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I think Nancy Pelosi is a ''Babe''

As the Russian mercenary slowly rotated his mobile phone, the camera
captured rows of tents and abandoned equipment at a deserted US army
base close to the Syrian city of Manbij.
“Good morning from Manbij,” private contractor Oleg Blokhin said in
the video posted on Twitter. “Yesterday it was them here, and today it
is us.”
Russia’s ministry of defence confirmed that the base was now
controlled by Syrian forces allied with Moscow.
The change of occupancy underlines how Russia has become the dominant
foreign power in Syria, using the country’s more than eight-year war
to project its influence in the Middle East by seizing on US reticence
and leveraging a network of alliances.
As withdrawing US army trucks sped past Syrian army vehicles heading
in the opposite direction on Monday, Vladimir Putin was in Saudi
Arabia for his first visit to the kingdom in 12 years, courting
Washington’s most important ally in the Arab world.
“All our co-operation is aimed at strengthening peace and security in
the region,” Mr Putin told Saudi Crown Prince Mohammed bin Salman.
Russia and its allies in the Syrian government have been able to
consolidate their gains after a decision by the US to withdraw troops
and protection for their Kurdish allies based there.
As a subsequent Turkish invasion bore down on their cities, the
Kurdish militants were forced to strike an alliance with the
Russia-backed Syrian army, paving the way for Damascus to reassert
control of its large territory.
The deal, unthinkable until a few days before, bears the hallmarks of
Mr Putin’s gambit in the Middle East since a high-risk military
intervention in 2015 swung the Syrian war in favour of president
Bashar al-Assad: rebuild Russia’s regional influence through flexible
friendships and ruthless pragmatism that often embraces bitter foes.
“Russia rarely tells others what to do. It understands what each of
them wants the most, and what each might afford to do without, and
then seeks mutual accommodation on that basis,” Dmitri Trenin, head of
the Moscow Carnegie Center, said of its regional strategy.
Mr Putin’s heavily choreographed trip to the Gulf to visit two
critical US allies while the crisis in Syria raged highlights the
breadth of the Kremlin’s engagement with the Middle East.
On Tuesday, as Mr Putin talked with Abu Dhabi’s Crown Prince Mohammed
bin Zayed al-Nahyan, his special envoy for Syria, Alexander
Lavrentiev, said that Moscow was simultaneously brokering negotiations
between Damascus and Ankara to head off a military clash.
Arab Gulf states have worried about US disengagement from the region
ever since the Obama administration was perceived to have dropped
Hosni Mubarak, the former Egyptian president, as he faced a popular
uprising that toppled him in 2011.
Those worries intensified in 2013, when Washington decided not to
enforce a “red line” set on Syria using chemical weapons.
Donald Trump’s election was seen in Riyadh and Abu Dhabi as a chance
to reset relations and they welcomed his tough stance against Tehran.
But doubts resurfaced after Mr Trump chose to abort strikes against
Iran after a US drone was downed in June, highlighting his reluctance
to use force against Tehran.
Mr Trump’s decision to pull troops out of Syria — a move expected to
embolden the Assad regime and Iran — has been widely criticised as the
latest sign of US policy incoherence.
Meanwhile, relations between the Gulf and Russia have warmed despite
Moscow being on the opposing side to Riyadh and Abu Dhabi in Syria.
“[Russia and the UAE] are getting closer on all fronts, including
Syria,” said Abdulkhaleq Abdulla, a Dubai-based political commentator.
“Russia is seen as the best way to counter Iranian influence in Syria,
and to help stabilise the situation there.”
While the deal with the Kurdish forces, struck on Sunday evening at a
Russian air base in Khmeimim, expands Damascus’s authority and cements
Moscow’s role as the pre-eminent powerbroker in the Syrian conflict,
it is not without dangers.
Uncertainty clouds its implementation and whether or not it will halt
the Turkish advance. The rapid redrawing of alliances also means that
Russian troops fighting alongside Mr Assad’s are theoretically at risk
of being drawn into a conflict against Turkey, or forces backed by
Ankara.
Russia’s defence ministry said on Tuesday that its troops were
patrolling the contact line between Turkish and Syrian forces outside
Manbij, while Ankara has vowed to continue the assault despite US
sanctions announced on Monday.
Analysts say the agreement between Damascus and the Kurdish forces
hands more responsibility of the larger conflict to Moscow.
By committing Russian troops, fighter jets and bombers to a larger
battlefield, it could drag Mr Putin deeper into a conflict he has been
keen to replace with a political settlement.
Russia also risks upsetting Ankara, which is both a military partner
and a Nato member, by opposing the invasion: relations between the
countries were frozen for a year after Turkey shot down a Russian jet
in 2015, but have been rebuilt in the past three years through
co-operation in Syria and energy and defence deals.
“Russia’s challenge now is to help work out an arrangement among three
players: Turkey, the Kurds, and Syria: Hard, but not impossible,” said
Mr Trenin.
“It looks like Russia’s military deployment and diplomatic involvement
in the Middle East will become permanent.”
In addition to the territorial gain for Mr Assad, Moscow’s role in
brokering the deal will allow it to portray Washington’s abandonment
of the Kurds as evidence that the US is an untrustworthy ally.
It also ushers in a potential solution to a problem long overlooked by
Moscow in its post-conflict road map.
The Kurdish fighters’ previous alliance with the US was an obstacle to
negotiations with Damascus. Russia had largely excluded the group from
a stalled process aimed at drawing up a new constitution.

