Farmer Diaries

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...