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Satchu's Rich Wrap-Up
 
 
Friday 12th of August 2022
 


A perplexing, ever changing matrix, a Squid Game where asset values have to be maintained to support the majesty of the debt, a meta verse paid for by the serfdom of the ordinary Joe. @hendry_hugh
World Of Finance


A perplexing, ever changing matrix, a Squid Game where asset values have to be maintained to support the majesty of the debt, a meta verse paid for by the serfdom of the ordinary Joe. Where are the opiates that will keep the many in their chains? Why do the stakes keep rising?

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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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“Derivatives,” Alvin said. “I don’t speculate about the future, I trade it.” @NewYorker
World Of Finance




And they were cross‑linked and interwoven and resold in large bundles, “future on future,” Alvin said, handing me a paper towel. 

“Forget about the forces of the free market, my friend. Commodity prices no longer refer to any value, past or present—they’re just ghosts from the future.”

In the morning, when the window was fogged up and Alvin had fallen asleep with the computer on his stomach, I knew that he had told the truth. 

After half an hour of trading, we had switched places, so that I could do the clicking while he told me what to click on. 

I don’t know whether it was the friction of the mouse, its smooth, slightly greasy surface, or the amounts being transferred, disappearing and reappearing, inseparable from their I.D. numbers and in time with my clicking—or the fact that we were actually having a nice time together; 

Alvin heated up a can of curry soup and went out to buy more cigarettes, and at some point we laughed a lot because I had accidentally bought the right to buy a massive batch of chickens, millions of them, from a farm in Jerusalem a few months from now—

in any case, I felt at home in derivatives trading, as if it had been waiting for me, and I for it. 

We brought the computer into bed with us and continued trading on Alvin’s stomach. 

He told me—in a neutral voice and with his eyes on the screen, as he said everything else—that his parents were dead, but that he had inherited some money, which he had grown large enough by investing in stocks to enter the world of derivatives trading, where you never actually buy the asset in question but always resell the agreement before the closing date. 

He mumbled something about a guardian and “trading without attachments” and fell asleep.


I didn’t mind lying in bed, watching Alvin’s face twitch, the contours of a dream quivering under his eyelids.

He said, “What’s mine is yours.” “Thanks” died unsaid on my lips, as if someone had placed a long, cold finger over them. 

I remember all the things he used to do: pelvis against the handlebars of the scooter, center of gravity sinking into his knees, he leans into the bumps on the road. 

The slight irony in the way his fingers hold a cigarette. 

That day, even the planes were beautiful. Broken air. Plants shooting up through broken asphalt. Rancid smell of beef and other dead animals in a market on the city outskirts. A gorgeous butcher shop, wasps floating in blood

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W. H. AUDEN @holdengraber
Misc.

 W. H. AUDEN @holdengraber

“But once in a while the odd thing happens,
Once in a while the dream comes true,
And the whole pattern of life is altered,
Once in a while the moon turns blue.”

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14-FEB-2022 :: The End of the World is a Concept Without a Future
Misc.


14-FEB-2022 ::  The End of the World is a Concept Without a Future




September 1, 1939 by W. H. Auden comes to mind

Waves of anger and fear
Circulate over the bright
And darkened lands of the earth,
Obsessing our private lives;
The unmentionable odour of death

Into this neutral air
Where blind skyscrapers use
Their full height to proclaim
The strength of Collective Man,
Each language pours its vain
Competitive excuse:
But who can live for long
In an euphoric dream;
Out of the mirror they stare,

Faces along the bar
Cling to their average day:
The lights must never go out,
The music must always play

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In the grip of overlapping crises, Europe faces a leadership vacuum @NewStatesman
Law & Politics


@EmmanuelMacron  is a lame duck, Mario Draghi is leaving office and @Bundeskanzler  is hesitant. Who will step up in their place?

