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Satchu's Rich Wrap-Up
Friday 01st of April 2022

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Its a Wizard of Oz moment
World Of Finance

We have reached the point when the curtain was lifted in the Wizard of Oz and the Wizard revealed to be ‘’an ordinary conman from Omaha who has been using elaborate magic tricks and props to make himself seem “great and powerful”’’ 

The Curtain has been lifted and Mr. Powell has now arrived at his Volcker moment 

Deutsche Bank's Jim Reid notes that yesterday's surge in the 2-year US Treasury yield was, by one measure, "the biggest "shock" since October 1979 when Volcker announced his intentions on the world @ReutersJamie
The last time inflation was here, February 1982 - the Fed Funds Rate was 15%. @Convertbond
Dartmouth economist and former Fed adviser Andrew Levin says the Fed needs to get rates to a neutral setting within a year or so, and that the means getting the Fed Funds rates up to 4% or 5%

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If you believe that asset markets have already largely absorbed the current rate structure and are now priced for a 3% terminal rate, there are good arguments to suggest the terminal rate can go higher still DB @FerroTV
World Of Finance

“If you believe that asset markets have already largely absorbed the current rate structure and are now priced for a 3% terminal rate, there are good arguments to suggest the terminal rate can go higher still, until such time as financial conditions tighten materially” DB

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29-NOV-2021 :: Regime Change
World Of Finance


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

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Bear market rallies: (1) the most breath-taking & awe-inspiring rallies occurred most often in the bear market. @MasterPandaWu
World Of Finance

Bear market rallies: (1) the most breath-taking & awe-inspiring rallies occurred most often in the bear market. (2) the last crash in 2020 is an atypical fast-paced move--even that included some single-day rally record, i.e. +9.3% on 3/13. (3) better form a concept now--otherwise

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The @POTUS Official Who Pierced Putin’s “Sanction-Proof Economy @NewYorker
World Of Finance

Singh said, “We’ve made him stare into an economic abyss. But he could choose to pull back.”

The markets are where these two systems touch—the supply of buckwheat, the joint energy ventures, the price of the ruble—and within this arena the sanctions were a demonstration that Washington still had levers to pull. “You know, we can play chess, too,” Singh said. “It was important for us to show that the fortress could come crumbling down.”


Sanction warfare against a TriPolar Power is a monstrous debacle

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#Zoltan Night time sneak attack. via @TheBondFreak
World Of Finance

We are witnessing the birth of Bretton Woods III – a new world (monetary) order centered around commodity-based currencies in the East that will likely weaken the Eurodollar system and also contribute to inflationary forces in the West.
A crisis is unfolding. A crisis of commodities. Commodities are collateral, and collateral is money, and this crisis is about the rising allure of outside money over inside money. 

The beautiful paradox of linear rates (the stuff you trade and I write about) is that you need to think linear to find relative value most of the time, but you have to think non-linear to recognize and survive regime shifts

We are seeing a regime shift unfold in funding markets currently (which, as always, will pass), and a sea change in inflation dynamics and FX reserve management practices.

Do you see inflation in the West written all over this like I do?
This crisis is not like anything we have seen since President Nixon took the U.S. dollar off gold in 1971 – the end of the era of commodity-based money.
When this crisis (and war) is over, the U.S. dollar should be much weaker and, on the flipside, the renminbi much stronger, backed by a basket of commodities.
From the Bretton Woods era backed by gold bullion, to Bretton Woods II backed by inside money (Treasuries with un-hedgeable confiscation risks), to Bretton Woods III backed by outside money (gold bullion and other commodities).
After this war is over, “money” will never be the same again... ...and Bitcoin (if it still exists then) will probably benefit from all this.

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24-JAN-2022 :: The Charge of the Light Brigade
World Of Finance

 In a World of hocus pocus monetary policy making, the Russian Ruble is the soundest of sound money.

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Gas supplies to Europe (billion cubic meters per year). @Vas7Alexander
World Of Finance

From Russia - 153 billion cubic meters; 
From Algeria - 29 billion cubic meters; 
From the USA - 18.8 billion cubic meters. 
Purple indicate degree of dependence on Russian gas. Source: Jacques Delors Institute.

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If we want things to stay as they are, things will have to change. - Giuseppe Tomasi di Lampedusa , The Leopard

"Now the road was crossing orange groves in flower, and the nuptial scent of the blossoms absorbed the rest as a full moon does a landscape ..all cancelled out by that Islamic perfume evoking houris and fleshly joys beyond the grave."

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Chariot by Alberto Giacometti

In every work of art the subject is primordial, whether the artist knows it or not Alberto Giacometti

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Video reportedly of Ukrainian attack helicopters striking oil facility in Belgorod, across the border inside Russia @ELINTNews
Law & Politics


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The notion that declassified US intel knows what's really goin' on in the Kremlin and the Russian MoD; is SO ridiculous that, well, roars of laughter do apply. @RealPepeEscobar
Law & Politics

The notion that "declassified US intel" knows what's really goin' on in the Kremlin and the Russian MoD; and that Putin has been "misinformed" about Operation Z by, in fact, Gerasimov and Shoigu - the whole thing is SO ridiculous that, well, roars of laughter do apply.

