USA Vs Brazil Soybean Production

Fertilizer prices have gone up for both USA and Brazil, which could have a detrimental effect on soybean crop yields. But which country will suffer the most?

Soybean prices are generally the same for both countries. Shipping costs are slightly lower for Brazil.

However, the cost of production is significantly lower in Brazil due to low overhead costs like property taxes. Even for the direct costs, which include fertilizer and seeds, the costs between the two countries are comparable.

This is why Brazil will stay very competitive compared to USA. Brazilian soybean exports are rising.

Gas prices are skyrocketing in USA

USA is selling cheap gas to Europe.

U.S. Debt hits 25 trillion or 120% debt to GDP

Congratulations USA!

Go on and add more debt!

 

Comparing the Dow Jones and Shanghai Composite against Europe

Over the last few years after the 2008 crisis, I want to give a performance update for the Dow Jones vis a vis the Shanghai Stock Exchange. The Dow Jones has gone up 50% after the 2008 stock market plunge (Chart 1), while the Shanghai Stock Exchange has gone up first, but essentially lost all of its gains in the period between 2010 and 2012 (Chart 2).

Indeed, many economists have pointed out that the U.S. stock market has outperformed almost every market in the world. Marc Faber pointed this out in a recent interview on Bloomberg Radio.

Chart 1: Dow Jones Industrial Average

Chart 2: Shanghai Stock Exchange Composite Index

I want to analyze this further. How can there be such disparity? It can't be the exchange rate between the USD and the CNY, because the Chinese yuan has only gone up 5% against the USD between 2008 and 2012. So what are the reasons?

Let's take a look at the basic market metrics: P/E, dividends, book value in the full version of this article.

A look at the balance sheet of the big 4

Let's take a look at the balance sheets of the four biggest economies of this world (Europe, USA, China, Japan) and discuss their effect on stocks and precious metals. Although the USA and Europe have the biggest GDP of the four economies of this world, surprisingly, China has the biggest balance sheet of them all, with a whopping $US 4.5 trillion balance sheet. Second comes Europe with a balance sheet of $US 4 trillion. Then comes the USA with a balance sheet of $US 2.9 trillion. And last but not least, Japan with a balance sheet of $US 2 trillion.

To read the analysis, go to: A look at the balance sheet of the big 4 economies

US Real Estate a Bargain?

On 20 January 2012, the National Association of Home Builders showed confidence in the housing market rose for a fourth month in January to the highest level since June 2007.

There are many reasons why I follow Marc Faber's market outlook and this is one of them. He is mostly right in his predictions.

A few months ago, Marc Faber told us that US real estate was a bargain. And look what happened, the housing market index improved. Housing starts also improved more than forecasted.

Housing Market Index

As a result the iShares Dow Jones US Real Estate (IYR) has been doing quite well over the last years.

iShares Dow Jones US Real Estate (IYR)

There has been evidence of houses in the US with multiple bedrooms, swimming pools, etc... that can be bought for only $US 150000. That is a real bargain if you compare that to where I live (Belgium), where you can only buy a medium sized appartment for $US 200000.

I don't recommend buying US real estate as I know interest rates in the US will go up. But compared to other countries (housing bubble in Belgium), real estate in the US is certainly not overpriced.