Welcome to RICH.CO.KE - Satchu's Wrapup

Macro Thoughts

29-NOV-2021 :: Regime Change

https://twitter.com/TWenseleers/status/1464069652158590992?s=20

Many Years ago, I lived in Putney Hill.

In a curious twist, my neighbours in my block of Flats were Iraqi and Insiders of the Ancien Regime.

Mr. and Mrs Chalabi lived opposite and of course it was their nephew Dr. Ahmed Abdel Hadi Chalabi who was a close confidante of the Bush Administration and a big Promoter of American intervention in Iraq and a Math Whiz.

Mrs. Chalabi was a seriously accomplished Chef and would occasionally knock on my door and invite me for the finest Tea, considerably outperforming anything Fortnum and Mason’s could dish up.

We had bought the apartment from Dr. Allawi and in fact up there on Putney Hill, I later appreciated I was surrounded by Folks whom Saddam Hussein probably was not very keen on.
There were many moments after a late night out that I imagined that Saddam’s fidā'i known as the Order of Assassins, often referred to as the Hashshashin were probably en route and due to a cruel twist of fate would mistake Flat 31 for flat 32 and I would be an inexplicable foot note in the entire US Iraq Bush the elder and the younger Saddam Hussein saga.

Regime Change came to Saddam’s Iraq and for a while regime change was de rigeur.
Muammar Gaddafi was decapitated and the domino effect only stopped when Vladimir Putin decided he was going to put a stop to it and intervened on behalf of Bashar Al-Assad in Syria.
Today, the US has exited Afghanistan and the days of a Unipolar World are self evidently behind us.

We exist in a Tripolar World [US China and Russia] with rapidly emerging Middle Powers.

I am not discounting Fortress Europe but one senses the Fortress is keener on a more defensive posture unlike the US [notwithstanding its withdrawal from Afghanistan], China and Russia.

Taiwan and Ukraine are the immediate geopolitical flashpoints.

The Invisible Microbe has metastasized into Omicron and what we know is that COVID-19 far from becoming less virulent has become more virulent.
B.1.1.529 seems to have gone from 0.1% to 50% in just a couple of weeks, when it took Delta several months to achieve that. #Omicron @TWenseleers

"The greatest shortcoming of the human race is our inability to understand the exponential function."

this variant is out-competing others *far* faster than Beta and even Delta did #Omicron @jburnmurdoch

https://twitter.com/jburnmurdoch/status/1463956686075580421?s=20
South Africa was where the #Omicron Variant was first identified and cases have exploded there [admittedly from a low base]
Nation w/ fast COVID19 case/day increase past 2wks @jmlukens

https://twitter.com/jmlukens/status/1464654513667592195?s=20
South Africa: 1124% France: 191% Spain: 134% Portugal: 115% Switzerland: 111% Ecuador: 105% Czechia: 101% Jordan: 95% Vietnam: 89% Sweden: 88%
Update #COVID19 in GAUTENG • 2,629 new cases today, 7-day avg up 331% week-on-week Case incidence doubling every 3.5 days @rid1tweets

https://twitter.com/rid1tweets/status/1464671183627038729?s=20

The transmissibility of #Omicron is not in question, it clearly has a spectacular advantage.
The Open Question is whether it is more virulent. If it is less virulent then #Omicron is breaking the Trend of increasing virulence.

The arrival of #Omicron brought ‘’Regime Change’’ to the markets on Friday.
For some time I have been saying
A REGIME CHANGE IS UNDERWAY [in the markets]
There is no training – classroom or otherwise.. that can prepare for trading the last third of a move, whether it's the end of a bull market or the end of a bear market. There's typically no logic to it; irrationality reigns supreme, and no class can teach what to do during that brief, volatile reign. Paul Tudor-Jones
I have been warning
The Music has been playing for Eternity and its about to stop
https://bit.ly/2Wzp4Fg
And below captioned is my favourite musical snippet of recent times
Just played #laritournelle with @ESKAonline and some amazing musicians @southbankcentre paying tribute to the legendary #tonyallen @thenitinsawhney

https://twitter.com/thenitinsawhney/status/1459652573812695040? s=20
And Friday saw some seriously dramatic moves
Concern about the latest Covid variant on Friday drove 10-year Treasury yields to their biggest one-day drop since the early months of the pandemic.

