Farmer Diaries

 Reading the comments on Zerohedge about Rivian IPO, and you would be hard-pressed to get comments that make any sense at all.  The bottom line is they hate EV, it's a passion.  never mind that 95% of EVs are manufactured in the US for the US market. They really want to have coal-fired cars if they could.  it's a pollution thing.  One bozo even said that Ford sells 900,000 F150 per annum (it's actually 128,000), not zero but still  Of course, there are always the guys who talk about camping with an EV or going on long road trips.  Facts, 99% of all vehicle trips, excluding trucks) are for less than 200 KM. The range for all EVs is nearly twice that. The issue with Rivian is that they sold 20 odds cars, they have an order book for 150,000 more.  

 The airline industry has pledged that by 2050 they will be carbon neutral, amusing if you think about it, considering that the airline industry has little say on the technology being deployed -- it GE, RR  and SNECMA who design engines for aircraft. Still 2050, lots can happen in 30 years

 OK in the 3rd quarter of 2021, Tesla delivered a total of 210,000 cars which is not bad, a few days ago, Rivian a competitor to Tesla did its IPO, and today the stock opened 35% above its IPO price, the total market cap for Rivian is north of US$ 90 billion. How many cars has Rivian delivered over the past 2 years...its s a smaller number than Telsa that's for sure, how about 22, not 22,000 but as of October 20th, 2021, Rivian had delivered a grand total of 22 vehicles, just short of two dozen cars. Rivian is today worth more than General Motors.  In the third quarter of 2021 GM sold about 240,000 cars Now Tesla is down 12% on the news that EM may sell some shares.  The company's market cap is still just north of 1,000 billion, only 10x more than Rivian, which sold 22 cars.  

 Two weeks ago, the already contentious announcement that CFE would prioritize the use of power produced by CFE rather than the independent producers.  This was already seen as a hard knock on the back of foreign investors, but it got worse last week when AMLO started talking about expropriation, not only that but those who have installed a rooftop solar systems to reduce power costs would be forced to remove them.   According to th the law before Congress, those who saw these systems removed would be compensated, although considering the state of Mexico's treasury, it's not entirely clear, the CEO of CFE on Monday indicated that the best bet was nationalization without compensation, like in 1936.  The old men who run Mexico today have this vision of Mexico as an energy-independent country (85% of all-natural gas is from the US, 22% of Mexico's electricity is purchased from the US).  This dream is based on this vision of a perfect example of what Cuba and V...

https://www.amazon.ca/dp/B09BLFJ1NZ

 One thing for sure, the Delta variant is far more transmissible than the other variants, it's the only point everyone seem to agree upon.  As for the rest... Zero Hedge used Daniel Horowitz -- (we assume its actually the trump loving lawyer who got disbarred a few weeks ago), and now refer to him as a writer (there is a David Horowitz who is actually a conservative writer).  Says that Variant D is not dangerous and it's all a tissue of lies, then again he said that America faced no risk in 2020 from the first variant, you can quibble on the number of dead Americans, but it got to be around 600,000 -- some will say that figure is no worse than the seasonal flu (which is not correct about 60,000 Americans die from the flu every year -- mostly elderly). Then there is the announcement that its more contagious but far less deadly, and the proof are some numbers out of the UK, for once AD didn't use Russia -- because Russia is in trouble with Moscow and St Petersburg being aff...

 When Bitcoin hit $3,000 some years ago a friend said to me this was a great trade, and I should invest.  I told him, that to me, for now, Bitcoin was a purely speculative play and not an investment.  The same way a Picasso at $100 million was not an investment it was speculation, speculation that someone else would pay more for an asset that has no function -- sure its pretty but so is a poster! Bitcoin made it all the way to $60,000 or thereabout. my friend who had bought 500 coins at $250 in 2016 would be worth $ 90 million if he had sold at the peak -- he didn't sell at the peak he sold at around $10,000. Now Bitcoins are going down based on nothing, except that investors have soured to the instrument -- by the way, it's not only bitcoin that has seen a massive drop in price, it trades around $38,000 today down 37% from its peak in early April 2021, all other cryptos took a hit. My point was always the same if there is no reason for the price of a financial instrument...

