rupee 64.935
South Korea Won 1113.65
Brazil Real 3.2547
Egypt Pound 17.6425
South Africa Rand 14.1550

U.S. crude rose to $57.92 on Wednesday, highest since July 2015, as
tension flared between Saudi Arabia and Iran, while the Saudi crown
prince tightened his grip on power.

Brent crude gained 0.25 percent to $63.65 per barrel LCOc1 to edge
back towards a 2-1/2-year high of $64.65 scaled on Tuesday.

As Venezuelan bond prices sink toward a mere 20 cents on the dollar, a
pair of sovereign debt specialists are publicly asking questions that
many people are wondering in private: Is President Nicolas Maduro
fooling the bond market? Was last week’s debt restructuring
announcement simply a ruse to spark a panic, push down prices and then
buy them back on the cheap?

“Maduro drove the secondary market prices of the bonds off a cliff,”
Cleary Gottlieb Steen & Hamilton’s Lee Buchheit and Duke University’s
Mitu Gulati wrote Wednesday in an opinion piece in the Financial
Times.

There’s been radio silence from Caracas since the unveiling of the
plan last week -- including when Bloomberg News called the Finance
Ministry seeking comment on this theory -- but such a move isn’t
without precedent. A decade ago, Rafael Correa, the president of
Ecuador and a close ally of Maduro and his mentor Hugo Chavez,
implemented a similar tactic, announcing he was defaulting on a series
of foreign bonds and then scooped them up in the secondary market at
depressed prices.

Frontier Markets

When José Eduardo dos Santos, the man who ran Angola with
near-absolute authority for 38 years, made João Lourenço his chosen
successor last year, Mr Lourenço swore he would not be anyone’s
puppet.

Few took him at his word. Mr dos Santos, who remains head of the
Popular Movement for the Liberation of Angola (MPLA), would, most
believed, continue to run the oil-rich nation for the benefit of the
elite in general and his family in particular.

Yet less than three months after the national elections that sealed Mr
Lourenço’s ascendancy, the new president of sub-Saharan Africa’s
third-biggest economy appears to be keeping his promise. So sweeping
are some of the changes the 63-year-old has wrought that there is even
speculation that he has the dos Santos power structure in his sights —
including billionaire daughter Isabel, who heads Sonangol, the state
oil company cash machine.

If that proves the case, it could have big implications both for the
global oil industry and for Angola’s 13m people, many of whom live in
poverty despite the country’s vast, if dwindling, oil wealth.

Mr Lourenço’s bold moves have involved personnel changes and a
rhetorical laying down of the gauntlet. In his inauguration speech in
September, he hit out at monopolies in telecoms and cement, a barely
disguised attack on Ms dos Santos, who has become Africa’s richest
woman on the back of these, among other, industries. In another
apparent swipe at the dos Santos clan, he abolished a government
communications department through which money had been funnelled, via
lucrative contracts, to one of the former president’s other daughters.

Last week, the new president disposed of the central bank governor, in
what may be an attempt to clamp down on illicit flows of money
overseas. He has brought in his own loyalist as presidential secretary
for economic affairs.

Even more significant for a government that derives the bulk of its
revenue from petroleum, this month Mr Lourenço appointed Carlos
Saturnino as his secretary of state for oil. Mr Saturnino had been
sacked by Ms dos Santos from Sonangol last year. Now he has popped up
again in a position of oversight and in charge of a 30-day review of
the sector.

“Lourenço cannot govern without controlling the finances, particularly
the oil revenues,” said Paula Roque, a political analyst at Oxford
university specialising in Angola, adding that this helped explain his
apparent circling of Ms dos Santos. “I think he will push for her to
leave, but there will be furious resistance.”

Ms dos Santos could not be reached for comment.

Ricardo Soares de Oliveira, an expert on Angola, also at Oxford, said
that initial disappointment at Mr Lourenço from civil society had
given way to cautious expectation. “A lot of people who were critical
of João Lourenço are now holding their breath,” though the new
president hadn’t “touched dos Santos’s children at Sonangol or the
sovereign wealth fund” he said, referring to Isabel and her brother,
José Filomeno, who runs the country’s $5bn sovereign fund.

It was, he cautioned, “premature to assume that Lourenço has a broader
development agenda”.

