Economic News This Week

clip image00214 thumb

Earnings Reports This Week

clip image00212 thumb

Kathy Findlay is Vice-President and Investment Advisor at RBC Dominion Securities Inc. She will be presenting two workshops on this topic at the 2012 World Outlook Financial Conference this Friday and Saturday.

How much money, investment, real estate is enough?
Do you think about retiring, but aren’t sure when you can?
Can you imagine yourself facing any of these situations:

• Having to live off your existing assets
• Feeling uncertain that you are saving enough
• Feeling uncertain of where all your money goes each month
• Not understanding how your investments are allocated
• Feeling uncomfortable with your investment allocation
• Feeling overwhelmed by all the information you get via the press, email, your investment firm
• Wanting to provide for a disabled loved one
• Wanting to leave a legacy but unsure how to fund it
• Owning your own business and looking for an exit strategy

Answering the questions underlying these and many other issues can be accomplished through one single process:


Developing a Financial Plan

Join me at the World Outlook Financial Conference, where I will highlight real life stories of clients who have used Financial Plans to take charge of and change their financial futures:

– A retiring executive unsure of what life without work will look like
– A retiree concerned about outliving their savings
– Two busy medical professionals with no time and little interest in determining where to begin

Your personal Financial Plan is the most critical and crucial document you can have to empower yourself to take charge of your own financial future.

Join me on February 10th and 11th at the Westin Bayshore in Vancouver to learn more.

Interview starts at the 21:40 minute mark.

{mp3}Moneytalks – January 28 2012{/mp3}

“Now is the Time You Need Metals – Particularly Gold and Gold Stocks”

Steen Jakobsen, chief economist for Saxo Bank in Denmark has some interesting thoughts to share on gold and metals in an email update that just came in.

Steen writes …

Interesting session with Fed yesterday! Both the ECB and the FED have now clearly showed that the changed board of directors is far more willing to print money and keep rates low forever than ever before in a central banking history – which is probably not a good thing or is it?
It’s a wait and see game now – the FOMC action left plenty on the table for both the bulls and the bears. For the bulls this is ‘easy money’ for longer and low rates will have to work. 
For the bears it’s sign of incoming depression when Fed feels obliged to signal low rates for longer. 

The truth is probably somewhere in between. There is reason for low rates, but also printing money to the extent the major central bank does it makes all of us speculators chasing, again, investments which we would not normally engage in as commodities, metals, housing et al. We are effectively all being forced to take more risk for same return with low interest now predicted into the financial “forever”. 
Sometimes the best analysis on an issue, and in my case almost always, comes from someone else – with reference to the FOMC I personally really enjoyed Caroline Baum’s piece:‘Fool in the shower’ to Give Fed a Good Scalding 
Not only a gifted journalist and writer but excellent arguments and stories. Please do read her take on Fed’s difficult balance.
Today’s market open carry plenty of positive momentum, however Greek PSI and Portugal could ruin the party short-term. 
Medium-term all things positive seems to have been priced in: 

  • More QE in both US, UK and Europe including low rates and basically banks funded through 2012
  • A forced voluntary deal in Greece – the real test is the next payment three month down the road
  • A fiscal compact by next Monday where Germany will declare victory and then allow EFSF/ESM to be merged
  • Iran on the back-burner at least for now.
My good colleague Peter Garnry kindly provided me with this chart (which is now part of Stress Indicators) on key central bank’ balance sheet in percentage of their countries GDP. Simple stuff, scary stuff:
Central Bank Balance Sheets as of GDP-1
Note how Europe or rather ECB in the space of six month have done more expansion than the FED has done in three years in terms of printing money(relative to GDP) – again – buy some paper producers! The world could run out of paper to print those debasing currencies on pretty soon!
Now is the time where you need your metals – particularly gold and gold stocks. The above issues shows you clearly and forcefully that we have moved from a ‘Maximum Intervention’ period into a ‘Maximum printing’ phase – this will give the policy makers a false sense of “improvement” and hope for a turning point not dissimilar to the comments seen exactly one year ago in Davos –

This new hope will stop the move towards the “Endung” – as the ultimate solution remains the same: Germany needs to decide for or against Europe – end of story – they will cave in last day, last minute but only if forced to do so, this more of same pretend-and-extend will delay this from Q1 to Q2 or Q3 meanwhile the balances or rather imbalances inside the system will increase making the ultimate price(loss) yet higher – but why bother with something which is more than one week away? As someone commented today by this time next year most of today’s politicians could be out of office anyway: China, France, Italy, Greece etc…

The story is always the same: Politicians spend money – the private economy tries to keep up. Meanwhile the challenge for us skeptics is best defined by Keynes old comment: ‘The market can stay irrational longer than I can stay solvent’ – and that is the bet Princess Merko-cy is playing when she kissed the frog and got an Italian prince with a huge balance sheet in Frankfurt. A true fairytale it is!

Safe travels,


Mike “Mish” Shedlock says: As pertains to metals and Baum I agree. Here is my favorite line from “Fool in the Shower”.

