What is in this article?:
- North Carolina growers stunned by bullish cotton report
- Cotton acreage down
- Leans to the left
• When bearish news hits a bearish market and nothing happens, think bullish thoughts.
SUFFOLK, VA.,-based economist Dennis Gartman says he is bullish on cotton and bearish on corn right now.
Leans to the left
“The new leader, President Dilma Rouseff, is far to the left of President Lula. She is an economist, but also a socialist and a former Marxist urban guerilla.
“I don’t really know what’s going on in Brazil and how these changes will impact soybean production.
“What I do know is that banker friends in Sao Paulo (Brazil’s financial center) are taking money out of Brazil at a rapid pace,” he says.
Gartman says he is more bullish than bearish on soybeans, but that was on Jan.17 (the day he spoke to the North Carolina All Commodities meeting), “but tomorrow I might be more on the bearish side,” he adds.
Compared to other major agriculture producing countries, the Virginia economist says the U.S. economy is in great shape. And, the agriculture component of our economy is particularly well situated to remain strong for the next few years.
“I am totally bullish on America at a time when most are so pessimistic,” Gartman says.
“The U.S. is still by far the most dominant economic country in the world.”
Though most economists condemn the U.S. for the high debt load, Gartman says other major economic powers in the world, particularly Japan, Germany and France, all have more debt than the U.S.
“Our currency is the predominant currency in the world and will continue to be so for many generations, he says. “Perhaps my fellow economist Brian Wesbury says it best, ‘Nobody ever risked their life to cross an ocean on a raft to get to France, yet people do it all the time to get to the U.S.’”
Gartman says his biggest fear is that the U.S. will continue to raise taxes to try and balance the budget. “We have a spending problem, not a tax problem,” he says And, at no time history and in no country in history has an economy ever increased revenue by raising taxes, he says.
“For example, in New Zealand in the 1970s and 1980s, their economy was a basket case. They raised taxes and devalued their currency and things got worse. Then Roger Douglas was elected as treasurer, similar to Secretary of the Treasury in the U.S. He cut taxes from 80 percent to 50 percent and on down over the years to 20 percent.
“New Zealand went from a model of financial disaster to a model of financial success. When Douglas retired from office, one of the first questions asked of his successor was, “will you cut taxes?” The new treasurer replied, “We have so much tax money now I don’t know where to spend it, so I don’t think that would be a good idea.”
“Unfortunately, the U.S. doesn’t have that kind of problem right now, but our problems are not nearly as bad as we are being led to believe,” Gartman says.
For the agricultural sector, Garman says 2013 and beyond are bright and he urges growers to plant wisely and grow aggressively.