BRENT front-month futures closed down -11.3% on Friday, a percentage price change almost 5 standard deviations away from the mean. It was the 9th largest one-day decline since 1990 @JKempEnergy

The Oil Markets are no doubt looking over their shoulder and remembering the negative prices we witnessed last year.
Mirrors on the ceiling, The Pink champagne on ice
https://bit.ly/3Bk45Gj
Last thing I remember, I was Running for the door

The Stock Market has a long way to fall
Just to put things into perspective: S&P 500 trades at a higher multiple than before the pandemic crash in Mar2020 @Schuldensuehner

https://twitter.com/Schuldensuehner/status/1464676086604873734?s=20

Bitcoin tumbles 20% from record highs earlier this month, entering a bear market #BTC @crypto

If after this morning you still think that #BTC is a hedge against world events, or represents "diversification", you must stay out of finance, & take up some other hobby s.a. stamp collecting, bird watching or something less harmful to yourself & others. @nntaleb

They can never beat you if you buy the dips. @nayibbukele

The ‘’Bukeleists’’ are going to be tested
"Money Suppy increases", if they went somewhere, they went to ... Bitcoin. @nntaleb
I’m really concerned about @bankofengland printing money out of thin air. @nayibbukele

And we are back at the bottom of the channel. @Remi_Tetot
https://twitter.com/Remi_Tetot/status/1464234830372249602?s=20

The Signal in the Noise is the Dollar

The Dollar has been on a roll and simply crushing other G10 currencies and creaming EM
EM looks like Trevor Berbick did when he was crushed by Mike Tyson
The Turkish Lira has been leading the downside charge of course
The emerging markets sovereign CDS index has just taken out the year's wide; got to a peak of 470 bps in the initial Covid lockdown in March 2020 (and over 800 bps in the GFC). @bondvigilantes

https://twitter.com/bondvigilantes/status/1463837250005856258?s=20

For a while this Portfolio did not look too clever
23-AUG-2021 :: ZigZag Therefore, I am clearing the decks and just holding
https://bit.ly/2Wzp4Fg
$TNX 20%
Ultras (#UB_F) 50% $NFLX 10%
Short ZAR 10% Cash 10%
The newest iteration is as follows
$TNX 20% reducing to 10% at 1.15-% to 1.25% yield levels
Ultras (#UB_F) 50% scale reduction to 20% at above 203.00 on a price basis
$NFLX 10%
Short ZAR 10%
Cash 10%
Increasing allocation to
Coffee
Natural Gas
Wheat

Home Thoughts

The overarching problem is that we need better mental firewalls for the information constantly coming at us. @elonmusk

Critical & first principles thinking should be a required course in middle school.

Who wrote the software running in your head? Are you sure you actually want it there?

Political Reflections

America and China Are in a Global Fight Over Military Bases @business

The Chinese People's Liberation Army opening its base in Djibouti. Photographer: STR/AFP via Getty Images @business

The Taiwan Strait is the most contested flash point in the U.S.-China military rivalry.

But that rivalry is also playing out in locations far from China’s shores.

A global battle over the placement of military bases is underway, as Beijing tries to expand its overseas presence and Washington tries to block it.

This game of geopolitical cat-and-mouse is likely to last decades. And it shows, paradoxically, why an America that is too focused on the Western Pacific may struggle to stymie Beijing.

The most recent skirmish occurred in the United Arab Emirates. According to the Wall Street Journal, U.S. intelligence agencies discovered that China was secretly building a military installation at the port of Khalifa.

The revelation prompted sharp warnings that the project could jeopardize the UAE’s critical security relationship with Washington — and halted the construction activity for the time being. But the UAE isn’t the only place where China’s military footprint is expanding.

In 2019, China secretly secured use of Cambodia’s Ream Naval Base.

In 2017, Beijing established its first overseas naval installation in Djibouti.

Even before that, the People’s Liberation Army built air bases and other installations in the South China Sea, often on artificial islands created in contravention of international law.

There are also a variety of “dual-use” facilities — ports, communications facilities and other nominally civilian installations with military applications — that Beijing has built, obtained or pursued in countries from Argentina to Sri Lanka to the Kiribati Islands.

China has good reasons to want a more global military. It is not lost on Xi Jinping that the country depends heavily on energy and food imports that must pass through waters the U.S. Navy dominates, such as the Persian Gulf.

China’s overseas economic presence has created an array of assets that Beijing must be able to protect.

For nearly two decades, Chinese strategists have urged the development of a navy that can compete for influence and conduct decisive combat operations not just in the Western Pacific but far beyond.

There is nothing historically atypical here: When America became a great power, it acquired the naval bases and coaling stations needed to extend its military reach. China has simply learned well from the U.S. example.

Granted, Beijing’s basing network remains tiny compared with America’s. The U.S. has dozens of major military facilities around the world and, depending on how one counts, hundreds of smaller ones.

