Farmer Diaries

After the blistering pace of GDP growth on Q4/2010 (4.5%), the sudden drop in activity is somewhat worrying (-0.2%).  Then again, Canada , an export nation is dependent on its southern neighbors for nearly 70% of its exports, and as yesterday’s U.S. figures show that the economy is slowing south of the border. (Source: StatsCan) Moreover, the strength of the Canadian dollar is almost certain to have impacted the terms of trade and new order flows.  Interestingly the Canadian real estate sector continues to grow, and expectations of this trend to continue for some time (maybe until he end of Q2/2011).     (Source: StatsCan) The net contributors to GDP for February were retail, services and construction whereas manufacturing was a real drag on GDP for February (-1.6%), it had been positive to the tune of 2.5% in January.  The biggest drag in the manufacturing -7.5% was vehicles and spare parts… once again the North American picture is painted south of the bor...

The democratic process is an amazing thing.  How the mood of a nation can be expressed and make radical changes to the direction of a country, and to the life of its politicians.  A month ago when the Liberal/NPD and Block Quebecois “forced” a no-confidence vote against the Conservative government of Steven Harper, the intent was as follow: Steven Harper was hoping that his conciliatory budget would provide sufficient ammunition to demonstrate to the population that (a) he didn’t want elections, (b) he had the best and most experienced team to lead the country.  Michael “Iggy” Ignatief was not really a player here, he was not courted by Harper in the budget negotiations – he was bidding his time till the next election.  Jack Layton, the forever leader of the NPD thought he held the most compelling cards; setting himself apart from the other two parties as the one offering a third way.  The Block was for “ Quebec ” whatever that means.  They have been adrif...

Yeah most people have only barely heard of this place.  Basically the Canadian Northern Territories eastern part that was split out 12 years ago.  A tiny (29,000) population an incredibly harsh climate and really far from the beaten track.  From Montreal it’s a 5 hour flight with a connection. The last road north ends at James Bay project, nearly 500 km from the southern border.  There are no roads between the communities (distance and cost).  Nunavut is Land area 1.6x the size of India .   The Globe and Mail has a fascinating series on the territory – discovered while reading the Economist… Saddening is the level of despair, extreme binge drinking, low education standards (or even completion rate) and massive unemployment.  Although I didn’t live in Canada when the region was formed, it remains that a territory constituted I remember wondering what was the benefits of creating this new territory.  Turns out that those who runt he place a...

Not terribly exiting, but it turns out that Canadian house prices are up again to the tune of 0.1%.   The Canadian market had seen a brief correction, in the closing months of 2010, but this “correction” (about 0.3%) has now been fully reversed.   Everything is well again in the land of Canadian housing, Vancouver ’s recent insanity (25 bidders on one house with a $600k bump over the asking price) is not a sign of anything nefarious, it’s all good. Canadian premier house price index is the Teranet National Bank of Canada House Price index

Having lunch with a friend today we realized that we were both voting Liberal for the same reason:   The Conservatives’ assault on our democratic system.   In politics it is often the small things that need to be watched.   Unfortunately, few are watching the small but important things.   First assault was the Prorogation a very Canadian move by the governor general that allows for the suspension of parliament.   It was used by the conservative government as a way to stop the three opposition parties from forming a government.   Never mind that this all started because Canada ’s minister of defense refused to answer some embarrassing questions on the action of Canada ’s troops in Afghanistan . The second assault occurred just a few weeks before the recent budget failed and the minority conservative government lost a vote of no-confidence (leading to the election of May 2 nd ).   This was the Minister of International Cooperation Bev Oda who LIED to p...

Considering the direction of grain prices (actually all commodities) Canadian farmers are unsurprisingly looking to max out their planting acreage.  No so much an interesting statistics, but in fact if you double the price of wheat farmers will increase their wheat production. Obviously farmers have done their math, and the dramatic increase in fuel prices (and pesticide and fertilizer) still make the farming business attractive.  Anyway, there you go, if you raise prices farmers like the rest of us will respond to price incentive.

