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Satchu's Rich Wrap-Up
Friday 08th of April 2022

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14-FEB-2022 :: 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.
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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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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When push comes to shove, the real value in the Petrodollar system is the Petro- portion, not the -dollar portion. @LukeGromen
World Of Finance

When push comes to shove, the real value in the Petrodollar system is the "Petro-" portion, not the "-dollar" portion.

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Unless & until Putin is replaced by another ruler, any peace will have to be negotiated with his government by Zelensky's. After recent outbursts, USG should deny any regime-change intentions @ELuttwak
Law & Politics

Unless & until Putin is replaced by another ruler, any peace will have to be negotiated with his government by Zelensky's.  Hence it is irresponsible to call him a criminal, demand his war- crimes trial etc. After recent  outbursts, USG should deny any regime-change intentions

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Law & Politics

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.

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Unless it is proved that Putin ordered the killings, he cannot be called a war criminal for Bucha. Also wrong to sanction's Lavrov's daughters. No cease-fire without talks with P & L @ELuttwak
Law & Politics


The number of the unit that killed civilians in Bucha and its commander's name are both known. Unless it is proved that Putin ordered the killings, he cannot be called a war criminal for Bucha. Also wrong to sanction's Lavrov's daughters. No cease-fire without talks with P & L


The Answer is no ceasefire talks are intended.

Was unhappy to hear that US has sanctioned two daughters of Russia's foreign minister Lavrov. If they are nefarious characters in their own right, their misdeeds should be listed with the sanction notice. Otherwise it seems sheer vindictiveness @ELuttwak


its baffling but isn't if the real intention is to expunge Putin & Russia from the record 


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If Poland Hosts US Nukes, Russia Will Station Nuclear Weapons Along Western Border: Kremlin @zerohedge
Law & Politics

As fully expected, Kremlin spokesman Dmitry Peskov on Wednesday blasted Poland's offer to the United States of its 'readiness' to host nuclear weapons for NATO. The recent words of Deputy Prime Minister of Poland Jaroslaw Kaczynski were widely reported this weekend.He  told Germany's Welt Am Sonntag newspaper: "If the Americans asked us to store American nuclear weapons in Poland, we would be open to it."

"If the US were to ask us to host nuclear weapons in Poland, we would be open to this option. Such a step would enhance deterrence against Moscow," he had said.

In fresh reaction, Peskov described that this would constitute a "serious threat" to Russia's security. He described in the comments to French TV channel LCI on Wednesday that it would force the Kremlin to ensure its nuclear readiness is sufficient to repel the potential deployment of US nukes so close to Russia's border.

Peskov additionally ensured it would be "inevitable" for Russia to respond in kind by sending its nuclear arms to its western borders. This would without doubt trigger a new Cold War nuclear arms standoff akin to the Cuban missile crisis. 

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President Zelenski just abused the Greek Parliament's invitation by sharing its platform with members of the neoNazi Azov Battalion, thus undermining the Ukrainian people's heroic resistance @yanisvaroufakis
Law & Politics

President Zelenski just abused the Greek Parliament's invitation by sharing its platform with members of the neoNazi Azov Battalion, thus undermining the Ukrainian people's heroic resistance to Putin's criminal invasion. We stand with Ukraine, not with the Azov neoNazi Battalion

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Quelle urgence, pour le #PNF, à cette enquête #McKinsey 4 jours avant l’élection? N’est-ce pas craquer une allumette dans un baril de poudre et donner à #MarineLePen un coup de pouce insensé? @BHL
Law & Politics

Cf le FBI rouvrant un dossier oiseux sur Hillary: 11 jours plus tard, victoire de Trump.
What urgency, for the #PNF , to this survey #McKinsey 4 days before the election? Isn't it to strike a match in a powder keg and give #MarineLePen an insane boost? Cf the FBI reopening an idle file on Hillary: 11 days later, victory for Trump.

5 DEC 16 :: One common theme is a parabolic Putin rebound. At this moment, President Putin has Fortress Europe surrounded

At this moment, President Putin has Fortress Europe surrounded. The intellectual father of the new Zeitgeist that propelled Brexit, Le Pen, the Five Star movement in Italy, Gert Wilders in the Netherlands, is Vladimir Putin.

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Le Pen risk rising as polls narrow ahead of 1st round of the French presidential election on 10 April.
Law & Politics

If #France elects a populist president, France & the EU would face a major upset almost comparable to the surprise win of Donald Trump in the 2016 US elections, Berenberg says.

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Currency Markets at a Glance WSJ
World Currencies

Euro 1.085705 
Dollar Index 99.902
Japan Yen 123.981 
Swiss Franc 0.93519
Pound 1.306225
Aussie 0.747900
India Rupee 75.8410 
South Korea Won 1225.070 
Brazil Real 4.7536 
Egypt Pound 18.342700 
South Africa Rand 14.76700 

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TTF vol (gas price in EU) has come right down. Yet, the bid ask is extremely wide if you try to buy or sell (talking about a difference of $30m per cargo). @Theimmigrant84

TTF vol (gas price in EU) has come right down. Yet, the bid ask is extremely wide if you try to buy or sell (talking about a difference of $30m per cargo). Traders are just sitting on the side lines and only entering when they have to. No volumes

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Pakistan Seeks to Avert Crisis With Biggest Rate Hike Since 1996 @markets @FaseehMangi
Emerging Markets

Pakistan’s central bank raised interest rates by 250 basis points following an emergency meeting, as escalating political chaos at home and higher global oil prices threaten to spill over into a fullblown economic crisis.
The key rate now stands at 12.25%, State Bank of Pakistan said in a statement Thursday. 