 Nearly 100% of the over 60 in New Hampshire have received their first vaccine dose, and 60% their second dose. In Tennessee, only 30% of those over 60 have received their first dose and less than 10% their second dose. The President of Mexico vacillates between taking and not taking the vaccine, he doesn't wear a mask.  The Prime Minister of India, in the middle of an election, is having massive rallies with his supporters with no mask in sight, neither the President of Mexico nor the Prime Minister of India wear mask.  The president of the United state, Canada, and all the EU all wear masks. Right now the worse affected country for covid 19 is Uruguay that had draconian rules until recently, India has an explosion of new cases  Some friends took extraordinary measures to obtain their vaccine paying large sums of money to get to the US to get vaccinated.  Me as a Canadian I am allowed to obtain the vaccine but because I am living outside of Canada it's impossib...

 Over the past few weeks I have been in Mexico, largely for work, but also to escape the winters of Quebec that was, in 2020 brutal.  So far 2021 has proven to be less painful.  First off it was far less cold, yes there were days of -40 but only very few.  Canada's winter was mild if you consider that the great lakes remained largely ice-free the whole winter. Snow that was still 50 cm deep in April is nearly gone.  The roof of our house is entirely free of snow, and in fact, the property is sloppy but nothing compared to last year.  This winter appears to be mild, and normally we would consider leaving Mexico later next month to start opening the house for spring and summer. But our plans are now up in the air.  Although Air Canada has announced that it will resume flights to Cancun sometime in May, we can still fly via New York, the news on Covid in Canada is not good.  Quebec is seeing daily infection rates rising again, it had been falling sin...

The Quebec government will soon introduce a law to reduce/control the number of available places in English-speaking CEGEP (schools that last two years after high school and before university).  Their popularity is understandable if you are a smart francophone who had his entire education in French -- it's your last chance to "master" the English language.  Quebec is surrounded by nearly 350 million English speakers -- Quebec is a very open economy that exports all over North America. I can tell you exactly what the impact of "reducing the number of available places"  it will dramatically increase the number of application because parents concerned with the children's education will want their kids to go to the best school and the best schools are those who restrict the number of places... Anglophone and francophones that want to study outside of Quebec will go to English-speaking CEGEP, entry will become more competitive standards will become higher.  It ha...

 So yesterday Elon Musk invited Putin to a conversation on Clubhouse (new version of WhatsApp) which feels like an "early" Gmail where you needed an invitation!  The market impact was that UNRElATED company Clubhouse Media saw its share price spike 12x its morning opening... Bitcoin hit $51,000!  At this stage there is no reason to think that Bitcoin could go to $300,000 or $50 there is no reason for the crypto to rise (or fall), Bitcoin is not a tool of exchange (or payment) its a speculative instrument.  You can chart the price, see the demand but there are NO FUNDAMENTALS (granted there are no fundamentals for Gold or Silver either). In fact, gold and Bitcoin share many aspects in common.  Gold is a store of value (it has been relatively stable around $1,800 per ounce), cryptos have been on a massive tear.  Neither are really used in exchange since gold is "complicated" and has never really been used that way.  Apparently, the majority of the world'...

 I have like many been watching the events in the US (and Northern Mexico), the funniest is via Zerohedge an interesting rightwing blog post website.  Anyway, it has been published everywhere on ERCOT's website that the Principal reason for the power failure is the freezing of the state's natural gas infrastructure (and yes some wind farm have been affected too), the net loss of generation is 30MW in the natural gas sector and 4MW in the wind sector -- there's wind but also icing conditions and the Texan windmills didn't have to install de-icing systems on their wings (because it's warm -- usually -- in Texas).  Every 10 years or so, Texas has a big freeze!  Every 10 years a report is written on the failures of the grid. The amusing thing here is the right-wing "blogosphere" who seem intent on saying -- we should have kept the coal, we should not use renewable energy... let's be clear coal power plants only work one way 100% of rated capacity -- if yo...

 Well, it's a done deal Bombardier that has been part of my life -- first as a manufacturer of snowmobiles then as a train maker (famously for building the first rollingstock for NYC subway in nearly 30 years) in the late 1980s. It then acquired Learjet, Short Brothers, Canadair, and DeHavilland (Toronto).   I worked for the company for a few years.  I had just been hired from working in London and I remember as I integrated my new office a guy came into my office and asked me "what position I played"  I had no idea what he was talking about (e.g. Hockey). I asked him if Bombardier had a league (jokingly) and he replied no we have leagues (plural). It was a big company with an ever-increasing share price! Bombardier had two problems; it was more or less time to change the firm's leadership (its CEO was looking to hand off the responsibility of day to day activities), and the truth was that the commercial aircraft division had a very hard time making money -- tur...