The EU is confronted with genuine leaderlessness, just as it faces a potentially explosive series of interlocking military, diplomatic, energy and economic crises.
Advances in the EU have traditionally been forged at times of crisis, but a leader or group of leaders has always been available in the past to chivvy disparate interests and views towards consensus.
It is difficult to see who will have the clout or credibility to perform that role this year and next, just as the acute domestic consequences of Russia’s invasion of Ukraine – accelerating inflation, shortages of energy and some foodstuffs, possible rationing, even recession – really begin to bite.

The idea that Germany’s size and economic strength make it the EU’s default power has never sat comfortably with Berlin, which has not been keen to take on a leadership role in the EU – if leadership means identifying, promoting and selling solutions in the face of opposition from other EU countries. 

The core of “Merkelism” was something different: “leading from the centre” – for the most part, a more passive and cautious approach focused on building consensus around a majority view, rather than boldness and creativity in responding to new challenges.
Olaf Scholz, the new German chancellor, is even more “Merkelian” than Angela Merkel was herself. 

He does not have the political clout Merkel enjoyed, nor the ambition or interest to shape the EU. 

But Germany’s leadership problems today go beyond the character of its chancellor; they are structural, and relate to Germany’s new position in the EU rather than personality politics.

Russia’s invasion of Ukraine is the first European crisis in which Germany is the “demandeur” rather than the protector of the EU. 

In the eurozone crisis from 2009 onwards, Berlin’s financial firepower was the EU’s decisive asset; in the 2015 migration crisis it was Germany’s willingness to take on the bulk of Syrian refugees. 

When Russia first invaded Ukraine in 2014, it was Merkel’s skilful diplomacy, backed up by Germany’s willingness to countenance sanctions, that drove the EU’s response.
Today’s crises are different. Because of its energy dependence on Russia, Germany now needs to rely on the “solidarity” of its EU partners. 

While Germany could offer more military support to Ukraine, senior German officials remain sceptical about whether a “Ukrainian win” can be achieved and the level of escalation it would entail. 

Scholz himself has said that Germany will never push ahead of other Nato countries when it comes to military aid and that a “special” role for Germany would be a “mistake”.

This has contributed to Germany’s loss of moral superiority – its asset in previous crises. 

In 2009, Germany’s austerity policy was presented as a moral virtue. 

But the war in Ukraine has marked the collapse of Berlin’s long-standing policy towards Russia, weakening its legitimacy and its ability to offer solutions or, indeed, leadership.

But Europe’s problems are bigger than Germany. With the Ukrainian war approaching its seventh month and the energy crisis growing, France also heads into its summer break in a state of political uncertainty and fragility.

Emmanuel Macron would be an obvious candidate to fill the EU’s leadership vacuum. 

But on 19 June, he became the first French president for 30 years to have no parliamentary majority (after becoming, on 24 April, the first French head of state in two decades to be re-elected as president).
Macron now faces a political landscape split equally and poisonously three ways between the radical left, consensual centre and the far right. 

The new frontier between the centre and the nationalist-populist right passes through the heart of the centre-right Républicains. 

While it’s possible that it will split along that fault line in the months ahead, even that would not necessarily give Macron enough reinforcements for a stable majority in the National Assembly.
The French president will therefore be much more distracted by drama at home: he faces an angry and hostile parliament that will fight tooth and nail against his government’s programme, especially controversial economic and social reforms he intends to pass when parliament returns in October. 

These policies will also be contested “on the street” by trade union marches and strikes, starting in September. 

These were always inevitable; in the new political landscape, they are likely to become even more intense and self-righteous.
So Macron faces a choice: between dissolving parliament or accepting he will have to drift through the five years of his second term as a lame-duck president. 

Given his ambitions, it’s becoming increasingly likely he will call a new parliamentary election in the first half of next year, a further risk that will also distract from his ability to lead the EU. 
But it’s not only Macron’s domestic troubles that will contribute to Europe’s leadership deficit. Rightly or wrongly, the perception that he is soft on Russia has undermined him and his “strategic autonomy” agenda – 

Macron’s belief that the EU needs to grow a strategic brain and military muscle to match its global importance – with Poland and the Baltic and Nordic member states who consider themselves party to the conflict with Ukraine. 