This Russian Insertion started in October 2015

Let us return to UNGA, where Putin set out his stall and I quote: ‘’I
cannot help asking those who have caused the situation, do you realise
now what you’ve done?’’
With hundreds of thousands of refugees entering Europe, his question
was a sharp one.
Within 24 hours of delivering that speech, Russia instructed that the
US should vacate Syrian Air Space. This message was not delivered to
Ashton Carter by his Russian counterpart Shoigu.
It was delivered to the US Embassy in Baghdad. And pretty soon after
that message was delivered, Russia began its intervention on the side
of President Bashar Assad of Syria.
You could hear the squealing start immediately from Ankara to Riyadh,
from the GCC to Washington. All these capitals have assets on the
ground in Syria, and what is clear is that Russia is not making a
distinction between IS or the ‘’moderate opposition fighting Assad’’
[which really means ‘’our’’ terrorists].
Lavrov said: “If it looks like a terrorist, if it acts like a
terrorist, if it walks like a terrorist, if it fights like a
terrorist, it’s a terrorist, right?”
Putin fancies himself the fly-catcher and syria the fly-trap. The
speed of execution confirms that Russia is once again a geopolitical
actor that will have to be considered. It is a breath-taking rebound.

“Having witnessed the great moments of his thinking atop Mt Paektu,
all the officials accompanying him were convinced with overflowing
emotion and joy that there will be a great operation to strike the
world with wonder again and make a step forward in the Korean
revolution.”
It was unclear what the operation might involve, but Kim has often
made trips to the sacred mountain at times of major policy endeavors
Analysts say the symbolism underscores North Korea standing up to
international sanctions and pressure over its nuclear weapons and
ballistic missile programs.
“This is a statement, symbolic of defiance,” said Joshua Pollack, a
North Korea expert at the Middlebury Institute of International
Studies in California.
“The pursuit of sanctions relief is over. Nothing is made explicit
here, but it starts to set new expectations about the coming course of
policy for 2020.”
In late 2017, Kim visited Mt Paektu days after North Korea launched
its largest intercontinental ballistic missile, and weeks before he
made a key New Year’s speech in which he opened the door to engagement
with South Korea.
Last year, Kim took South Korean President Moon Jae-in to the top of
the mountain as part of a historic summit.

