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Macro Thoughts

We are in ‘’nose-bleed’’ territory. This is ‘’Voodoo Economics’’

Meanwhile far from the volatile Frontier, we are witnessing whiplash
inducing moves at the centre. There has been a Major Flight to
''quality'' in 2019.
Treasuries, gold and the Japanese yen are clocking “the largest number
of outsized rallies” combined since at least 1990, according to Bank
of America Corp.
The latest milestone in the haven frenzy arrived this week, when the
yield on 30-year U.S. Treasuries slipped below 2% for the first time.
“Investors have not been so worried about the future in the past
thirty years,” BofA strategists led by Stefano Pascale wrote in an
Aug. 13 note.
The charge into havens this month has been spurred by flashing
recession indicators, trade-war tit-for-tat and data disappointments
-- all amid thin liquidity. Gold is up about 18% this year, while the
yen is the top performer against the dollar across G-10 currencies
[Bloomberg]
Safe Havens are priced for Armageddon now.
Now the last time G7 Economies went full on ''zombie'' the liquidity
surge washed up just about everywhere in every corner of the World.
It was characterised as the Global Hunt for Yield. Now when Safe Haven
Demand turns parabolic, Investors are signalling they are not
interested in the return but only in getting their Principal back.
Emerging and Frontier Markets look in big trouble this time around.

Home Thoughts

The most striking feature of The Lonely Londoners is its narrative
voice. Selvon started writing the novel in standard English but soon
found out that such language would not aptly convey the experiences
and the unarticulated thoughts and desires of his characters.[5][6] In
creating a third person narrator who uses the same creolized form of
English as the characters of the novel, Selvon added a new,
multiculturalist dimension to the traditional London novel and
enhanced the awareness in both readers and writers of a changing
London society which could no longer be ignored. Thus, in style and
context, The Lonely Londoners "represented a major step forward in the
process of linguistic and cultural decolonization." [7]

The language used by Selvon's characters and by the narrator contains
a multitude of slang expressions. For example, when "the boys" talk
about "the Water" or "the Gate", they are referring to Bayswater and
Notting Hill respectively. (Unlike today, the Notting Hill area evoked
a down-at-heel area of cheap lodgings where Caribbean immigrants could
more easily find accommodation than elsewhere in London, but be
victims of practices like Rachmanism.) Sometimes referring to
themselves and each other as "spades", in their spare time they can be
found "liming"—the Caribbean pastime of hanging around with friends
eating, talking and drinking—and some of their talk will be "oldtalk",
reminiscences of their previous lives in the West Indies and the
exchange of news from home. Finally, a white English girl can be a
"skin" ("a sharp piece of skin"), a "frauline" [sic], a "cat", a
"number", or of course a "chick" or "white pussy".

“Always, from the first time he went there to see Eros and the lights,
that circus have a magnet for him, that circus represent life, that
circus is the beginning and the ending of the world. Every time he go
there, he have the same feeling like when he see it the first night,
drink coca-cola, any time is guinness time, bovril and the fireworks,
a million flashing lights, gay laughter, the wide doors of theatres,
the huge posters, everready batteries, rich people going into tall
hotels, people going to the theatre, people sitting and standing and
walking and talking and laughing and buses and cars and Galahad
Esquire, in all this, standing there in the big city, in London. Oh
Lord.”
― Samuel Selvon, The Lonely Londoners

Political Reflections

The type of repression China imposed on Tibet and Muslim regions could
be repeated in Hong Kong. There is absolutely nothing any of the
world’s powers can do about it. China will then turn its attention to
‘renegade province’ Taiwan

if Xi sends in the People's Liberation Army or paramilitaries to crack
down, he would transform one of the world’s leading financial centers
into an urban battleground. The resistance would bleed the Chinese
economy — Hong Kong still plays a vital role in funding China Inc. —
and set back China’s soft-power efforts around the world. Beijing
could forget about a peaceful unification with Taiwan. Indeed, a
conviction is taking hold among protesters that only the prospect of
colossal damage to Hong Kong, as well as to China’s global reputation,
stands between the city’s freedoms and a military onslaught. A message
they spray-paint on city walls and pedestrian bridges reveals their
desperation: “If we burn, you burn with us.”

