|Monday 01st of March 2021
Confluence of recent and long-run trends which brings us closer to a point of praxis @Rabobank @zerohedge
World Of Finance
Rabo: We Are About To Lose All Price Discovery – And Never Go Back Again Without A Systemic Crash
Most importantly, the market is currently testing central-bank resolve to keep control of the yield curve.
In short, as free markets always do, they are testing a paradigm to its limits.
It just so happens that this limit will happily reach the point of praxis beyond which conditions for them, on the surface, become ‘perfect’.
Yet as has been warned about here for years, we would lose the function of market price discovery – and never be able to go back again without a systemic crash.
08-FEB-2021 If you have a "normal" pandemic that is fading, but a "British variant" that is surging, the combined total can look like a flat, manageable situation. @spignal
We are at peak vaccine euphoria
Global covid19 cases [are] falling at just under 2%/day @video4me
No one wants to think that If you have a "normal" pandemic that is fading, but a "British variant" that is surging, the combined total can look like a flat, manageable situation. @spignal
They fancied themselves free, wrote Camus, ―and no one will ever be free so long as there are pestilences.
We've updated our preprint on the transmissibility of SARS-CoV-2 VOC 202012/01, aka B.1.1.7, with new statistical and modelling methods.
Headline: we estimate VOC is 43–82% more transmissible than preexisting variants.
We have exited this interregnum
Circulating SARS-CoV-2 variants escape neutralization by vaccine-induced humoral immunity
Vaccination elicits immune responses capable of potently neutralizing SARS-CoV-2. However, ongoing surveillance has revealed the emergence of variants harboring mutations in spike, the main target of neutralizing antibodies.
To understand the impact of globally circulating variants, we evaluated the neutralization potency of 48 sera from BNT162b2 and mRNA-1273 vaccine recipients against pseudoviruses bearing spike proteins derived from 10 strains of SARS-CoV-2.
While multiple strains exhibited vaccine-induced cross-neutralization comparable to wild-type pseudovirus, 5 strains harboring receptor-binding domain mutations, including K417N/T, E484K, and N501Y, were highly resistant to neutralization.
Cross-neutralization of B.1.351 variants was weak and comparable to SARS-CoV and bat-derived WIV1-CoV, suggesting that a relatively small number of mutations can mediate potent escape from vaccine responses.
While the clinical impact of neutralization resistance remains uncertain, these results highlight the potential for variants to escape from neutralizing humoral immunity and emphasize the need to develop broadly protective interventions against the evolving pandemic.
Of particular concern is an E484K mutation in RBD, which was recently identified through deep mutational scanning as a variant with the potential to evade monoclonal and serum antibody responses (Greaney et al. 2020, 2021).
Novel variants arising from the B.1.1.28 lineage first described in Brazil and Japan, termed P.2 (with 3 spike missense mutations) and P.1 (with 12 spike missense mutations), contain this E484K mutation, and P.1 in particular also contains K417T and N501Y mutations in RBD.
These strains have been spreading rapidly, and both P.2 and P.1 were recently found in documented cases of SARS-CoV-2 re-infection
Taken together, our results highlight that BNT162b2 and mRNA-1273 vaccines achieve only partial cross-neutralization of novel variants and support the reformulation of existing vaccines to include diverse spike sequences.
Ultimately, development of new vaccines capable of eliciting broadly neutralizing antibodies may be necessary to resolve the ongoing pandemic.
We focused on variants of concern first described in the United Kingdom (B.1.1.7), Denmark (B.1.1.298), United States (B.1.429), Brazil and Japan (P.2 and P.1), and South Africa (B.1.351), most of which arose in late 2020 (Figure 1A-B).
Although the naturally arising mutations in these variants span the entire spike protein, they mainly occur in S1 and RBD, the main target of neutralizing antibodies (Figure 1C and S1).
However, neutralization of the Brazilian/Japanese P.2 variant, whose RBD contains a E484K mutation, was significantly decreased (13.4-fold, p < 0.001) (Figure 3C and S2).
This is in line with previous studies suggesting that the E484K mutation can evade polyclonal antibody responses (Greaney et al. 2020; Jangra et al. 2021) and has been found in cases of SARS-CoV-2 re-infection (Paiva et al. 2020; Faria et al. 2021; Naveca et al. 2021; Resende et al. 2021; Nonaka et al. 2021).