The Events that took place on Friday at the truce village of Panmunjom
and during the Inter-Korean Summit were breathtaking for the Hollywood
Optics. The Opening Shot of Kim Jong Un surrounded by a Phalanx of
North Korean Officials [later replayed as Chairman Kim sat in his
Presidential Vehicle surrounded by his Ninja bodyguards] was almost as
good as the opening Sequence in PT Anderson's Boogie Nights [Steadicam
operator Andy Shuttleworth]. This was Cinema of the highest level
which is no surprise when You consider that Kim Jong-Il the Father was
obsessed with Cinema and amassed arguably the world’s largest personal
film collection: over 20,000 bootlegged 35mm screening copies. Kim
Jong-Il also had a penchant for Hennessy Paradis cognac and for two
years in the mid-1990s, he was the world's largest buyer of Hennessy
Paradis cognac, importing up to $800,000 of the stuff a year.  Kim
Jong-Il began his career as the head of the state’s propaganda and
agitation department and its clear that Kim Jong-Un's sister Kim Yo
Jong who holds the same role and evidently handles all the optics, is
a chip off the old Block. Friday was tip-top Geopolitical Optics. Mike
Pompeo, the newly minted US Secretary of State [His predecessor was
fired via Twitter] had visited Pyongyang the previous week and
pronounced; that the young North Korean leader was "a smart guy who's
doing his homework"

They all have had tiny little hands like the Elves in the Elves and
the Shoemaker. And this country has nuclear weapons and on its border
with its neighbour South Korea sit 25,000 American soldiers.

International Markets

Lots of investors chafe at the idea of buying negative-yield bonds.
Few are as repelled by the prospect as William Eigen.
The JPMorgan Asset Management fund manager says he’d retire before
buying sub-zero securities, even as some of his peers profit from the
trade amid mounting fears of a global recession.
He predicts negative-yielding bonds will eventually lead to
“devastating” losses and has parked almost half of his fund in cash
that will be insulated from a market sell-off.
“The whole concept of negative yields, of people paying for the
privilege of lending money, is insane behavior to me,” Eigen, a
29-year industry veteran who oversees the $12.4 billion JPMorgan
Strategic Income Opportunities Fund, said in an interview from Boston.
“I do not pay to lend money. That’s not fixed-income investing, that’s
fixed-loss investing.”
Eigen says investors will ultimately face a train wreck in a market
distorted by vast amounts of negative-yielding debt spurred by years
of ultra-loose monetary policy from Europe to Japan. Some $13.3
trillion of securities now trade with sub-zero yields as several
European central banks and Japan slashed rates to below zero after the
financial crisis in a bid to spur growth.
The measures, including the European Central Bank’s enormous
bond-buying program, were meant to be temporary, but Europe’s
benchmark rate has persistently stayed below zero since 2014.
The value of negative-yielding bonds has surged 60% this year,
triggered in part by fears of a prolonged U.S.-China trade war.
Eigen said he’s shunning the debt even as he predicts a recession in
Europe and a “pretty rough” slowdown in the U.S., which would normally
be a good time to buy bonds.
He gave three reasons: bonds are already pricing in bad times. And you
can only make a capital gain from negative-yielding debt “if someone
crazier than you is willing to come in to pay more for the privilege
of lending money to an over-levered government or a company.”
But most importantly, nothing about the current bond market is
sustainable, according to Eigen. Sooner or later, it’s going to crash,
and he wants to be there with dry powder when it happens.
“What I’m saying is that you print this much money, you put trillions
of dollars of securities on your balance sheet, at some point
something’s going to break,” Eigen said.
“I’m not saying it’s going to be in the short term, but man, when this
thing breaks, the losses fixed-income investors will be facing will be
devastating, and it’s my job in that environment to post positive
returns.”
Eigen’s fund, which aims to outperform cash, has returned 3.2% in
2019, above the effective Federal Funds rate of 1.75% to 2%.
But he’s also trailing behind peers who buy low or negative-yielding
bonds: the Bloomberg Barclays Global-Aggregate Total Return Index has
gained 6.3% this year.
He’s not alone as bond bears have underperformed this year, with even
heavy hitters such as Dan Ivascyn’s Pimco Income Fund and Ray Dalio’s
flagship investment losing out amid a global rally.
It’s not just sub-zero rates in Europe that are raising Eigen’s
wariness. An automotive enthusiast with a penchant for fast Italian
motorcycles, he takes his cues on the economy from customers at two
commercial garages that he partly owns in central Massachusetts.
Eigen’s not liking what he’s hearing as the 2020 presidential election
draws near.
“I see some of our bigger buyers and the bigger customers getting
really nervous,” he said. Elections “have become so polarized here in
the U.S. that that can’t be good for confidence, and confidence drives
the economy.”
The cocktail of risks is prompting Eigen to favor cash and highly
liquid assets. His strategy, which can invest in or bet against almost
anything in the fixed-income universe, has 21% parked in
investment-grade corporate debt. He also favors non-agency mortgages.
Junk bonds now make up less than 5% of the fund from as high as 70%
three years ago. While Eigen profited last year from shorting
five-year German government debt, he’s not willing to repeat the wager
today.
“My feeling is that rates can probably get a bit lower here in the
U.S. and German rates will probably follow,” he said.
Even predictions of a further rally in U.S. Treasuries aren’t enough
to whet his appetite. He sees potential for the 10-year Treasury yield
to drop to 1%.
Eigen’s portfolio is “about as defensively positioned as it’s ever
been” and he’s building a war-chest of cash to deploy when bond
markets sell off. And in the meantime, even if he loses out on some
returns, he won’t be buying securities with negative yields.
“I won’t engage in that,” he said. “The day I buy a negative-yielding
security is when I’m retired. I don’t do that for investors. If people
want to lock in losses they can do it all by themselves.”

