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Jim Rogers: QE3's Already Started! I'm Shorting Stocks, Long Commodities and Currencies
By EconMatters
Jim Rogers, chairman of Rogers Holdings, talks about his investment strategy. from Singapore with Susan Li on Bloomberg Television's "First Up" on Monday 29 Nov. Rogers also comments on Europe's sovereign debt crisis, Federal Reserve monetary policy and the U.S. economy. (Rogers Bloomberg interview video available at our site)
Rogers says he does not pay too much attention to the rating agencies upgrades and downgrades as their track record has left him with very little confidence. Markets may rally on certain short-term fixes or good news, but until some resolution comes to the mountainous sovereign debt, no rally will last.
He also commented that QE3 is already underway if you look at the huge jump up of M2 money supply since August (see chart below). In Rogers words, "they are buying something." He also thinks the world could be better off without the central banks money printing press.
Regarding his current investing strategy, he said he's shorting European stocks, American technology stocks (He is shorting a package of U.S. technology stocks including Microsoft calls), emerging market stocks, but long commodities and currencies (Rogers owns some euros).
(The Rogers Bloomberg interview video is available at our site.)
Related Reading - Jim Rogers Sees Gold Cross $2,000, and My Contrarian View on Silver
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Jump in US M2 Money Supply is not the result of "Fed printing" or "QE3" (yet).
There is a run on the Euro taking place across the pond. People want out of Euros and into anything else, dollars included.
Expanded F/X Swap lines announced by the Fed yesterday are confirmation that Germany will soon be leaving the Euro. The "run" will turn into a "stampede" when that announcement comes.
Be interesting to see. I however, remain skeptical about Germany's "threat" to leave the Euro. To me it looks like a political mandate building tool for the ever popular fiscal union.
In other words, puppet theater.
The ability to "print" trillions of dollars overnight using keystrokes, binary data, and millisecond transatlantic transfers means that no one is safe from the hegemony of the central bankers.
Just when logic and reality would force sanity and consequences upon financial transactions and markets - the central bankers shake the etch-a-sketch to debase everything.
NO TRUST
Shake the etch-a-sketch!
Well done, Ebworthen.
;-)
Thank you.
It angers me so; 30 years of paying my mortgage and bills and taxes, only to see it and me debased by a bunch of stuffed suits.
Doesnt matter if the banks dont lend to the real economy.
Commodities will get killed if the EZ and China both go tits up.
No amount of printing will stop this.
UNLESS the printing goes straight into consumer pockets.
As long as the slosh goes to the banks, the zombies are just going to sit on it.
With the new basel reqs coming, its only going to get worse not better.
China lowering its RRR may help but not enough, not unless they do a 2008 buildout redux.
What just happened yesterday?
Governments spend money (into consumer's pockets) they don't have. Banks provide this money by buying their Bonds which are worthless because they cannot be repaid. Central banks print money and give it (zero interest loans) to the Banks so they can continue the cycle. In the end, the newly printed money ends up in consumers pockets.
QE 3 is panick stations to save the global banking cartel. And to keep the USD devaluation on track WITHOUT LOSING USD RESERVE CURRENCY STATUS.
As Merkel won't do it to fix banking collapse in EUroland, and inevitable meltdown of US finance, the FED has to.
Bottom line : The US financials have MUCH more to lose than the Germans; they could lose the WHOLE shooting match of PAX americana. And that means that they lose the control of Middle East oil and Far East Pacific rim to China/Russia and other new players. Now that...
read Gary Dorsch on this at 321gold. he says QE3 will commence as soon as the Eurobonds deal is complete. he says that Bernanke's job is to juice the market higher and get Barack Obama reelected. (counterpoint 1) and that currency markets are heading lower (counterpoint 2) he agrees on a lift for commodities and gold. he calls it the United States of Europe (good point - we bail them out, we own them) he says the banking oligarchy is behind all this (agreed). it's all about accepting austerity, will they or won't they. [if a GOP candidate gets it we get austerity up the ass, cuts to medicare and social programs, if Obama gets it the banksters pop the champagne : heads you lose, tails they win]
"good point - we bail them out, we own them"
Who owns whom?
www.youtube.com/watch?v=5D0VhS8qXT0
"We?" Must mean the BIS.
