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Satchu's Rich Wrap-Up
Friday 09th of September 2022

There is a tendency to overcomplicate markets. @KobeissiLetter
World Of Finance

There is a tendency to overcomplicate markets. @KobeissiLetter

We have a market with:
1. Rising interest rates into a recession
2. Energy crisis and geopolitical tensions
3. Credit card debt up 30% this year
4. A top in the housing market
This will be the most anticipated crash in history.

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These became known as the “halcyon days,” when storms do not occur. Wikipedia has an article on: halcyon days and it reads thus

These became known as the “halcyon days,” when storms do not occur. Wikipedia has an article on: halcyon days and it reads thus

From Latin Alcyone, daughter of Aeolus and wife of Ceyx. When her husband died in a shipwreck, Alcyone threw herself into the sea whereupon the gods transformed them both into halcyon birds (kingfishers).
When Alcyone made her nest on the beach, waves threatened to destroy it. Aeolus restrained his winds and kept them calm during seven days in each year, so she could lay her eggs.
These became known as the “halcyon days,” when storms do not occur. Today, the term is used to denote a past period that is being remembered for being happy and/or successful

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The World was once a more simple place [or so our received memory will lead us to believe]
Law & Politics

The World was once a more simple place [or so our received memory will lead us to believe]

Vanity[a] of vanities, says the Preacher,
vanity of vanities! All is vanity.
A generation goes, and a generation comes,
but the earth remains forever.
The sun rises, and the sun goes down,
and hastens[b] to the place where it rises.
What has been is what will be,
and what has been done is what will be done,
and there is nothing new under the sun.
Is there a thing of which it is said,
“See, this is new”?
It has been already
in the ages before us.
There is no remembrance of former things,[c]
nor will there be any remembrance
of later things[d] yet to be
among those who come after.
Ecclesiastes 1:2-11 2 11 [1]

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Currency Markets at a Glance WSJ
World Currencies

Currency Markets at a Glance WSJ

Euro 1.00515
Dollar Index 109.15
Japan Yen 143.64
Swiss Franc 0.96649
Pound 1.1549
Aussie 0.6787
India Rupee 79.68
South Korea Won 1379.04
Brazil Real 5.2149
Egypt Pound 19.32
South Africa Rand 17.4428

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2022 doesn't look like 1985. @RencapMan
World Of Finance

2022 doesn't look like 1985. @RencapMan

My take-away from this is that coordinated intervention was seen to be so successful because

1) US dollar overvaluation was extreme, 

2) economic and some market fundamentals no longer justified dollar strength and 

3) the $ had already turned.
2022 doesn't look like 1985.

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April 10, 2022 Apocalypse Now
World Of Finance

April 10, 2022 Apocalypse Now

The @POTUS Official Who Pierced Putin’s “Sanction-Proof” Economy
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.”
The Sanction warfare program is a reiteration of the @BarackObama 2014 version but then Oil was dropped to $20.00 and today its trading at $97.56 a barrel. This is the first flaw in the sanction warfare effort.
‘’You can print money, but not oil to heat or wheat to eat’’ wrote @CreditSuisse’s Zoltan Pozsar.
Russia essentially gave the $ and the Euro the very same exorbitant privilege that King Abdul Aziz Ibn Saud of Saudi Arabia gave President Franklin D Roosevelt aboard the USS Quincy in Great Bitter Lake in February 14, 1945 when the petro dollar economy was symbolically born.

By insisting payments are made in Russian Rubles for Russian commodities Vladimir Putin has withdrawn that exorbitant privilege.
The Russian Ruble rally is real and has much further to go.

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Jul 3 By sanctioning the Russians, we created a reverse '' Petro Dollar'' We created a ''Petro Ruble'' a currency backed by commodities.
Law & Politics

Jul 3 By sanctioning the Russians, we created a reverse '' Petro Dollar'' We created a ''Petro Ruble'' a currency backed by commodities. 

