Good morning to you all. Jim Rogers, co-founder of the Quantum Fund along with billionaire investor George Soros and whom we covered on AGORACOM quite extensively, was on Bloomberg TV this morning discussing every financial crisis under the sun.
I am writing this as I watch the interview, so don’t mind my form but do mind the facts.
UPDATE: Video is now up on Bloomberg.
Rogers was one of the first to go on record with a $200 oil call, saying $100 oil was a forgeone conclusion, as well as, $1,000 gold. He is also one of the biggest US bears out there, having announced that he is selling all of his US holdings and dollars, as well as, going short on the entire financial sector. Read our coverage from November 2007 here.
On the other hand, he is the biggest Agricultural bull anywhere, telling investors at every opportunity to buy Agriculture due to demand out of Asia.
Given what has happened to oil, gold, US markets, the US dollar and Agriculture, we make sure to pay attention to anything he has to say. You don’t have to follow all of his advice – but you should consider his comments at the very least.
*NOTE – This was an interview via Satellite so the notes below are more like shorthand notes…but they’re well worth your time tor read.
On Fannie and Freddie
An unmitigated disaster to buy stock and guarantee debt with taxpayer money.
Balance sheet shows both companies were a sham. They should be or go bankrupt. The Fed is simply bailing out Japanese and Chinese investors with massive positions in both Fannie and Freddie.
Fed action will drive down the dollar and lead to rampant inflation and demise of US Dollar.
If you bank in America, don’t have an account balance greater than $100,000.
Not the way capitalism works. This is welfare for the rich. If you don’t let Fa/Fr go broke today, what will happen 2-3 years down the road when they will go broke?
People at Fannie and Freddie should be in jail.
On US Dollar
Dollar is a flawed currency. Value is being ruined by Fed Reserve that chooses to bailout their Wall Street friends. But there are 300M real people who are going to have to pay for this.
Agrees with Volcker that this action is illegal.
Interest rates are going higher due to inflation. Governments typically lie about inflation but they are no longer doing so. UK is an example of worst inflation since 1987. Why won’t US come clean on inflation? Pension funds are getting killed and can’t buy commodities to hedge inflation.
US economy is going into recession and exacerbated by mistakes at Fed Res and gov’t. Much like Japan. Possibly worst recession since WWII.
On US Treasuries
Short US bonds and treasuries. US debt will be downgraded over next few years, as will US bonds.
Fed Reserve balance sheet is stretched.
On US Financial / Banking Stocks
Has been short all US investment banks and will continue to be so. If they rally, he will short more.
Does not expect any good news this week.
Bernanke and Fed can’t be trusted.
Possibly worst recession since WWII.
On Commodities
We are in the 4th inning of the commodities boom. Recession will cut demand of commodities but will also cut supply faster. 70’s are an example of a recession with a booming commodities market because supply fell faster than demand.
Still bullish on Oil, which started this cycle in 1999. Oil has dropped by more than 40% on three separate occasions since 1999 – but none of these put an end to the oil boom.
Agriculture is his favourite commodity group but he is starting to take a look at base metals such as zinc and lead. Investors should be buying Agriculture.
On China
Will continue buying Chinese and Taiwanese stocks. 2008 in China is like the US in 1908. Have to buy here and have your children still holding stock. Selling is not an option.
END