When “Cash Becomes King” . . . .

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When “Cash Becomes King” . . . .

Dec 11, 2019 | 01:43 1 Credit Suisse now issuing heavy caution of increased risk of sharp equity market correction . . . soon.

Repo (short-term) bank leading fire that the Fed is battling nightly with massive capital injections is not being controlled. Bank liquidity concerns are forefront.

Fed is now massively printing money via repo emergency injection and according to Credit Suisse, Fed may officially call it QE4 within the month. Fed rate cuts no longer have any impact (IMO). China now experiencing incoming bond market defaults.

Dennis Gartman parting words in his last newsletter . . . Get into cash.

Buffet apparently holding a large cash position.

Demand for equity market put options apparently surging as a protective hedge for large wealth positions.

Is this the big one or not? Have been watching this central bank manipulated financial situation explode to insane levels for several years now. But even the big boys are now starting to bark . . . .

One thing for sure, The Fed has built “one hell of a deck-of-cards” since the financial crisis of 2008. I’m concerned, your thoughts? . . . .
Last edited by errolanderson; Dec 11, 2019 at 01:47.
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Dec 11, 2019 | 02:35 2 Not answering your question but old saying ag first into recession first out this gonna put downward pressure on grain.

And stating the obvious grain bought on credit with LCs poorer counties have to be able to pay for it.

Enter stage right Russia with all sorts of deals for impoverished countries/buying agencies

Hopefully not to of topic mate

Geez I’d love to see a combine drop 20% in price overnight yep I’m in La La land Reply With Quote
SASKFARMER's Avatar Dec 11, 2019 | 06:12 3 Canada is in a recession right now.

Slowest Xmas will be this year for retailers.

Go to a dealership and see how many are working sitting in there office or wondering what day the layoffs are coming.

Farmers are in a tight pickle you can see it.

Business is also having issues.

Gov can't keep going into debt. Canada has hit the Trillion. Reply With Quote
Dec 11, 2019 | 08:08 4 The big one?

Wake me up when the looting starts... Reply With Quote
Dec 11, 2019 | 08:13 5 Personally, don't see any U.S. / China deal by Trump's Dec 15th deadline. This has turned into a staring match.

Some U.S. analysts say button-up your long positions, whether grains to oil to equities. There is risk of a broad-based commodity market pullback should nothing happen. But then again, any positive movement by Saturday nite would give markets a kick higher . . . but rallies won't hold regardless (IMO). Reply With Quote
biglentil's Avatar Dec 11, 2019 | 08:19 6 The Fed has unfettered access to the printing press. Imagine you are playing the boardgame monopoly and everytime someone runs outa cash to pay debt the central banker hands em another wad of cash. The game would carry on and on and on. In the last 50 years the dollar has lost 95% of its purchasing power, but the game keeps on chuggin along.
Last edited by biglentil; Dec 11, 2019 at 08:26.
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  • Dec 11, 2019 | 08:48 7 Errol, you use the word, “cash”. What is cash in today’s world? Cash in hand, money in the bank, liquid collateral? Reply With Quote
    Dec 11, 2019 | 09:05 8
    Quote Originally Posted by sumdumguy View Post
    Errol, you use the word, “cash”. What is cash in today’s world? Cash in hand, money in the bank, liquid collateral?
    And in what currency? Reply With Quote
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  • Dec 11, 2019 | 09:10 9
    Quote Originally Posted by sumdumguy View Post
    Errol, you use the word, “cash”. What is cash in today’s world? Cash in hand, money in the bank, liquid collateral?
    Available liquidity whether cash in-hand, in cash accounts. Asset devaluation strengthens the position of cash. Availability to purchase assets for pennies on the dollar as this financial crisis takes deeper hold into 2020. This is already occurring.

    Debt no longer generates growth in many industries, it has become a heavy liability, despite cheap money. Many promote gold. But the weakness of gold (IMO), deflation is its enemy. Gold thrives during inflationary times. Gold struggles to maintain rallies in a deflationary environment.