This view has persisted, even as Macron has stated in recent interviews and broadcasts that the Ukraine conflict will endure for many months and that France will continue to support Ukraine with military, financial and humanitarian aid until “victory” has been achieved on terms acceptable to Kyiv.
Early elections in Italy on 25 September also create political instability in one of the EU’s larger member states, not least because it’s likely the next government will be a far-right coalition led by the populist Fratelli d’Italia, with the Lega and centre-right Forza Italia.
As prime minister, Mario Draghi never exercised the leadership he showed at the European Central Bank. At best, he was a guarantor of stability. 

But with his departure, Italy is no longer likely to make even a minimally positive contribution to EU decision-making or consensus-building.
Instead, Rome will again become a source of concern, as the new government will be less willing to implement economic reforms in exchange for its share of the EU’s pandemic recovery instrument – a fund whose next disbursement to Italy will be worth €19bn, or around 1 per cent of the country’s GDP. 

A far-right Eurosceptic government will eventually comply with EU mandated reforms, but the learning curve could be steep, and the process painful.
It is a truism that the EU has no single “leader”. It is equally true that small and medium-sized member states rightly resent the suggestion that they are the “other ranks” while Germany, France and Italy provide the “officer class”.
But the small and medium states are themselves divided between north and south, east and west. Now could be their moment. But which of them will have the courage or credibility to lead?

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Vanity of Vanities! All is vanity
Law & Politics



Vanity of Vanities! All is vanity


Blofeld: Kronsteen, you are sure this plan is foolproof?
Kronsteen: Yes it is, because I have anticipated every possible variation of counter-move.
Politics therefore suffers from a surfeit of narcissists.

In terms of a method to ‘manage’ government, it is not far from tribal elders howling incantations around the camp fire after inspecting the entrails of slaughtered animals. 

The democratization of authority spurred by the digital revolution has flattened cognitive hierarchies along with other hierarchies, and political decision-making is now driven by often weaponized babble.
At a time when what is required is agile multi disciplinary thinking we have ''weaponized babble''


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War and Interest Rates @CreditSuisse Zoltan Pozsar H/T @RonStoeferle conclusions
Law & Politics


War and Interest Rates @CreditSuisse Zoltan Pozsar



War is inflationary.
Wars come in many different shapes and forms. There are hot wars, cold wars, and what Pippa Malmgren calls hot wars in cold places – cyberspace, space, and deep underwater (see here). 

when in fact we live in an unstable world where geopolitical risk premia are rising and where supply-side issues are more powerful than demand management.

President Putin’s efforts to make Europe dependent on cheap Russian gas – in order to tip the balance of economic power in Europe away from the U.S. – were frustrated by the U.S. sanctioning Nord Stream 2 last November, 

and President Putin’s frustration with the shifting balance of military power in Europe (NATO) then spilled over into a hot war in Ukraine on February 24th, which supercharged the economic war. 

Both sides went “nuclear” quickly, economically: the U.S. weaponized the U.S. dollar, and then Russia weaponized commodities.


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War and Interest Rates @CreditSuisse Zoltan Pozsar more
Law & Politics


War and Interest Rates @CreditSuisse Zoltan Pozsar 


Welcome to the war economy...
...where heads of state matter more than heads of central banks.

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. 

Translating speeches from Russian and Chinese and catching high-fives as opposed to fist bumps are becoming more important than parsing subtle grammatical nuances in central bankers’ policy utterances.
Central banks’ policy objectives are changing...
If you see the “special relationship” between China and Russia in this context, you can see it as an “alliance of resources” that supplies the necessities the West needs to ensure social stability at lower ends of the income distribution:
think of Russia as a “G-SIB of Commodities” and China as a “G-SIB of Factories” that are the world’s biggest producers of commodities and consumer goods, respectively, providing two pillars of the low inflation world we described above.
By extension, Russia and China have been the main “guarantors of macro peace”, providing all the cheap stuff that was the source of deflation fears in the West, which, in turn, gave central banks the license for years of money printing (QE).