The Wizard of Oz is a film made in 1939 and widely considered to be
one of the greatest films in cinema history. It is a version of L.
Frank Baum’s 1900 children’s book The Wonderful Wizard of Oz and
featured the then child star Judy Garland as Dorothy Gale.
The wizard is one of the characters. Unseen for most of the novel, he
is the ruler of the land of Oz and highly venerated by his subjects.
Believing he is the only man capable of solving their problems,
Dorothy and her friends travel to the Emerald City, the capital of Oz,
to meet him.
Oz is very reluctant to meet them, but eventually each is granted an
audience, one by one.
the Wizard appears in a different form, once as a giant head, a
beautiful fairy, a ball of fire, and as a horrible monster.
When at last he grants an audience to all of them at once, he seems to
be a disembodied voice.
Eventually, it is revealed that Oz is actually none of these things,
but rather an ordinary conman from Omaha, Nebraska, who has been using
elaborate magic tricks and props to make himself seem “great and
powerful”.
Last week we witnessed some ‘’Wizard of Oz’’ level moves in the
markets. The universe of nega- tive-yielding bonds grew about $1.2
trillion last week pushing the total past $13 trillion for the first
time.

Euro 1.1078
Dollar Index 98.067
Japan Yen 108.77
Swiss Franc 0.9936
Pound 1.2787
Aussie 0.6784
India Rupee 71.2175
South Korea Won 1185.04
Brazil Real 4.1502
Egypt Pound 16.2326
South Africa Rand 14.8850