Similarly, neutralizing antibody responses were also significantly decreased for the Brazilian/Japanese P.1 strain (15.1-fold, p < 0.0001), which harbors three mutations in RBD (K417T, E484K, and N501Y) and has also been found in cases of re-infection.
Return of the bond vigilantes: will inflation fears spoil the post-pandemic party? @FT
World Of Finance
Many eulogies have been written for the “bond vigilantes” that were once said to prowl global markets for spendthrift countries to bully into fiscal rectitude. But the vigilantes seem to have saddled up again.
The term was originally coined by former EF Hutton economist Edward Yardeni in the early 1980s to describe how bond sell-offs could force the hand of central banks or governments.
The concept was later immortalised by James Carville, an aide to President Bill Clinton who in 1994 ruefully wished he could be reincarnated as the bond market so he could “intimidate everybody”.
For the past two decades there has been little sign of the vigilantes. Inflation remained quiescent globally, and a desperate hunger for returns eroded the discipline of many bond investors.
Since the financial crisis, central banks have smothered fixed-income markets with a succession of vast quantitative easing programmes that neutered any would-be vigilantes.
But 2021 has seen a disconcertingly swift and powerful bond market rout.
The 10-year US Treasury yield — arguably the most important interest rate in the world as it influences prices in virtually every other corner of financial markets — jumped from under 1 per cent at the start of the year to over 1.6 per cent amid tumultuous trading.
As the pandemic starts to wane, many governments around the world have promised to “act big” to spur recovery and repair the economic scarring of the past year.
But some analysts now believe the bond vigilantes are riding again — and could undermine the economic recovery and on unsettle booming financial markets.
“We’re in a brave new world of excesses in fiscal and monetary policy, and that’s where the bond vigilantes thrive,” Yardeni says.
“It’s their job to bring law and order back to the economy when the central banks and the fiscal authorities are lawless. And that’s arguably what we’re seeing here.”
The central reason for the global bond sell-off is a positive one: although the economic scars from the Covid-19 pandemic remain significant, the combination of ample financial stimulus and pent-up demand being unleashed by the rollout of vaccines means that analysts are rushing to ratchet up their growth forecasts for 2021. Many now expect the biggest economic boom in generations.
However, some fear that this could finally reignite long-dormant inflationary pressures. Inflation is the nemesis of bonds, because it erodes the real value of the fixed interest rates that they pay.
Central banks have vowed to stay their hand as long as unemployment remains elevated, but the deepening bond dive shows that markets are beginning to be sceptical of that promise.
For now, most analysts and investors stress that even if inflation is likely to accelerate in 2021, it is likely to prove a fleeting phenomenon, and not something that will pose a serious, longer-term challenge to fixed income markets.
While the recent rise in yields has been notable for its speed and power, bond yields remain astonishingly low by historical standards, and some investors now reckon they have moved too far, too fast and are likely to stabilise soon.
Nonetheless, others worry that with investors so accustomed to low bond yields, even a modest rise could upset the dominant fuel of the “everything rally” across markets.
Stock markets have already started trembling at the recent uptick, and bond market sell-offs have a nasty way of revealing unexpected faultlines.
“We will certainly get an overshoot. The question is whether the market structure is now vulnerable enough that you’re going to have that echoed and exacerbated in ways we’ve not seen previously,” says Joyce Chang, chair of global research at JPMorgan.
Almost exactly a year ago this weekend, Italy abruptly quarantined 10 towns to limit the outbreak of a novel coronavirus originating in China.
The move hammered home that a pandemic was a serious, global threat, and turned simmering nervousness into a full-blown financial market meltdown by March.
Highly rated government bonds are the investment world’s panic room, a safe space where everyone from sovereign wealth funds and insurance companies to money managers and individual savers instinctively head to when times are tough.
That causes their prices to rise, and pushes down their effective interest rate, or yield.
When Covid-19 rattled markets, the bond yields of countries from the US to Finland, Germany to Australia, France to the UK, plunged to fresh lows that in some cases made even past records seem dowdy.
But since last summer, sovereign bond yields have been creeping steadily up.
The first big impetus came from the emergence of several highly effective vaccines last November, which meant investors could finally start to contemplate what a post-Covid global economy might look like in 2021.
Then Democrats won control of the US Senate in January, making possible another big stimulus package that would swell the deficit but hopefully ensure a powerful economic upswing that balms some of the scars left by the pandemic.
