Farmer Diaries

OK first,  I have no skin in the game, but what is remarkable is that I had completely understated the amount invested in the AI sector.   To give you a sense of how large the investment in the sector is, the Bank of England in a recent study indicated that for AI investment to meet the current stated rate of return, the entire sector would need to generate nearly $2.5 trillion in revenues per annum.  To give you a sense of perspective, it's equal to 140% of the total revenues from the global tech sector.  BTW, that's a lot of money! Today, right now, (and from the same study) corporate executives use AI for about 100 minutes per week, they pay small amounts and have generally indicated that they have not seen any real value to the product.  Still they pay the minimum (a few hundred dollars a year).  The second group are small businesses that have been able to scale up their operation using AI instead of human staff.  Again, not nothing, but not a...

There were two American icebreakers, the Polar Star and the Healey.   The first one has been in drydock for over three years, but the work has now stopped, it has now been determined that the 50 year old hull is simply not up to the challenge.   The Healey was supposed to be the answer, in 2024 it suffered from a massive fire, and limped back to port. In its recent sea trials it had a massive engine room fire. It is not clear at this stage if the vessel can be rehabilitated.  In short, the US navy needs new icebreakers. So far so simple, one tiny fly in the ointment, there are no US shipyards that are currently able to build a new military vessel (the shipyards that could, are booked until at least 2031).   The solution is to purchase new hulls from other nations.  The problem: the two shipyards that have the ability and capacity to build such vessels are in Canada and Finland.   Not exactly good friends right now.  The first is obv...

It has been evident that the era of scientific achievements has now passed, it has taken two Republican governments to seal the faith of science as a cornerstone of the American system. Don't believe me, look at who leads the nation today; lawyers and idiots – think Robert Kennedy or the recent candidate to the CDC – obvious examples of people who are driven by ego and "truthiness" rather than the cold reality of science.   The seven stages are: The Age of Pioneers: Small, energetic nations burst onto the world stage with high courage, dynamic leadership, and a strong sense of collective purpose. The Age of Conquests: Territorial and political expansion through military might, building upon the momentum of the pioneer phase. The Age of Commerce: Great enterprise and trade flourish, bringing massive influxes of wealth and transforming the nation into a global economic hub.The Age of Affluence: Wealth peaks and comfort becomes widespread; however, greed begins to replace ...

That's how much it costs now for a big mac, a french fry and a coke.   In 2019, the same meal would cost $7.50.  What happened? The reality of the fast food industry in America is fascinating, the country is awash with fast food restaurants and low value chains.  The reality of the game is two fold: first the corporations that run the fast food industry have run against a fundamental large number problem – there's simply no room for expansion.   The franchise that operates new restaurants cannot find "interesting opportunities" which translates into areas where there is a shortage of supply.  In order to keep their stock prices up they have resorted to increasing the price of ingredients that the franchises have to purchase (including services).   Over the past five years, despite virtually no additional outlets, and stagnant sales figures, companies such as McDonald have increased margins through higher prices, which translates into a 160% increase in the ...

First, its been obvious for weeks that the stories around the deterioration of the Washington Reflection Pond were completely made up but a morally bankrupt administration.  Now the head of the Justice Department and the head of the department of interior are fighting about who is more at fault, especially now that it has been proven that not only did the Park service testimony was that there was no evidence of willful destruction.  In addition, those who have been accused of damaging the reflection pool are now seeking legal redress – it's going to cost a few people some serious coin. Now the head of the department of health, an anti-vaxxer had a total meltdown on television over the weekend, where he accused the interviewer of not being a scientist…which is true, but he is not a scientist either.  The public health crisis, the complete stupidity of those being sent up to the Hill for confirmation.  The person that was nominated to head the CDC had never heard or rM...

