Farmer Diaries

Well it seems that my analysis was correct, it appears that Boing has been holding acquisition talks with Embraer for some time -- therefore its actions against Bombardier make sense.  if you want to acquire a 100 seat aircraft manufacturer's whose product is now 10 years old, and you know that the US airline market is "hot for the type" either you buy one or the other, but you ensure yourself that the competitor is excluded. It has been widely reported that Boeing was in talks to acquire Bombardier's C Serie of aircraft, these talks failed, but to Boeing surprise (maybe it was a strategic move to lower the price), Bombardier went to see Airbus who say this a perfect fit in the construction of aircraft in the US.  Moreover, the US content of the C series is already higher than that of Boeing B787 aircraft. Anyway, what Boeing could not get via a contract it is trying to get via the government

There is no doubt that Trump's recognition of Jerusalem as the capital of Israel was done for two reasons:  (a) Fulfill a campaign promise to the evangelical Christians and (b) a bit of "realpolitik" in that for Israel, Jerusalem is the de facto capital -- the idea of the international community has always been that the world couldn't recognize Jerusalem as the capital of Isreal because of the UN's "two-state solution".  This "solution" has been on the books for decades and neither Hamas nor Israel want that outcome. The first reason that Trump decided to make Jerusalem the capital of Israel is a political, no cost, promise he made to the evangelical Christians.  The big question is why the evangelicals are so keen on having Isreal as the capital of the country.  Several years ago, 60 minutes had a segment on the evangelical movement -- at the core, it is this: The great world war which will engulf the Middle East at the end of the age is ...

Imagine a world where tasks are assigned in a company by a sophisticated AI (Artifical intelligence) that instead of user preferences for certain employees use an elaborate system of staff selection?  It sounds improbable and far-fetched, but is actually real now!  Imagine a very complex engineering project that has multiple areas of work and and work delegation outside of your expertise -- you are the team leader and are a material engineer specialist (Yeh that's what you know and trained -- but now you are the boss) when it comes to electrical issues you are less comfortable on the best employees and most efficient method of doing the job...guess what there is an intelligent system available TODAY for that. A few months ago I was reading about Ocado that can fill 90% of  a grocery order in less than 5 minutes -- while a human would require 30 minutes (after some serious training...) This is not only a very repetitive task it's boring and subject to lots of erro...

Well, it's not like I didn't warn you that I tended to be wrong.  For the life of me, I still cannot believe that the GOP passed its tax bill and at the same time killed Obamacare (the removal of the individual mandates will have a huge impact on the system).  I never thought that the GOP would sink as low as it did, the final document (out of the Senate) was unreadable, with notes in margins -- they didn't even retype the document in their rush to meet their deadline. On Sunday, FOX News blame the Democrats for not supporting the legislation -- being very very careful never to state that the document was made public to all Senators (i,e, the Democrats) about 4 hours before the vote.  The GOP has paid off its masters.  Most Americans earning less than 100,000 will be worse off, if you earn 100,000 you will be better off to the tune of $100.00 -- so one nice dinner.  However, carried interest and flow through are stronger -- you even get bigger dedu...

For those who know me that I would talk about the National Football League will elicit surprise.  I've never watched a football game on TV (or maybe while surfing channels years ago on a rainy September...) and I think I want to one game (the Montreal Alouettes) in the 1980s -- free tickets or something at the Montreal Olympic stadium. In a nutshell, I don't follow American football at all (I don't follow any type of organized sports) but the NFL is an interesting economic beast.  In a country that has outlawed slavery "players" are being bought and sold, there is clearly a huge concussion problem in the NFL (its a problem in many organized sports) that the NFL has been downplaying for years.  The NFL was the embodiment of masculinity with big arms tight asses...well you get the picture.  It was also a sport in which the team leaders (quarterback) were all white and the guards and "muscle" were all black. The concussion thing is a huge problem that...

On Monday the US head of equity at GS said that he could only see blue skies ahead and that the bank's new S&P target was 2,850.  This morning the economist of GS said that the last time the market had the same "symptoms"  -- you know it cannot be good when they use these terms, was in 1929 just before the crash. Both of these guys are based in the same building in NYC, you would think that they talk to each other!  In reality, the world of banks is constructed in such a way as to avoid this type of "collusion" There is a method to the madness. On the other side of the equation, GS can say it got it right either way:  If the world's economy continues to grow or if we are facing a 10-year correction a la 1929.  Only time will tell.