A few weeks ago, I blasted a Canadian newsmagazine over its coverage of the Canadian house price rise over the past few years, and how there was not really a bubble (then maybe there was) without giving any facts. In Canada , looking at the principal cities house price to median income we have: Montreal :   4.2x Toronto :     5.6x Vancouver 7.0x Victoria    9.0x Halifax :   3.5x BTW these are those I remember of the top of my head, although Calgary house price are high, income (all that oil business) have been rising even faster, so that although Calgary is expensive in absolute term, its not in terms of income.   Finally anything seriously over 4x is considered overvalued territory. Below is a diagram of the U.S. (countrywide average) median income to house price.     (Source: The  Big Picture Blog ) As can be observed U.S. house price are still not “affordable” by any sensible metrics (despite what the medias are sayin...

The story right now is that the “war” premium – caused by Middle Eastern instability is around $30; oil should be priced around $80 -- $90/bbl, instead of the $125/$110 we are seeing in the Brent and WTI markets. One of my favorite bloggist is EarlyW arning which discuses a range of issues but seems to have built a very interesting side business in looking at the Middle Eastern oil production market. Readers will remember my commentary a few days ago that the Saudi oil minister had indicated that because of glut the Kingdom was reducing production from 9 million to 8.5 million bbl/day.     (Source:  Early Warning) Early Warning looking at some third party data noted a number of interesting facts:   Rig count which had been declining for years has been rising in the past quarter.   Halliburton, one of the companies involved in drilling in the Kingdom indicated that most of the rigs were being deployed on older fields (that’s how you increase production), but a...

Expectations was for March 2011 inflation to be 0.6% and 0.2% (CPI & Core CPI), but the numbers were a lot higher:  1.1% and 0.7%.  More to the point, over the past 12 months consumer prices rose 3.3%, very close to the Bank of Canada’s target CPI upper edge (The February number was 2.2% -- so this is a very bad figure). Digging in the data some of the biggest culprits were clothing/shoes (100% imported) and food (part of the food component is included in core inflation calculation).  Of course last week I commented on the difference in prices in Canada Vs. the U.S. and one of the sectors where Canada did worse was clothing and shoes… I guess Canadians are used to getting ripped off.  The implication here is that the BoC will have to look very closely at its interest rate policy; the second impact is that the apparels segment will probably face some margin compression going forward. Seasonal: What is even more worrying is the seasonally adjusted inflation...

Reality of the European crisis are finally hitting market prices.  Also this weekend the Saudi oil minister said that SA was reducing production, because there’s just not enough demand to justify the current production level, which would seem to indicate that a good chunk of the current market pricing is driven by financial market hysteria – wow something new. Back to Europe , over the weekend two developments:  the Finns elected parties that are against further PIIGS bail outs.  The second event was that the British government has indicated that they will no support any further financial aid beyond the help they have given so far under current European agreements.  Then this morning a spokesperson for the German ministry of finance indicated that Greece debt will be restructured before the summer.   Once it is generally accepted that restructuring is required, the issue then becomes how much of a hair cut will be required.  The generally agreed (and to ...

“I asked my friend's little girl what she wanted to be when she grows up.   She said she wanted to be Prime Minister of Canada some day. Both of her parents, NDP supporters, were standing there, so I asked her, "If you were Prime Minister what would be the first thing you would do?"   She replied, "I'd give food and houses to all the homeless people." Her parents beamed, and said, "Welcome to the NDP Party!"   "Wow...what a worthy goal!" I told her. I continued, "But you don't have to wait until you're Prime Minister to do that. You can come over to my house, mow the lawn, pull weeds, and sweep my yard, and I'll pay you $50. Then I'll take you over to the grocery store where the homeless guy hangs out. You can give him the $50 to use toward food and a new house." She thought that over for a few seconds, then she looked me straight in the eye and asked, "Why doesn't the homeless guy come over and do the...

A study conducted by the Bank of Montreal showed that prices in the U.S. are between 15% and 30% lower than in Canada!  This is no big surprise, with the internet I can buy books at Amazon (for my Ipad) that are at least 20% cheaper than if I bought them from the Canadian equivalent. But the best one yet relates to Quebec’s based SAQ (Quebec’s liquor store monopoly).  A few months ago they purchased a high end U.S. distributor, and the same bottle of wine in the U.S. sells for 28% less than in Quebec.  When confronted with this fact, the PR person (soon to be unemployed if there is any justice) argued that the SAQ has a wider mission, to generate additional revenues for the Government -- really this person said that to a journalist from the Montreal based French newspaper “ La Presse ”.  Truth of the matter, the SAQ is now stating that as a monopoly it has an OBLIGATION to rip-off its customers. There used to be a thriving business in Canada of buying cars in the ...