A decade ago, China launched a high-profile challenge to the dominance
of the US dollar, projecting a greater role for the renminbi in the
global financial system. But the would-be challenger is struggling.
The dollar is still used on one side of 88 per cent of all foreign
exchange trades, according to the latest triennial survey by the Bank
for International Settlements, while the renminbi’s share is just 4
per cent, with a rise in turnover “only slightly faster” than the
overall market. The currency amounts for about 2 per cent of total
foreign exchange reserves, according to the IMF. In Hong Kong,
renminbi deposits tracked by the Hong Kong Monetary Authority have
dropped more than a third from their 2014 peak. And the value of
offshore renminbi bonds was $53bn at the end of the first quarter of
this year, down more than half from the 2015 peak, according to the
Asia Securities Industry & Financial Markets Association. Market
participants say internationalising the renminbi would require Beijing
to let the currency trade more flexibly and to open up the country’s
capital account. “Right now it isn’t safe to do either,” said Brad
Setser, an economist at the Council on Foreign Relations, a US
think-tank. Beijing still yearns for a financing system independent of
the dollar, in part to reduce Washington’s reach into China’s business
sector. A US appeals court ruling earlier this year offered a reminder
of how far that reach extends: the decision raised the possibility
that the Shanghai Pudong Development Bank, a lender with $900bn in
assets, could be cut off from dollar-denominated funding for failing
to provide records on a Hong Kong-based company allegedly used to
evade US sanctions. But progress is slow. At a conference in
September, Chris Hall, the London-based head of trading at state
lender China Construction Bank, said US-China trade tensions had put a
dampener on the growth of offshore renminbi markets. There is a
“tendency to take a step back and wait and see”, he said
During the depths of the financial crisis, China had grand plans. Zhou
Xiaochuan, then governor of the People’s Bank of China, called for
sweeping reforms to the dollar-dominated international reserve system
and a greater role for the renminbi. “The crisis and its spillover to
the entire world reflect the inherent vulnerabilities and systemic
risks in the existing international monetary system,” he warned.
Global use of the renminbi would reduce exchange rate risks for
Chinese companies, and minimise exposure to sharp drops in dollar
liquidity — one driver of the fall in Chinese exports during the
financial crisis.
“There was both an objective to use renminbi internationalisation as a
wedge to drive finance sector reform, but there was also a very strong
and widely held view that having a more fully independent currency was
really important to secure China’s economic sovereignty,” said Arthur
Kroeber, managing director of research company Gavekal Dragonomics.
Mr Zhou’s initiative came at an awkward time. Despite having a large
economy, China had neither deep financial markets facilitated by an
open capital account nor widespread confidence in its currency —
elements deemed “fundamental determinants” of international currency
status by Harvard economist Jeffrey Frankel.
Yet the central bank pushed on, creating an offshore market for
renminbi debt centred in Hong Kong. By 2014 annual offshore issuance
had climbed to Rmb112bn ($16bn), according to Dealogic. The offshore
exchange rate is independent from the controls used by the central
bank on the onshore rate, which limits moves against the dollar to 2
per cent in either direction of a daily fix.
But in August of 2015, the central bank set the daily fix sharply
weaker, inducing a shock devaluation in the normally stable onshore
rate. Global markets convulsed and the offshore rate pushed below its
onshore counterpart, spurring massive capital outflows on fears of a
further sharp depreciation. Ultimately, Beijing tightened capital
controls to stem renminbi outflows, which cut off liquidity to the
offshore market.
Mr Kroeber contrasted this move to the US decision in the 1960s not to
throttle the nascent eurodollar market when an offshore pool of dollar
liquidity began ballooning in Europe. China’s decision stabilised the
renminbi, he said, but left it bereft of credibility as an
international financial currency. “Who’s going to issue or buy bonds
in a market where liquidity can be turned off at the drop of a hat?”
he asked.
This year, offshore renminbi bond issuance totalled just Rmb16bn at
the end of September compared with onshore issuance of Rmb4.5tn,
Dealogic data show.
Logan Wright, director of China research at Rhodium Group, said there
was still a case for the renminbi’s rise in global reserves but,
barring drastic changes to trade flows, not to the level of the
dollar.
“It depends upon countries and millions of individual participants
being willing to hold the currency and transact in it,” he said.

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.
The Purest Proxy for the China, Asia, EM and Frontier markets feedback
loop phenomenon is the South African Rand aka the ZAR.

Netflix expects to sign 7 million more international customers during
the current three months, ending the year with its strongest overseas
growth to date.
The company benefited from new seasons of a couple of its most popular
shows. The teen science-fiction show “Stranger Things” was viewed by
64 million households in its first four weeks, making it the
most-watched season of original programming on Netflix.
A new season of “La Casa de Papel,” a Spanish heist series, was viewed
by 44 million households. It was Netflix’s most-watched show in
non-English-speaking countries.
“We’re incredibly low-priced compared to cable,” Chief Executive
Officer Reed Hastings said. “We’re winning more and more viewing.”

“Just like the evolution from broadcast TV to cable, these
once-in-a-generation changes are very large and open up big, new
opportunities for many players. For example, for the first few decades
of cable, networks like TBS, USA, ESPN, MTV and Discovery didn’t take
much audience share from each other, but instead, they collectively
took audience share from broadcast viewing.”
“Over the next 10 years, many streaming services will grow viewing as
streaming replaces linear TV,” Netflix wrote.