Maybe to understand the path of inflation from here, we should read less Friedman and Schwartz and much-much more Brzezinski and Mackinder, for the special relationship between China and Russia covers most of Eurasia, and Eurasia has most of the stuff needed to meet inflation targets in the West.

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Vanity of Vanities! All is vanity ..
Law & Politics


Vanity of Vanities! All is vanity


Blofeld: Kronsteen, you are sure this plan is foolproof?
Kronsteen: Yes it is, because I have anticipated every possible variation of counter-move.
Politics therefore suffers from a surfeit of narcissists.

In terms of a method to ‘manage’ government, it is not far from tribal elders howling incantations around the camp fire after inspecting the entrails of slaughtered animals. 

The democratization of authority spurred by the digital revolution has flattened cognitive hierarchies along with other hierarchies, and political decision-making is now driven by often weaponized babble.
At a time when what is required is agile multi disciplinary thinking we have ''weaponized babble''

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Sunday, April 10, 2022 Apocalypse Now
Law & Politics


Sunday, April 10, 2022 Apocalypse Now


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.

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War and Interest Rates @CreditSuisse Zoltan Pozsar H/T @RonStoeferle [continued]
Law & Politics


War and Interest Rates @CreditSuisse Zoltan Pozsar H/T @RonStoeferle [continued]


the unfolding economic war between great powers is stochastic and not linear, and what inflation will do in the future does not only depend on the shocks that occurred in the recent past, but also on the many shocks that can happen still. 

do you see inflation as cyclical (a messy re-opening after Covid, exacerbated by excessive stimulus) or structural (a messy transition to a multipolar world order, where two great powers are challenging the might and hegemony of the U.S.). 

If the former, inflation has peaked. If the latter, inflation has barely started, and could actually be understood as an outright instrument of war, for as Lenin said, “the best way to destabilize the capitalist system [is] to debauch the currency”.
Finally, two more notes to close our opening essay about war and inflation...

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Context of a now extinct 'Unipolar' World and a freshly minted Tripolar World.
Law & Politics


Context of a now extinct 'Unipolar' World and a freshly minted Tripolar World.



It is clear the Russian abrasiveness is in part informed by a fundamentally better understanding of realpolitik and its chagrin that The US might still be reliving its glory days of the 1990s and essentially inviting its own triangulation

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War and Interest Rates @CreditSuisse Zoltan Pozsar H/T @RonStoeferle .....
Law & Politics


Given today’s inflation backdrop, and the similarities and differences between now and then, let’s talk about the Fed’s tightening campaign to slow inflation.
I chose the word “campaign” carefully, as I think that it is fundamentally wrong to refer to what the Fed is currently doing as a “tightening cycle”. 

That’s because a “tightening cycle” is something that corresponds to a “business cycle”, and business cycles are about central banks managing short-term misalignments between supply and demand. 

But our opening essay was making the point that what we are living through now is structural, and so we are not dealing with a business cycle, but rather with something straight from the Book of Genesis...
...a “seven fat years, followed by seven lean years”-type of thing.

As we articulated above, the Fed went from generating demand structurally to soak up an excess supply of cheap stuff, to curbing demand structurally to adjust to shortages. 

That’s called right-sizing, or belt-tightening, which are structural, not cyclical affairs. 

It follows that what the Fed is currently engaged in isn’t a hiking cycle, but a structural tightening campaign. 

A tightening campaign that’s necessary because the supply of cheap labor, goods, and energy is over and the level of demand is too high and didn’t respond to lower supply fast enough (or by itself), which, in turn, are the fundamental sources of inflation. 