I was expecting the worse!  Truly I entered the cinema backward expecting a really boring and disjointed film (the only reason I went is that of the director, the stars and the writers).  Instead, I found a truly well-crafted movie, that leaves the viewer wanting more.  I understand too well why American audiences didn't like the move.  It may play well on the coasts but it's too close to reality (even today) for most Americans. The most amazing was the dialogue (background) of those protesting the arrival of a black family in an all-white suburb.  The movie takes place in the 1950s and what is amazing is that the dialogue (without the "negro" word) could be replayed in any conversation in 2017. This is a hard movie, with some really really bad people.  That's probably the worse of it, all the bad "hombres" are white, while the black family seems to be peaceful, compassionate and reasonable. An excellent movie

I didn't so much as miss the whole September figures because by now any Chinese financial disclosure I take to be complete bunk.  This morning Zero hedge had a very interesting article about the "one day" performance of Alibaba on which they sold a total of US$ 25 billion in goods -- to give a sense of the scope of this it's equal to the ANUAL sales of Sears & Kmart -- granted not companies that are in the best of health.  That Alibaba shipped more than 800 million packages...yeah, that's not a typo 800,000,000 packages where shipped in one day -- oh and by the way, Alibaba doesn't use a logistical courier service. Now, all that is just big numbers but here are two interesting statements: 1)  Alibaba announced that it's been one of its most profitable quarter (no numbers) 2)  Alibaba's delivery system is one of the best in the world...although it seems to be bicycles More interesting is that Alibaba is coming back to the US bond market, for ...

Empires tend to fail when the centers of power become self-absorbed in political struggles while the prosperity and security of the imperial lands decline.   (E. Gibbson) In Europe, things are getting interesting.  Theresa May’s government showed her true collar when a letter (email?) was made public in which Boris Johnson, her Secretary of State indicated how the UK could initiate a “hard exit” instead of a negotiated exit – that everyone in the UK expects.  Germany is less and less amused, it has figured out that (a) it would be a sucker’s bet, (b) that the UK leaving Europe is generally a bad idea -- therefore to be discouraged, and (c) that the UK is giving ideas to the Italians and Catalans. Britain's government is in disarray, each minister seems to have his own agenda as the prime minister faces rebels on all sides because she committed the cardinal sin of losing her majority and her authority.  Her lack of courage and inability to face up to the popular ...

Where do we start, two weeks ago the Euro was trading at 1.19 its now at 1.15 -- not a huge move but it's directional -- that means that the market thinks that the Euro has further to fall against the US dollar.  The question is always the same how far will it go!  More than 4 years ago I was certain that the Euro was on one-way road to sub 1 US dollar rate -- the reason was that while the US economy was not hitting on all cylinders it was doing OK, whereas Europe was in real trouble.  I still am convinced that the European experiment cannot continue the way it's going, either it breaks apart or further integration will occur. The fate of Italy, Greece, Portugal, and Spain hang in the balance.  There are no real tools for correction in Europe -- in a sense, Europe needs what all good unions require a method of creating transfer payment between the rich and poor regions.  In Europe, the opposite has occurred.  The Germans, who basically entered the E...

Italy First off, a new study shows that banks are unpopular in Italy -- swear to God someone decided that this was an important metric -- in a country where banks are continually being rescued by the central government.  Apparently, their popularity level is at 16% -- I suspect that banks are not very popular elsewhere either! Anyway, what is really interesting is the capital flight from Italy -- you see I don't like my bank at all, its services are expensive and when you really need there, they are not interested in working with you...but I know they are good at what they do and secure (Hurray for Canadian Banks).  What's going on in Italy is different; its capital flight to the tune of Euro 432 billion per annum (or at least for the past 12 months).  The problem is that the most popular political party right now is the Five Star Movement -- that is rabidly anti Europe (yes even after seeing what's happening in the UK -- which is not part of the Euro).  They wan...

Soooo, you want a loan? Usually this ends up being a short conversation with those seeking to finance their dreams.  There are good reasons for this; flawed business plan, no real thought of cash flow or even worse -- seeing a new business as "just a thing to do". However, for the thousands of false dreams there are the real MacCoys, the fully thought out business plan seeking financing.  Until recently, many of these ideas went unfunded -- some had a real objective of profits, others didn't -- but funding was difficult.  The first alternative platform of any significance was Kickstarter, and it produces some "winner" and some rather amazing funding projects. After 25 years as an investment banker, I can tell that most prospectus are a formula, sure there's some hard work by really really smart bankers but as the saying goes: "Garbage in garbage out"  maybe not the most elegant saying but what it lacks in elegance it more than makes up in its...