Ms Roque agreed matters could not be taken at face value. “Everything
in Angola has a shadow. And the shadow here is that Lourenço and a lot
of the elite have intertwined business and economic interests. So they
can’t do much without harming themselves.” Some of the changes had
almost certainly been negotiated with Mr dos Santos, she said, given
his linchpin constitutional position as MPLA president.

Others are more sceptical still that anything substantive has changed.
Rafael Marques de Morais, an Angolan investigative journalist and
activist, called Mr Lourenço’s government “a redux of the dos Santos
one”. There had, he said, been no move to bolster anti-corruption
laws, nor to respond to allegations in the leaked Paradise Papers over
the alleged transfer of four-fifths of the $5bn sovereign wealth
fund’s assets to a Swiss-based investment manager who is a friend of
José Filomeno. “For someone who talked about fighting corruption for
months, the silence is deafening.”

Piers Pigou, an analyst at the International Crisis Group, said some
changes might have been orchestrated to appease ordinary Angolans, who
in August voted for the MPLA in record low numbers.

“Things may have been choreographed to give the impression that things
are changing and that there’s a new broom,” he said. “It’s possible
that much of this is theatre.”

Zimbabwean President Robert Mugabe’s decision on Monday to fire former
spy chief Emmerson Mnangagwa as his deputy is wrecking the very
security apparatus that has kept him in power for almost four decades
in the southern African nation.

Mnangagwa, who received military training in Nanjing, China, had been
a pillar of a military and security apparatus that helped Mugabe
emerge as the nation’s leader after independence from the U.K. in
1980. Mnangagwa, 75, was Zimbabwe’s first national security minister.

Now Mugabe, 93, has broken with most of his comrades who fought in the
liberation war, leaving the so-called Generation 40 faction of younger
members of the ruling party championed by his wife, Grace, in the
ascendancy. The final outcome of the power struggle could be
determined by the military and the stance of the 61-year-old commander
of the army, Constantine Chiwenga, who traditionally supported
Mnangagwa.

“I don’t think the army guys will take it lying down,” Annie
Chikwanha, a Zimbabwean professor of political science at the
University of Johannesburg, said Wednesday. “Other than the
presidential guard, I don’t think Mugabe really has control over the
rest of the armed forces. There is also massive disillusionment with
the state of the economy. I don’t think we can rule out a major show
of force by the army.”

The Zimbabwe National Liberation War Veterans Association condemned
Mnangagwa’s dismissal and said it was breaking with the ruling party.

“The party and indeed the nation is being traumatized by one person,
Robert Gabriel Mugabe, who is bent on maintaining his hold on power
and ensuring that he passes on this power to his wife in a dynastic
fashion,” the group said in a statement Wednesday. “We are stating in
no uncertain terms that we have completely disowned Mugabe. He is no
longer one of us.”

Mnangagwa’s firing and his expected expulsion from the ruling party
come amid growing tensions before elections next year when it may face
a seven-party opposition coalition that’s capitalizing on public anger
over cash shortages, crumbling infrastructure and a collapse in
government services. The economy has halved in size since 2000.

“Mnangagwa has been consumed by a monster he helped create -- the
so-called one center of power giving Mugabe powers to do what ever he
pleases without consulting anyone,” said University of Zimbabwe
political science professor Eldred Masunungure.

Supporters of Grace Mugabe, 52, gathered outside the headquarters of
the Zimbabwe African National Union-Patriotic Front on Wednesday with
banners calling for her to be named vice president. Mnangagwa’s
dismissal came after she accused him of plotting against her husband.
Similar allegations she made against then Vice President Joice Mujuru,
who also fought in the liberation war, led to her ouster three years
ago.

“Grace has always had this agenda to get rid of this entire cohort of
liberation struggle people,” said Chikwanha. “She is almost succeeding
-- the war veterans have been alienated.”

While Mugabe is the party’s candidate for the elections, Grace, the
president’s former secretary whom he wed in 1996 after the death of
his first wife, said on Sunday that she’s ready to succeed him.

Her announcement came as Zanu-PF is planning to amend its constitution
at a congress next month to ensure that a woman is appointed to its
top body, known as the presidium. It currently comprises the
president, Mnangagwa and Zimbabwe’s other vice president, Phelekezela
Mphoko.

