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Jun 24, 2020 | 10:55 1 Strap-in . . . 2021 may be the year of corporate bankruptcies.

In the meantime . . . the NASDAQ hit an all-time high this week as the fatherland Federal Reserve is now providing total support to U.S. equity markets.

But the grain sector may be the least impacted. There are solid positives especially in the pulse sector with the reappearance of India and steady demand from China. Canola will remain a cashflow king. Wheat is having an ongoing struggle . . . corn lows may yet to be seen.

The cattle board would be impacted should the Fed shield be penetrated and reality strike equities. Feeders may want to consider price protection.

The loonie may climb further as the USD reserve status may be threatened. Gold is a wildcard with sharp gains and losses ahead.

But mom and pop shops are going to be hurt, may jobs will never come back, corporate mergers may be ablaze over the next five (5) years. The S& P index may be unrecognizable within the next five (5) years. Reply With Quote
Jun 24, 2020 | 11:18 2 I agree, it's hard to see a path for the US dollar to get stronger with all that is going on there right now.

But What do you see as a viable alternative? Reply With Quote
Jun 24, 2020 | 11:51 3 No country can challenge the reserve currency. If its replaced, it will be bcause the US chooses to replace it with something else.

Canada is headed for a BBB soverign debt status and with our oil patch decimated, that will eventually take the loon to 60 some cents.

The just in time model is dead and that might have an impact on food demand.
Last edited by jazz; Jun 24, 2020 at 11:53.
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Jun 24, 2020 | 12:06 4 The inverse of falling interest rates is rising equity prices. Not every stock, by a long shot, but enough that the broad market indices will continue to rise. Many stocks such as airlines and brick and mortar retail, for instance, will not be joining the party.

If grain prices remain at least stable, expect farmland prices to continue their rise, thus squeezing the margins of operators even further.

The reason is simple: markets will eventually figure out a way to broadcast signals that indicate the scale of the wanton destruction of capital that we are seeing today. In a normal market, that signal would be interest rates rising to the stratosphere. Since central banks now actively seek to mute that signal, the natural response is for the destruction of capital to be signaled by rapidly rising asset and real estate prices, a rise which is all out of proportion to the value they generate.

The U.S. dollar, being the world's reserve currency, could very well rise to new highs. Its collapse is not imminent. The main factor in its favor it that it exists in sufficient quantities to be used to execute transactions in the billions and trillions of dollars as are increasingly common today. The Euro is a distant second when it comes to quantity. Everything else is way down on the scale. Reply With Quote
Jun 24, 2020 | 12:50 5 There will be bombs and bullets flying before the US gives up the currency hold Reply With Quote
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  • Jun 24, 2020 | 13:47 6 As I predicted, Canada hasnt even done a fully accounting of the covid spending and fall out and our credit rating has already been cut.

    I wouldnt bet a red cent on trudeau.

    One of U.S.'s big 3 credit agencies downgrades Canada's credit rating Reply With Quote
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  • Jun 24, 2020 | 14:05 7 The sad part is the liberals chose to not to support farmers that can be a real economic boost to the country...

    1 in 8 jobs you know depend on agriculture....more like 1 in 5 right now...

    And our products are wealth creators and make it to all parts of the world...

    Supporting agriculture is a key part of almost any other country in the world economic plan ... Reply With Quote
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  • Jun 24, 2020 | 14:09 8 Ain’t got time to look at reasons but sea of red this morning thurs 5.30 am grain metals currency and livestock Reply With Quote
    Jun 24, 2020 | 14:47 9 Thanks Jazz and Austrian, Whenever I hear a dollar bear prognosticating about the demise of the USD always have to ask. I've yet to have anyone show a well reasoned path to any other form of wealth replacing the USD. Reply With Quote
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  • Jun 24, 2020 | 14:58 10 David Rosenberg is kind of a doomer but he makes a couple valid points in these articles.
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    It may be true that the federal government went into this mess with a seemingly well contained debt-to-GDP ratio of 31 per cent, but for the entire economy, at all public and private sector levels, that ratio is an unprecedented 350 per cent. Canada in aggregate doesn’t have a AAA-rated balance sheet to begin with and now Ottawa has to somehow shoulder a good chunk of these liabilities.

