Asset Reset Guaranteed

[Crestliner]

Given the catastrophic events witnessed the last 7 days, there is no doubt that COVID-19 has dealt a body blow to the World’s Economy and to ours right here at home and it has just started.

The depth of the reset will be determined by how long it takes to find a Vaccine or at the very least a dependable the****utic treatment to recover from contracting the virus. Vaccine is a long ways away it seems.

Trillions are being wiped out....some of into people hands (the shorts) most of it to thin air (the longs).

When your land has gone from 1000$ per acre to 2000$ per acre in the last 10 years...and you still grow 40 BPA of wheat at $6.00 per bushel....yah that $1000 is called AIR! It’s only real when you cash out and make the $2000 an acre someone else’s problem.

80 percent of small business will be decimated...only critical business will survive. Everything is going to get real now. No more climate issues...surviving is king now. Governments are going to print shiploads of cash to try and stabilize until the ink runs out. Deflation will still win and value will be the new word in the business news.

Thankfully Ag is critical but not immune to deflation but has value. The question is what value. The more complex things are the more fragile they are...farming finances are always complex and are super fragile now and will loose value.

We could see a pull back of 30 percent land and equipment costs in the next months and years...maybe worse we don’t know. Short term money will be easy 6 months to 1 year....long term money will be hard....bond sales will not be easy to find buyers and there will be resistance to the coupons.

So how many out there today want to pay $1.5 million for less than a section and pay the highest price in history.....or a $700K combine? How many want to outbid the neighbour and pay record price on rented land today...or maybe I have enough this year? The screw is turning and you will be getting calls from people to see if you want to buy and or rent....sooner or later.

Look at buy and sell....huge amounts of stuff coming online to sell to raise cash...it’s gonna get worse. I’m sorry to say.

[ajl]

The biggest question is: have the central banks shot their last round of ammo or not? Rates are now zero again. Europe has experimented with negative rates and they created more problems then they solved over there so is it the market's turn to sort it all out now or not. If it is then expect the repricing to get serious.

[helmsdale]

The speculative economy is DEAD!

Real Estate? She's in the process of crashing on all levels. Reading that:

Bloomberg reports that the Canada Pension Plan Investment Board's planned sale of a 50% stake in the 900 million pound Nova development in London’s Victoria district collapsed on Friday. Similarly, Singapore-based ARA Asset Management Ltd., which was lined up to purchase the pension fund’s half of Nova, has balked on the deal.

Viacom also announced last week that it's suspending its plans to sell the Black Rock building in Manhattan because potential buyers can't visit the property. Simon Property Group's proposed acquisition of Taubman Centers, Inc., is also now up in the air.

More than $13 billion in funds in the UK has been frozen in property funds while appraisers warn that the virus makes it impossible to assess their value. China's office market has been devastated with plunging rents and spiking vacancy rates, which could climb as high as 28% next year in Shanghai, according to estimates.

REITs in the U.S. have been destroyed. Names like Brookfield Property Partners, which made a $15 billion bet on malls in 2018, expects "severe consequences" in coming weeks. The company's CEO says it has $6 billion in undrawn credit lines and cash."

Also:

As the uncertainty grows, the level of credit available begins to shrink. Financing has dried up for hotel, mall and senior living projects and it's estimated that up to 15% of loans on commercial property could default over the next couple of years if the recession continues. The value of commercial mortgage-backed securities is collapsing...

How many "investors" had clamored into farmland? How many estates were "living the dream" watching their underlying asset increase by double digit percentage points every year?

The Game has changed! I'll be amazed if Farmland doesnt follow suit!

[Guest]

Given the catastrophic events witnessed the last 7 days, there is no doubt that COVID-19 has dealt a body blow to the World’s Economy and to ours right here at home and it has just started.

The depth of the reset will be determined by how long it takes to find a Vaccine or at the very least a dependable the****utic treatment to recover from contracting the virus. Vaccine is a long ways away it seems.

Trillions are being wiped out....some of into people hands (the shorts) most of it to thin air (the longs).

When your land has gone from 1000$ per acre to 2000$ per acre in the last 10 years...and you still grow 40 BPA of wheat at $6.00 per bushel....yah that $1000 is called AIR! It’s only real when you cash out and make the $2000 an acre someone else’s problem.

80 percent of small business will be decimated...only critical business will survive. Everything is going to get real now. No more climate issues...surviving is king now. Governments are going to print shiploads of cash to try and stabilize until the ink runs out. Deflation will still win and value will be the new word in the business news.

Thankfully Ag is critical but not immune to deflation but has value. The question is what value. The more complex things are the more fragile they are...farming finances are always complex and are super fragile now and will loose value.

We could see a pull back of 30 percent land and equipment costs in the next months and years...maybe worse we don’t know. Short term money will be easy 6 months to 1 year....long term money will be hard....bond sales will not be easy to find buyers and there will be resistance to the coupons.

So how many out there today want to pay $1.5 million for less than a section and pay the highest price in history.....or a $700K combine? How many want to outbid the neighbour and pay record price on rented land today...or maybe I have enough this year? The screw is turning and you will be getting calls from people to see if you want to buy and or rent....sooner or later.

Look at buy and sell....huge amounts of stuff coming online to sell to raise cash...it’s gonna get worse. I’m sorry to say.

The $3000 /ac land ship is just leaving the dock here

[MBgrower]

i dont think farm land values will go down that much, if at all. If a farmer can make any kind of profit on a new piece of land, there will be demand for it and there are plenty of equity rich farms still willing to expand the base, at least around here. As for machinery, new costs never go down, manufactures either scale back production, and small ones go out of business. As for used machinery, with an exchange rate of 1.45, i would suspect USA farmers are going to be buying lots of cheap CDN equipment, so that should support prices.

[furrowtickler]

Let’s give a big hand clap to those in power that let this get out of control , both in the Canada and the U.S.
The powers that be knew a while ago , that’s the sad part .

[jazz]

There is a flight of capital to safety so things like gold, land and USD are the prime beneficiaries. Interest rates to the bone, I dont see land going down much. But the profit margin on that land could be wobbly.

China will be going offline for our commodities. Probably trade with Russia. They will be a shadow of themselves after this. US will disconnect and Canada will be forced to do the same and doubtful they will buy anything from the west.

[Austrian Economics]

Negative interest rates will be here soon enough. But not everyone's mortgage interest resets instantly. How you fare depends on if you can take advantage of the bottoming in rates or not.

As for land prices, this is really difficult to say. In the years around 2008, the rise in land values stalled out, but not for long. That fits with the idea that as interest rates fall, land prices rise.

The ability of foreigners to continue to buy our commodities is questionable now. If no one can afford them, the price has to fall.

[Ab7]

Negative interest rates will be here soon enough. But not everyone's mortgage interest resets instantly. How you fare depends on if you can take advantage of the bottoming in rates or not.

As for land prices, this is really difficult to say. In the years around 2008, the rise in land values stalled out, but not for long. That fits with the idea that as interest rates fall, land prices rise.

The ability of foreigners to continue to buy our commodities is questionable now. If no one can afford them, the price has to fall.

Will the tsunami of government spending cause interest rates to rise at some point due to inevitable inflation?

[15444]

Anyone priced out rate on mortgage lately? Neighbor kid wants to build new and both Royal and CIBC told him they weren't interested in doing anything at less than 5%.

[Austrian Economics]

Will the tsunami of government spending cause interest rates to rise at some point due to inevitable inflation?

Central banks will step into the bond market and snap up, directly or indirectly, enough government debt such that interest rates on government debt won't rise.