My Mind kept to an Article I read in 2012 ‘’Annals of Technology
Streaming Dreams’’ by John Seabrook January 16, 2012. “This world of
online video is the future, and for an artist you want to be first in,
to be a pioneer. With YouTube, I will have a very small crew, and we
are trying to keep focused on a single voice. There aren’t any rules.
There’s just the artist, the content, and the audience.”
“People went from broad to narrow,” he said, “and we think they will
continue to go that way—spend more and more time in the niches—
because now the distribution landscape allows for more narrowness’’.
And this brought me to Netflix. Netflix spearheaded a streaming
revolution that changed the way we watch TV and films. As cable TV
lost subscribers, Netflix gained them, putting it in a category with
Facebook, Amazon, and Google as one of the adored US tech stocks that
led a historic bull market [FT].
Netflix faces an onslaught of competition in the market it invented.
After years of false starts, Apple is planning to launch a streaming
service in November, as is Disney — with AT&T’s WarnerMedia and Com-
cast’s NBCUniversal to follow early next year. Netflix has corrected
brutally and lots of folks are bailing big time especially after
Netflix lost US subscribers in the last quarter.
Even after the loss of subscribers in the second quarter, Ben
Swinburne, head of media research at Morgan Stanley, says Netflix is
still on course for a record year of subscriber additions. Optimists
point to the group’s global reach.
It is betting its future on expansion outside the US, where it has
already attracted 60m subscribers. And this is an inflection point
just like the one I am signaling in the Oil markets. Netflix is not a
US business, it is a global business.
The Majority of Analysts are in the US and in my opinion, these same
Analysts have an international ‘’blind spot’’ Once Investors
appreciate that the Story is an international one and not a US one
anymore, we will see the price ramp to fresh all-time highs.
I, therefore, am putting out a ‘’conviction’’ Buy on Netflix at
Friday’s closing price of $270.75.

Commodities

Emerging Markets

Frontier Markets

Sub Saharan Africa

As hundreds of pensioners line up outside a bank in central Harare in
the hope of collecting their pensions, military veteran Elias Nyabunzi
has a sense that he has seen this all before.
If there is cash available, he will collect the equivalent of just
$26, down from the $400 he was getting a few months back.
A decade ago when he went to collect the lump sum he was also entitled
to after 25 years in the army he was given just $1. The rest had been
eaten away by hyperinflation, he was told.
“It buys nothing,” the 62 year-old says of the pension as he stands
under a purple blossomed jacaranda tree wearing a faded England track
suit.
Pensioners in Zimbabwe, who are estimated to number about 500,000, are
among the hardest hit in an economy that’s stagnated for almost 20
years, a result of a botched land reform program and a profligate
central bank printing press.
Abrupt changes in the currency system have wiped out savings twice in
a decade and, according to the government, the economy has halved in
size. While pensioners have little choice, in total about a quarter of
the population of 16 million has left.
This June the authorities suddenly banned the use of foreign
currencies and reintroduced the Zimbabwe dollar, which has since
plunged 59% against the U.S. dollar. That’s a problem in a country
where almost everything is imported.
In 2009 the opposite happened when the Zimbabwe dollar was abolished
after a bout of hyperinflation.
Now, many pensioners have had to sell their assets, take in lodgers or
depend on remittances from their children, who’ve emigrated to find
work.
Those with no other financial lifeline live from hand to mouth.
“I live like a destitute,” says Patrick Nyanhewe, 78, a former waiter
who spent 36 years at the country’s leading hotels.
He has asked a lobby group, the Zimbabwe Pension and Insurance Rights
Trust, to fight for what he believes he is due.
The group estimates that the national pension industry is worth $22
billion. The Insurance and Pensions Commission, the industry
regulator, says its worth about a third of that. The commission didn’t
immediately respond to a request for comment.
It is “to justify the low benefits that they are paying through
understating the size of the industry,” Martin Tarusenga, ZIMPIRTs
general manager, said in an interview from his office in Harare’s city
center.
Currency changes and an inflation rate that was estimated at 300% by
the International Monetary Fund in August, aren’t the only threats to
pension value, says Tarusenga.
The pension industry is riddled with poor management, use of improper
accounting methods and a lack of proper record keeping, he added.
The pension trust has sued the government over its decision to halt
the publication of annual inflation figures and has objected to the
value of the pensions being switched to Zimbabwe dollars from the U.S.
currency.
In a televised state of the nation address on Oct. 1, Mnangagwa
promised that parliament would pass the Pension and Provident Funds
Bill.
“It is designed to ensure compliance with international standards,” he
said. “The ultimate objective is to protect policyholders and
pensioners so that they fully enjoy their rights and benefits.”
That’s cold comfort for Morgan Moyo, who fought as a guerrilla in
Zimbabwe’s liberation war in the 1970s and later served in the army.
“We never thought that we would be suffering like this,” the
65-year-old said. “If you see a person who looks destitute, hungry and
with worn-out shoes and clothes, you know that it’s a pensioner.”
He and Nyabunzi were among those lining up in the early hours of the
morning outside a branch of the Central African Building Society where
elderly women huddle under blankets before the 8 a.m. opening of the
bank.
When the doors open Elizabeth Msengwa, the branch manager, breaks the
news that cash is in short supply. Only the first 500 in the line will
be handed numbered cards by the bank’s security guards, and given
Z$80, the equivalent of just over $5, mostly in coins.
“We have to try and make sure everyone gets something,” she says.

