Me and @ mweke in same buses. though I travel in others.

Inflation trend courtesy of KNBS

@hisah.thanks for the inflation trend above. helps me to relook and consider my investments option or how i manage my cash.At approx 7.5% inflation rate in May 2014, to be able to make any cash investment returns have to be higher

Ticking inflation with an econ slump is a funky mix that will mess up equities soon.

- GDP Q1 2014 4.1% vs 5.2% in Q1 2013
- Inflation above 7%
- USDKES floating up and stubbornly stuck above 85/-
- Manufacturing will also slow down as the econ is in a slump
- Retailers already posting reduced sales revenue (uchumi etc)
- Agri is already facing headwinds
- Tourism - no comment - http://tinyurl.com/maunkbm
- Banks continue confounding everyone with profits yet NPLs are also bulging...

Now let's look at KE econ like a local kiosk.

- So where will KES get the strength to be mascular vs USD et al?
- How will GDP scale above 5% for 2014 with major econ sectors already on the back foot?
- How will equities maintain lofty values and saucy dividends with declining/flat profits due the ongoing econ slump?
- How will banks continue posting fatty profits in this macro environment?

Know that's just a simple way of looking at the econ and trying to see how the market weather is likely to play out.

**Pick your cherries carefully**

CBK Q2 2014 banking report shows profits are still on the rise for banks. However, the NPLs have refused to deflate. Out of the 11 econ sectors, 8 continue to post rising NPLs. Quite sad to see that those among the struggling sectors are trade, manufacturing, tourism, transport and household while inflation is on the rise. Only agri and mining didn't post increased NPLs.

How will banks continue posting double digit profits in this environment? And so I continue avoiding the banking counters...

http://tinyurl.com/lgdv96a