It is a straightforward calculation now between a Money Printer and a currency backed by hard and soft commodities. Its a No Brainer and a seismic macro development. 

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Do you remember the three units of Minsky? War and Industrial Policy @CreditSuisse Zoltan Pozsar
Law & Politics

Do you remember the three units of Minsky?  War and Industrial Policy @CreditSuisse Zoltan Pozsar

Do you remember the three units of Minsky? 

Hedge units can cover their payments from their incomes. 

Speculative units have to borrow to be able to make payments. 

And Ponzi units can make their payments only if they sell some of their assets and are thus the most exposed to rising interest rates. 

As our chip examples demonstrate, Minsky would classify our military supply chains as “speculative” units at best, which are exposed to a further escalation of geopolitical tensions that could easily turn them into Ponzi supply chains

We can also apply Minsky’s framework in Europe, where Germany can’t cover its payments without Russian gas and the government is asking citizens to conserve energy to leave more for industry.
Minsky moments are triggered by excessive financial leverage, and in the context of supply chains, leverage means excessive operating leverage: in Germany, $2 trillion of value added depends on $20 billion of gas from Russia...

...that’s 100-times leverage (see the last chart here) – more than Lehman’s.

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Germany’s Energy Suicide: An Autopsy
Law & Politics

Germany’s Energy Suicide: An Autopsy 

When Green fanatic Robert Habeck, posing as Germany’s Economy Minister, said earlier this week “we should expect the worst” in terms of energy security, he conveniently forgot to spell out how the whole farce is a Made in Germany cum Made in Brussels crisis.
Flickers of intelligence at least still glow in rare Western latitudes, as indispensable strategic analyst William Engdahl, author of A Century of Oil, released a sharp, concise summary revealing the skeletons in the glamour closet.

Everyone with a brain following the ghastly Eurocrat machinations in Brussels was aware of the main plot – yet hardly anyone among average EU citizens. 

Habeck, Chancellor “Liver Sausage” Scholz, the European Commission (EC) Green Energy VP Timmermans, EC dominatrix Ursula von der Leyen, they are all involved.
In a nutshell: as Engdahl describes it, this is about “the EU plan to de-industrialize one of the most energy-efficient industrial concentrations on the planet.”
That’s a practical translation of the UN Green Agenda 2030 – which happens to be metastasized into crypto Bond villain Klaus Schwab’s Great Reset – now renamed “Great Narrative”.
The whole scam started way back in the early 2000s: I remember it vividly, as Brussels used to be my European base in the early “war on terror” years.
At the time, the talk of the town was the “European energy policy”. 

The dirty secret of such policy is that the EC, “ advised” by JP MorganChase as well as the usual mega speculative hedge funds, went all out into what Engdahl describes as “a complete deregulation of the European market for natural gas.”
That was sold to the Lugenpresse (“lying media”) as “liberalization”. 

In practice, that’s savage, unregulated casino capitalism, with the “free” market fixing prices while dumping long-term contracts – such as the ones struck with Gazprom.
How to decarbonize and destabilize
The process was turbo-charged in 2016, when the last gasp of the Obama administration encouraged massive export of LNG out of the U.S.’s huge shale gas production.
For that one needs to build LNG terminals. Each terminal takes as much as 5 years to build. Within the EU, Poland and Holland went for it from the start.

As much as Wall Street in the past invented a “ paper oil” speculative market, this time they went for a speculative “paper gas” market.
Engdahl details how “the EU Commission and their Green Deal agenda to ‘decarbonize’ the economy by 2050, eliminating oil, gas and coal fuels, provided the ideal trap that has led to the explosive spike in EU gas prices since 2021.”
The creation of this “single” market control implied forcing illegal rule changes on Gazprom. 