“Money is accordingly a system of mutual trust, and not just any
system of mutual trust: money is the most universal and most efficient
system of mutual trust ever devised.”
“Cowry shells and dollars have value only in our common imagination.
Their worth is not inherent in the chemical structure of the shells
and paper, or their colour, or their shape. In other words, money
isn’t a material reality – it is a psychological construct. It works
by converting matter into mind.”
The Point I am seeking to make is that There is a correlation between
high Inflation and revolutionary conditions, Zimbabwe is a classic
example where there are $9.3 billion of Zollars in banks compared to
$200 million in reserves, official data showed.
The Mind Game that ZANU-PF played on its citizens has evaporated in a
puff of smoke.
‘’The choice of that moment is the greatest riddle of history’’ and
also said “If the crowd disperses, goes home, does not reassemble, we
say the revolution is over.”
What is clear to me is that Zimbabwe is at a Tipping Point moment.

Charlie Robertson [Chief Economist Renaissance Capital] has pronounced
that South Africa [is] Heading for [a] Junk Downgrade. A meme flying
round on social media is that There is a New sex position called the
“Ramaphosa” Get on top and do nothing [@danielmarven].

Uganda plans to withdraw more financing from its Petroleum Fund than
it did in the past two fiscal years combined, central bank data show,
even as the East African country is yet to pump a drop of oil.
The Finance Ministry is expected to draw down 445 billion shillings
($120.6 million) in the fiscal year to end-June, according to the Bank
of Uganda’s annual report.
While it is yet to begin commercial oil production, Uganda has already
taken out 325.3 billion shillings from the fund.
Uganda Makes Second Withdrawal From Oil Fund Before Output
Uganda has 6 billion barrels of oil resource and plans to start
production in 2022.
It created the fund in 2015 to receive revenue-deposits from
oil-related activities including output, as well as pre-production
transactions.
The central bank will transfer the money from the Petroleum Fund to
the Consolidated Fund quarterly for investment, according to the
report.