    Italy’s debt ratio is 360 per cent and its credit rating is BBB. Greece is 340 per cent and it is rated BB-. Spain’s debt ratio is 360 per cent and it has a BBB ranking. And China is at 290 per cent and has an A+ rating by S&P. So Canada, even as it stands, deserves a AAA sovereign rating based exactly on what criteria?

    “It will be interesting to see how a central bank which does not govern the world reserve currency and a country with a massive balance of payments deficit can ensure that all these generosity are reflected in the balance sheet of the BoC” without compromising the trusted by global investors, he said.
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    The Canadian dollar will fall and this time it will stay there. Our debt, low productivity and demographics make us very similar to some of the PIIGS in Europe. Had we grabbed the bull by the horns and went after our resources and supported bedrock sectors this could have been avoided.
    Last edited by jazz; Jun 24, 2020 at 15:01.
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    Jun 24, 2020 | 20:47 11
    Quote Originally Posted by jazz View Post
    David Rosenberg is kind of a doomer but he makes a couple valid points in these articles.
    -----
    It may be true that the federal government went into this mess with a seemingly well contained debt-to-GDP ratio of 31 per cent, but for the entire economy, at all public and private sector levels, that ratio is an unprecedented 350 per cent. Canada in aggregate doesn’t have a AAA-rated balance sheet to begin with and now Ottawa has to somehow shoulder a good chunk of these liabilities.

    Italy’s debt ratio is 360 per cent and its credit rating is BBB. Greece is 340 per cent and it is rated BB-. Spain’s debt ratio is 360 per cent and it has a BBB ranking. And China is at 290 per cent and has an A+ rating by S&P. So Canada, even as it stands, deserves a AAA sovereign rating based exactly on what criteria?

    “It will be interesting to see how a central bank which does not govern the world reserve currency and a country with a massive balance of payments deficit can ensure that all these generosity are reflected in the balance sheet of the BoC” without compromising the trusted by global investors, he said.
    ----
    The Canadian dollar will fall and this time it will stay there. Our debt, low productivity and demographics make us very similar to some of the PIIGS in Europe. Had we grabbed the bull by the horns and went after our resources and supported bedrock sectors this could have been avoided.
    Unless the U.S. can get control of COVID, the American economy is at serious risk heading into 2021 . . . including further fallout in the USD. Alternate currencies could gain further strength (IMO). Our projected range for the spot loonie heading into the fall market is a range of 73 cents to 76 cents U.S. Reply With Quote
    Jun 25, 2020 | 06:49 12 Fed buying junk bonds, now rumblings on Wall Street . . . Fed may start buying stocks. Fed actively buying companies with horrible balance sheets. President metric is focused on just one number . . . stock market index, no matter how falsified.

    Meanwhile in reality land . . . . Reply With Quote
    Jun 25, 2020 | 07:06 13
    Quote Originally Posted by errolanderson View Post
    Fed buying junk bonds, now rumblings on Wall Street . . . Fed may start buying stocks. Fed actively buying companies with horrible balance sheets. President metric is focused on just one number . . . stock market index, no matter how falsified.