Remember nominal GDP targeting? We’re still doing it, but now in the opposite direction:
instead of playing “catch-up” with the pre-GFC trend of aggregate incomes, we’re now playing “catch-down” to the post-nativist, post-Covid, and post-Ukraine trend of aggregate supply. 

The level of economic activity needs to adjust down in an “L”-shaped manner. If it doesn’t, we will have more inflation problems...
In this context, the market’s recession/no-recession soul-searching is ridiculous

The market reaction is Pavlovian. Sure it's been an annus Horribilis in the First Half but betting on a return to QE, lower rates and easy money seems to me a seriously sub optimal Bet. 



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War and Interest Rates @CreditSuisse Zoltan Pozsar H/T @RonStoeferle end
Law & Politics


The market can talk all it wants about a “soft landing,” but as explained above, we need an “L”-shaped adjustment in activity, and an “L”-shape has two parts: first an “I” which you can think of as a vertical drop (perhaps a deep recession); second, an “_” which you can think of as a flatline (stagnation, as in stagflation).

Regarding the first bit, there is nothing “soft” about a vertical drop.
Regarding the second bit, there is nothing that guarantees an interest rate cut after the vertical drop: stagnation, especially when paired with inflation (stagflation), means that interest rates may be kept high for a while to ensure that rate cuts won’t cause an economic rebound (an “L” and not a “V”), which might trigger a renewed bout of inflation. 

To date, I haven’t heard anything from the FOMC that would suggest that the Fed wants to avoid a recession (“there will be pain”), or that the Fed would rush to cut rates if we had a recession with high inflation (“we’ll cut when we are confident that rate cuts won’t ramp inflation back up”).
Don’t marry your views too much to the SEP and the dot plots...
...because the SEP is just a forecast in an increasingly stochastic world, and forecasts can change with incoming geopolitical events, and the next step after the Fed ending a running commentary of hikes (too much forward guidance) may be ending the practice of publishing the SEP and the dot plots.

  Were that to happen, how will the market price the “terminal rate” and the “neutral rate”?
Precisely...

It’s time to think outside the box and to appreciate the pattern: the Fed went from transitory to not transitory; no hikes to hikes; hikes to a string of rate hikes; a string of 25 bps to a string of 50 bps; a string of 50 bps to a string of 75 bps; a string of 75 bps with forward guidance to the same without any comments...
Bill Dudley and Larry Summers are having a Volcker moment in a “spot” sense, but they are not in charge, and they don’t have to navigate the political aspects of interest rate hikes.

Jay Powell has too, and that is why he is moving slower. But moving he is, and he is quietly having his Volcker moment in a rolling, “forward” sense: look at the pattern above; listen to him when he says that “there will be pain”; listen to him when he says “we’ll cut when inflation is dead” – we are paraphrasing Powell only on the last bit but are not exaggerating...

This is not the growth-sensitive Fed of the post-GFC era.
This is not the stocks-sensitive Fed of the post-Greenspan era.
This is not the unipolar world order the Fed’s been operating in since WWII. This is a different ballgame...

...and if you think that the peak of tightening is 3.5% because inflation peaked, (maybe it hasn’t; see above) and that cuts are coming next year because a recession is nigh and stocks are now at the cusp of a bear market (maybe not, because we need a recession, and lower asset prices are the path to a recession), you might be terribly wrong. 

Bill Dudley and Larry Summers are right about the direction of travel (more from here, not less), but Jay Powell sets the pace...
...because he is accountable to Congress; Dudley and Summers are not. 

But make no mistake about it: the risk of the Fed hiking to 5% or 6% is very real, and ditto the risk of rates cresting there despite economic and asset price pain.
The market and the Fed’s SEP (perhaps the market, because of the Fed’s SEP) is telling us that we will curb the biggest outbreak of inflation in fifty years with a “hiking cycle”, where the peak of the “hiking cycle” next year corresponds to negative real interest rates... unless you think that inflation moderates to target, that is 2%, by next year. If that is true, I am going to re-take Economics 101.