The ominous quote from “The Hunger Games,” though, doesn’t quite
capture Xi's dilemma. He may well calculate that he could ride out the
storm from a military intervention, just as his predecessors shrugged
off international sanctions and opprobrium in 1989 after they crushed
the Tiananmen Square pro-democracy protests with tanks and machine
guns. The West had far more leverage over a backward China at that
time but hesitated to use it; the allure of China’s vast markets
eventually triumphed over its impulse to mete out punishment. Just
over a decade later, the U.S. ushered China into the World Trade
Organization. A few years after that, the whole world flocked to
Beijing to celebrate the Summer Olympics. Many in China believe that
the killing of hundreds, perhaps thousands, of demonstrators around
Tiananmen Square laid the foundation for the political stability on
which China’s economic success today is founded.

Still, pacifying Hong Kong would be nothing like bringing the Chinese
capital to heel. Beijing’s broad avenues, straight and flat, were
built to accommodate military parades. Hong Kong Island climbs almost
vertically from its waterfront along narrow, twisting roads and
concrete staircases, while the district of Kowloon across the harbor
contains some of the world’s most densely packed housing estates.
Fresh military recruits from the mainland pouring across the border in
armored troop carriers would be met in these neighborhoods like an
invading army.

Beijing blames what it now calls a “color revolution” on foreign “
black hands,” a euphemism for meddling Americans. In reality, the Hong
Kong protests are homegrown and broad-based, and they are largely the
product of intransigence. Beijing missed repeated opportunities to
respond flexibly to peaceful mass protests by reasonable,
sophisticated middle-class residents demanding a democratic say in
their post-colonial government — an arrangement that Beijing itself
promised under the terms of the territory’s handover from Britain.
Instead, it imposed a leader selected by a committee packed with
pro-Beijing loyalists. Now it is faced with flash mobs and Molotov
cocktails. At its extreme fringes, the protest movement is pushing for
Hong Kong’s independence.

Unless he is prepared to torch Hong Kong, the first thing Xi should do
is abandon the lame-duck Lam, whose popularity has sunk to record
lows. He should then give Lam’s replacement the green light to kill
the extradition bill and launch an independent inquiry into the
actions of police who have outraged the public by firing tear-gas
canisters and other nonlethal projectiles into crowds of protesters at
point-blank range, and by appearing to side with pro-Beijing
vigilantes. Next, he could revisit political reform. Full democracy,
of course, has always been out of the question. But a measure of
representative government ought to be achievable. An administration
more rooted in the popular will could set about fixing Hong Kong’s
deep-seated economic problems, including unaffordable housing.

Political realists will argue that the leader of a Leninist party
would never countenance such compromises. In such systems, power is
nonnegotiable — “I live, you die” is the ruling creed. And now that
the official Chinese media has declared Hong Kong protesters to be
akin to terrorists, it shows that Xi and the top Chinese leadership
have concluded that force is necessary, even if there’s no consensus
on the timing, or whether military intervention will actually work. If
that analysis is correct — and it may well be — this is how one of the
world’s greatest new economy success stories will end.

“Whoever controls the territory possesses it. Possession of territory
is not primarily about laws and contracts, but first and foremost a
matter of movement and circulation.”
The amophorous Leaders of the Hong Kong Protests called on ''Friday
(August 16) for Hong Kong citizens[to]  take out all bank deposits.
primary goal is Chinese banks, but he said other banks should also be
targeted, otherwise Chinese banks can borrow money from other banks to
solve problems."
This is a sophisticated response and speaks to the sophistication of
the Protestors in Hong Kong. China will surely flood the zone.

Four senior Hong Kong democrats have found themselves labeled by
Chinese state media as a new “Gang of Four,”
An edition of the party’s People’s Daily newspaper aimed at an
overseas audience called the four “secretive middlemen and modern
traitors.” “Places and nails have been saved for them on shame pole of
history,” the commentary said.
The piece published under the Political and Legal Affairs Commission,
which is led by Politburo member and former public security chief Guo
Shengkun, refers to Lai as a “running dog” of the U.S. and a conduit
for “black money,” without elaborating.
Last month, several senior Trump administration officials including
Secretary of State Michael Pompeo and National Security Advisor John
Bolton met with Lai, 70, in Washington.

Taiwan’s F-16V is a big step toward an integrated approach to regional
defense with the United States, against an expanding and aggressive
China.