<img src="http://upload.wikimedia.org/wikipedia/commons/thumb/9/93/German_Hyperinf...">
Does Benidiot know what a hyperinflation looks like?
Only in retrospect.
Jimmy Rogers is usually a little early, but he is long term trader. His clients must have iron stomachs sometimes...but JR's track record is very strong.
When he talks I listen, but being a dshorter term trader tha he, I just don't pile into his prognostications.
Jim Rogers? You mean the guy that took until January of 2010 to recognize that there was a property bubble in China and still had the temerity to bad mouth Chanos because Rogers thought everything was hunky dory with the Chinese economy? That Jim Rogers? Yeah, he's great.
You may be right, Smiddy, but how many of us are right all the time? I suspect he has made at least a billion more than you have. Quantum co-founder? Still a major player after all these years?
I watched million-dollar locals get carried out year after year on the Comex floor. Rogers is still kicking ass and taking names. Some respect is due.
Yes, he is a long term position trader, an approach I have reluctantly adopted after trying to manage 100-lot leap spreads in 2008 -- heavy surf. The post-Lehman market's just too crazy to trade. Now I'm hunkered with physical and allocated PMs -- and oil for political risk. Food commodities to be added on cue from CRB.
The other guy I respect on the commodity issue: Jeremy Grantham on resource scarcity. See his quarterly letter archived.
Don't forget the ongoing treasury short he's had now since the begining of time.
I think I'll pass on all that wisdom
That's just his personal style though. He's comfortable holding a position like that until it eventually goes the way he believes it should, based entirely on fundamentals.
The treasure short could come his way big time if the US goes the way of any one of a number of European countries, where rates have skyrocketed over a very short period. I wouldn't be at all surprised if he (and many other savvy investors) aren't adding to this trade right now.
Not my trade either, but Rogers is good to listen to because he shares what wisdom he has openly, and he's certainly done well enough for himself.
Well, he does have a lot larger margin buffer than most of all of us. Still though, I'd say his short is based upon economic opinions, when political ones are far more relevant here. Sure, given the economic realities, Treasurys should crash. Given the political ones though, I can't see it happening until the regime fails outright, which I don't see happening until they break a lot more stuff. (ZIRP4EVA)
One man's "reversion to the mean" is another's "failed paradigm."
Jim is mostly right in normal times. Go long physical gold and silver.
Rogers is the best.
Let's face it, few people can pull off the bow tie. Retired Justice Stevens?
Regarding bow ties, Al Franken comes to mind ;)
Sounds like someone from a different planet; with a bad telephone connection. Short stocks, eh? Currencies? Not for me, thanks.
800, Rogers is short BRIC currencies, I believe. Coud have spreads on against USD. The guy is a master.
I love JR, He has made me a ton over the years so thanks for always linking him up guys! When to many people get to one side of the boat Rodgers moves to the other side. Not to difficult to understand. This holding true, Silver will be the star this year. Special shout out to the reader who mentioned the site comparesilverprices the other day. it saved me some bank on my order this week. Keep up the great work TD! $50 silver soon.
Yes JR has made me money!!!! He was in the farm land camp long before anyone else.
There are several things happening at once. I am a real estate broker - okay who laughed? -
Our market is somewhat rural with average suburban centers.
Properties are behaiving like this:
Commercial/Retail - down (Medical facilities would be an exception here.)
Residential - down and falling fast
Apartments - Stable to rising
Farm land - Rising rapidly!
This tells me there are two forces at play. Deflation in non essentials - Inflation in essentials.
But what the fuck do I know? Got silver?