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Sunday, April 10, 2022 The moment we find ourselves is in is one of extreme stress and complexity.
Law & Politics


Sunday, April 10, 2022 The moment we find ourselves is in is one of extreme stress and complexity


The Geopolitical fault line is most visible in Ukraine and therefore at the European periphery, however, fault lines are emerging all over the global landscape and exhibiting multiple feedback loops, which feedback loops all have viral and exponential characteristics.

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Currency Markets at a Glance WSJ
World Currencies

Currency Markets at a Glance WSJ

Euro 1.02954 
Dollar Index 105.133
Japan Yen 133.3405
Swiss Franc 0.94255
Pound 1.217555
Aussie 0.711725 
India Rupee 79.68055 
South Korea Won 1302.94 
Brazil Real 5.1595000 
Egypt Pound 19.155300
South Africa Rand 16.21533 

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Arabica, the higher-end stuff most of us drink, is trading around $2.14 a pound, not quite the decade high touched earlier this year but almost double the price two years ago. @markets @ClaraDFMarques
Commodities


Arabica, the higher-end stuff most of us drink, is trading around $2.14 a pound, not quite the decade high touched earlier this year but almost double the price two years ago. @markets @ClaraDFMarques


Buyers are paying record premiums for prompt delivery. Stockpiles monitored by the ICE Futures exchange, meanwhile, are at their lowest since 1999 — a sign that demand is outstripping supply. 

Ongoing logistics constraints haven’t helped, but coffee prices are boiling over mostly because of extreme weather from Colombia to Vietnam. 

The largest exporter, Brazil, experienced drought and then severe frosts last year, prompting farmers to cut down trees, hurting not just that crop but also this one, which is supposed to be higher-yielding. 

Farmers now report bigger-than-expected losses and small beans. 

The longstanding correlation between the weak Brazilian real/strong dollar and coffee prices has broken down, as suppliers are unable to respond.

Alarm bells should be ringing.
The vicissitudes of the past two years are a reminder that this is a climate-vulnerable crop. 

A study of cashew, avocado and coffee published this year by scientists in Switzerland concluded that land suitable for coffee-growing would shrink dramatically by 2050, with the most highly suited regions declining by more than 50%, as the planet warms. 

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This one, in the Elbe river, is from 1616 and says: "If you see me, cry" @Citizen09372364
Misc.


This one, in the Elbe river, is from 1616 and says: "If you see me, cry"  @Citizen09372364

The recent droughts in Europe once again made visible the "Hunger Stones" in some Czech and German rivers. These stones were used to mark desperately low river levels that would forecast famines.

This one, in the Elbe river, is from 1616 and says: "If you see me, cry"

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In chaos theory, the butterfly effect is the sensitive dependence on initial conditions in which a small change in one state of a deterministic nonlinear system can result in large differences in a later state.
Africa



In chaos theory, the butterfly effect is the sensitive dependence on initial conditions in which a small change in one state of a deterministic nonlinear system can result in large differences in a later state.


Lorenz wrote:
"At one point I decided to repeat some of the computations in order to examine what was happening in greater detail. I stopped the computer, typed in a line of numbers that it had printed out a while earlier, and set it running again. I went down the hall for a cup of coffee and returned after about an hour, during which time the computer had simulated about two months of weather. 

The numbers being printed were nothing like the old ones. I immediately suspected a weak vacuum tube or some other computer trouble, which was not uncommon, but before calling for service I decided to see just where the mistake had occurred, knowing that this could speed up the servicing process. 

Instead of a sudden break, I found that the new values at first repeated the old ones, but soon afterward differed by one and then several units in the last decimal place, and then began to differ in the next to the last place and then in the place before that. 

In fact, the differences more or less steadily doubled in size every four days or so, until all resemblance with the original output disappeared somewhere in the second month. 

This was enough to tell me what had happened: the numbers that I had typed in were not the exact original numbers, but were the rounded-off values that had appeared in the original printout. 