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24-JAN-2022 :: The Charge of the Light Brigade
Law & Politics

President Putin's Russia is oftentimes compared disparagingly on a GDP basis [the GDP comparison is made with Italy] and Russian power projection dismissed out of hand.

For example, @MittRomney described #Russia as a gas station parading as a country.
Sun Tzu pronounced ''“Pretend inferiority and encourage his arrogance.”
The sheer arrogance and naivete of the Hashtag Warrior #StandWithUkraine @SecBlinken and ''the UK and our partners would impose a severe cost on Russia'' @LizTruss is simply unfathomable.
It is difficult to know who is producing a bigger guffaw in the Kremlin. It is a ''Charge of the Light Brigade'' moment.
The Charge of the Light Brigade was a failed military action involving the British light cavalry led by Lord Cardigan against Russian forces during the Battle of Balaclava on 25 October 1854 in the Crimean War.
The Charge of the Light Brigade BY ALFRED, LORD TENNYSON
Half a league, half a league, Half a league onward,
All in the valley of Death
Rode the six hundred.

 “Forward, the Light Brigade! Charge for the guns!” he said. Into the valley of Death
Rode the six hundred.
“Forward, the Light Brigade!” Was there a man dismayed? Not though the soldier knew
Someone had blundered. Theirs not to make reply, 

Theirs not to reason why, 

Theirs but to do and die.

Into the valley of Death Rode the six hundred.

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14-FEB-2022 :: Friday's action and next immediate sessions might afford us the greatest macro trading opportunity to reset shorts in the US 10 and Ultra Bond. We can look across all G7 Bonds
World Of Finance

Friday's action and next immediate sessions might afford us the greatest macro trading opportunity to reset shorts in the US 10 and Ultra Bond. We can look across all G7 Bonds because this is a Super Bubble that is going to burst big. There is no way out now.

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Currency Markets at a Glance WSJ
World Currencies

Euro 1.106500 
Dollar Index 98.457
Japan Yen 122.522
Swiss Franc 0.92407 
Pound 1.313115 
Aussie 0.74745
India Rupee 75.8853 
South Korea Won 1215.785 
Brazil Real 4.7395000
Egypt Pound 18.279657 
South Africa Rand 14.60849 

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*U.K. ECONOMY GREW 1.3% IN 4Q FROM PREVIOUS QUARTER - Bloomberg @Convertbond
World Of Finance

*Ben Broadbent “UK braces for inflation to hit a 40-year high of nearly 9%” - The Independent.

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U.S.'s planned release of 180 million barrels of crude would be the largest drawdown in the SPR's 45-year history. @lisaabramowicz1

Top oil analysts say that the U.S.'s planned release of 180 million barrels of crude may dampen prices in the near term, but longer-term supply-demand imbalances will persist. It would be the largest drawdown in the SPR's 45-year history.

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Sri Lanka Turns Off Street Lights As Energy Crisis Worsens; Fishermen Unable To Sail For Lack Of Fuel @zerohedge
Emerging Markets

Tiny Sri Lanka is struggling through an economic crisis that is having terrible repercussions for its economy, as a brutal energy crisis threatens to blossom into shortages of food and other essential goods.
Thanks to an energy crisis (and China's reluctance to allow the country to restructure its debts), Sri Lanka is resorting to turning off its street lights to save electricity as its worst economic crisis in decades bites, forcing - among other cutbacks - the temporary closure of the local stock market as the impact of the crisis is felt (the Colombo Stock Exchange reduced daily trading to two hours from the usual four-and-a-half because of the power cuts for the rest of this week at the request of brokers).

The island nation of 22 million people is struggling with rolling power cuts for up to 13 hours a day as the government is unable to make payments for fuel imports because of a lack of foreign exchange.

According to Reuters, the energy-drained country expects a diesel shipment paid for under a $500 million line of credit from neighboring India is expected to arrive on Saturday, but the situation isn't expected to improve any time soon, as power restriction will need to continue, according to the country's power minister.
"We have already instructed officials to shut off street lights around the country to help conserve power," Power Minister Pavithra Wanniarachchi told reporters.
"Once that arrives we will be able to reduce load shedding hours but until we receive rains, probably some time in May, power cuts will have to continue," Wanniarachchi told reporters, referring to the rolling power cuts.
"There's nothing else we can do."
Another reason for the power crisis (and a lesson for all nations that are aiming to ramp up 'green' energy sources): Water levels at reservoirs feeding hydro-electric projects had fallen to record lows, while demand had also hit record levels during the hot, dry season, she said.
As Reuters explains, the crisis in Sri Lanka is the result of a confluence of factors that have drained the country's foreign exchange reserves.
The crisis is a result of badly timed tax cuts and the impact of the coronavirus pandemic coupled with historically weak government finances, leading to foreign exchange reserves dropping by 70% in the last two years.
Sri Lanka was left with reserves of $2.31 billion as of February, forcing the government to seek help from the International Monetary Fund and other countries, including India and China.
And if the situation doesn't improve soon, the small country's energy crisis could metastasize into a food crisis. 

