Jim Rogers: “Volume Is Not Going To Come Back. We’ve Had A Great 30 Years. That’s Finished!”

Tuesday, May 15th, 2012

 
Jim Rogers is hedging his gold (and silver) positions reflecting that this is normal, following such a tremendous run, and that this is good for the precious metal in the long-run. In his discussion with Maria Bartiromo this afternoon, he notes India’s anti-gold ‘protectionism’ (and its potential balance of payments issues) that are trying to force the hoarding into risky ‘productive’ assets (as others might say). The immutable commodity maven suggests JPMorgan (and its peers) could be behind the drops in the overall commodity complex as the uncertainty of their positions (and liquidation potential to raise cash as bank examiners begin their forensics) becomes more important. He holds the USD, which he hates; has a number of equity shorts; and is most fearful of banks – specifically admitting he is a serial seller of calls on JPMorgan.

His advice, and perhaps Maria should look into it given their ratings recently, is to become a farmer; own farmland; and speculate on agriculture. On the dismal ‘ethical’ state of our leaders and management, the thoughtful Rogers opines, “You can read world history for decades. There are always people doing things wrong. We have not changed our human nature and we will continue to have scandals and problems” and in a follow-up to CNBC’s standard ‘money-on-the-sidelines’ argument he crushes the money-honey’s dreams: “Finance had a great 30 years. That’s finished. Now to advance, we have too many people, too many MBAs, too much leverage and too many governments that don’t like us”. A must-see rebuttal to the ‘normal’ CNBC hopium with more on China’s slowdown, a US recession, Europe and a Greek exit, QE3, and ‘tractors’.

Tags: Balance Of Payments, Bank Examiners, Cnbc, Farmland, Forensics, Gold And Silver, Hoarding, Human Nature, Jim Rogers, Maria Bartiromo, Maven, Money Honey, Precious Metal, productive assets, Protectionism, Qe3, Rebuttal, Sidelines, Slowdown, World History
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SWOT: Emerging Markets

Sunday, December 20th, 2009

Emerging Markets

Strengths

• Singapore’s exports rose 8.7 percent year-over-year in November, the first increase in 19 months. The increase was due to a surge in pharmaceuticals shipments and a moderation in the decline of electronics exports. Month-over-month growth was even stronger at a seasonally adjusted 19.8 percent.
• Annual industrial production growth in Russia returned to positive territory for the first time in over a year. According to Rosstat, industrial production rose 1.5 percent year-over-year in November.
• Mobile subscriber data from Brazil showed 1.7 million net additions during November, bringing penetration up to about 85 percent. Vivo accounted for 36 percent of net adds, followed by TIM (25 percent) and Claro (23 percent).
• Unemployment in Brazil in November fell to 7.4 percent, below the year-to-date average of 8.2 percent. Retail sales in Brazil in October rose 1.4 percent from September and 8.4 percent year-over-year. October was a sixth consecutive month of rising retail sales.

Weaknesses

• China set down-payment ratios at a minimum of 50 percent of principal with a payoff period maximum of two years for property developers to curb speculative behavior that includes land hoarding and land flipping. China also gathered vice mayors from more than 600 cities to discuss housing policy.
• October retail sales in the Czech Republic contracted 4.7 percent compared to last year. Continued recession in private consumption reflects the weak labor market in the country.
• Standard & Poor’s lowered its foreign currency investment rating for Mexico by one notch to BBB (still investment grade). The factors that contributed to the downgrade were deterioration of the country’s fiscal position, diminishing oil production and reduced GDP growth prospects.

Opportunities

• To facilitate its prospective policy shift from public spending to private consumption next year, China needs new regulatory support for consumer financing to better unleash demand for durable goods. Only 8 percent of China’s car purchases were financed through auto loans as of 2008, compared with 85 percent in the U.S. (chart below). Expanded consumer financing should benefit Chinese domestic banks as an offset to a subsequent slowdown in infrastructure lending.
  

  Chinese Car Buyers’ Leverage Incredibly Low

  	2008
  Source: CEIC, J.P. Morgan estimates.
  Spain	89%
  Italy	87%
  UK	87%
  US	85%
  EU	80%
  France	78%
  Germany	71%
  India	70%
  LatAm	60%
  China	8%

• After years of neglect, Russian retirees will see their pensions double in 2010. The pension hike, financed from National Welfare Fund, will be worth about 3.1 percent of GDP and will be spent on consumer staples.
• Banco do Brasil indicated its intention to expand abroad, possibly buying a small regional bank in the U.S. to access Brazilian expatriates.
• Mexico City government employees this week became eligible for food vouchers redeemable in the stores of Walmex, Soriana and Comerci. The program is worth around $2.1 billion pesos, roughly 2.7 percent of Walmex quarterly revenue.
• The Brazilian government held its first wind-energy auction to purchase 1,805 megawatts of wind-generated energy from 71 wind farms. The program is meant to reduce reliance on hydropower as the economy expands.

Threats

• Should the countertrend rally in the U.S. dollar be sustainable, risk aversion might revisit Asia given the longstanding negative correlation between the U.S. dollar and Asian equities. Global liquidity rotation from Asia back to the U.S. cannot be ruled out in the short term under this scenario.
• The strengthening of the U.S. dollar over the past two weeks brought back into focus the exposure of the banks in emerging markets. Lending in the Czech Republic and Turkey is traditionally done in local currency, while Polish and Russian banks face higher risk on their foreign-currency loans.
• Lower commodities prices would be a headwind for resource rich countries like Peru and Brazil.

Tags: 19 Months, Bbb, Brazil, BRIC, BRICs, China, Commodities, Currency Investment, Emerging Markets, Fiscal Position, Foreign Currency, GDP Growth, Growth Prospects, Hoarding, India, Investment Grade, Mayors, Mobile Subscriber, oil, Oil Production, Payoff Period, Policy Shift, Private Consumption, Property Developers, Public Spending, Regulatory Support, Rsquo, Russia, Subscriber Data
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