    Meanwhile in reality land . . . .
    If the fed starts buying these over inflated stocks. It will be a blood bath. What has Tesla done to get where it is from March? Reply With Quote
    Jun 25, 2020 | 07:37 14 The Quebec government pension plan is actively seeking to buy stock in bankrupt companies like Aldo and others. I always thought pension plans should strive to get value for retirees instead of destroying their capital. But I guess this is the new normal. Sigh. Reply With Quote
    Jun 25, 2020 | 07:58 15
    Quote Originally Posted by Austrian Economics View Post
    The Quebec government pension plan is actively seeking to buy stock in bankrupt companies like Aldo and others. I always thought pension plans should strive to get value for retirees instead of destroying their capital. But I guess this is the new normal. Sigh.
    Look at Sears...investor groups raided them instead of making them more competitive against Amazon ....then the retirees got shit on....and recently they sold some logistics to Costco for a billion ,,,,doubt they are funding the retirees. Reply With Quote
    Jun 25, 2020 | 11:23 16
    Quote Originally Posted by bucket View Post
    Look at Sears...investor groups raided them instead of making them more competitive against Amazon ....then the retirees got shit on....and recently they sold some logistics to Costco for a billion ,,,,doubt they are funding the retirees.
    Sears got into trouble to a large extent due to their defined benefit pension plans. These work in a stable and sustainable interest rate environment. We haven't had that since 1971. In an environment where interest rates are going to zero and beyond defined benefit pensions will simply collapse. Reply With Quote
    Jun 25, 2020 | 11:59 17
    Quote Originally Posted by Austrian Economics View Post
    Sears got into trouble to a large extent due to their defined benefit pension plans. These work in a stable and sustainable interest rate environment. We haven't had that since 1971. In an environment where interest rates are going to zero and beyond defined benefit pensions will simply collapse.
    But only after the unions bankrupt the taxpayers and the companies who they forced into funding them. Reply With Quote
    Jun 25, 2020 | 12:31 18 Was FCL employees on a defined benefit plan and fully funded by Federated?

    I know who was funding it was an issue but unsure of what type of plan it was Reply With Quote
    Jul 8, 2020 | 07:01 19 WHEN DESPERATION MEETS GREED . . . .

    JP Morgan stated this past week . . . The world is drowning in so-much debt that there is 'no chance' of the stock market going down. Now, this is actually a major U.S. bank making this statement . . . .

    The U.S. Federal Reserve has now totally erased all signals to the market. The Fed rules everything, at the cost of everything (IMO). Nothing matters economically. Stocks will simply continue to go up widening the income gap, because the Fed is only focused on liquidity, not jobs or actual economic growth. Stock market indexes now appear to be the key metric of success for the White House.

    Meanwhile, the USD is at-risk of losing its reserve status. Some commodities may no longer be priced in USD. And Powell caved despite unavoidable incoming consequences of 'desperation now meeting greed' (IMO) . . . .

    These changes are now coming-in-strong. Meanwhile, the NASDAQ is again at record highs . . . . Reply With Quote
    Jul 8, 2020 | 07:10 20
    Quote Originally Posted by errolanderson View Post
    JP Morgan stated this past week . . . The world is drowning in so-much debt that there is 'no chance' of the stock market going down. Now, this is actually a major U.S. bank making this statement . . . .
    . .
    Go at that from a different angle Errol, the major pension plans are all invested in the markets including our own CPP.

    I would say asking for a reality check in the markets would be a disaster of biblical proportions at this stage. Reply With Quote
    Jul 8, 2020 | 07:13 21 Which commodities and which currency are you hearing Errol? That's a fun scenario to run, just not sure it's possible without a default of sort by govt of insurance and then it'll likely require a replacement for the swift system, which has been talked about forever Reply With Quote
    Jul 8, 2020 | 07:16 22 Errol at present there are many industries like the Airline industry, the retail industry, the restaurant industry even oil exploration that are all in serious trouble with questionable paths to recovery. The stock markets are certainly disconnected from reality as is our federal government and its illustrious leader! Reply With Quote
    Jul 8, 2020 | 07:18 23
    Quote Originally Posted by jazz View Post
    Go at that from a different angle Errol, the major pension plans are all invested in the markets including our own CPP.