This makes the real rate “mildly positive” and will help preserve external and price stability, it said.

The decision comes hours ahead of a key verdict from the Supreme Court, which is expected to hand out at 7:30 p.m. in Islamabad its ruling on the validity of Prime Minister Imran Khan’s disputed decision to dissolve parliament and call for fresh elections. 

The political vacuum risks making it tough for Pakistan to convince the International Monetary Fund to release a much-needed loan installment. 
“Heightened domestic political uncertainty” contributed to a 5% depreciation in the rupee, triggered a surge in local bond yields as well as Pakistan’s Eurobond yields and CDS spreads, the central bank said. 

“Externally, futures markets suggest that global commodity prices, including oil, are likely to remain elevated for longer and the Federal Reserve is likely to increase interest rates more quickly than previously anticipated, likely leading to a sharper tightening of global financial conditions.”

The rupee dropped 1.1%, most in two years, to a record low of 188.18 a dollar Thursday.

Apart from money from the IMF, Pakistan’s political situation is also contributing to delays in a planned $1 billion green bond sale. 

A refinancing from China is also awaited -- the repayment in recent weeks had triggered the biggest drop in Pakistan’s foreign-exchange reserves in data going back to 2010.
Pakistan’s central bank had warned in its meeting last month that it may meet earlier than scheduled to contain any blowout. 

It raised its average inflation forecast to slightly above 11% for the fiscal year ending June from 9%-11%. 


Pakistan is a Harbinger 

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Update on African eurobonds in quarter 1 of 2022 @emsovdebt

This is a quick update on the African eurobond space, focused on the first quarter of 2022. 
January to March 2022 was a quarter characterized by market volatility. As concerns about the risks of investing across emerging markets heightened. 

This was caused at first by a hawkish Federal Reserve (and the prospect of higher global interest rates). 

Then linked later in the quarter to Russia’s invasion of Ukraine. 

These events caused emerging market bonds to sell-off. African eurobonds were not spared. 

The weakness spiked at the end of February 2022, but recovered partially in March 2022. 

There was some differentiation between sovereigns as higher oil and metal prices meant the bonds of countries exporting such commodities fared better. 

While higher global food and fertilizer prices were expected to negatively impact many African economies. All African eurobonds (except Angola’s) ended the quarter weaker.
Ghana’s eurobonds have been trading at stressed levels (preventing market access) since the latter months of 2021. 

The government tried to court investors in January with a presentation highlighting their reform plan, but the bonds did not rally in response. 

The markets' skepticism was backed by Moody’s who downgraded Ghana to a Caa1 credit rating. This was Ghana’s first ever ‘c-level’ rating since they were first rated in 2003. 

The downgrade led the Ghanaian government to publicly criticize the rating agency and claim that alternative agencies are needed. 

Meanwhile Angola’s credit rating was upgraded by S&P, a move that put all 3 of its ratings back in the Bs (following IMF supported reforms and higher oil prices).
While its eurobonds came under pressure, Egypt saw it debt management reforms rewarded by 12 of its local currency bonds being included in JP Morgan’s global bond index

Such inclusion is crucial for African economies as it represents an important step towards attracting inflows from a wider investor base, and in local currency denominated longer-maturity securities. These carry less risk for sovereigns than hard currency eurobonds.
There was no sovereign African eurobond issuance in January and February 2022, mirroring the situation across emerging markets, where issuance was at the lower end of the historical trend. 

As most high-yield (that is non-investment grade) sovereigns postponed their plans given the weak markets. 

However, Nigeria’s Bank of Industry (a development bank), issued a EUR 750mn eurobond, maturing in 2027. 

While this was not a sovereign eurobond, it does have a sovereign guarantee. 

The only African sovereign eurobond issuance came late in the quarter from the Nigerian Federal government. 

In March 2022 they priced a $1.25bn bond maturing in 2029, with a coupon of 8.375%. 

Given the weak markets the country paid a premium to attract investors (NB Nigeria issued similarly sized 7-year eurobonds in better markets in 2018 at 7.625%, and in 2021 at 6.125%).

Zambia is still working on a restructuring of its 3 eurobonds (with a face value of $3bn), having defaulted in 2020. 

Meanwhile all the other 133 African sovereign eurobonds are being serviced. 

With Nigeria’s recent issuance, and other bonds being repaid, the total face value of African eurobonds was $140bn at the end of March 2022, issued by 20 African countries.

While the asset class continues to grow the debt risks in many African countries have increased since the start of the pandemic. 