 It seems Aero Mexico's owners have found a solution in the cash US$ 1 billion injection (in new equity) and US$ 1 billion in senior unsecured debt (the DIP financing was done in September).  The new investor Appollo Management has a long and distinguished reputation for buying troubled assets and turning them around.  It's not always been pretty but the AM model could be interesting for several players in the industry. AM went into Chapter 11, sometime last summer, when it was clear that its board could not in good conscience continue trading; interestingly enough they filed in the US, but that doesn't matter.  The challenge for the new owner is to discover how it can make money on its investment. Apollo is a medium-term investor, they will look to exit their investment within 5 to 7 years -- this has worked well for them in the past, moreover, as a fund, they really have not much choice, but I suspect that they see AM has a long term investment that just needs to b...

 So the outrage of the ordinary investors was a good story but it turns out it was mostly BS.  Some of the early investors had a strong feeling about the company and its ability to turn its story around.  These guys made big bets and were very well rewarded. However, it seems that the real play was Gamma Hedging!  First off, short interest in GME was small once the stock hit $70.  That's important, prior to that week in late January 2020 the short interest was huge something like 180% of available stock, which means many players were doing naked shorting (which is illegal), but once the stock doubled short interest went down fast -- to around 30%  still high but nowhere near the nose bleed zone of before (it should be noted that the cost of borrowing GME stock exploded in mid-February -- making the whole thing expensive). It seems now that it was the derivative market (puts and call on the stock) that created the frenzy.  These were the places where th...

A bit of levity...considering that GME dropped another 50% this morning.  The loss accumulated for the late entrants to this game.  The market cap of the company is down to $6 billion -- $30 billion was wiped out. So enjoy this classic movie Stories are that Phil was stuck in groundhog day for 10,000 years!

So about 4 months ago a small retail outlet that acted as a sales point and exchange mart for videogame that had a rather tepid market cap of $150 million became the object of a play by Wall Street's finest Hedge Fund playing their usual game of "Wakamole" the well tested game of shorting a small company -- don't kid yourself Wall Street knows how to play the game well, using "unattributable" specialized journalists they were able to push down the price of the company's shares all the way down the $2.46 -- a nice little earner if you sold the shares at $30 and have to buy them back at $2.00 Generally, it's a well-known game "picking up dimes in front of a steam roller"  a good game with no real losers (aside from the company).  One fly in the ointment was Michael Burry who has been adamant since 2019 that GameStop is actually a good company and that the new management has a "good plan", and that the company is undervalued. Enter t...

The only reason that counts:  Robinhood ran out of collateral for GME and AMC and other high vol names.  Those who bitch about this just don't understand how markets operate (or care for that matter) First principle:  Wall street, like the casino of Vegas, never loses! Second Principle:  Pigs always end at the slaughter Looking at Gamestop (GME) you know it's a bubble, trend following this kind of volatility (750%) tells you the stock can go to zero as it can go to $900.  Fundamental of the company at $10.00 showed the company possibly undervalued but a price of $360.  Well, that's just a mania. A few months ago, Hertz (which was in chapter 11) tried to do a new share issue -- prior to the reorg.  You knew that ANY investor that bought these shares (maybe cheap) was 100% certain of getting wiped-out.  The SEC shut it down despite a huge appetite for the issuance. What is also important is that the daily traded volume of the shares is equal to the ...

Yesterday, an acquaintance called to point out that I was an idiot if I thought that solving the airline business problems was as simple as I made it to be!  I pointed out that this was not a "how to list" but provide to the layperson a sufficient understanding of the industry's complexity, and how different players made different decisions based on valid concerns and realities, that applied to their situation -- Singapore airline decision process is very different than that of American airlines! So he no longer thinks I'm an idiot, just a "higher functioning moron"  I call that an improvement! However, my ex-friend (he was really really really upset) did make one massive error (and that's where things got ugly) he was sure that the older aircraft would come out of retirement.  I spoke with some acquaintance at ILFC (Now AerCap -- not so sexy a name) he said that out of the 1,000 aircraft they expected maybe 50 not to return to service --- ever (these us...

