Farmer Diaries

Over the past 12 months the S&P 500 is up about 6%.  Not the greatest but still not too bad, against this background of "strong" market performance you have earnings that are off by 20%.  This is unprecedented.  Never in the past 100 years has market performance been so decoupled from market fundamentals. The pros don't know what to do, all their models scream sell and go short, and anyone who has followed this strategy has lost his/her shirt. BTW that's why I don't talk about market fundamentals anymore, because the fundamentals don't follow; a weak recovery (granted the US government -- Federal/local has been shrinking since Obama came to power).  The weak recovery, the poor earnings tell you that you should be out of the market at best and even a little short -- Caterpillar for the 7th consecutive quarter has posted terrible performance. Yet the market goes up!

The departure of Trump's chief of staff on Thursday is a lesson of what seems like a good idea turns out to be terrible.  The guy was an operator (granted no one knew he was an operator for Russia's interests in the Ukraine). It appears that Paul Montford had been phoning it in for a few days/weeks prior to his removal -- a series of reason; first the candidate completely ignores the words of paid professionals; and it shows in the past month Clinton has basically disappeared from the national seen -- leaving all the room to Trump that seems to do his darnedest to lose the elections in November.  Question:  Aside from what uneducated white men is there any group that Trump likes? The second "conspiracy theory" is that the presidential elections are only an excuse for the creation of a new right wing network to rival FOX.  I suspect that this is the wet dream or the conclusion that the media has made of Trump's behavior over the past six week.  In fact, he s...

finally, the authorities have taken step to slow the Vancouver housing market.  The tool used was rather blunt, and somewhat late to the game, still housing prices in Vancouver seem to finally be slowing down, some estimates show that housing prices in metro Vancouver are down 20%.  Now like everything this must be taken with a grain of salt, one month doesn't a year make, still the introduction of a 15% tax on real estate transactions is important. It isn't very efficient insofar as it it a tax on transaction, but it can be reduced or removed quickly should the price action be sustained.  Now, economically, this type of tax makes sense, it was introduces successfully in the UK about 18 months ago, and did cool the market there to a degree.  Vancouver has different issues that make the tax more or less useful.  There is little speculation driver in Vancouver, the price action is based on real demand from foreign investors, but there too the real drivers are ha...

Its Friday, and really I cannot say that I am surprised.  A few days ago, the internet was agog at Trump's latest and greatest, which was to basically say that a 2004 dead American soldier was a traitor, that his father was a ISIS sympathiser and that his wife was afraid of her husband -- as all good muslims women should be; that was the end of Trump. Guess what not even close: In the last few days and in no particular order: ISIS was created by Obama and Clinton That if Clinton wins then those who support the second amendment (guns) should do something, maybe. The NYT should lose its accreditation ('cause they've been such strong supporters of Clinton...not) That's in seven days; its not really important but the facts are that ISIS was created in the late 1990 and became what it is today in the early 2000 -- so maybe Bill Clinton -- but Hilary was only his wife then!  As for inciting violence against clinton -- second amendment remedies are usually...

This is obviously not a good outcome (so that we are all clear about my political inclination).  But nevertheless it is very possible.  Over the past few months Trump has said some rather horrible things about many many individuals: McCain is not a real hero (McCain still supports Trump) Clinton should go to jail American judge cannot be impartial because he is of Mexican descent Clinton is responsible for Benghazi Every Muslim is a enemy combatant in waiting -- including the father of a slain American solider I had nothing to do with the organisation of the GOP convention... The primaries are rigged (yet he won...) The elections will be rigged (if he doesn't win) The debate schedules are rigged This is just stuff over the past few days and stuff I remember.  What is important to understand is that Trump is only the natural extension of the GOP's policies over the past 40 years.  Until Trump the GOP has not been overtly racist -- it is today (which begs...

A short comment: The Italian banks have just received their grade on the latest stress test.  Banco De Monte dei Paschi results were not exactly excellent.  In the worse case scenario the result was -2.4% capital (which means insolvent by the way).  BNDP is planning to raise Euro 5 billion and sell Euro 9 billion in NPL. How such a bank will raise Euro 5 billion (its current market cap is Euro 5 billion) and sell Euro 9 billion in NPL is anyones guess, still they get a passing grade because they made these commitments. Amazing

Well while no one was really paying attention to anything oil price have crashed by nearly 20% over the past few weeks.  No so long ago, oil prices were trading around US$50/bbl now they are below (okay a little above right his minute) US$ 40/bbl.  The first impact will be on inflation that was already low, is about to get lower. The real issue is what does this mean for the world economy: America is a now a net producer and as such lower oil prices are certain to hit, a huge chuck of the sub-prime credits are in the American oil and gas shale boom (past tense) and these loans that were slowly recovering are getting hit hard again.   Canada is also a producer and as such lower oil prices will hit the Canadian dollar -- the economy too by the way.  Things are difficult, bit the Federal and Alberta count on oil royalties to meet certain of the costs -- these are now a lot lower.  Alberta is even flirting with income taxes. Europe which is a net im...