Hence efforts for better borrowing (as set out in my book) remain essential if the asset class is to prosper and continue to provide African countries with investment opportunities. 

I also published my views in a recent article for the IMF (found here) stating that ‘African countries access to global capital markets should be celebrated, but the road is bumpy and a more robust vehicle is needed’. 

If changes are not made, the asset class remains vulnerable to another global recession, large economic shock, or even just sustained higher global interest rates. 

Such events would make many countries debt unsustainable. Given the risks, a debt rescue plan should be developed, so that it could be utilized if many countries are forced to restructure their debt at once.

One Creditor Is Delaying Zambia’s Debt Restructuring, U.K. Says @markets 

Zambia’s reorganization of as much as $17.3 billion of external debt is being delayed by a single foreign creditor, according to U.K. Minister for Africa Vicky Ford.

“We’ve got one creditor that seems to be -- one international creditor -- that seems to be taking a bit more time to make a decision,” Ford, who is visiting Zambia, said in comments broadcast on Hot FM radio Thursday in the capital, Lusaka. 

“I discussed that with the foreign minister as well last night, and I know that he has been working incredibly hard to try and speed up that process.”

Zambia, which became Africa’s first pandemic-era sovereign defaulter in 2020, has been seeking to restructure its dollar obligations under the Group of 20’s Common Framework, a set of guidelines that the most powerful countries drafted to mitigate debt crises in poorer states. 

Under those rules, Zambia first needed to reach a preliminary bailout deal with the International Monetary Fund, which it did in December.

Disagreements among official creditors or prolonged negotiations with private lenders could delay an eventual restructuring deal and IMF approval into the second half of this year or even into 2023, Fitch Ratings said this week.

Zambia’s $1 billion in Eurobonds due April 2024 have fallen 6% this year to trade at 74 cents on the dollar by 10:23 a.m. in London.

Zambian Finance Minister Situmbeko Musokotwane on Dec. 15 asked bilateral lenders to form an official creditors committee as soon as possible. 

That’s yet to happen, even as the IMF and World Bank have since completed a debt sustainability analysis that sets the economic criteria used in negotiations for debt treatment.

Ford didn’t identify the creditor that she said has been delaying the process.
Out of Zambia’s total $17.3 billion of external public-sector debt, commercial and state-owned Chinese lenders account for $5.5 billion, making the nation by far the biggest source of Zambia’s loans, according to Finance Ministry data. 

Zambia owes $3.3 billion in Eurobonds and interest arrears since it defaulted at the end of 2020 and stopped servicing almost all other international loans. It also has a $147 million debt to Russia’s export-import bank.
Puzzling Plans
The Chinese Embassy in Lusaka and the Finance Ministry didn’t immediately respond to emails seeking comment. 

Chinese creditors were “puzzled” about Zambia’s restructuring plans, the nation’s ambassador to Zambia, Li Jie, said in November.

Zambia had been targeting a deal with creditors in the first half of this year, in order to have its $1.4 billion deal with the IMF concluded by June. 

There has been behind-the-scenes work to establish an official creditors committee co-chaired by China and South Africa, Eurasia Group said in a note to clients last week.

South Africa is still finalizing its delegation for the creditor committee for Zambia, the National Treasury said in reply to emailed questions on April 4. 
Ford said she’d be discussing with the IMF and World Bank how to expedite Zambia’s debt treatment at their spring meetings in Washington from April 18 to 23.
“I’m really encouraging them to say: How can we get this process going faster?” said Ford. 

“Because the longer it’s going, the more that overhang of uncertainty is going to impact on people here.”

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Banks Allowed to Set Forex Rates to Tame Zimbabwe’s Black Market @bloombergquint

Zimbabwe is allowing banks to set their own rates for exchanging U.S. dollars in transactions of up to $1,000, as it seeks to ease pressure on weekly currency auctions and to tame a runaway parallel market. 

Lenders can now now use “a willing-buyer, willing-seller basis” rather than being restricted to the official exchange rate for the local dollar, central-bank Governor John Mangudya said.

The Zimbabwean unit is priced officially at Z$145.87 per U.S. dollar, but trades at Z$260 in the parallel market, according to ZimPriceCheck.com
Mangudya has previously rejected calls from industry to devalue the local unit and close the gap to the black-market price. He had described that as “chasing one’s tail.” The dysfunction had also helped spur inflation, which reached 73% in March.
Chains such as OK Zimbabwe Ltd., the largest retailer, and South Africa’s Pick n Pay Stores Ltd. offer 50% off for payments made in foreign currency.

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21-JAN-2019 :: @harari_yuval & money

“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
The Mind Game that ZANU-PF played on its citizens has evaporated in a puff of smoke.

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In FY22/23, Kenya's total debt service projected at Kes 1.36 trillion (up 17.2% year-on-year). @AmbokoJH
Kenyan Economy

Of this:
1. Internal debt interest - Kes 482.4 bln
2. Internal debt redemption - Kes 436.6 bln
3. External debt redemption - Kes 279.0 bln
4. External debt interest - Kes 161.02 bln

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

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