 Nothing like Covid-19 has ever happened to the airline industry.  An effective shut down of a multi-billion-dollar industry that lives on high leverage.  The vast majority of airlines will visit the bankruptcy courts those who "survive" will need to follow strict principles and face difficult new challenges: (1) Leverage was brilliant when profits are there but is terrible in a crisis (2) Fleet flexibility is more important than cost  (3) Deal quickly and decisively with all your input costs (4) Be ready to respond to low-cost startup (maybe) The most important decision during the crisis was to deal with costs upfront.  Many airlines assumed a "SARS" or "9/11" problem and modeled their financial response with that in mind.  In other words, a local crisis that could be dealt with in a few weeks or months, and that's the model all airlines used when raising cash in the bond market in March and April.  Certain airlines decided to shut down (Porter Airlin...

 The most amazing outcome of the arrival of Biden was his 17 decree which he signed within the first hour of being in the White House; at the stroke of a pen, Biden basically canceled all of Trumps' own "legislative successes" and he did because Trump never bothered to seek new laws to support his strategies -- a sharpie and a photo were enough for him.  So By 5 PM on January 20th all but Trump's tax cuts were reversed -- every single one (oh yeah the Space Force still exits -- and I thought it was just a Netflix joke starring Steve Carrell).  It turns out that Biden issued 30 decrees overturning 99% of Trump's "legislative effort" In four years, Trump was not able to kill the ACA (he tried via the courts but even that was half-hearted efforts).  It goes to show if you want to get it done for good you've got to spend the energy and the time. Trump's interest in the legislative was near zero P.S.  I'm sure that some of the crazies on the right...

The first problem is "does the government know?" because there's not $20 billion lying around in the coffers of the Mexican government.  Everything indicates that they've already looked in every drawer and spent everything.  The announcement indicated that CFE wants to keep the lead as Mexico's energy producer -- already it's about 80% 53% that is generated by CFE -- so its leader wants to increase that amount.  The only problem is that CFE has been a cash cow for years -- and has a horrendous balance sheet.  Any borrowing (and it will be borrowing) will have to be approved by the Mexican Treasury -- and probably specifically guaranteed by them, because of all the stunts that the Mexican government pulled with lenders. BTW when I say cash cow I mean paying dividends to the government even when it was losing money, not prosecuting energy theft, which is rampant (but mostly done by poor people) but who consume, individually, very little power. Again, all this c...

 According to the FT the "cost of regulation" of the exit of the UK from Europe will be about STG 7 billion or about 0.1%.  That's just to do the paperwork. The city (financial district) will be gravely affected -- about 40% of the business will/has migrated to Europe.  That's about 400,000 jobs that will go away Manufacturing:  The UK automobile industry accounts for about 800,000 jobs (direct employment) it is estimated that between 40 and 60% will lose their job! So that alone is about 1 million jobs that are certain to go over the next few months.  In addition, the UK should expect to see about 3/4 million jobs from smaller firms that can no longer export into Europe (read tape, taxes etc).  the UK should lose a total of about 4 million jobs over the next 18 months -- maybe some will find new work, but we can safely estimate that about 10% of the labor force will be out of work by this time next year (on top of those not working now).

flying to Malaysia:   We had a rule that if you went to meet a customer you had to fly their aircraft.  So I book on Malaysian Airlines (Montreal, Vancouver, Taipei, Kuala Lumpur).  Everything is fine, till we get to Vancouver where an actuator for a thrust reverser is broken, and a mechanical delay is caused. Three hours later everything is fixed, but by then several customers refuse to sit down -- they want a different aircraft...flight is scrubbed (because the crew was timed out)and we are put up in a hotel overnight (where the same aircraft takes off and start its journey).   We eventually land in Taipei for refueling (these were the days) and as we take off, the thrust reverse flap opens (its a 747 so not the end of the world) pilot shut down the engine and we return to Taipei -- I'm ushered to another Malaysian airline aircraft and arrive in KL 28 hours late. The next day I sit down with the CEO, CFE, and Chairman of the airline -- who chides me for being ...