So when I bought my first iPhone in 2009 for about $500 I thought it was a lot of cash for a phone.  Now the new iPhone X is coming out in a few days and it will cost just about $1,300 -- under the system in which assets are calculated there has been no "inflation" in the cost of an iPhone because the telephone is so much more powerful... Its just that there's a problem with that analysis (i understand how it started)  in fact, your phone doesn't do anything more than the first version (slight exaggeration).  But overall you check your emails, you make your calls...new programs such as WhatsApp and Skype were introduced, but that's just a different way of communicating.  In fact the only real benefit is that images are better, its got a faster processor, which is all good, but to say that the value added is worth an increase in the price of the phone of nearly $800...I find that hard to stomach.  The whole value adjustment (bigger screens for your TV) started i...

So a few weeks ago the American government, at the behest of Boeing Aircraft decided that Bombardier was a worthwhile target, filling a complaint that led to the imposition of 300% tariff on Bombardier  C- Series aircraft. Now for a start you've got to understand the tariff thing, the initial complaint was drafted by Boeing with a very clear intent -- to kill a non-competitor.   Not entirely clear what their idea was, it maybe that Boeing is thinking of getting in bed with Embraer and getting rid of the Canadian would be a good deal for them...I just don't know. You see Boeing complained that Bombardier was using unfair advantage in the 90 to 150 seat category of aircraft (this is important).  You see the C-Series aircraft is a 125 seat aircraft (trust me its a big big difference) and therefore is not competing with ANY Boeing aircraft product.  The smallest Boeing aircraft (737NG) is 150 seats (and its a pig). So the complaint will eventually (this is the key he...

I mean, its been almost a year, Hillary Clinton lost the election to Donald Trump, and yet she's in the news all the time.  She gets the kind of free publicity that did so much good for Trump. There's even a senate investigation committee, that started yesterday and is in full swing, if you consider that the Russia Senate investigation committee has been at it for nearly 9 months with virtually nothing accomplished: One is about a sitting Presdient! The other is about a private citizen! Guess which one is being followed with the more zeal... It starts with Fox News asking almost every day: What would Hilary do, in Trump's place -- when the real question is what would Mike Pence do in Trump's place!  Anyway that's what the constitution says, and Clinton is not in any succession plan to the White House. Very strange, the GOP won but is acting like a loser.  Its hard to fantom what's up with that.  The only thing I can come up with is that the GOP is havin...

The capital market are by definition optimistic in their outlook, until reality or a crisis or just fear take over, since as in 1927, 1987, 2001 and 2008 (there were others...but these are either recent or well known), the market is looking expensive.  The most well know index for valuation of the market is the CAPE which stands for cyclically adjusted price earning ratio;  It stands today only second (in level) to that of 1927 and 2000) First the market has been uneven for a long time; the majority of the S&P500 has generated pedestrian returns for investors -- aside from Tech the market has done little to impress  Five companies account for fully 30% of the market's rise over the past 3 years.  So is the market in a bubble?  I don't know anymore because ALL asset classes have seen massive increase in value (reduction in yield).  From housing, to bonds to equity -- everything is up.  In fact, since January 1, the market is up nearly 14% -- n...

So Trump & friends have finally delivered on their tax cut promise, as expected the bulk of tax cuts go to the richest 1%, but then again they do pay the bulk of all taxes -- yes they do!  However, for a gang (looking at you Paul Ryan) who were so anti deficit just a year ago the new tax cuts are unfunded with promised reduction in tax loopholes. Lying liars:  Trump & his advisor say that most of the tax cuts are going to the middle class.  Fact, 50% of all tax cuts will go to the 1%. Loopholes:  Certain (unspecified) tax breaks will be removed.  Since its corporation that benefits from these tax cuts (and their advisors) it is unlikely that the White House will have a smooth sailing on that one.  The other big shift was to remove the deduction for state taxes (after all its not income if you've paid it to the state government!).  That would do two things (a) screw the blue states (e.g. California, NY, Connecticut and New jersey) and (b) it...

A few months ago, a poll showed that most Republicans though it was a good idea to delay the next presidential election until the electoral rolls were cleaned up and the "millions of fake voters" were purged.  A recent study by Oxford professor equate a substantial level of support by Republican state ("Red States") for autocratic rule -- in a sense, it's an extension of the vision of an orderly society (very homogenous that is often found in the Republican states -- either because most resident are white or via social and economic segregation  -- what percentage of white Texans live in gated community?). Listening to Trump's "fight" with the NFL -- where the whole flag thing is a 2009 tradition -- and a tradition adopted by the NFL only once they got paid by the US government (seriously, the US government paid the NFL so that players would stand at attention during the signing of the national anthem).  Joking aside -- its only a tradition when i...