    This will be very hard on the consumer debt-driven banking industry. Fallout already in-progress . . .

    My two-bites . . . . Reply With Quote
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  • Dec 11, 2019 | 09:13 10 Buffet has indeed been sitting in cash, and is missing out on a massive bull run. Far underperfromed the broader market:
    https://www.cnbc.com/2019/11/01/even...-a-puzzle.html
    https://economictimes.indiatimes.com...8.cms?from=mdr

    Errol, I do appreciate you bringing actual economic information and starting the discussions here. It is such a pleasant change from the usual global warming Trolls. But, have you taken the time to check back through some of your old posts, to see how your track record has been for forecasting deflation, and stock market collapse? I just went as far as 2012, and didn't see any optimism all the way. In fact, in early 2012, with the DJIA at way less than half of today's value you were still warning about a stock market crash and related deflation. Climbing a wall of worry has never seemed as applicable as it does in this market, but relentlessly climb is all it does.
    Last edited by AlbertaFarmer5; Dec 11, 2019 at 09:15.
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  • Dec 11, 2019 | 09:46 11
    Quote Originally Posted by AlbertaFarmer5 View Post
    Buffet has indeed been sitting in cash, and is missing out on a massive bull run. Far underperfromed the broader market:
    https://www.cnbc.com/2019/11/01/even...-a-puzzle.html
    https://economictimes.indiatimes.com...8.cms?from=mdr

    Errol, I do appreciate you bringing actual economic information and starting the discussions here. It is such a pleasant change from the usual global warming Trolls. But, have you taken the time to check back through some of your old posts, to see how your track record has been for forecasting deflation, and stock market collapse? I just went as far as 2012, and didn't see any optimism all the way. In fact, in early 2012, with the DJIA at way less than half of today's value you were still warning about a stock market crash and related deflation. Climbing a wall of worry has never seemed as applicable as it does in this market, but relentlessly climb is all it does.
    You are right AlbertaFarmer, but the market has been highly manipulated by central bankers. As an analyst, you can see the curve in the road, but how long to get to the curve is a different story. Just like in the movie "The Big Short" the incoming mortgage crisis could be seen well in advance, but it took 2 extra years before fallout began. A lot of toe tapping in-wait . . . .

    I'm a believer that true economics ALWAYS prevails, not matter how much central bank manipulation occurs. Yes, this process has taken much longer and the stock market is now artificially supported by money printing with insane valuations and this has contributed to the current wildfire repo crisis. But in reality, central bank Keynesian economics (taught in all financial schools) this has made the big picture economic situation far worse. 'Feed me now' is going to take a toll on the next generation's standard of living.

    In 2015, I did pen an article for Country Guide on incoming deflation . . . a word that was unheard-of at the time. Call me wrong . . . but in my mind, not a chance . . . this dance is beginning in-earnest. Reply With Quote
    Dec 11, 2019 | 09:48 12 Errol

    With the impending doom about to happen how will this affect agriculture in regards to grain prices ...they can't really drop further or there will be a lot of hurt???? Reply With Quote
    Dec 11, 2019 | 10:29 13 Eight years of predicating doom and gloom! Who are you and what credentials do you have to make these economic assertions. Are you a professional financial adviser? Have you personally had any success timing the markets while taking your own advice?

    If you have been taking your own advice, what has that CASH you have held on hand earned you since 2012?

    You mention Buffet for the first time in your economic synopsis that he is now holding a large amount of cash, what was he doing the last eight years, hoarding cash waiting for the big crash? No the majority of the time he as buying Blue Chips!

    Yes there may be some sort of a correction to come, but for coming Agriville with your monthly predication of a cash is coming is like crying wolf over and over again! Reply With Quote
    Dec 11, 2019 | 10:31 14
    Quote Originally Posted by bucket View Post
    Errol

    With the impending doom about to happen how will this affect agriculture in regards to grain prices ...they can't really drop further or there will be a lot of hurt????
    bucket, there will be rallies, but they won't hold in this environment.