“We’re experiencing what’s clearly the unraveling of the state under
Mugabe and, more significantly, the un-bundling of the securo-state in
which Mnangagwa and defense force commander Chiwenga are a part,” said
Ibbo Mandaza, head of the Southern African Political Economic Series
Trust in the capital, Harare.

Dollar versus Rand 6 Month Chart INO 14.1555
http://quotes.ino.com/charting/index.html?s=FOREX_USDZAR&v=d6&t=c&a=50&w=1

#Ghana Annual #Inflation at 11.6% @tEconomics
https://twitter.com/tEconomics/status/928278179294400512

Ghana Stock Exchange Composite Index Bloomberg +41.33% 2017
http://www.bloomberg.com/quote/GGSECI:IND

Meanwhile in Tanzania @masaku_
https://twitter.com/masaku_/status/927861842030014465

This is the second time in three months that the seven-judge bench is
being called upon to adjudicate on a presidential poll dispute.

On Wednesday, the CJ gave directions on timelines for the hearing of
the three petitions filed at the court, which is set to rule on the
matters by November 20.

Treasury secretary Henry Rotich has defended the government’s decision
to issue another Eurobond whose proceeds will partly be used to repay
a Sh77.3 billion ($750 million) syndicated loan issued in 2015.
Mr Rotich, in an interview Wednesday, said the fresh Eurobond and the
Treasury’s negotiations with international investors to delay debt
repayments did not indicate that the government was struggling to
service its loans.
The Treasury says that it is considering tapping the international
debt markets to either finance infrastructure developments or for
“liquidity management”.
The rapid rise in Kenya’s public debt to more than Sh4.4 trillion at a
time when the taxman is struggling to meet his targets has raised
fears over sustainability of the loans.
A Reuters story on Tuesday quoted Mr Rotich saying that most investors
in the syndicated loan had agreed to extend its maturity by six months
from October this year to April 2018, meaning the fresh Eurobond could
be floated before then.

Conclusions

The Eurobond Market is attractive at this moment.

Par Value:                  1/-
Closing Price:           40.75
Total Shares Issued:          3066056647.00
Market Capitalization:        124,941,808,365
EPS:             6.46
PE:                 6.308

KCB Group Q3 results through 30th September 2017 vs. 30th September 2016
Q3 Kenya Government securities available for sale 60.388247b vs.
46.967903b +28.573%
Q3 Loans and advances to customers (net) 419.494427b vs. 364.332066b +15.141%
Q3 Total Assets 643.832809b vs. 562.302261b +14.499%
Q3 Customer Deposits 496.305024b vs. 429.321388b +15.602%
Q3 Total shareholders’ funds 103.193001b vs. 91.313956b +13.009%
Q3 Total interest income 46.764414b vs. 48.496025b -3.571%
Q3 Total interest expenses [11.091349b] vs. [12.446856b] -10.890%
Q3 Net interest income 35.673065b vs. 36.049169b -1.043%
Q3 FX trading income 3.631784b vs. 3.529540b +2.897%
Q3 Total operating income 53.156900b vs. 50.818418b +4.602%
Q3 Loan loss provision [3.136905b] vs. [3.400445b] -7.750%
Q3 Total other operating expenses [30.739464b] vs. [29.075228b] +5.724%
Q3 Profit before tax and exceptional items 22.417526b vs. 21.743190b +3.101%
Q3 Profit after tax and exceptional items 15.076294b vs. 14.353622b +5.035%
Basic and diluted EPS 6.56 vs. 6.24 +5.128%
Gross NPL and Advances 34.731290b vs. 31.096578b +11.688%
Total NPL and Advances 30.969484b vs. 26.540155b +16.689%
Net NPL and Advances 9.226531b vs. 13.055209b -29.327%
Liquidity ratio 37.7% vs. 38.0% -0.300%

1. Personal Loans - 31.9%
2. Real Estate Loans - 17.1%
3. Manufacturing - 11.3%
4. Trade - 10.8%
5. Construction - 9.1%

Nairobi All Share Bloomberg +21.49% 2017
http://www.BLOOMBERG.COM/quote/NSEASI:IND

Nairobi ^NSE20 Bloomberg +18.27% 2017
http://j.mp/ajuMHJ

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