JPMorgan Asset Management estimates that the combined central bank and government stimulus measures already totalled $20tn last year, or more than a fifth of global economic output.
Now some economists fret that the additional $1.9tn spending package being readied by President Joe Biden’s administration may overheat the US economy.
Pimco, a bond investment group, expects that this additional Covid-19 relief package will boost the US budget deficit to a record $3.5tn in 2021, and lift the annual growth rate to over 7 per cent.
That is a pace that has only been hit in three quarters since the 1950s — all of them in the inflationary 1970s and 1980s, Pimco notes.
Dan Ivascyn, Pimco’s chief investment officer, is sceptical that inflation will take off, but stresses that the economic environment is unique.
“There’s a lot of stimulus at a time when the economy is starting to show some strength. And that understandably makes bond markets nervous,” he says.
Dan Fuss, vice-chair at US asset manager Loomis Sayles, has seen many economic cycles through his six-decade career as a bond investor, and he is worried that history shows that the scale of the stimulus will inevitably reignite inflation.
“I can almost hear Milton Friedman shouting ‘look out here it comes’,” he says. “Can it work out differently? Of course. Is that the way to bet? No, it’s not.”
Notably, the primary drivers of the bond market sell-off have subtly shifted in recent weeks.
While the increase in yields since November was primarily powered by rising inflation expectations, the latest moves have largely come from investors starting to price in central banks tightening monetary policy more quickly than they have previously indicated.
That is particularly dangerous for other financial markets, as sub-zero “real”, inflation-adjusted yields have been the dominant reason why investors have felt comfortable paying more for a range of other financial securities than they have in the past.
“You’ve built these mini pockets of speculative excess that arguably could be subject to more profit-taking if this continues,” says Liz Ann Sonders, chief investment strategist at Charles Schwab.
Underscoring this tense relationship, equity markets have recently seesawed nervously on days when yields have climbed higher, even though the fundamental reason is rising economic optimism.
More than $800bn has been sliced off valuations of the companies that make up the Nasdaq Composite over the past two weeks.
Although most real yields remain negative across most major government bond markets, Matt King, a Citi strategist, notes that the threshold for rising real yields to trigger sell-offs across markets seems to be falling.
“The more dovish central banks are, the more money they pump into the system, the more dependent markets become on that money to maintain high valuations,” says King.
Nonetheless, most investors and analysts are sceptical that a new era of inflation is dawning given the scale of the economic devastation left in the wake of the pandemic, and longer-term deflationary forces like ageing demographics, global supply chains and technological innovation.
Seth Carpenter, chief US economist at UBS, also envisages only a shortlived inflation burst.
Spending on services will surge as lockdowns end, yet spending on goods will probably fall as people choose to visit restaurants and do less shopping online.
Furthermore, much of the additional stimulus cash coming into households will go to repaying overdue debts, Carpenter says.
Central bankers have this week been at pains to stress that they will not tighten policy to stem an expected inflation spike this year, and that they are keeping a close eye on the bond market reversal.
The Reserve Bank of Australia has already restarted its quantitative easing programme, and some analysts expect that others may take action to ensure that the fixed income rout doesn’t deepen further into something more destructive.
The dramatic shifts this week may precipitate action sooner rather than later, argues Scott Minerd, global chief investment officer of Guggenheim Partners.
“This volatility is starting to have a real impact in financial markets and given the excessive amount of leverage in the system . . . we are running the risk that we are going to have financial instability,” he says.
“Ultimately the Federal Reserve may have to become even more aggressive to keep markets from becoming more chaotic.”
However, the bond vigilantes’ comeback tour may be a shortlived one. Robert Michele, chief investment officer at JPMorgan Asset Management, points out that the Fed is still buying $120bn of bonds a month.
Add in the purchases of other central banks and there is a global tsunami of money that will eventually manage to quell the turbulence, he expects.
“At some point — and it may be now — there will be a capitulation, yields will have gotten too high, and the relentless weight of the bond purchases from the central banks will stabilise the market,” he says.
“The asset purchases are relentless. You can’t fight that.”
@PMEthiopia has launched an unwinnable War on Tigray Province.
Ethiopia which was once the Poster child of the African Renaissance now has a Nobel Prize Winner whom I am reliably informed
PM Abiy His inner war cabinet includes Evangelicals who are counseling him he is "doing Christ's work"; that his faith is being "tested". @RAbdiAnalyst
@PMEthiopia has launched an unwinnable War on Tigray Province.
