E-letter: Listen to the quiet

Down here in the Credit River valley, we often feel as if we’re remote from the urban buzz, even though we’re only an hour from Toronto. We got our first significant snow Sunday night, and I recorded a brand-new yard bird Monday morning – a bald eagle. It has been an active week for raptors (birds, not basketball), as Friday morning a red-tailed hawk swooped out of nowhere and nabbed one of the ever-present squirrels from under the feeders.

Kerry Knudsen

Kerry Knudsen

There is very little traffic on our road, as it’s a cul-de-sac, and nobody lives within eyesight across the river, as it’s a flood plain over there. At least, no humans live there. There is a mink family, and a fox lives nearby, as do the normal complement of raccoons, ‘possums, skunks, coyotes and deer. I feed wild turkeys out back, so that costs me about 20 kg a week in feed corn.

It is as if somebody turned off the television set, and all the static, chatter, stress and threats have retreated for the new year.

I think we must admit in Canada that the American election cycle has a disproportionate effect on us. No matter where we go … Tim’s, the grocery store, out for a walk … people are talking about the election. I even was approached about the election when I went in to have my winter tires installed. Trump, Trump, Trump. It’s like listening in as a kid on my parents’ bridge parties. Trump takes hearts. Trump takes diamonds. Trump takes everything.

 

Of course, the American economy as a whole has a disproportionate effect on us. I am guessing nobody in business in Canada has missed the soaring stock markets, the proclamations about trade and the media hand-wringing over Trump’s cabinet picks: “What could it possibly mean?”

It will be interesting to see how much and how far the business environment changes.

The media is concerned that Trump will not follow the status quo, which they think is bad. Well, they should think it’s bad. It appears Trump spent about 10 percent of what Clinton spent on media advertising, while capitalizing on the free exposure he was guaranteed by the news shows and Twitter. Assuming he will follow the same strategy in four years, you are looking at hundreds of millions of dollars in advertising dollars not spent in the top 20 or so benefactor networks. There go the expense accounts.

The din of the American elections did not drown out, but did mute, several other significant events that affect us. Brexit comes to mind, and news reports out of the UK suggest there will be a wholesale burning of unwanted and unwarranted regulations imposed by the EU.

I expect quite a bit of regulation burning in the States, as well, following January 21. However, you have to wonder…. For years I have been writing about how regulatory agencies set themselves up along an income stream and then drop in a pump, just as people pump water from our river for lawn maintenance. And, just like individuals using river water for their lawns, it is not long before the golf courses and farmers add their pumps until the river slows to a trickle.

The difference is, when private parties use too much water, the regulators step in and slow the water draw, but when the agencies draw too much revenue they demand the private parties pony up more cash.

Trump says he will create more big-time jobs, and I have a sense that he will. However, there may also be a lot of homeless bureaucrats sitting around the heater grates in February with signs saying, “Will enforce for food.”

What do out-of-work regulators do, anyway? They likely started out as bathroom monitors in primary school and don’t know anything else.

 

However, we may discover that Trump is not an enemy of all regulations. Earlier this year the governments of Canada and the United States responded to overwhelming complaints from consumers, demanding that the governments regulate invasive, obnoxious and fraudulent advertising. The demand was so loud, the combined efforts of the (non-governmental) Better Business Bureaus of the United States and Canada, the U.S. Federal Trade Commission and the Canadian Competition Bureau united to publish and enforce standards demanding truth in advertising, particularly in the are of in-content, or native, advertising.

Why do I think Trump will get behind this initiative and not others? There are two reasons. The first is that Trump’s enmity for the media is no secret. But that’s not the big one. I think the big one is, as noted, this initiative is based on consumer demand, not regulator opinion.

I also think the stock phenomenon is worth noticing, not because it has been screaming up like a bald eagle on a December morning, but because it has been screaming up in spite of what I consider to be the major drag of the soon-to-be vanishing Quantitative Easing.

I assume you have never seen me write a positive word about QE, because I cannot imagine ever having written one. Therefore, with QE drifting off into the setting sun, with all its billion$ dripping into the pockets of regulators and operatives, it seems clear there is an unimagined pressure from pent-up demand.

All the normal indicators for our sector support this view, from housing starts and building permits to GDPs and immigration projections. Most of us recall the days when we could not produce enough products to satisfy the American demand, and those days are returning. In addition, it is the American demand for more than it can produce that will lead Trump to look at both sides in the new NAFTA agreement he hopes to mould.

What’s the downside? At the moment I don’t see one. In fact, it is coming into Christmas, and everything looks rosy, including Christmas. Trump’s disdain for all things Politically Correct may well bring back a heart-felt “Merry Christmas” among people for which the holiday is more than five days off and a hangover. I have long felt we need to quit letting people lacking in brilliance dictate our language for us, and Christmas leads my list where naughty people should sit quietly in a corner and figure out something better to do for a living.

 

From all the staff at W.I. Media, and from all our families to yours, Merry Christmas and Happy New Year. It promises to be interesting.

 

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