    Be prepared to price grain as markets are moving up . . . if you wait for the peak it'll be too late. Green peas are hot right now, so is canary seed. Durum looks quite good, but coming off recent highs. Flax may be a sleeper depending on Kazakhstan final production. Keep close to your buyers . . . watch for those weekend texts for premiums to fill near-term sales. Sales will come and go.

    Without a China deal, beans appear vulnerable to near-term weakness. Moving grain will be a challenge this winter. Try to move where possible, bin quality a concern . . . you can always reopen the price ceiling with a broker . . . safer option plus it injects cashflow. Realize easier said than done . . . . Reply With Quote
    Dec 11, 2019 | 10:42 15
    Quote Originally Posted by foragefarmer View Post
    Eight years of predicating doom and gloom! Who are you and what credentials do you have to make these economic assertions. Are you a professional financial adviser? Have you personally had any success timing the markets while taking your own advice?

    If you have been taking your own advice, what has that CASH you have held on hand earned you since 2012?

    You mention Buffet for the first time in your economic synopsis that he is now holding a large amount of cash, what was he doing the last eight years, hoarding cash waiting for the big crash? No the majority of the time he as buying Blue Chips!

    Yes there may be some sort of a correction to come, but for coming Agriville with your monthly predication of a cash is coming is like crying wolf over and over again!
    forage . . . China commodity boom peaked in 2012 . . . it basically been all downhill since then. China consumes about 50% of global commodities. This was the beginning of deflationary pressures and slowing trade. I'm not making this up . . . this is now being reflected in local economies right now. Reply With Quote

  • Dec 11, 2019 | 10:55 16 I have been hearing CASH IS KING ever since the 2008 crash and as far as I could tell it never did become king.

    When i was young go into a dealership and they would go gaga when you offered cash for a deal and you would get a hot price. Since I heard cash was king in 2008 go into a dealership and they don't even care if its cash. They just want you to sign up for finance and the price is the same cash or not. Reply With Quote

  • GDR
    Dec 11, 2019 | 11:38 17
    Quote Originally Posted by seldomseen View Post
    I have been hearing CASH IS KING ever since the 2008 crash and as far as I could tell it never did become king.

    When i was young go into a dealership and they would go gaga when you offered cash for a deal and you would get a hot price. Since I heard cash was king in 2008 go into a dealership and they don't even care if its cash. They just want you to sign up for finance and the price is the same cash or not.
    That's because they get a kick back from the finance company now. The cash meaning is not about new purchase at dealerships it's about capitalizing on someone else's misfortune. One party needs to sell to pay bills or keep the doors open, today, not tommorrow or next week when the financing comes through. The guy with the cash is able to capitalize on the deal because they can deliver today. I see that all the time in everything from small item purchases way up to multi-million dollar land deals. As lending tightens up which it needs to the difference between today's price and the if I can get the loan price grows.

    Same applies to having your money tied up in investments, assets whatever if you can't liquidate fast enough you miss the opportunity. Reply With Quote
    ajl
    Dec 11, 2019 | 11:39 18 I guess we will see if cash is king at operating loan renewal time which starts in Feb. There is a lot of deflation out there if one was to open there eyes. I have pointed them out before and it is the reason there is a farm income crisis right now. Canola was $14 US in 2013 and is now $7.50. A lot of wheat is being sold for this winter for the same price as 1975. Local gas price at the pump is around 0.89 but has more tax in today than before so the rack prices are lower so plenty of signs of deflation if you care to look. Governments and there central banks have fought deflation 24/7 for more than a decade now so that is why there has not yet been a lot of it until recently but once the ball gets rolling it will be unstoppable. When is it time to go short? The right answer to that will be worth a lot. Will be interesting. Reply With Quote
    Dec 11, 2019 | 12:56 19 I wouldnt be holding too much cash. A few yrs ago the govt authorized bail in legislation where the bank can take personal savings and bail itself out if needed. Reply With Quote
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  • Dec 11, 2019 | 12:57 20 https://business.financialpost.com/n...case-of-crisis


    cash may be king but don't store it in a bank...
    in case you don't understand... a banks liabilities are the deposits that people and business have.