The c21st Real Time not only unfolds itself at the Speed of Light but
is full of mind bending twists and turns. Jeffrey Epstein ''had a
collection of eyeballs on his wall'' [Counterpunch]

The eyeballs make sense, because Epstein was a watcher. ..Is it a
coincidence that we all live in a watch-and-collect digital economy?
Maybe. But we feast upon each other in the 21st century.

He was, in the words of the New York Times, “not closely monitored.”
Jeffrey Epstein was a spy, in a society of spies. He was a collector,
in a collector’s economy. He was a watcher, and he died while nobody
was watching.

“To the millennials who are looking at the world through their phone
Johnnie Walker is way more aspirational than any other brown spirit in
East Africa,” Mr Andrew Cowan told African Business Magazine.

The Point is that the Smart Phone is ubiquitous even in the furthest
corners of the World and we are all peering at a newsreel. Except, of
course, if you are in Kashmir which was described by Nehru as “the
snowy bosom of the Himalayas”  and which is currently switched off
from the c21st. Prime Minister Narendra Modi revoked  Article 370,
which protected Kashmir’s demography by restricting residency to
Kashmiris alone and, under a sub-section known as Article 35A, forbade
the sale of property to non-Kashmiris. Essentially, Modi is seeking to
flood the zone. The Periphery is a Tinderbox in many parts of the
World. Xinjiang in China is also under lock down and a c21st
experiment. Writing in the Washington Post earlier this year, Xiao
Qiang, a professor of communications at the University of California,
Berkeley, dubbed China’s data-enhanced governance “a digital
totalitarian state.” In the last two years thousands of checkpoints
have been set up at which passersby must present both their face and
their national ID card to proceed on a highway, enter a mosque, or
visit a shopping mall. Uighurs are required to install
government-­designed tracking apps on their smartphones, which monitor
their online contacts and the web pages they’ve visited. Kashmir, Gaza
and Xinjiang are being managed in precisely the same way and it is
precisely because they all reside at the  Periphery and can be cut off
from the World.

Interestingly, The Wall Street Journal reported last week that China's
Huawei had exported this same model to many parts of Africa.

While many of the projects are rudimentary, Huawei has sold advanced
video-surveillance and facial-recognition systems in more than two
dozen developing countries, according to data gathered by Steven
Feldstein, an expert in digital surveillance at Boise State University
and a former Africa specialist at the State Department. Huawei lists
foreign firms among its partners in its safe-city products, including
U.S. smart-sensor manufacturer and systems
integrator Johnson Controls International PLC and iOmniscient Pty.
Ltd., an Australian producer of A.I. systems that analyze video, sound
and smell.

Emerging and Frontier Markets have been encountering a bout of serious
turbulence. The rand [which can be viewed as a Proxy for the Global
appetite for risk]  is back as the world’s most volatile major
currency, and options pricing suggests it’s not going to lose that
status any time soon. The premium of options to sell the rand over
those to buy it, known as the 25 Delta risk reversal, widened 23 basis
points to 338. South Africa’s currency has depreciated 6.5% versus the
dollar in August, the worst performance among emerging-market
currencies after Argentina’s peso. Argentina'a MerVal Index fell 37%
in a single day the largest 1-day decline in its history. This was a
17-sigma event which means that it should not have happened even once
in the history of the universe (assuming a normal distribution which
markets do not follow). Stock Markets from Lagos to Nairobi to
Johannesburg are in reverse. There is a big negative spillover
happening in front of our eyes.

Meanwhile far from the volatile Frontier, we are witnessing whiplash
inducing moves at the centre. There has been a Major Flight to
''quality'' in 2019.  Treasuries, gold and the Japanese yen are
clocking “the largest number of outsized rallies” combined since at
least 1990, according to Bank of America Corp. The latest milestone in
the haven frenzy arrived this week, when the yield on 30-year U.S.
Treasuries slipped below 2% for the first time.

“Investors have not been so worried about the future in the past
thirty years,” BofA strategists led by Stefano Pascale wrote in an
Aug. 13 note.

The charge into havens this month has been spurred by flashing
recession indicators, trade-war tit-for-tat and data disappointments
-- all amid thin liquidity. Gold is up about 18% this year, while the
yen is the top performer against the dollar across G-10 currencies
[Bloomberg]

Safe Havens are priced for Armageddon now.

