When “Cash Becomes King” . . . .

[foragefarmer]

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!

[errolanderson]

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 . . . .

[errolanderson]

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.

[seldomseen]

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.

[GDR]

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.

[ajl]

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.

[jazz]

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.

[tmyrfield]

https://business.financialpost.com/news/fp-street/new-bail-in-regime-for-canadian-banks-will-ease-burden-on-taxpayer-in-case-of-crisis https://business.financialpost.com/news/fp-street/new-bail-in-regime-for-canadian-banks-will-ease-burden-on-taxpayer-in-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?

[Guest]

and where would you store it ?
what do you think would happen to the stock market the day a bail in happened?

[ajl]

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.

[macdon02]

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

[SASKFARMER]

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.