    Also ironic that they are saying that this is done to protect taxpayers...lol, just who in the world do they think have money on deposit? Reply With Quote
    Dec 11, 2019 | 13:11 21 and where would you store it ?
    what do you think would happen to the stock market the day a bail in happened? Reply With Quote
    ajl
    Dec 11, 2019 | 14:19 22 On a related matter Errol, when or do you see negative rates becoming reality in canuckistan? Have been giving a lot of though to how to restructure the portfolio if that becomes reality as I was thinking 3 years but now am not so sure. Reply With Quote
    Dec 11, 2019 | 16:37 23 Lol this repo mess has about 12 different tentacles and can be played multiple ways, unfortunately being dependent on the short term bond market isn't one of them. Deutsch bank is sitting on roughly 54 trillion of derivatives in currency and rates. Go watch the Big Short for definition of derivative. Here's the problem, GS, Citibank, Bank of America, everyone but Wells Fargo and JPM are counter party risk on that 54 trillion, and I mean everyone across the world. The Fed is losing control on short term rates, hence the spike to 10% in Sept. Canadian pension funds at Bank of Montreal, TD and Scotia are also involved indirectly but could become collateral damage. Govt regulated a 40% requirement back in 08 that pensions had to hold bonds. Merkel and the ECB is on record there will be no bailout of Deutsch or any other European bank. So if this thing lets loose, the account holders are on the hook. QE4 doesn't fix this as it's more of a structural issue then banks in US and Canada no meeting reserve requirements, they have enough deposits versus loans. So when liquidity crisis gets mentioned, it isn't North America directly thats at risk. This isn't at a retail level either, it's all institutional and out of our hands. Im skeptical that this will hit because it's been talked about so much, usually when this happens, the expected result is the opposite. Every dollar of credit we rely on resides in the bond market, along with insurance company holding. Anyone remember MF Global? The judge in New York took the account holders cash to bail in MF. So the precedent is already set we can lose cash in the deal. JPMorgan is unraveling their counterparty risk through tbills, why i mentioned they are not at risk, institutions have to pay tax on earnings starting on the 16th, usually everyone takes profit on yr end and the books get squared up on yr end but then where does the $ go? I can't explain this in less then a couple hour presentation as it reaches so far. Negative yielding bonds, there's 17 trillion of them and im guessing Deutsch is involved there as well, if the short term rates come unglued, and 20% wouldn't be out of the question but likely 8~% more likely, the 17 trillion in negative yielding bonds would revalue at 64% of initial value. If short term rates go, so will longs, then currency. Incredibly deflationary because you also have to remember every govt in the world is reliant on the bond market to function because they can't run a surplus. I truly can't get my head around it completely. The Fed is stepping in because JPMorgan is rebalancing, its almost dollar for dollar. There's rating involved as to cost for JPMorgan to borrow and that's likely somewhat a factor but my guess is they know Deutsch is going down, Merkel said no bailout, and their offices have been raided twice for documents. Again it's so much in the news i doubt it'll happen, but the safe haven might be a forward price contract spring delivery, and grain in the bin, assuming ABCD are not exposed in this mess, end of Q1 we could see pressure build again. It has the potential to be epic, sort of 10x of '08. Can you put a crop in the ground without credit through CCGA or input finance companies? Cash would be king in the above scenario
    Last edited by macdon02; Dec 11, 2019 at 16:51.
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    SASKFARMER's Avatar Dec 11, 2019 | 17:06 24 In my safe at 9999.00 every trip. Just kidding.

    I still believe in having cash around in a safe for you just never know kind of day.

    I do believe the USA dollar will come out as king and the Canadian will be like Mexico or Greece. Junk. Reply With Quote
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  • Dec 11, 2019 | 17:11 25
    Quote Originally Posted by SASKFARMER View Post
    In my safe at 9999.00 every trip. Just kidding.