In practice, Big Finance and Big Energy – which totally control anything that passes for “EU policy” in Brussels – invented a new pricing system parallel to the long-term, stable prices of Russian pipeline gas.
By 2019, an avalanche of Eurocrat energy “ directives” by the EC – the only thing these people do – had established a totally deregulated gas market trading, setting the prices for natural gas in the EU even as Gazprom remained the largest supplier.
As lots of virtual trading hubs in gas futures contracts started popping up across the EU, enter the Dutch TTF (Title Transfer Facility). 

By 2020 the TTF was established as the real EU gas benchmark.
As Engdahl points out, “TTF is a virtual platform of trades in futures gas contracts between banks and other financial investors. Outside, of course, of any regulated exchange.
So LNG prices soon started to be set by futures trades in the TTF hub, which crucially happens to be owned by the Dutch government – “the same government destroying its farms for a fraudulent nitrogen pollution claim.”
By any means necessary Big Finance had to get rid of Gazprom as a reliable source to allow powerful financial interests behind the Green Deal racket to dominate the LNG market.
Engdahl evokes a case very few know about across Europe: “On May 12, 2022 although Gazprom deliveries to the Soyuz gas pipeline through Ukraine were uninterrupted for almost three months of conflict, despite Russia’s military operations in Ukraine, the NATO-controlled Zelensky regime in Kiev closed a major Russian pipeline through Lugansk, that was bringing Russian gas both to his Ukraine as well as EU states, declaring it would remain closed until Kiev gets full control of its pipeline system that runs through the two Donbass republics. That section of the Ukraine Soyuz line cut one-third of gas via Soyuz to the EU. It certainly did not help the EU economy at a time Kiev was begging for more weapons from those same NATO countries. Soyuz opened in 1980 under the Soviet Union bringing gas from the Orenburg gas field.”
Hybrid War, the energy chapter
On the interminable soap opera involving the Nord Stream 1 turbine, the crucial fact is that Canada deliberately refused to deliver the repaired turbine to Gazprom – its owner – but instead sent it to Siemens Germany, where it is now. 

Siemens Germany is essentially under American control. Both the German and Canadian governments refuse to grant a legally binding sanction exemption for the transfer to Russia.
That was the straw that broke the (Gazprom) camel’s back. 

Gazprom and the Kremlin concluded that if sabotage was the name of the game, they couldn’t care less whether Germany received zero gas via Nord Stream 1 (with brand new Nord Stream 2, ready to go, blocked by strictly political reasons).

Kremlin spokesman Dmity Peskov took pains to stress “problems in [gas] deliveries arose due to sanctions that have been imposed on our country and a number of companies by Western countries (…) There are no other reasons behind supply issues.”
Peskov had to remind anyone with a brain that it’s not Gazprom’s fault if “the Europeans (…) make a decision to refuse to service their equipment” which they are contractually obligated to do. 

The fact is the whole Nord Stream 1 operation hinges on “one piece of equipment that needs serious maintenance.”
Deputy Prime Minister Alexander Novak, who knows one or two things about the energy business, cleared up the technicalities:
“The entire problem lies precisely on [the EU’s] side, because all the conditions of the repair contract have been completely violated, along with the terms of shipping of the equipment.”
All that is inscribed into what Deputy Foreign Minister Sergey Ryabkov describes as

 “a total war declared against us”, which is “being waged in hybrid forms, in all areas”, with “the degree of animosity of our opponents – of our enemies” being “enormous, extraordinary.”
So none of this has anything to do with “Putin weaponizing energy”. 

It was Berlin and Brussels – mere messengers of Big Finance – which weaponized the supply of European energy on behalf of a financial racket, and against the interests of European industry and consumers.
Beware of the toxic trio
Engdahl has summarized how, “by systematically sanctioning or closing gas deliveries from long-term, low cost pipelines to the EU, gas speculators via the Dutch TTP have been able to use every hiccup or energy shock in the world, whether a record drought in China or the conflict in Ukraine, to export restrictions in the USA, to bid the EU wholesale gas prices through all bounds.”
Translation: casino capitalism at its finest.
And it gets worse, when it comes to electricity. There is a so-called EU Electricity Market Reform in progress. 