The initial round-off errors were the culprits; they were steadily amplifying until they dominated the solution." (E. N. Lorenz, The Essence of Chaos, U. Washington Press, Seattle (1993), page 134)[7]


Elsewhere he stated:
One meteorologist remarked that if the theory were correct, one flap of a sea gull's wings would be enough to alter the course of the weather forever. The controversy has not yet been settled, but the most recent evidence seems to favor the sea gulls.


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Jul 3 One can create inorganic cascade like price moves in the derivatives market and thereby control the physical commodity.
Commodities


Jul 3 One can create inorganic cascade like price moves in the derivatives market and thereby control the physical commodity.


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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On Emerging markets debt: @MwangoCapital
Emerging Markets


On Emerging markets debt: @MwangoCapital



JPMorgan: Use unsustainable rally to ditch debt from riskiest countries
Morgan Stanley: Pile up on EM debt as lower-than-expected US inflation will boost EM bonds
Goldman Sachs: Act cautiously because of  risk from tightening US financial conditions

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Freetown in shock after dozens killed in Sierra Leone protests @Reuters
Africa


Freetown in shock after dozens killed in Sierra Leone protests @Reuters 



Dozens died in anti-government protests in Sierra Leone, police and other sources said on Thursday, sharply raising the death toll from the previous day's clashes as shocked citizens stayed mostly behind closed doors in the capital Freetown.
Six police officers and at least 21 civilians were killed, the sources said, as hundreds took to the streets in frustration at economic hardship and a perceived failure by the government to cushion the impact of rising prices.

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21 OCT 19 :: The New Economy of Anger
Africa


21 OCT 19 ::  The New Economy of Anger


People have been pushed to the edge and are taking to the streets.
Paul Virilio pronounced in his book Speed and Politics, “The revolutionary contingent attains its ideal form not in the place of production, butin the street, where for a moment it stops being a cog in the technical machine and itself becomes a motor (machine of attack), in other words, a producer of speed.’’

The Phenomenon is spreading like wildfire in large part because of the tinder dry conditions underfoot. 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.”

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Egypt is considering raising a loan of about $2.5 billion as economic pressure in the North African nation intensifies, sources say @markets
Africa


Egypt is considering raising a loan of about $2.5 billion as economic pressure in the North African nation intensifies, sources say @markets

The government is in talks with regional and international banks about the details of the financing, the people said, asking not to be identified because the talks are private. 

Discussions are preliminary and may not result in a deal, they said. 
Egypt government officials said they had no information on the issue.
Urgency is building for Egypt’s $400 billion economy to secure more foreign currency as it seeks to plug gaping deficits. 

Soaring oil and commodity prices have hit one of the world’s largest wheat importers hard, as has the loss of tourists from Russia and Ukraine. 

The conflict has put pressure on Egypt’s currency and prompted it to seek International Monetary Fund assistance.  

As the cascade of side effects spread, Egypt is seeking to garner $41 billion to pay for its current account deficit and maturing debt by end of 2023. 

Financing from the Gulf is providing a crucial backstop to Egypt as it looks stabilize finances. 

Saudi Arabia, the United Arab Emirates and Qatar have pledged more than $22 billion in deposits and investments in the struggling economy. 
Earlier this week, a unit of Saudi Arabia’s sovereign wealth fund scooped up state-owned stakes in four Egyptian publicly listed companies for $1.3 billion, as part of the kingdom’s commitment to channel resources.
First Abu Dhabi Bank PJSC and Abu Dhabi Commercial Bank PJSC are leading the loan and have invited other banks to participate, the people said. 

The borrowing is expected to be priced at around 400 basis points over the three-month secured overnight financing rate, according to two of the people.  

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#Ghana cedi is plunging, will be through GHS9/$ soon. @Markbohlund
Africa


#Ghana cedi is plunging, will be through GHS9/$ soon. @Markbohlund

Foreign investors cut holdings of domestic debt by a record GHS 3.2bn ($365m) in July, amid a growing likelihood that Ghana will restructure its debt.

