So where was this guy during the Mountain Pine Beetle epidemic? According to National Geographic, the Pileated Woodpecker is the largest woodpecker found in North America. They “forage for their favourite meals by digging large, rectangular holes in trees. These holes can be so large that they weaken smaller trees or even cause them to break in half. Other birds are often attracted to these large openings, eager to access any exposed insects. Pileated Woodpeckers don’t discriminate between coniferous and deciduous trees – as long as they yield the ants and beetle larvae that make up much of the birds’ diet.” We’re told they can peck up to 20 times per second, or up to 12,000 pecks per day, without ever getting a headache.
According to news that’s filtering through to us in the great White North, these be challenging days as friends and relatives to the south wrestle with decisions in advance of November elections, said by some to be aimed at “making America great again.” Say what? Again? Let us echo a Toronto ad agency’s campaign that helps cut through the negativity in play.
Having just returned this morning from the classy LBM Advantage Forest Products Conference, I was also reminded just how invigorating it is to connect with people face to face. It’s been said that the best social network is a table and two chairs, or, in the case of the Dakeryn table inside the packed White River Ballroom at the beautiful JW Marriott Indianapolis, a table and six chairs! Despite election angst, dealers appear to be cautiously optimistic about business for the balance of the year. While bullish on 2017, the extreme hand-to-mouth buying patterns in evidence suggest an emphasis on risk management through December. Coming from B.C., where we are inundated with SLA headlines, it’s interesting to note there so far seems to be little weight given to possible cross-border softwood lumber trade constraints in relation to market impact.
Upon arriving home late last night, my wife relayed this story after picking up our five-year-old from Kindergarten yesterday:
Evie: “Mommy, I made a new friend from my class today”
“Oh? How did that happen?”
“He came up to me and said ‘Evie, give me all your Bunny Crackers.'”
According to a report at World Trade Online from Jenny Leonard, IWP News, last Wednesday’s meeting in Toronto between U.S. Trade Representative Michael Froman & Canadian Minister of International Trade Chrystia Freeland “did not yield sufficient progress”. Some takeaways from the report:
- Multiple sources expect the U.S. lumber coalition to file a petition on Oct. 13 – the first day after the deadline expires – but they also note that the preliminary determinations won’t be announced by the U.S. Commerce Department until February or March, which gives both sides more time to talk.
- One source said it is “very common timing” to get a deal done before duties attach and noted the two sides could still “engage in negotiations parallel to a case.”
- The talks with the Obama administration can last only another seven weeks – leading some to doubt whether there is enough time to discuss all the outstanding details of the deal before a new administration’s team is put in place.
- So far there has been no meaningful engagement on those details – including the target number for U.S. market share, an exit strategy for Canadian provinces to get out of the deal if they can prove their lumber is not subsidized, and the exclusion of certain provinces that were not part of the old softwood lumber deal.
- Canada wants the new deal to reflect its provinces’ different demands – an approach referred to as “optionality” that was central to the framework of the expired deal.
- The U.S. is holding on to its demand for a quota-only approach, which it says would limit Canadian lumber in the U.S. with certainty.
- According to multiple sources, Froman emphasized during the meeting that the Canadians are better off reaching an agreement with the Obama administration by the end of this year – and noted that because of the transition period in which a new USTR must be nominated and confirmed, it could be months before the U.S. can come back to the table to discuss lumber trade.
- While both sides have not yet ruled out the possibility of a deal being reached before duties are applied, one Canadian source said “we are now in the days of magical thinking. There is too much ground to be covered,” the source said. “The two sides have been talking past each other for more than a year.”
Turns out prices aren’t set by Random Lengths afterall. Adam Taggart, President of Peak Prosperity, explains that prices are actually determined by two things: the upper limit that the marginal buyer is willing to pay, and how intensely the competition from other buyers pushes him towards that limit. Taggart tells us that this basic economic principle that prices are set at the margin, “is just as true for stocks and housing as it is for fine art,” adding: “Most of us don’t really think about the marginal buyer much, but he (or she) is very important. The marginal buyer can evaporate faster than you think. That is the nature of an asset bubble’s unavoidable destiny to pop.”
So what happens when the “current” marginal buyer of an asset disappears? “Prices must fall to become affordable to the next marginal buyer,” confirms Taggart. The example he cites hits home. He submits the marginal buyer of Metro Vancouver real estate has vaporized since the provincial government’s August 2nd passage of the 15% foreign buyer tax. His expert analysis makes for an interesting read, here.
Wall Street Farm Animals?
When a truckload of pigs going to slaughter rolled over this morning in Burlington, Ontario, it’s reported the surviving swines sprung to their hooves and made their getaway. Freedom! We’ve since learned that all that futures bacon has been corralled. The Great Escape was foiled. Bummer. It’s certainly a reminder there’s no underestimating the relative value pigs bring to the table when it comes to serving up a good breakfast. The chicken makes a significant contribution, but the pig makes the real commitment.