    I still believe in having cash around in a safe for you just never know kind of day.

    I do believe the USA dollar will come out as king and the Canadian will be like Mexico or Greece. Junk.
    Unless like Poloz and Lagarde have mentioned, they outlaw paper currency to prevent hoarding and a bank run. We can still see 83cad ~. Transporting more then 10k through an airport will get it seized. The risk they run by banning cash, is a barter system getting established. "Cash is for criminals" was IMF talk I believe. They are trying to close the loops Reply With Quote
    Dec 11, 2019 | 17:14 26 rumour has it Goldman Sachs is bailing out Duetchabank in the overnight lending window.

    If that's true they are trying to avert a 2008 style meltdown.

    Two corrupt institutions, one bailing out the other. Even the fed won't lend to whoever that is at the repo window every night for 3 months. Think about that for a second. How insolvent do you have to be when the institution that can print money from thin air won't touch you. Reply With Quote
    Dec 11, 2019 | 17:50 27
    Quote Originally Posted by jazz View Post
    rumour has it Goldman Sachs is bailing out Duetchabank in the overnight lending window.

    If that's true they are trying to avert a 2008 style meltdown.

    Two corrupt institutions, one bailing out the other. Even the fed won't lend to whoever that is at the repo window every night for 3 months. Think about that for a second. How insolvent do you have to be when the institution that can print money from thin air won't touch you.
    The leverage of the deritives makes this unfixable even for a CB. Take a look at GS shares, there's weakness JPMORGAN isn't showing at present. GS is also tied up in Malaysia through selling them a deal govt is revolting on and it's in the courts, there isn't much that sticks to GS but they might get scorched, they did the same to Greece 3 times through bailouts before IMF or ECB stepped in(can't remember which). If the short term rates explode, govt budgets get blown out of the water as they are all in, just rotating it, ECB is buying 90% of all new issued govt debt in Europe and then there's Japan. At least the fed is letting bonds expire causing a slight shrink, ECB and JCB are rolling all govt debt into long and short term snowball effect. Reply With Quote
    Dec 11, 2019 | 18:06 28 Keep posting Errol. U are more realistic than most on here. The shit is gonna hit the fan just when who knows. I say not this winter but after the US election in 2021. They will do their best to keep the balls in the air until they just say phuck it. Can only kick the can down the road so long. Reply With Quote
    Dec 11, 2019 | 22:49 29
    Quote Originally Posted by foragefarmer View Post
    Eight years of predicating doom and gloom! Who are you and what credentials do you have to make these economic assertions. Are you a professional financial adviser? Have you personally had any success timing the markets while taking your own advice?

    If you have been taking your own advice, what has that CASH you have held on hand earned you since 2012?

    You mention Buffet for the first time in your economic synopsis that he is now holding a large amount of cash, what was he doing the last eight years, hoarding cash waiting for the big crash? No the majority of the time he as buying Blue Chips!

    Yes there may be some sort of a correction to come, but for coming Agriville with your monthly predication of a cash is coming is like crying wolf over and over again!
    I would say Errol has the credentials to back up what he preaches. If you don't know who he is, you should look him up. He is well respected in the ag community.

    A little taste of who Errol is:

    Experienced President (Pro market communications) with a demonstrated history of working in the market research industry. Skilled in Commodity Risk Management, Public Speaking, Commodity Pools, Market Research, and Project Management. Strong business development professional with a BSc Ag Economics focused in Commodity Markets from University of Alberta.

    At least he has the cahonees to put his thoughts and opinions out there for people to learn from.

    I have said it once, and will say it again. I believe Errol is 100% correct in his depiction of what is to come. It is just hard to time with the government fighting tooth and nail to prolong it from happening as long as they can. Reply With Quote

  • biglentil's Avatar Dec 11, 2019 | 23:00 30 Enjoy the good ole days while they last. Ignorance is bliss. The can will get kicked again and again. Cash is king and at least it will be better than no toilet paper at all. Try that with a gold coin. Reply With Quote