Two policy makers — no names were attached to the forecasts — expect the funds rate to first begin rising in 2016. (My money is on New York Fed President Bill Dudley and Governor Janet Yellen.) That would mean eight years of 0 percent interest rates. There will be a revolution in this country before then if the economy is lousy enough to warrant 0 percent interest rates for that long. Even the fool in the shower knows that. 


Mike “Mish” Shedlock

The Coming U.S. farm boom

“Not all dirt is the same. Some dirt is astonishing, compared to other dirt,” – Jim Rogers 01/10/2012

“If I were buying anything I’d be buying agricultural commodities,” “Going forward we’re going to have huge shortages of everything – including farmers – I think ag will be a great place for the next 10-20 years” – Jim Rogers 12/30/2011


Analysis has revealed that with a buy date of December 6 and a sell date of June 13, investors have benefited from a total return of 95.14% over the last 10 years. This scenario has shown positive results in 6 of those periods. – by Don Vialoux of

image thumb

Analysis has revealed that with a buy date of December 6 and a sell date of March 12, investors have benefited from a total return of 58.35% over the last 10 years. This scenario has shown positive results in 5 of those periods. -by Don Vialoux of 

image thumb-1

Analysis has revealed that with a buy date of October 22 and a sell date of July 13, investors have benefited from a total return of 1276.17% over the last 10 years. This scenario has shown positive results in 8 of those periods. – by Don Vialoux of

Sioux County, Iowa: Ground zero for U.S. farm boom

by P.J. Huffstutter – Reuters

If there is an epicenter of the nation’s farmland boom, it can be found here amid the rolling hills of northwest Iowa.

A fortune is being plowed into the dirt of Sioux County, where well-heeled farmers and wealthy investors compete fiercely for some of the most fertile land in the Corn Belt. While farmland prices across Iowa have been among the heartland’s fastest growing – up 261 percent since 2000 – they’ve more than tripled in Sioux County, rising faster than most of the state.

Locals could not be more pleased about such prosperity – or more nervous.

Like many people across the Midwest, they’re increasingly anxious of a potential pull-back in values, despite stark economic differences with the 1980s farm crisis.

But their greatest fear is that if this boom turns to bust, as the housing market did last decade, people may well trace one of the key causes to this corner of the Hawkeye State — and blame local farmers and investors for creating an artificially inflated benchmark for the Midwest.

In what has been termed the “Iowa effect,” farmers and ranchers across the nation now routinely look to this 768-square-mile county as a benchmark for America’s 408 million acres of crop land. Record-setting land deals in this corner of the state are quickly deemed the new high-water mark for surrounding states.

“I hear people talk and it’s not in a good way,” said Bill Tentinger, president-elect of the Iowa Pork Producers Association, who runs his family’s hog farm in Les Mars, Iowa, in south Sioux County. “People see these prices and think, ‘Well, if land in Iowa sells for $20,000 an acre, then why can’t my farm in Illinois or Minnesota or Nebraska sell for that much?'”

Locals here will tell you exactly why: rich soil, favorable weather trends, a high concentration of livestock and biofuel operations, and an intensely competitive farming culture.

Those are some of the reasons state records have been shattered time and again at local auction halls and barnyard gatherings. Sioux County bidders cracked $13,000 an acre for crop land two years ago. Last fall, the price tag on a farm field jumped to $16,750 an acre. In December: $18,250. Then: $20,000.

That run-up, warn economists, is fueling a potentially dangerous axiom in the minds of investors: that there is plenty of profit to mine from U.S. cropland, even if prices continue to reach once unimaginable highs.

“Not all dirt is the same. Some dirt is astonishing, compared to other dirt,” said Jim Rogers, the billionaire commodities investor and author. “But it ultimately comes down to economics: How much does that land cost, what crop can you grow on that land, what price you can get for that crop, and how much it costs you to produce that crop?”

Economists are hopeful there will not be a repeat of the boom-to-bust farm cycle in the late 1970s and early 1980s.

Farmers today do not appear to be borrowing heavily against their high-value land in order to fund new real estate purchases, economists said. Such leveraging was one of the key causes behind the last agricultural bust: grain surpluses depressed prices, farmland prices dropped by half and farmers were squeezed by deepening debt.


As word spreads of each heady price tag from public sales in Sioux County, auctioneers and real estate agents said the boom is quick to ripple outward. The latest spike was set off in early December, when farmer Leland Kaster paid $20,000 an acre for fields next to his dairy near Hull, Iowa, a Sioux County hamlet located about 50 miles southeast of Sioux Falls, S.D.

If Kaster were to grow corn on his new 73.4 acres, he’d be able pull in about $1,250 per acre in gross revenues next year, given futures market prices and average corn yield. More simply put: It would take the Kaster family more than half a generation to recoup their money – and that’s only if corn prices remain relatively high.