Now the last time G7 Economies went full on ''zombie'' the liquidity
surge washed up just about everywhere in every corner of the World. It
was characterised as the Global Hunt for Yield. Now when Safe Haven
Demand turns parabolic, Investors are signalling they are not
interested in the return but only in getting their Principal back.
Emerging and Frontier Markets look in big trouble this time around.

Iqbal: “In the bitter chill of winter shivers his naked body / Whose
skill wraps the rich in royal shawls''

International Markets

Euro 1.0797
Dollar Index 98.225
Japan Yen 106.405
Swiss Franc 0.9798
Pound 1.2086
Aussie 0.6781
India Rupee 71.6313
South Korea Won 1207.96
Brazil Real 4.07425
Egypt Pound 16.58
South Africa Rand 15.3999

Commodities

Emerging Markets

Emerging and Frontier Markets have been encountering a bout of serious
turbulence. The rand [which can be viewed as a Proxy for the Global
appetite for risk]  is back as the world’s most volatile major
currency, and options pricing suggests it’s not going to lose that
status any time soon. The premium of options to sell the rand over
those to buy it, known as the 25 Delta risk reversal, widened 23 basis
points to 338. South Africa’s currency has depreciated 6.5% versus the
dollar in August, the worst performance among emerging-market
currencies after Argentina’s peso. Argentina'a MerVal Index fell 37%
in a single day the largest 1-day decline in its history. This was a
17-sigma event which means that it should not have happened even once
in the history of the universe (assuming a normal distribution which
markets do not follow). Stock Markets from Lagos to Nairobi to
Johannesburg are in reverse. There is a big negative spillover
happening in front of our eyes.

Frontier Markets

Sub Saharan Africa

“It will also have another effect with regard to China’s own
outward-bound investments on the continent,” he added, saying these
could also affect official development assistance.

China has exerted the power of pull over a vast swathe of the world
over the last two decades. We can call it the China, Asia, EM and
Frontier markets feedback loop. This feedback loop has been largely a
positive one for the last two decades.
With the Yuan now in retreat [and in a precise response to Trump],
this will surely exert serious downside pressure on those countries in
the Feed- back Loop.
To wit, emerging market stocks closed down for 11 days running , 12
being an all-time record which was narrowly missed.

Time to worry.

Others knelt and were named, too: Marcus Garvey, Muammar Qaddafi,
Usman dan Fodio, and Ngũgĩ wa Thiong’o.
The men who had tormented John for hours now embraced him. They passed
him a cup of Kokoma, a strong, weed-­infused punch. John was
exhilarated, and drunk. He was an Axeman.

Kenya

Par Value:                  4/-
Closing Price:           119.00
Total Shares Issued:          279602220.00
Market Capitalization:        33,272,664,180
EPS:             23.91
PE:                 4.977

Prominent Kenyan commercial bank

Diamond Trust Bank Kenya Limited H1 2019 results through 30th June
2019 vs. 30th June 2018
H1 Kenya government securities – held to maturity 88.968521b vs.
99.726123b -10.787%
H1 Loans and advances to customers (net) 190.777859b vs. 198.233933b -3.761%
H1 Balances due from Central Banks 26.198495b vs.  15.488792b +69.145%
H1 Total assets 375.929682b vs.  376.077751b -0.039%
H1 Customer deposits 283.065287b vs. 281.745588b +0.468%
H1 Total equity 62.505088b vs. 54.990268b +13.666%
H1 Net interest income 9.187701b vs. 9.928493b -7.461%
H1 Total non-interest income 2.976942b vs. 2.742867b +8.534%
H1 Total operating income 12.164643b vs. 12.671360b -3.999%
H1 Loan loss provision [0.534192b] vs. [1.677189b] -68.150%
H1 Total operating expenses [6.225470b] vs. [7.276902b] -14.449%
H1 Profit before tax and exceptional items 5.939173b vs. 5.394458b +10.098%
H1 Profit after tax and exceptional items 4.132368b vs. 3.755323b +10.040%
EPS 13.89 vs. 12.51 +11.031%
Total NPL and advances 12.863491b vs.  12.924463b -0.472%
Liquidity ratio 54.3% vs. 51.1% +3.200%

Conclusions

Loan Loss Provision refers.
Otherwise its been a very defensive posture
However, Price to Book of 0.6 is egregious.