Kenya

Kenya’s president rejected a bill that seeks to retain caps on
interest rates, paving the way for the removal of a law that’s been
choking the economy, central bank Governor Patrick Njoroge said.
President Uhuru Kenyatta sent the Finance Bill back to parliament and
won’t sign it as long at it provides for interest-rate caps, Njoroge
said in an interview Wednesday in Washington, where he’s attending the
annual meetings of the International Monetary Fund and World Bank.
Parliament could agree with the president and amend the bill to remove
the rate caps, or could decide to push the bill through, which would
require two-thirds support in the house.
“It’s very unlikely that they will come up with two-thirds of votes,
so we believe that we are in a position, very soon, of overturning the
interest-rate caps,” Njoroge said. “The president says remove it.”
Lawmakers first approved the controversial law, which restricts what
commercial banks can charge for loans to 4 percentage points above the
central bank’s benchmark interest rate, in 2016 to fulfill Kenyatta’s
campaign pledge to improve lending terms for borrowers.
Instead of boosting borrowing, private-sector credit growth slowed as
banks preferred lending to the government. Njoroge and the central
bank have been vocal critics of the rate caps, saying they complicate
the transmission of monetary policy.
The Nairobi High Court annulled the law in March but suspended
enforcement of the ruling for a year so lawmakers could review the
legislation.
The Treasury recommended scrapping the law, but a lawmaker then
proposed changes that clarify the extent to which banks can price
loans. That’s what the president wants removed, Njoroge said.
“The economy is being choked by interest-rate caps,” he said. “If you
want small and medium enterprises to continue strengthening and employ
people, you have to let go of these interest-rate caps.”
Lenders in Kenya have been wrestling with the uncertainty about how
much they can charge for loans. Njoroge said he’s had conversations
with banks and they understand “they can not take advantage” if rate
caps are removed.

Kenya’s debt-ceiling review not only shifts the goalposts but also
changes the rules on how goals are scored, and that could move the
government closer to debt distress.
Lawmakers last week approved the government’s plan to present the debt
limit in absolute figures and not as a percentage of gross domestic
product.
The National Treasury proposed a ceiling of 9 trillion shillings ($86
billion), which allows it to increase borrowing to almost match the
size of the entire economy, and would be about double the previous cap
of 50% of GDP, with the debt at net present value.
East Africa’s biggest economy is trying to balance building new
infrastructure while narrowing the hole in its budget. It had about
$3.8 billion of stalled projects to build new roads, dams and rail
links as of June last year partly because the government didn’t have
funds to disburse.
It’s cutting spending on everything from travel to printing and
advertising, using the savings to complete halted plans before
investing in new ones.
“The move effectively removes any restrictions on debt accumulation
for the foreseeable future due to the magnitude of the ceiling,” said
Jacques Nel, the chief economist for southern and East Africa at NKC
African Economics.
Already, the government is negotiating or about to sign 44 loan
agreements valued at about $4.1 billion with 15 lenders including the
African Development Bank, China, Japan and the World Bank, parliament
documents show.
The higher limit could derail Kenya’s planned fiscal consolidation,
the Parliamentary Budget Office, which advises lawmakers on spending
policies, said Oct. 7.
The new cap is likely to increase borrowing outside the country’s
borders because the government has already crowded out businesses from
the domestic market, and that raises refinancing risks, it said.
“There should be a limit on external borrowing at commercial rates to
contain external vulnerabilities,” the PBO said, adding that the
auditor general should undertake a forensic audit on the current stock
of public-sector debt, and that new rules are needed on pre-approving
of debt-financed projects.
Lifting of the ceiling is meant “to create transparency and headroom,”
Principal Treasury Secretary Julius Muia said by phone. “We are going
to be very methodical in taking on more debt.”
The International Monetary Fund in October raised the probability of
Kenya’s external debt distress to moderate from low due to increasing
refinancing risks. The IMF recommends the present value of
emerging-market nations’ debt shouldn’t exceed 74% of GDP; Kenya set a
lower cap of 50% and has breached it.
The IMF estimates the ratio for Kenya at 59.9% for this year. The
nation first breached the debt threshold in 2016, when it rose to
50.6% of GDP amid increased borrowing to fund construction of projects
such as railways and roads, official data show.
Kenya is already exceeding the recommended limits for debt-servicing
costs; the IMF’s recommended threshold is 30% of revenue, but the
country’s reading for 2017 was 42.7%.
“The economy is not generating enough revenues to cover the
debt-servicing requirements,” the PBO said. “The risk is that that
country will continue to borrow to repay the existing debts and not
for development expenditure as contemplated in law.”