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9 DEC 19 :: Time to Big Up the Dosage of Quaaludes
Africa


9 DEC 19 :: Time to Big Up the Dosage of Quaaludes


Everyone knows how this story ends. When the music stops, everyone will dash for the Exit and the currency will collapse 

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Hyperinflation Spurs Zimbabwe to Halt Payments to Contractors @markets
Africa


Hyperinflation Spurs Zimbabwe to Halt Payments to Contractors @markets 


Zimbabwe has suspended payments to government contractors as part of efforts to halt a slump in its currency that’s fueling hyperinflation.
The order was sent to government ministries, departments and agencies by Permanent Secretary of Finance George Guvamatanga after the Treasury noticed they were submitting invoices of cash for goods and services using parallel market rates. 

The MDAs are required to seek approval from Treasury for current and future contract pricing and share with it their due diligence on existing charges, Guvamatanga said.
The dollar changes hands on the parallel market for as much as Z$800 -- 41% higher than the official rate. 

The discrepancy has caused extreme volatility in the market and seen the Zimbabwean dollar plunge 76% this year against the greenback, stoking inflation that’s been in triple digits since May.
“Such pricing framework by the suppliers of goods and services, have not only been causing inflationary pressures but also parallel market activities,” Guvamatanga said in the circular seen by Bloomberg and dated Aug. 4. Treasury confirmed the letter. 

“This has resultantly caused instability in the foreign exchange market characterized by unnecessary movements on the rate resulting in exorbitant prices being charged,” he said.
The Treasury also raised concern over the implications paying the parallel market rate has had on MDAs’ budgets and on national fiscal resources.  
The measure adds to others announced this year to stabilize the currency and curb inflation such as lifting the key interest rate to 200% from 80% in June, reintroducing the US dollar as legal currency, selling gold coins and potentially setting up a currency board.

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21-JAN-2019 :: @harari_yuval & money
Africa

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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Raging Inflation Spurs Rwanda to Hike Rate by Most Since 2009 @markets
Africa



Raging Inflation Spurs Rwanda to Hike Rate by Most Since 2009 @markets 


Rwanda’s central bank unleashed its biggest interest-rate hike in more than 13 years as runaway inflation caused it to revise its forecasts upwards.
The monetary policy committee increased the key policy rate to 6% from 5%, Governor John Rwangombwa said in the capital, Kigali. 

That’s the most since January 2009 and takes the cumulative rate increases for this year to 150 basis points. 

The MPC decided to hike to avoid second-round inflation effects and expects the increase, together with other measures coming from government, to bring the rate of price growth back within the central bank’s target range of 2% to 8% in the second half of next year, the governor said. 
Annual urban inflation in Rwanda quickened to 15.6% in July, its highest level in at least 12 years, as the prices of bread to vegetables surged. It’s also breached the central bank’s target range for four months. 
The Rwandan franc has been trading at record lows and weakened almost 2% against the dollar since March. 

High inflation has prompted the government to cut gasoline taxes to rein in prices.
Inflation is projected to average 12.1% in 2022, compared with 9.2% forecast in May.

Rwanda’s economy, which earns most of its revenue from tea and coffee exports and tourism, is expected to expand 6% this year, the governor said. 
The Rwandan franc declined 0.32% against the dollar Thursday to trade at 1,034.39 at 3:30 p.m. local time.

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JP Morgan has a sell recommendation on Kenya Eurobonds. @BusinessIntelKE
Kenyan Bonds - Long Term


JP Morgan has a sell recommendation on Kenya Eurobonds. @BusinessIntelKE



It’s urging investors to use “unsustainable” rally in emerging market bonds to sell risky and less liquid bonds. : Bloomberg

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@SafaricomPLC share price data
N.S.E Equities - Commercial & Services


@SafaricomPLC share price data 


Price: 31.80
Market Capitalization: $10.706b
EPS: 1.74
PE: 18.276

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