 Its funny, because its so very true; a friend reminded me that the only trips we remember are those where something unexpected and unplanned -- or even when disaster struck.  Like all children, my first trips were with my parents, rather later than most, still. Here is a rundown of the funniest; Mexico 1984:   In those days travel costs were so much higher in Canada than in the US that it was really worth it to drive down to NYC and catch a flight there...the night before our planned departure for NYC (by car) we (my sister, mother and I) saw the news about a major storm arriving that evening; my dad not so concerned, said there would be "no snow because of a high-pressure front".  As the words emerged from his mouth the snow started.  We rushed to finish our bags and leave Montreal...it was fun we ended up sleeping in Albany because the snow was so bad, but we were able to catch our flight in the morning. The same trip:  New years eve in Mexico City my d...

So last week my MacBook air finally gave up the ghost and died.  It's a 2011 machine, that worked just fine for me, certainly, the screen was old-time, but it was fine, the speed was more than sufficient for word, excel, and Outlook.  The three principal programs I use,  SO off I went to the online apple store to configure a new machine and buy it.  First off all stores are close in Canada -- so no pick up, then Apple informed me that the delay would be three to four weeks. The solution I went on Amazon.ca and purchased a slightly used refurbished 2019 MacBook air for $1,100, so about $400 cheaper than a brand new machine, and it was delivered a few days ago... The moral of the story, the covid made me save $400 unexpectedly.  The machine is just fine!

There's a scene in the series "the west wing" where the President of the US is replaced by the Republican speaker of the house, and after a few days on the job, the "new president" askes the chief of staff, "when does the fun stuff begin?"   The reality of being President is not so much driven by the agenda (which is a short-lived process of about 100 days) since soon after the elections Congress is again running for office.  The reality of higher office whether it's political or business is that most of the issues you face are on your desk either for rubber stamping because the issues were resolved lower down the food chain or are so intractable that there is no clear winning. For Trump who never ran for office, the trapping of the Presidency was probably the most attractive aspect of the job, the rest not so much.   Trump's reputation preceded him to the white house.  He is well known for shooting from the hip and shooting the messenger.  He...

 The blow to Alberta's economy cannot be underestimated; the black gold that Alberta relied upon to keep its taxes low and grow its economy is the "dirty" kind -- granted that most oil is not particularly clean either in the extraction or in consumption, but Alberta's dirty little secrete is that the Athabascan oil sand was very dirty indeed, somewhere around 50% worse in terms of pollution than the light sweet crude that Texas produces. That's the first reason, but certainly not the most important.  Over the past 20 years, America has become more and more self-reliant in its production of oil; in fact, 2021 will mark the lowest level of import since 1954 -- when America started facing a production deficit. For the new administration, where oil prices are already low and the supply, both domestically and internationally is cheap the cancellation of the Keystone project was an easy one:  both economically and environmentally the project didn't work for America....

 There are three projects that were lauched by AMLO:  The new Mexico City airport, Dos Bocas refinery and the Maya Train. Obviously, with Covid-19 the immediate need for a new airport in Mexico City has abated; both the two largest carriers Interjet and AeroMexico have filed for bankruptcy protection -- Actually, AM filed last summer and Interjet last week.  Funny enough, and although certainly not ready in 2022, the Felipe Ángeles international airport seems to be proceeding as planned.  It seems that the airport will cost about MXN 89 billion pesos -- so far if you consider that the "old" new airport had a total bill of US$ 7 billion, you can see that this airport is cheaper (if you disregard the cost of new roads and rail links that are needed.  It would appear that the new airport will cost around MXN 110 billion to 120 billion in total including road and rail links (in US$ terms between 5 and 6 billion).   For now that seems to be a win! Dos Bocas...

 I was first introduced to Chinese companies listing on the Canadian stock exchange about a decade ago when my then boss asked that I pitch to Chinese companies to list on the TSE.  To say that I was dubious would be an understatement and further proved that many of my then colleagues didn't take their fiduciary duties very responably.   The first thing you need to know is that there is no such thing as audited financial statements in China.  The concept of "verification and certification" simply doesn't exist. Case and point: Sinoforest was covered by all the big Canadian brokers, who all certified that they visited the company in China and saw their sawmills and everything.   First lie:  They visited the head office...actually the image on the annual report (and the address in the annual report) is placed at which Sinoforest never even had operations.  So these analysts failed the first test; take the annual report, look at the last page, a...