“We call it the Iowa Effect,” said Nebraska auctioneer Randy Ruhter. Land prices in eastern Nebraska, a state which saw a more than 40 percent jump in the third quarter, edged up another 3 to 5 percent after the deal.

“When prices go up there,” Ruhter said, “prices go up elsewhere.”

Part of the reason that land values can be so easily influenced by a single auction in a small rural county is that calculating the value of a farm field is different than figuring out what people are willing to pay, say economists.

Land values can fluctuate wildly, depending on who is doing the math and what income and expense factors are used. The Federal Reserves’ Midwest farmland surveys come out quarterly. Researchers at land-grant universities regularly roll out their research, too.

And there are so many different elements to weigh – including human emotion and other hard-to-quantify factors – that nailing down a transparent answer that is universally accepted can be difficult.

“Each land sale is unique and each person will take their own set of assumptions into the calculation,” said Michael Duffy, an agricultural economist at Iowa State University.

That inconsistency is partly why investors and sellers alike have turned to public auctions to figure out what the market will bear.


In many ways, Northwest Iowa is unusually ideal for such a perfect investment storm.

Amid the rolling hills that border the Big Sioux River, tilled fields abut ethanol plants, hog farms and dairy factories.

The soil is rich. Weather patterns have shifted in recent decades, allowing the dirt to retain more water and improve crop yields in northwest Iowa. The county’s annual precipitation has averaged 30.44 inches in the past 30 years, up 13 percent from the previous three decades, according to state climatology officials.

Extreme summer heat has been less frequent. In Sioux City, for example, there were only seven days where the temperatures hit 100 degrees or higher in the past decade, down from 21 days in the 1980s.

Competition for land and grain is also intense. Sioux County has more farms – 1,664 – than any of the state’s other 98 counties, according to the USDA’s 2007 Census of Agriculture. It’s the state’s top seller of cattle and hogs, and the second largest seller of corn.

There are 13 ethanol plants, and two biodiesel factories, within a 90 minute drive of the county’s center, reducing transportation costs. Those plants compete for crops with the region’s scores of hog farmers, dairy producers and cattle feedlots, the engine that drives much of the county’s success.

Worries about Washington, and the growing regulatory influence of the U.S. Environmental Protection Agency in rural America, have livestock farmers here scrambling to buy more land to dispose of their animals’ manure. The EPA has already warned dairies in California over their failure to dispose of manure.

The growth of a larger local customer base has reshaped land values, too, according to data compiled by Iowa State University.

During the farmland boom of the 1970s, land prices were valued higher on the eastern side of the state, where farmers were physically closer to barge transportation on the Mississippi River.

Louisa County in southwest Iowa, which sits alongside the Mississippi, saw its farmland valued among the highest in the state during that period: It jump 355 percent during the 1970s, according to Iowa State University research.

Now, however, its value has risen 64 percent in five years, lagging behind Sioux County’s 80 percent leap. Graphic:Iowa farmland values:


Then, there’s the human factor. Auctioneers and real estate experts say the extreme high-priced deals are often driven by a regional culture of competitiveness, rather than economics.

Dutch immigrants flocked to Sioux County in the mid-to-late 1800s, in search of cheaper land to carry on their farming heritage. They brought with them a culture of faith and frugality that exists today, with farmers flush with cash and deep emotional roots to their land.

But they also carried with them an intense enmity between neighbors and outsiders. Such rivalries were so intense that, back in 1872, a fight over where to set up the county seat reportedly prompted farmers and townsfolk in Hull and Orange City to raid the log courthouse in Calliope, Iowa, and steal a safe with all the county property records in it. (The documents were later returned.)

Such clashes continue today.

“I’m hearing a lot of, ‘You were rude to me and by god I’m not going to let you have it.’ Or, ‘That was granddad’s land and I’m going to get it back’,” said Duffy, of Iowa State University.

Such was the case with the Kaster deal. The land he bought a month ago for $20,000 an acre does not look particularly dramatic: a field of tilled black soil where frost sparkles on clumps of dirt the size of bowling balls. But the auction price tag spiked when Kaster, who runs a relatively small dairy, faced off against a rival neighbor, who operates a much larger farm.

Kaster “told me at the break that he was going to get that land, no matter what,” said auctioneer Pete Pollema.

Despite the dangers of extrapolating Sioux County’s land values for outside guidance, and given that the federal ethanol subsidies quietly expired last year, some people still believe there is plenty of life left in the local boom.

That faith prompted town officials in Hull — home to nearly 2,200 people, eight churches and no stop lights — to join the land rush: The town’s economic development team bought a nearby 80 acre parcel two years ago for $1 million.

City administrator Les Van Roekel insists the deal was a savvy move. Area crop and dairy farmers clamored to cash-rent the land, after a local cheese plant recently announced plans to double the amount of milk it processes each day.

Recently, local real estate agents and auctioneers pegged its worth at nearly $19,000 an acre, Van Roekel said. Local leaders are shopping for more land, either to buy or trade.

“We’re somewhat in a bubble here,” Van Roekel said. “But I think we’re going to be fine.”