According to it, producers of electricity – from solar or wind – automatically receive “the same price for their ‘renewable’ electricity they sell to the power companies for the grid as the highest cost, i.e. natural gas.” 

No wonder the cost of electricity in Germany for 2022 increased by 860% – and rising.
Baerbock incessantly parrots that German energy independence cannot be secured until the country is “liberated from fossil fuels.”
According to Green fanaticism, to build the Green Agenda it’s imperative to completely eliminate gas, oil and nuclear power, which happen to be the only reliable energy sources as it stands.

And it’s here that we see the toxic trio Habeck/Baerbock/von der Leyen ready for their close up. 

They pose as saviors of Europe preaching that the only way out is to invest fortunes in – unreliable – wind and solar power: the “answer” from Providence to a gas price debacle manufactured by none other than Big Finance, Green fanaticism and Eurocrat “leadership”.
Now tell that to struggling pan-European households whose bills will surge to a whopping, collective $2 trillion as General Winter knocks on the door. 

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Jul 3 The Tail will no longer wag the Dog and the Dog will simply run amok.
World Of Finance

Jul 3 The Tail will no longer wag the Dog and the Dog will simply run amok.

Western markets are turbo finiancialized and for an eternity, Western banks and Central Banks have been able to distort the commodity price complex with little difficulty. 
Take the Gold market for example where derivatives are 100x the underlying. 
One can create inorganic cascade like price moves in the derivatives market and thereby control the physical commodity. 
There are plenty of examples of these inorganic price moves. In essence, the Tail wags the dog. 
The challenge is where the Supply/Demand balance is precarious and a small adjustment [reduce Supply or increase Demand] tips the situation into disequilibrium. 

The Tail will no longer wag the Dog and the Dog will simply run amok.

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From the UK Cabinet Office's policy paper on the government energy price guarantee (my **emphasis**): @JavierBlas
Law & Politics

From the UK Cabinet Office's policy paper on the government energy price guarantee (my **emphasis**): @JavierBlas

"If a fixed commitment was made there would be **an uncapped liability** and overall scheme cost could escalate further"

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One of the preeminent Thinkers today is @CreditSuisse's Zoltan Pozsar and he said
World Of Finance

One of the preeminent Thinkers today is @CreditSuisse's Zoltan Pozsar and he said 

The policymakers to follow are no longer central bankers, but heads of state at the pinnacle of power who aren’t known for the transparency of their thinking – especially not when at war. @CreditSuisse Zoltan Pozsar
I have no faith in those at  the pinnacle of power. None. So I expect more babble and a doubling down.

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Consider the attached chart, published in February. @Chxta

Consider the attached chart, published in February.  @Chxta

As of February, based on the exchange rate, we were paying 40 cents per litre of petrol. In #Benin it was 95 cents, in #Niger it was 97 cents, in #Chad it was 89 cents, and in #Cameroun, it was $1.09.

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Does this make Nigeria’s state oil company NNPC one of the biggest aid donors to the rest of west Africa ? @RencapMan

Does this make Nigeria’s state oil company NNPC one of the biggest aid donors to the rest of west Africa ? @RencapMan

Good thread noting the big price differential that encourages smuggled petrol across Nigeria’s borders. 

Thanks to the petrol subsidy. Does this make Nigeria’s state oil company NNPC one of the biggest aid donors to the rest of west Africa ?

