INTEREST RATES FUTURES SUGGEST 35% PROBABILITY OF FED FUNDS RATE OF 3%-3.25% AT YEAR END, VS 52% BEFORE FOMC

Conclusions

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%

The Music has been playing for Eternity and its about to stop

What’s underpinning Wright’s bearishness isn’t the Fed, inflation or the war. It’s the zealous behavior of investors during the past few years that sent everything from meme stocks to cryptocurrencies soaring. 

The stock market gains helped U.S. household wealth balloon to a record $150 trillion, or more than six times the size of the American economy, according to data compiled by the Fed.
“There’s no other country on earth that has staked so much of their net wealth in stocks,” said Wright, who co-founded Sierra Investment with Kenneth Sleeper in 1987. “But we are at a very big peak of complacency.”

Using computer models, the Sierra fund, which Wright manages with Sleeper and Douglas Loeffler, sets trailing stop losses for its holdings. 

Once prices fall to those preset levels, the fund liquidates the holdings and moves to cash or other assets that are trending up. It targets retirees and other investors who want to minimize risk.
Such a conservative approach helps it limit losses in a market downturn. But it also hurts performance when the market goes straight up -- which is mostly has since the 2008 crisis. 

The fund returned 2.4% annually over the past five years, compared with an average gain of 5% among its peers, according to data compiled by Bloomberg. 

A portfolio made of 60% stocks and 40% bonds has returned 9% a year during the same period. 
Wright didn’t specify the amount of losses he thinks are ahead, but pointed out that significant retreats in the 1970s and 1980s didn’t end until the market’s price-to-earnings ratio dropped below 10. 

Currently, while the S&P 500’s 12-month trailing P/E ratio has dropped to 21, from 32 in March 2021, it is still above the average of 19 over the past two decades.
“Young people have no clue what the downside might be, what causes drawdowns and how far it can go,” said Wright, one of the top 100 independent financial advisers, according to Barron’s.

Mellon doctrine Territory. Mellon believed that economic recessions, such as those that had occurred in 1873 and 1907, were a necessary part of the business cycle because they purged the economy. 
In his memoirs, Hoover wrote that Mellon advised him to “liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate. Purge the rottenness out of the system. High costs of living and high living will come down. ... enterprising people will pick up the wrecks from less competent people.”

“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.

It’s therefore very weird. I cannot determine whether our Sanction warfare specialists are just insanely stupid or don’t care about the average person.

“But it is a curve each of them feels, unmistakably. It is the parabola They must have guessed, once or twice -guessed and refused to believe -that everything, always, collectively, had been moving toward that purified shape latent in the sky, that shape of no surprise, no second chance, no return.’’

He said that the real “scandal” of Putin’s war is “NATO barking at Russia’s door,” which he said caused the Kremlin to “react badly and unleash the conflict.”

“In Ukraine, it seems that it was others who created the conflict. I am pessimistic but we must do everything possible to stop the war.” 

Conclusions

May 2 Currency puzzles

Prolonged stand-offs eviscerate economies, reducing opportunities and accelerate the negative feed- back loop.

Antonio Gramsci wrote, “The crisis consists precisely in the fact that the old is dying and the new cannot be born; in this interregnum, a great variety of morbid symptoms appear. now is the time of monsters.”

Ryszard Kapucinski also said: “If the crowd disperses, goes home, does not reassemble, we say the revolution is over.”
It is not over. More and more people are gathering in the Streets.

Par Value:                  5/-
Closing Price:           37.00
Total Shares Issued:          142,000,000
Market Capitalization:       
EPS:              6.85
PE:                

Crown Paints reports FY 2021 Earnings

FY Revenue from contracts with Customers 10.733b versus 9.192b

FY Profit before Tax 1.124b versus 0.863b

FY Profit after Tax 731m versus 600m

FY EPS 6.85 versus 8.42

weighted average number of share outstanding 107m versus 71m

Number of shares issued 142m versus 71m

Cash and cash equivalents at end of year 660m versus 303m

Final Dividend 4 shillings a share 

Following the outbreak of the COVID-19 pandemic in 2020, the epidemic continued to present significant challenges in 2021 to the health and business sectors. 

The measures that had been instituted to control its spread remained in place but were relaxed as the year progressed . 

The strengths of Crown paints brand and our network of stakeholders and their resilience continued to yield better returns and this is hoped to remain into the foreseable future.

The Group’s turnover for the year ended 31 December 2021 grew by 17% (KShs1.5 billion) to KShs 10.7 billion in comparison with year 2020 which had a 7% (KShs 588 million) increase to KShs 9.1 billion against the year 2019. 

Similarly, the operating profit before tax, for year ended 31 December 2021 rose by 30% (KShs 264 million) to KShs 1.1 billion compared to the year ended 31 December 2020 where a 63% (KShs 335 million) growth to KShs 863 million was attained against the year ended 31 December 2019.

The increase in turnover was offset by an increase in cost of sales and the general increase in operating costs due to price inflation.
For the year ahead, after adapting to the lessons learnt from the pandemic, we have redefined innovative approaches of doing business in respect of the focus on the well being of our employees, how to cope with new multifaceted challenges, the use of virtual environment and positioning of information technology to drive our business. 

In addition to resurgence of the pandemic in some key global strategic markets, the year 2022 is witnessing unfolding economic constraints ranging from volatility in the foreign exchange rates, scarcity of major foreign exchange currencies, inflation, lockdowns affecting supply chains, general shortage of commodities in the market and changes in the geopolitical environment. 

As a result of these factors, the cost of raw material has risen pushing the cost of living and doing business. 

Our company shall continue to assess its position to ensure that the core strengths of our brand and our network of stakeholders remain robust to continue delivery of modest return to our shareholders.

Par Value:                  1/-
Closing Price:           4.19
Total Shares Issued:          432155985.00
Market Capitalization:        1,810,733,577
EPS:             -0.04
PE:              

SUMMARY CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2021
FY continuing operations Revenue 7.596164b versus 6.341145b

FY Gross Profit 2.352241b versus 2.238979b

FY Interest Income 224.38m versus 204.010m

FY Operating and administrative expenses [2.464381b] versus [2.704801m]

FY Impairment of investment in associates [29.921m] versus [158.827m]

FY Impairment of goodwill 0 versus [315.671m]

FY Allowance for expected credit loss net of reversals 20.975m versus [757.581m]

FY Profit / (loss) before tax 134.083m versus [1.454493b]

FY Loss for the year from continuing operations [37.94m] versus [1.732528b]

Discontinued operations 0 versus [126.682m]

FY Net gain on disposal of discontinued operations after tax  0 versus 2.242028b

FY EPS [0.04] versus [3.89]

Commentary 

Group gross profit for the year ended 31 December 2021 from continuing operations amounted to Ksh 2,352m, increase of 5% compared to the previous year. 

Operating and administrative expenses of the Group decreased by Ksh 240m, or 9%, mainly due to reductions in staff costs. 

The Group also impaired the carrying value of investment in associates of Ksh 30m. 

The profit before tax for the group from continuing operations amounted to Ksh 134m compared to a loss of Ksh 1,454m in 2020. 

PROPOSED DIVIDEND

The directors do not declare a final dividend for the financial year ended 31 December 2021 (2020:Nil). 

A special interim dividend of Ksh 8.00 per share totalling Ksh 3,457,247,880 based on 432,155,985 shares in issue was paid in 2020.

Conclusions

stabilised.