Charts Of Interest

A few interesting charts to end the year. (viea Zerohedge)

Gas prices have soared the past 11 years...



Guns and ammo sales skyrocketed the past 11 years ....



DO NOT BELEIVE THE WEEKLY JOBLESS CLAIMS RELEASED BY OUR GOVERNMENT.   THESE NUMBERS HAVE BEEN ABSOLUTELY WRONG!  The chart below shows the actual revisions made to this weekly government release.....



The usage of food stamps has nearly tripled in the past 11 years . . .




Happy New Year All

Euro Debt - Who Gets Bailed Out, Who Don't!

Brian Vestal CFP

An excellent article appeared at Zerohedge today that discusses the Eurozone crisis.  The author provided a lengthy discussion of why Greece was let go and why the ECB (European Central Bank) has been stepping into the credit markets to buy Italian and Spanish debt.  Towards the bottom of the article, he provided the following discussion with charts... a must read:  View Article

The Pattern

I keep mentioning that the ECB is interfering heavily in the bond markets of various countries in their attempts to keep things going. Apparently they've tossed in the towel on Greece, as evidenced by the Greek yields above. 

However, when we note the ways in which the Spanish, Irish, and Italian debts have come down off their highs, can we make sense of why the ECB focused their efforts there? Sure, that's easy, and the BBC has put together an extraordinarily helpful interactive chart to make it all crystal clear. 

The interactive chart can be found here, but I've taken a number of screen shots so that you can more easily follow the story. 

To begin with, what the chart is showing by the width of the arrows is how much money is owed to banks of other countries -- the wider the arrow, the greater the amount.
Here's the country that was let go:

Is Farmland Expensive ?

Brian Vestal CFP

Several weeks ago, it was reported that an 80 acre piece of land in northwest Iowa sold for $20,000 per acre. We all know farm land has been rising significantly for the past 10 years, but the ($64,000 Question) is can farm land sustain its accent?

A recent article in the Choices Magazine "Are Economic Fundamentals Driving Farmland Values?", discusses this issue. (Read article).  They do a wonderful job of determining the value of farmland by using valuation methods commonly used when valuing stocks and other capital assets.

The study charts the profitability of farmland versus cash rent values.  This is similar to the "net profit" margin of a stock.

Budgeted Contribution Margin and Cash Rental Rate for Average Quality Indiana Farmland, 1991-2011 

The budgeted contribution margin is calculated by subtracting the variable costs of production from revenues and is what remains to cover all overhead costs including land, machinery replacement, family labor, and management. Today’s contribution margin is at its most favorable level in recent times. The chart also shows that cash rental rates have risen steadily, but not as rapidly as contribution margins. Given the large increases in contribution margins, one would expect that rental rates will continue upward at least in the short-term. One of the most important considerations influencing land values is whether these higher contribution margins and cash rental rates will be maintained into the future.

As you can see, it has never before been more profitable to be a farmer which possibly explains a major reason for rising farmland values.

Technology & Farming

Ben Heckart

The advances in technology over past decade or two has been astonishing to say the least.  It has changed the way we communicate with each other and for many it has changed the way we get our news.  It has also forever changed farming.  Forty years ago, a farmer could harvest about 4,000 bushels per day, while today the same farmer can harvest nearly 50,000 bushels per day due to the technological advances of machinery.  The table below was taken from the 2011 issue of The American Bankers Association.

History of Interest Rates

Brian Vestal CFP

As you well know, rates are low!  The chart below illustrates the history of short term interest rates dating back to the 1800's.  The only other time rates were as low as they are today (0%) was the period immediately following the great depression in the 1930's.  After rates bottomed in the 1940's, we experienced a 40 year period of a rising interest rate enviornment (to thier peak in 1980).  Will history repeat itself?

Source: Bianco Research LLC

EURO versus GRAINS

Brian Vestal CFP

Its often argued that the devaluing of our dollar (which strengthens the Euro) has had a major positive impact on the price of grains.  Dollar gets cheaper = Euro gets stronger = grains go higher.  Recently the dollar has been gaining strength and the Euro has been tumbling, so I wanted to look at how this relationship between the Euro and grains has been fairing:

The first chart shows the period between October 2010 and May 2, 2011.  The Euro (Blue) rose nearly 15%, the Dollar (Green) declined by -11%.  The basket of grains, represented by the iPath Grains ETN (Red line) rose by over 25%.

Now, since May 2, 2011 the Euro (blue)  has reversed course and lost -12%, the Dollar (green) has risen by over 6.0% and Grains (Red) have dropped by over -25%.

So far, it looks like this relationship is holding up.  In other words, is a strong Dollar, weak Euro going to be the straw that "breaks the farmers back"?

Charts of Interest

Brian Vestal CFP

There is nothing like a good chart to make a point.  Some charts are good and some are bad.  Just for fun, I want share a few charts I ran across which were produced by Goldman Sachs (some good, some bad).  Enjoy!