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Nigeria education minister Mr Opiah “It is heartwarming to note that the current statistics of 2022, based on estimations, captured the non-literate population at about 31 per cent of the estimated total population” @RencapMan

Nigeria education minister Mr Opiah “It is heartwarming to note that the current statistics of 2022, based on estimations, captured the non-literate population at about 31 per cent of the estimated total population” @RencapMan

69% literacy close to 70-80% target in  @TTTEconomist

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The fine print though suggests that there is scope to preserve face + some level of future coupon, for a host of reasons (the $8.4b headline number is the flow financing gap including amortizations, it isn't a target for debt reduction)

So the "fine print" suggests that the program will capture all of China's claims: $6b in bilateral fx debt + some new arrears+ most of the $1.5b in commercial fx debt v $3.3b in eurobonds (counting 21 but not 22 arrears) and v $17b in external fx debt ... @Brad_Setser

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A constant nominal debt level = falling debt to GDP @Brad_Setser

A constant nominal debt level  = falling debt to GDP @Brad_Setser

Why -- first, forecast GDP growth is relatively strong (3-4%) in part because higher copper prices (and associated taxes) have delivered a significant part of the fiscal adjustment (+ demographics, etc). A constant nominal debt level  = falling debt to GDP

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Kenya’s President-Elect @WilliamsRuto Stamps Authority on Parliament @bpolitics @herbling
Law & Politics

Kenya’s President-Elect @WilliamsRuto  Stamps Authority on Parliament @bpolitics  @herbling

William Ruto, who won Aug. 9 presidential elections by a razor-thin margin, stamped his authority over the East African nation’s parliament on Thursday, with his allies securing key posts in both chambers. 
Moses Wetangula, a long-serving lawmaker and senior member of Ruto’s Kenya Kwanza coalition, was elected speaker of the National Assembly -- the third-most senior role in the government after that of the president and the deputy. 

Wetangula defeated Kenneth Marende, who served as speaker from 2008 to 2013 and had the backing of an alliance led by Raila Odinga, the runner-up in last month’s presidential vote. 
Amason Kingi, another Ruto ally, was elected speaker of the Senate earlier on Thursday. The parliamentary sessions were broadcast live from the capital, Nairobi.
Securing control of parliament will be key for Ruto to control the legislative agenda and make budget allocations and executive appointments. 

His pledges to invest at least 500 billion shillings ($4.2 billion) in farming, which employs more than 40% of the workforce, and set aside 50 billion shillings annually for a so-called “Hustler Fund” to boost small businesses, may require lawmakers to review the 2022-23 national budget that was approved in April. 

Ruto, who is scheduled to be sworn in as President Uhuru Kenyatta’s successor on Sept. 13, also plans to change parliamentary rules to allow ministers to appear before lawmakers to answer questions about their briefs. 

The move will help increase accountability, he told supporters on Wednesday in Nairobi.

The 349-member National Assembly processes funding allocations and legislation, and approves presidential appointments, including those of cabinet ministers, envoys and heads of state agencies, while the senate’s 67 members focus mainly on matters affecting the administration of the country’s 47 counties.

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The biggest winner of the Kenyan election is the Kenyan people. From a time when elections were a life and death affair, now they are routine. @mutigam
Law & Politics


The biggest winner of the Kenyan election is the Kenyan people. From a time when elections were a life and death affair, now they are routine. @mutigam.And the pressure from below has forced both institutions and politicians to perform better.

Kenyan people & their democratic institutions have once again taught us an important lesson in politics: a democratic constitution leads to free, fair & credible elections; an independent judiciary ensures peaceful resolution of electoral disputes. @TunduALissu


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Kenya Shilling versus The Dollar Live ForexPros

𝐖𝐡𝐲 𝐂𝐞𝐧𝐭𝐫𝐚𝐥 𝐁𝐚𝐧𝐤 𝐨𝐟 𝐊𝐞𝐧𝐲𝐚 𝐀𝐭𝐭𝐞𝐦𝐩𝐭 𝐭𝐨 𝐂𝐨𝐧𝐭𝐫𝐨𝐥 𝐭𝐡𝐞 𝐄𝐱𝐜𝐡𝐚𝐧𝐠𝐞 𝐑𝐚𝐭𝐞 𝐰𝐨𝐧’𝐭 𝐰𝐨𝐫𝐤 a blog post by @IEAKenya @Mo_Wanja

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

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