But China’s basing offensive could make key waterways such as the Persian Gulf or the Bab al-Mandeb Strait more crowded and contested.

It could provide the People’s Liberation Army with better opportunities to spy on or harass American forces, as has happened in Djibouti.

It could help China frustrate a U.S. maritime blockade in the event of conflict, or even give Beijing options for taking the fight to American or allied shipping.

Most broadly, it presages a future in which Washington and its allies no longer enjoy nearly uninhibited access to the open seas, but increasingly have to worry about encountering Chinese fleets in peace or war.

The dustup in the UAE is thus a preview of things to come. Stealth, corruption and the lure of trade and investment are China’s best tools in this contest: Beijing outmaneuvered American officials with its move into Djibouti several years ago. The U.S., for its part, has — for now — the leverage that comes with being a global power.

America appears to have prevailed in the UAE because Abu Dhabi had so much to lose by displeasing Washington.

Intelligence cooperation, sales of cutting-edge military technology, and America’s use of the Al Dhafra Air Base have created a web of ties that the kingdom could not afford to disrupt.

Only the U.S. can ensure freedom of navigation in the Persian Gulf and protect the UAE from its rivals, namely Iran.

Here and elsewhere, America’s decades-long experience in the superpower game gives it a lot of cards to play vis-à-vis Beijing.

But this highlights an emerging dilemma. Resources are finite, and America’s presence in regions other than the Pacific has increasingly come to be seen as a distraction from checking China.

Yet great-power competition isn’t confined to the Pacific, which means that America’s global footprint is in fact a key weapon of rivalry with Beijing.

As the contest with China intensifies, the U.S. will be tempted to do less in other theaters so that it can do more in the Western Pacific.

As the basing battle indicates, though, an America that is less committed to the Middle East or Europe may also be less capable of combating the global expansion of Chinese power.

23-AUG-2021 :: Xi Jinping is on a winning streak ever since he started salami slicing his then adversary President Obama.

AUG-2021 :: There is a fluidity at the Apex of World Power and this brings friction, increases risk and creates Geopolitical Tail Risks across the spectrum.

It is inevitable he will roll the dice on Taiwan and imminently.

Belarus leader offers to host Russian nukes as Moscow-Nato tensions mount @SCMPNews

Viruses exhibit non-linear and exponential characteristics

This variant is out-competing others *far* faster than Beta and even Delta did #Omicron @jburnmurdoch

28-MAR-2021 we are seeing a sustained acceleration in mutant viruses.

While there is rampant speculation Omicron is more mild, I'd like to speculate that it is not attenuating, but becoming more immune-evasive in the true sense of the phrase And of course retaining all the pathogenic features. @fitterhappierAJ

The transmissibility of #Omicron is not in question, it clearly has a spectacular advantage.

The Open Question is whether it is more virulent. If it is less virulent then #Omicron is breaking the Trend of increasing virulence.

Ridiculous The speed of Omicron is from its sera escape Huge advantage @fitterhappierAJ

Existing COVID vaccines will struggle against the highly transmissible Omicron variant, Stephane Bancel, head of US vaccine manufacturer Moderna, told the Financial Times

People come to me saying my assessment is too early while Omicron is spreading at a FANTASTIC rate

And claiming that the variant is mild... something that is determined far after the transmissibility...

Ridiculous The speed of Omicron is from its sera escape Huge advantage

23-AUG-2021 :: We have now crossed peak Vaccine Euphoria

Existing COVID vaccines will struggle against the “highly transmissible” Omicron variant, Stephane Bancel, head of US vaccine manufacturer Moderna, told the Financial Times on Tuesday, adding that it will take two weeks to know whether current vaccines are effective and months to develop a new one.

Global avg cases up 15% to 561,668/day but rate of acceleration on decline since 22-Nov. @jmlukens

COVID European Union H/T @greg_travis

Daily avg global COVID deaths down 5% to 6,900/day past 2wks, continuing deceleration trend since 19-Nov. Global avg cases up 15% to 561,668/day but rate of acceleration on decline since 22-Nov.

COVID Germany H/T @greg_travis

International Markets

Euro versus the Dollar Chart @/Bellehos 1.1334

Currency Markets at a Glance WSJ

World Currencies

Euro 1.1334
Dollar Index 95.887
Japan Yen 113.55
Swiss Franc 0.9201
Pound 1.3325
Aussie 0.7169
India Rupee 74.84
South Korea Won 1178.145
Brazil Real 5.624
Egypt Pound 15.713
South Africa Rand 15.7713

Dollar Index Chart INO 95.887

World Currencies

World Currencies

Commodity Markets at a Glance WSJ

Commodities

Gold INO 1787.00

Commodities

Crude Oil INO 68.24

Minerals, Oil & Energy

Sub Saharan Africa

19-JUL-2021 Many Folks seem to feel we are in the final Act of the COVID-19 Play. I would be limit short that particular narrative.