Because, as the AFP explains, without fuel, the country's fishermen have been stranded on shore, unable to reel in the day's catch. And the ramifications are being felt by families across the country.
"If we queue up by five in the morning, then we will get fuel by three in the afternoon, on good days," Arulanandan, a seasoned member of Negombo's close-knit fishing community, tells AFP.
"But for some, even that is not possible, because by the time they get to the end of the queue, the kerosene is gone."
As they look for somebody to blame, the locals have settled on one key culprit: Beijing, and its 'debt diplomacy', which seems to have caught Colombo in its trap.

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@IMFNews in Talks With Tanzania Over Potential $700 Million Loan @markets

Tanzania is seeking at least $700 million from the International Monetary Fund as it adjusts its borrowing strategy to take on more concessional loans and reduce the risk of debt distress, President Samia Suluhu Hassan said.
The move is part of Hassan’s wider plan to boost Tanzania’s fiscal position, after the IMF in September raised the East African nation’s risk of debt distress to moderate from low. 

The government ramped up commercial borrowings in the past few years to fund infrastructure projects, including about $1.5 billion from Standard Chartered Plc to help fund construction of a new railroad. 
“We have redirected the loan program,” Hassan, 62, said in an interview from her office in the capital, Dodoma. “I am looking for concession, not for commercials.”  

An agreement with the IMF hasn’t been reached yet, Hassan said.
Increased borrowings amid the pandemic even as tourism revenue, which accounts for about a quarter of Tanzania’s gross domestic product, plunged led to a jump in the nation’s debt level. 

The talks if successful, will result in the nation’s first IMF policy-reform funding program in a decade

The institution’s disbursement of about $570 million for Tanzania last year was under the emergency lending provision for recovery from the coronavirus pandemic. 
The nation’s debt climbed 20% to $37.1 billion last year. The fiscal deficit may widen to 4.2% of GDP this year, compared with 1.4% in the 2019-20 fiscal year, the World Bank said in a January report.

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Zambia Inflation Slows to Two-Year Low on Food Prices Easing @markets

Consumer prices rose 13.1% in March from a year earlier
Preliminary data shows economy expanded 3.6% in 2021

Zambia’s inflation rate dropped to a more than two-year low in March as food and non-food price growth eased. 
Consumer prices rose 13.1% from a year earlier, compared with 14.2% in February, interim Statistician-General Mulenga Musepa told reporters Thursday in Lusaka, the capital. 

That’s the lowest level since January 2020.  

Inflation has slowed from last February when it was at a five-year high due to the depreciation of the kwacha to an at least 28-year low which made imports more expensive. 

Food-price growth slowed to 15.3% in March, compared with 16% in the previous month, and non-food inflation decelerated to 10.3% from 11.8%. Costs rose 0.8% in the month. 
The slowdown in inflation for an eighth month may see the central bank’s monetary policy committee keep the key interest rate unchanged for a second straight meeting in May. 

But it will need to assess the impact of surging agricultural commodities and oil prices, caused by the war in Ukraine, on its forecasts.
The economy expanded by an estimated 3.6% last year after a coronavirus-induced contraction of 3.1% in 2020, Musepa said. The southern African nation’s worst slump in 26 years. 
Central bank Governor Denny Kalyalya said last month the policy committee sees inflation continuing to trend toward its 6% to 8% target range over the next eight quarters, averaging 13.2% in 2022 and 7.3% in 2023.

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@SafaricomPLC came off 2.6% to hit a 14-month low of KES 34.15 share price data
N.S.E Equities - Commercial & Services

Closing Price:           34.15
Total Shares Issued:          40065428000.00
Market Capitalization:   $11.908b
EPS:             1.71
PE:                 19.971

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Kenya Re-insurance Corp. Ltd. reports FY 2021 Earnings here
N.S.E Equities - Finance & Investment

Par Value:                  2.50/-
Closing Price:           2.28
Total Shares Issued:          2799796272.00
Market Capitalization:        6,383,535,500
EPS:             1.06 
PE:                2.15 

Kenya Re reports FY 2021 earnings through 31st December 2021 versus 2020
FY Net Earned premiums 19.095626b versus 20.850266b

FY Invest income Interest income 2.762092b versus 2.749776b

FY Invest income Other 0.895593b versus 1.042140b

FY Share  of Associate profits 404.174m versus 292.844m

FY Total Income 23.236336b versus 25.003287b

FY Net Claims and Benefits [11.652663b] versus [13.933382b]

FY Cedant  Acquisition costs [4.808789b] versus [5.310496b] 
FY Operating and other expenses [2.095804b] versus [1.964808b]

FY Provision for doubtful receivables  [0.909370b] versus [227.813m]

FY Total Claims Benefits & other expenses [19.235839b] versus [21.109695b]

FY Profit before Tax 4.000497b versus 3.983592b

FY Profit after Tax 2.968365b versus 2.942922b

FY EPS 1.06 versus 1.05 


The PE Ratio remains a conundrum  

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by Aly Khan Satchu (www.rich.co.ke)
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April 2022

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