I don't care about football.  However, I do know one thing. Inside the European football union (whatever they call themselves) they never agree to anything, ever.  When it was announced that FIFA was selling out to investors the rights to the world cup for $20 billion, the reaction was almost immediate.   55 members said that if there was a sale, they would not participate in any world cup event, ever!  It took the 55 members exactly one hour over a Zoom call to agree to this. That dog don't hunt – as my American friends would say

In my opinion, the biggest change to the world over the next five years will be the application of AI to government services.  Let's be honest here, Governments provide services, much of which are pushing bits of paper from  A to B.   A lot of the "work" is a reflection of a world before computers.   If an accountant, trader, banker and a lawyer can be replaced by AI then civil servants should be the first to go.    From my experience (and it has been limited) the vast majority of civil servants are there to collect and collate information, and disseminate the results of new rules and laws as drafted by politicians and senior civil servants. In a nut shell, probably in excess of 40% of current civil servants could be replaced by AI.   Now, the tricky part, as the US government has recently discovered, is who are the essential bits and who are the redundant bits.  Part of the problem is identifying the right one, and again this is wh...

It has been the most successful investor strategy over the past 30 years, but like everything it must come to an end.  For 30 years, hedge funds, private equity funds and other investors have been borrowing in Yen and investing all over the world.   The truth was that for the past 30 years the zero interest rates and the slowly depreciating Yen allowed the financial community to borrow massively (aka leverage) and generate higher returns.    How does this work?  Well you borrow $1 million in the tokyo market, effectively you borrowed Yen 100 million at a rate of exchange of 105 to the US dollar.  The interest rate on this loan is 1.3%.  That's the start, the risk is that the Yen rises, that's it.  You take that money and invest it at 4% (buying US treasury 10 year bonds for example), and you take the yield and declare it as your profit.   Now let's say that you do this for $100 million, and that you used $2 million of your own capit...

The new American CPI numbers came out yesterday and the news is excellent, inflation is down 0.5% which no one expected!    That's the good news, now the not so good news.   Oil prices are stripped from that dataset, its normal, fuel prices distort the "economic indicator".  However, the CPI figures have to be taken with a grain of salt (always mister negative – as the title indicates).  The 2020 pandemic led to massive consumer price increases.  What no one noticed is that since then prices have not fallen back, as a stupid example. In 2019, a brick of espresso coffee was £2.35.  Last week the same brick of espresso coffee was £6.75. Same brand, same size – almost three times as expensive.   Now, the point is as follows, and it's important, Americans have for years replaced revenues to meet their expenses with savings and debt.   This is not a secret to anyone in the world.   Americans have more debt today and less s...

Space X:  I don't know if collapse is the right word, but the shares are currently trading at $123.00 down from a peak of $201 and an issue price of $165.   The problem with SpaceX is that it generated no profits, in addition, the company has aggressively moved into the world of AI, which has little to do with its space venture. In fact, the free cash of the company appears to be destined to that endeavor rather than rocketry. Truth Social: In another note, I made the comment that Truth Social Media had increased the value of its intangible assets by nearly $1.1 billion (up from $25 million).   Apparently, there is an explanation, it's the brand. You see, Truth social is so valuable (despite generating no profits and declining revenues) that the company management (with the agreement of the auditors) has assessed that the company has an additional intangible value of $1.075 billion.  I'm just not interested enough to get to the bottom of all this.  Bo...

Nobody should be surprised by Europe's recent weapons' procurement announcements.  On one side, the word is out that Europe is looking, and has a verbal agreement with Donald Trump to manufacture Patriot missile systems under license.   However, Europe is also looking at short range missiles out of Ukraine.  Guess which system will be running first; sorry no contest, it will be the Ukrainian system, first its short range, (less than 1,000 NM) which matches the European theater of war (aka Russia), second, a deal with Trump is never real even when it is signed, looked at all the agreements he signed over the past two years, few lasted more than 90 days before Trump changed his mind.    The truth is that the Patriot deal is probably vaporware, and will never be implemented, but it gives Trump the oxygen he seeks with his base, which is the only thing that matters to him.  He can say that the Europeans are "begging" for US missile systems.  He probab...