Africa is currently reporting a million new infections about every 96 days @ReutersGraphics

'Talk about shooting the messenger': South Africa, Omicron and inequality @davidpilling

All countries are currently below the peak of their infection curve.

South Africa was where the #Omicron Variant was first identified and cases have exploded there [admittedly from a low base]

Update #COVID19 situation in SOUTH AFRICA🇿🇦 @rid1tweets

• 4,373 more cases today. 7-day avg up 311% week-on-week

Expect a large increase tomorrow post weekend effect

• Daily test positivity = 10.2%

• 2,414 currently in hospital
• 21 more deaths
• % population vaxxed = 28.8%

Drinking the Kool-Aid

Chinese President Xi Jinping has pledged a further one billion COVID-19 vaccines to help Africa achieve the goal of getting 60% of the continent's population vaccinated. @ReutersAfrica

Ethiopia Says It’s Making Headway In War Against Tigray Rebels @bpolitics

Let's meet at the war front, he wrote "The time has come to lead the country with sacrifice. @Reuters

Ethiopia’s government said its forces have recaptured a swathe of territory in the north of the country in a major counter-offensive against fighters loyal to the dissident Tigray province and have gained the upper hand in a year-long civil war.
Fighting has engulfed Africa’s second-most populous nation since Prime Minister Abiy Ahmed ordered an incursion into Tigray in retaliation for an attack on a federal army base.

The conflict, which shows no signs of letting up, has hammered investor confidence in what was one of the world’s fastest-growing economies and sparked a sell-off in the nation’s bonds.

After initially being pushed out of the Tigrayan capital of Mekelle, the region’s ruling Tigray People’s Liberation Front struck back and its troops retook the city, most of the province and parts of the neighboring Amhara and Afar regions.

That raised fears they could sever key trade routes or even stage a strike against the capital of Addis Ababa.

“The Ethiopian Defence Forces have launched a counter-offensive on the terrorist organization and the prime minister is now leading this from the front,” Billene Seyoum, Abiy’s spokeswoman, told reporters in the capital on Tuesday.

“In the past few days alone, great strides have been made in forcing the TPLF to relinquish their occupation of key areas” and the threat that they could choke off the country has been averted, she said.

The government’s claims couldn’t be independently verified, and it was unclear whether a major turning point had been reached in the fighting.

There was no immediate response from Tigray officials, who have previously said they were winning and their forces had advanced to within 220 kilometers (137 miles) of the capital.

Thousands of people have died in the conflict and hundreds of thousands of others have been displaced. Humanitarian agencies say more than 1 million people are in need of aid.

Billene accused the mainstream media of spreading a “false narrative” that exaggerated the extent of the war, “ignoring the fact there is no more fighting in Tigray and peddling libelous stories of ethnic cleansing and genocide by the government.”

The U.S., U.K., France and other Western nations have urged their citizens to leave Ethiopia, and the United Nations has evacuated most of its staff.
The European Union has meanwhile warned that there’s a risk of Ethiopia disintegrating completely unless the two warring sides agree to a cease-fire. African Union envoy Olusegun Obasanjo, a former president of Nigeria, is spearheading efforts to broker a truce.

The falcon cannot hear the falconer

https://bit.ly/3Bk45Gj

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 The ceremony of innocence is drowned;
The best lack all conviction, while the worst Are full of passionate intensity.

Whoever Controls The Narrative Controls The World

https://bit.ly/3hQcdEE

November 8, 2020 Ethiopia which was once the Poster child of the African Renaissance

https://j.mp/35ekJJr

South Africa All Share Bloomberg

Dollar versus Rand Chart INO 15.77

Egypt Pound versus The Dollar Chart INO 15.711

Egypt EGX30 Bloomberg

Scope of Nigeria's Security Threats in One Map @michaeltanchum

(Note: Map reflects the scope and not the magnitude of the respective threats)

Turning to Africa

@MoodysInvSvc affirms #Nigeria B2 credit rating but adjusts outlook from negative to stable. @OEAfrica

Moody’s affirms #Nigeria B2 credit rating but adjusts outlook from negative to stable. External pressures to ease due to Petroleum Industry Act and the completion of Dangote refinery. It should be noted that the benefits will be channelled through a sector in its twilight years.

Nigeria All Share Bloomberg