Farmer Diaries

I think its 6 trillion, but anyway, its a lot of money.  Over the past few years, American companies have aggressively raised low covenant debt so that they can retire equity... The reason, of course, is that its a great way of driving up stock price without any CAPEX, the debt will someday be someone else's problem. Traders have been moaning about liquidity issue, whereas a few years ago selling $ 100 million of a high brand name bond was easy, now it's difficult.  The same in the other markets too! The story here is that with the end of QE, and the overdue decision by the FEDs to finally seriously take the punch bowl away from the party, interest rates are rising, which impacts stock prices, and debt price.  Not only is it becoming more costly to issue debt, but the equity it is replacing is also dropping in price -- funny enough when stock prices drop there is very little appetite in corp boards to execute buybacks. The issue here is even more serious, because wh...

The new Mexican President is reviving an old idea of having a "high speed" train that would circle the Yucatan Peninsula -- liking Cancun, Merida, Campeche, Palenque, Calakmul and Tulum -- a US$ 5 billion venture (the figure is between 5 billion and 8 billion). First, let's do some math: Assume that the project will cost US$ 5 billion Assume that 30% will be equity (from the Federal government with zero return) Assume 70% debt, guaranteed by the Mexican government The result is US$ 3,5 billion in a 10-year bond The yield on this bond (issued in Peso) would be around 9% (today's 10-year bond is priced at 8.89%) This will lead to annual interest payments of US$ 315 million Operating costs for this rail project will be a small fraction of the total -- let's say there are 300 people working for the railway -- at an average salary of US$ 20,000 (which is way overestimated) and we get a total of US$ 6 million per annum.  The financing costs are US$ 315 millio...

It was bound to happen!  Something that had seen a wild price rise with no "real world use" was a bubble and now its price is dropping as those who invested in the bubble are looking to get out.  Bitcoin is now trading around $4,000 -- it was $5,000 just two days ago!  If you read the press you will see comments about all sorts of technical reasons why this is happening -- which by the way may be true, nevertheless, the real reason is that there are few real-world application for bitcoins (and cryptos in general) and they were seen by most as an engine of speculation... The question is where's the floor!  But it's not a question, in reality, bitcoin has no intrinsic value (granted nor do fiat currencies...but they have the support of national governments).  So Bitcoins and their friends will have to find their own support level.  Since the price changes have been mostly one way (up) there are no support charts, there is no concept of minimum support p...

Two commodity rule the world; oil and copper -- they are the foundation of our world!  Both have had a bit of a hard time of late.  It's hard to remember that on October 5th, 2018 oil prices peaked at US$ 75 bbl -- they stand today at US$ 56/bbl -- which is a 25% drop -- in fact oil prices are now at the same level they were a year ago. Last week a prominent analyst "predicted" that oil prices may drop to below $40/bbl.  who knows, but one thing for sure, the cost of production have dropped. In other news -- Germany's car production is now in negative growth territory

$1,400 for a portable phone that does little more than the old iPhone that I bought two years ago (I have an iPhone 6s), this is insane, what possible advantage will this phone bring that my phone doesn't have: Its faster (ok I cannot tell the difference) The camera is better (I don't really use the camera very much The battery is twice as powerful (lasts just as long -- 10 hours)  Screen is bigger (I don't want bigger) iphone Xs has lighting jack -- (which Apple is ditching) iPhone 6s has a normal jack (which is fine by me) That's it!  All that for $1,379.00 (plus VAT obviously so a grand total of $1,613.43) Ok so sometimes technology doesn't add value (to me at least)