.@MagufuliJP Government changes course on Covid-19 @mailandguardian @thecontinent_
However, in a speech last Sunday, he did make an important concession, acknowledging that there has been a dramatic increase in respiratory diseases, and that Tanzanians must start taking basic precautions.
The president urged citizens to wear face masks (but, bizarrely, urged them to avoid wearing foreign masks).
the impact of the pandemic in Tanzania has become impossible to ignore.
Not only are doctors and hospitals saying that cases are surging, based on their own Covid tests and clinical assessments, but a number of prominent politicians and government leaders have died recently after presenting Covid-like symptoms.
Things got so serious that even the World Health Organisation, which is often slow to criticise sovereign states, weighed in, urging Tanzania to take “robust action” against the virus.
In a surreal press conference on Tuesday, a clearly ill Finance Minister Philip Mpango addressed reporters to dispel rumours that he had died of Covid-19.
He was not wearing a mask, and coughed his way through a statement.
Magufuli has once again urged the country to participate in three days of national prayer to combat an unspecified “respiratory illness”.
It was after three days of prayer in May that Magufuli declared that Covid-19 was no longer present in Tanzania, and the government stopped testing and scrapped all precautionary measures.
Exposing a Congolese bank’s dirty secrets @mailandguardian @thecontinent_ @simonallison
There was nothing particularly exceptional about the day that Gradi Koko’s life changed forever.
It was early 2018, and he was at his office. He was working in the Kinshasa branch of Afriland First Bank, in the upmarket Gombe district, near government buildings and embassies.
Returning to his desk, he passed someone on their way to the restroom. It was a man who looked vaguely familiar, flanked by a security guard, coming from the office of the bank’s director-general.
When he sat down, his colleague Navy Malela called him over. “Did you see that person?” said Malela. “That’s Dan Gertler. We are going to have problems.”
In hindsight, that was putting it mildly. Not only because of Gertler, who was “just” a businessman blacklisted by the United States. But because the plot, as they say, was about to thicken.
Koko had always wanted to be a banker, like his father before him, and his career was going strong.
In just five years, he had risen to become Afriland’s head of accounting and risk, which meant it was his job to make sure the bank did everything by the book.
It was a heavy responsibility, and one he took seriously.
He asked Malela what he knew about the unusual visitor.
Malela said Gertler was an Israeli businessman who was close friends with the president, Joseph Kabila. He was in mining.
He was rarely far from scandal.
And, most concerning of all – from the bank’s perspective – that just months previously the US had targeted him with economic sanctions due to allegations that his vast fortune had been won through corrupt oil and mining deals.
This meant that Gertler, worth more than a billion dollars, was not supposed to be doing business with any bank anywhere in the world that deals in US dollars – and that included Afriland.
This was more than enough for Koko to launch his own internal investigation.
A few weeks later, in a letter seen by The Continent, he wrote to Afriland’s director- general, Patrick Kafindo, to express his reservations about Gertler’s accounts, and others he believed were linked to Gertler.
Koko said that he was immediately summoned into Patrick Kafindo’s office.
“The bank director was mad,” Koko told The Continent. “He said that these persons were not random individuals. He said Kinshasa is a dangerous place, I might go into the street and get shot.”
Koko was horrified. He knew, right then and there, that his career was over. He couldn’t keep quiet. Nor could he speak out without endangering himself and his family. Not in Kinshasa, at least.
A few days later, he fled to Europe, along with his wife and children. He took a trove of bank documents with him.
These later formed the basis of several hard-hitting reports, including by Global Witness and Bloomberg, that accused Dan Gertler of using Afriland to transfer tens of millions of dollars internationally, circumventing the sanctions regime.
Gertler strongly denies these allegations – he says the documents were illegally obtained and fabricated – and is suing for defamation in a court in Paris.
The bank director, Kafindo, echoed this complaint. He said the whistleblowers had forged documents, and had never brought their concerns to him.
He questioned their motives: “I don’t come to tell stories to get a visa in Europe,” Kafindo told RFI’s Sonia Rolley in an interview last week.
Koko, meanwhile, says he has no regrets. “I did it for my country. Yes, my life in Kinshasa was better. But this is not about me. It’s about my profession. I needed to respect the role of banker.”