    I would say asking for a reality check in the markets would be a disaster of biblical proportions at this stage.
    jazz . . . yes Reply With Quote
    Jul 8, 2020 | 07:29 24
    Quote Originally Posted by errolanderson View Post
    jazz . . . yes
    Easy fix, nationalize everything. Welcome to mother Russia. Ottawa wants the crash so they can seize it all. Banks, pensions, oil, pipelines, everything. "We don't need no stinking private investment, we got a printer." Stay at home and watch netflix, that's what we are paying you for. Reply With Quote
    Jul 8, 2020 | 07:32 25
    Quote Originally Posted by macdon02 View Post
    Which commodities and which currency are you hearing Errol? That's a fun scenario to run, just not sure it's possible without a default of sort by govt of insurance and then it'll likely require a replacement for the swift system, which has been talked about forever
    Oil is the only commodity proxy for the reserve currency of significance and it wont matter anymore because the US soon wont be buying any outside NA ever again. Who cares what currency Russia and china trade in.

    US is about to take top spot in the oil market and not look back. Not great news for Canada. If I was Kenny I would be making a trip to Washington very soon.
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    In its latest annual report of world recoverable oil resources, Rystad Energy finds that the United States currently holds 293 billion barrels of recoverable oil resources. This is 20 billion barrels more than Saudi Arabia and almost 100 billion barrels more than Russia. Rystad Energy’s estimate of US recoverable oil is also five times more than officially reported proven reserves as published in the BP Statistical Review of World Energy 2019.
    Last edited by jazz; Jul 8, 2020 at 07:34.
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    Jul 19, 2020 | 09:39 26 Rumblings now . . . the U.S. Fed might enter the market as a major buyer of stocks soon. The target: maintain the artificial support of the S &P 500 at any cost. The Fed must maintain the VIX volatilty index artificially low, at the expense of market integrity.
    There is really no need for stock market analysts anymore. Valuations mean little.

    The Fed will effectively own the entire U.S. financial market. Zombie companies can rejoice and continue to maintain-a-lifeline to nowhere . . . .

    What we all learned in Economics 101, doesn’t apply in today’s manipulated financial world. The only thing that will hold true is the final outcome.

    The rules of this game keep changing at the whim of the Fed . . . . Reply With Quote
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  • Jul 24, 2020 | 09:10 27 As David Rosenberg (economist) stated this week: "The stock market no longer thinks it needs the economy, if it has the Fed"

    But economic reality does have a say. Strap-in. Equity markets may be in for some rough August waters . . . . Reply With Quote
    Jul 24, 2020 | 09:41 28
    Quote Originally Posted by errolanderson View Post
    As David Rosenberg (economist) stated this week: "The stock market no longer thinks it needs the economy, if it has the Fed"

    But economic reality does have a say. Strap-in. Equity markets may be in for some rough August waters . . . .
    I give USD to about 93.2 max and it's gonna look pretty ripe for a long term buy and hold, looking for a macro shift, gold topping out and equities flush, might be all she wrote for this grain rally as well. Wait and see. Reply With Quote
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  • Jul 24, 2020 | 10:08 29
    Quote Originally Posted by errolanderson View Post
    As David Rosenberg (economist) stated this week: "The stock market no longer thinks it needs the economy, if it has the Fed"

    But economic reality does have a say. Strap-in. Equity markets may be in for some rough August waters . . . .
    Errol in March 2009 in the height of the financial crisis, the fed pumped in big liquidity and bailouts and that continued for several yrs even thought the real economy didn't recover until 5 or 6 later. The equity market barely noticed and kept rising. Inflation in consumer essentials already locked in. Reply With Quote
    Jul 24, 2020 | 14:46 30 The biggest concern of any central bank is the solvency of the banking system. They really don't care if stocks (or gold) rise steeply in value. Their principal concern is to avoid having the credit system lock up, as it did in 2008 and again in early 2020. They will buy stocks (or more likely ETFs) if they think that by doing so they can avoid solvency problems with large companies and the banks that they borrow from. They won't do it just to see stocks go up.

    The end game comes when the central banks have to absorb so much bad debt that they themselves become insolvent (liabilities dwarf assets). Reply With Quote