‘The Great Financial Writeoff’

[Rareearth]

Much appreciate your insight and comments Errol.

It’s easy to point out problems, the wise know the solutions, and the smart do something about it.

I am curious as to your solutions, and what if scenarios, with implications and opportunities,
- short the Bond markets
- buy real assets, land - many have done that and now it’s unsustainable
- housing many are predicting it to burst, yet people have to live some where
- commodities grains, funds were pouring money in as it was safe, tradeable, liquid etc seems the funds found stock market again
- will we see return by the funds into grain markets, more so and longer than before?
- stock markets, why can’t they go higher? And if they crash or fall into long steady, slow decline where will the money go?
- metals, gold? Investment or just every day commodities used in manufacturing
- crypto’s, threat or opportunity, face book thinks opportunity, and they have been right more than most the last 10 years


I’m interested in the cause and effects, risks and opportunities for my farming business.

[errolanderson]

Errol, you must be really rich by now. If you are so damn convinced the sky is falling, short the bond market. Short everything- go for it!

Again, my apologies for touching-a-nerve, but markets are always right, not opinion . . . .

Markets are now in the process of telling investors the true health of financial markets. Central bankers have failed miserably, talking up inflation until recently and pretending economies are healthy enough for rate hikes. QE has been a failure fixing nothing while producing producing far more capital than available investments. This created the U.S. stock market bubble. Simply, a parking lot for money struggling to find a home.

It’s not my intent to stir the pot, it’s my intent to offer opinion ‘outside’ of the political and banking sector that is directly tied to the health of ag business. If this motive is an insult to Agvillers, then it is time to leave this forum.

[GDR]

Again, my apologies for touching-a-nerve, but markets are always right, not opinion . . . .

Markets are now in the process of telling investors the true health of financial markets. Central bankers have failed miserably, talking up inflation until recently and pretending economies are healthy enough for rate hikes. QE has been a failure fixing nothing while producing producing far more capital than available investments. This created the U.S. stock market bubble. Simply, a parking lot for money struggling to find a home.

It’s not my intent to stir the pot, it’s my intent to offer opinion ‘outside’ of the political and banking sector that is directly tied to the health of ag business. If this motive is an insult to Agvillers, then it is time to leave this forum.

Keep the comments coming, always welcome.


In this scenario won't the money keep flowing to the stock market and gold. I cant beleive the fund managers and the wealthy would settle for negative or even flat returns for more than short term. Would be pretty risky for funds to post consecutive losses, customers would be jumping ship even if the alternative isn't any better.

[bucket]

...."...but markets are always right..."


Can you explain those markets? Are they the markets where 27 billion of government money has been committed and more to come as the trade war goes on....

Or is it that steel market in Canada that gets its tariff money back in the form of a subsidy and they continue with higher steel prices????

Or is it that market where every so called capitalist gets a government cheque for creating a few jobs....

Or is it that market where again those so called capitalists need the government to implement a TFW program because the capitalist won't pay for labour....since it reduces shareholder dividends...capitalists are welfare bums....


Where is this market that is always right...sounds like the government is always involved in the market...

The one exception is western canadian primary production....we are such noble people ...we pat ourselves on the back for using equity against government's treasuries that are impacting our markets that are...." always right " That's a bullshit statement....



You have to also believe in Santa Clause , the tooth fairy , the easter bunny,,,and unicorns....

[Rareearth]

Yes Errol keep it coming.

Buffet seems to favor ownership through stock markets, and Pattison buys companies outright for control?

Every one has their preferences.

I like to invest in my lively hood, what I understand, work life balance etc., yet government and politics is the main risk. Is it worse with Ag than with other businesses or industry?

[AlbertaFarmer5]

The key takeaway here is that this is global, not isolated. Hyperinflation happens when it is one country who prints to pay off debts in foreign currency and the market then loses all faith in its currency and governance, quickly spiraling out of control. In that case there are alternatives, so no one holds or accepts the hyperinflating currency, instead trading it for another currency, or hard assets as fast possible before it is even more worthless.
When it is occurring to all major economies at once, there are no alternatives, just some are really bad, and others just terrible, making it quite sustainable for longer than anyone thinks possible.

In this case, everyone is offering negative rates, and many pension funds are mandated to hold government debt, plus other asset classes are deflating.

[sumdumguy]

It is easy to comment on monetary and macro policy as opinions are free and welcome but as Rareearth says, “where’s the solution”? Opinions of “sky is falling” are cheap and are perpetual - I had a father who spent his life preaching the “sky id falling” theory. Thank God he never lived what he preached - we would be working at Walmart today.

[macdon02]

Keep the comments coming, always welcome.


In this scenario won't the money keep flowing to the stock market and gold. I cant beleive the fund managers and the wealthy would settle for negative or even flat returns for more than short term. Would be pretty risky for funds to post consecutive losses, customers would be jumping ship even if the alternative isn't any better.

Yes capital will shift in my opinion from bonds to equities, what isn't regulated by govt. Regulation was put in place in 2008 that a certain % (up to 40~) as bonds were deemed "safe". They have no choice. SEE THE PROBLEM? That's whats unique today compared to previous. The sheer size of the bond market is overwhelming, if there was a mass exodus it would double triple quadruple commods currency and equities, i have no idea the exact impact but it's massive.
Then you need to look at the industries that place their entire holdings in bonds in short term and overnight, banking, insurance, etc. and the consequences of having them wiped out. In my opinion it isn't what the fed does that'll be the next trigger it'll be the ECB and Japan. The difference between now and previous is the cb's are out of bullets. Nobody knows how it'll unfold exactly. Look at the breakouts above long term resistance on a monthly level for clues. When govts can't borrow at any price the results are not pretty as contagion sets in like '08 equities and commods, it's almost automatic a 62% cut. This is only theory, however it won't resemble anything in our lifetime. Could be 1929 or 1800's when states last defaulted.

[Rareearth]

Expect lower interest rates with bond market problems?


German 30-Year Bond Yields Goes Sub-Zero for First Time: Germany’s bond market is widely perceived as being one of the world’s safest as investors are lured in by the liquidity and credit quality offered. Now, the Euro area’s biggest economy joined Denmark and Switzerland in the region in offering negative returns to investors, taking the total stock of investment-grade debt yielding less than 0% to $14 trillion globally. I should mention, funds looking to extract a positive return from European sovereign assets have been forced further out the yield curve or into riskier debt markets such as Italy. I suspect this will most likely raise the probabilities of the next U.S. rate cut coming in September

[macdon02]

There's a stampede for the lowest currency happening, China started talking of a 6.9 peg and market immediately went over 7. New Zealand has now cut 50bps and its currency dropped 1%, India cut 35bps, the Aud has dropped. Gold was over 1500 briefly tonight and USD is hanging right in there on top end of resistance. Either gold or USD is making a false move, i have my suspicions but will wait for confirmation. This is gonna get interesting