For his own protection, there are details about Koko’s flight from Kinshasa and his current location that cannot be made public.
What we can say is that after leaving Kinshasa, and from a place of relative safety but with money running low, he considered his next steps.
For inspiration, Koko read up on the fate of another Congolese banker-turned- whistleblower: Jean-Jacques Lumumba, the grand-nephew of independence leader Patrice, who exposed alleged fraud connected to the family of former president Joseph Kabila.
When Lumumba raised the alarm with the head of the bank, he was threatened with a gun.
He too sought safety outside of the DRC, and has subsequently become a prominent anti-corruption crusader.
Lumumba received support in exile from the Platform to Protect Whistleblowers in Africa, better known by the French acronym PPLAAF.
Following in his footsteps, in early 2019, Koko sent a Facebook message to PPLAAF.
He said he was ready to blow the whistle, and had the documents to prove it.
It was these documents that formed the basis of the media reports Into Afriland last year.
But soon PPLAAF noticed something strange. Some of the documents were dated after Koko had fled Kinshasa.
There was a second whistleblower.
Navy Malela was nervous. He had stayed on at the bank after Koko left, but everyone there knew the two of them were close, and that he had helped with the initial investigation.
He wasn’t sure what to do. But just in case the worst happened, he started copying documents – which, as an IT specialist, was easy enough to do.
“I told myself it might protect me but I had no idea how,” he told The Continent. He shared some of these with Koko.
Eventually the stress, and the fear, became too much, and in early 2019 he put his wife and children on a plane to Europe, with support from PPLAAF.
A few days later, he followed them, claiming asylum.
To protect both Koko and Malela from retribution, their exact locations are not being disclosed.
His kids go to school, but neither Malela nor his wife can work. They miss Kinshasa every day.
“It’s my country. Kinshasa is where I grew up. I miss my city, I miss the heat, and I miss my life. The first moment I can, I will go back,” he said.
Like Koko, Malela brought a stash of documents with him. But these were far more extensive.
They provided extraordinary insight into the inner workings of Afriland First Bank’s Congolese branch, and raised a number of red flags. The kind that set off klaxons and put the entire base on high alert.
For it is not just Dan Gertler and his alleged associates who have been allegedly skirting the legalities of international sanctions regimes through the Afriland bank on Kinshasa.
The documents reveal connections to companies with alleged links to Hezbollah (the Lebanese Islamist group, considered by the US to be a terrorist organisation); and to a construction firm linked to the North Korean government, which was revealed by The Sentry last year to be part of Pyongyang’s efforts to evade economic sanctions.
The leaked documents also provide fascinating insight into the enormous sums that flow into and out of the bank accounts of some of Congo’s political elite, including Zoe Kabila (brother of Joseph); Richard Muyej, the governor of the copper-rich Lualaba Province; and the official account of the country’s senate.
The documents are not necessarily proof of wrongdoing, but do raise uncomfortable questions for the implicated parties; and especially for Afriland, whose credibility and due diligence has been called into question.
And that, as far as the whistleblowers are concerned, is the point.
“What I want is for Congolese authorities to investigate these affairs,” said Malela. “I don’t understand why they haven’t already.”
“Thanks to the silent revolution of whistleblowers like Gradi [Koko] and Navy [Malela] on the African continent, no crime will remain a secret forever, and the change we desire will eventually make itself felt,” said the other famous Congolese whistleblower, Jean-Jacques Lumumba. “Acts like theirs are a hope for the DRC and for our continent.” ■
Unga reports HY 2020 Earnings here
N.S.E Equities - Agricultural
Par Value: 5/-
Closing Price: 29.50
Total Shares Issued: 75708872.00
Market Capitalization: 2,233,411,724
Unga Half Year Earnings through 31st December 2020 versus December 2019
HY Revenue 9.472012b versus 10.033267b
HY Operating Profit 217.896m versus 303.507m
Finance Costs [103.504m] versus [89.561m]
HY Profit before Tax 122.544m versus 219.421m
HY Profit After Tax 83.476m versus 151.322m
HY EPS 0.63 versus 1.25
Cash and the end of period 822.464m versus [42.842m]
Revenues declined 3%
Credit Risk remained high
Delayed payment from GOK continues to negatively impact operations and cashflows
The debt owed to the human nutrition business remains outstanding more than 3 years after grain was supplied in support of government led maize subsidy program
World Wheat prices have rallied to levels not seen in the past decade