And PS - The banks are completely fucking frozen. If your are coming to play, please bring cash. Farm land would be the exception.
www.SouthGaRealEstateReport.com
Banks wanted a lot of fiat for my farm land. I gave it to them (while still holding more valuable assets).
My neighbor's 290+ acres isn't moving very fast. I suspect that it's pretty much as we thought, that those who "need" loans don't get them, and those that have cash get the loans. What, then, is the purpose of the banks?
In a healthy (i.e. consumer regulated) environment, banks would be looking for opportunities to make loans to productive entrepreneurs, as that is the only path to profitability. In a crony, bankster regulated environment though, playing paper games is perceived as a lot less risky, since the main game is front-running the Treasury/Fed syndicate, who also implicitly back-stop it. Of course, as we all know, this leads to systemic problems due to moral hazard. From a banker's view though, it's just the best way to make a buck, as everyone is doing it (with blessings from above, à la Greenspan), and no single act can be blamed. Also, if you don't play, you get left in the dust, as compared to your peers.
So... banks have a real purpose, and would pursue it under normal circumstances. Thing is, thanks to the Fed, and legal tender laws, all we have are zombie banks and the smaller ones that they prey upon.
SEER
What, then, is the purpose of the banks?
To make sure they do not lose money,and make sure they do OFF of yours.
'Janitor Ben' is out with his pooper scooper cleaning up all the dumps from the bankers lunches
Being mandated to backstop these losers is not a job for the squimish... we're talking alot of shit to clean up
and nobody is quite as qualified as Bernanke at picking up steaming crap (take a look at the Feds balance sheet)
Ben Bernanke, toilet cleaner par excellence
would like to understand his logic on shorting Microsoft, not a fan of microsoft but shorting calls on a company that yields 3%, has a strong balance sheet, and single digit PE seems dumb to me, there seems to be much more low hanging fruit than that.
when you go short the stock you pay the dividend
The post says his "short package" includes CALLS on Microsoft, so apparently he is long MSFT. Or maybe it means the package is also selling calls on MSFT? Confusingly written.
you can sell calls without an offsetting position if you have enough margin, or he could simply be in a bear spread, where he is selling the premium in the options. anytime you sell calls you are selling premium, which usually means you are either in a long strike, (smart players like the LEAPS) or in some kind of shorter duration at the money or spread of some kind.
He mentioned this when he was on CapitalAccount a couple of weeks ago (http://www.youtube.com/watch?v=RpxHFM74G_g). M2 is too braod a measure of money to prove that the Fed is engaged in quantitative easing. By definition, the FED has to expand the size of its balance sheet if it wants to manipulate interest rates and the money supply, but QE means LSAP, and the Fed, to my knoweldge at least, has not engaged in those type of LSAPs yet. I don't think you can just call it qe3 just because braoder money stock is expanding. that could be happening for all sorts of reasons
shhhhh this happened in Japan in the lost decade, the BOJ was parking money in Money Market accounts. they would periodically sweep the cash, no one seemed to know why they were doing it, but you can guess, that in this case the MM accounts are in Eurobanks. (ah the glory of the global economy) meanwhile VELOCITY is through the shithouse floor. i expect the GOP to get angry and populist about all this taxpayer money going to prop up Eurobanks. if the thing blows up Obama will be ridden out of town, and the election will be a nightmare.
"i expect the GOP to get angry and populist about all this taxpayer money going to prop up Eurobanks. if the thing blows up Obama will be ridden out of town, and the election will be a nightmare."
I'm thinking that it ends poorly no matter which way. Assuming Obama and The Bernank get tossed into the ditch, wouldn't that likely result in a flood of money, in massive inflation (which would be short-lived, followed by a massive [last?] POP)?
most of the money they 'print' is really notional, or electronic money, or monetized debt to replace other monetized debt. there are two things i would do, or try to do, one is to create a second currency out of these notional dollars, and float that dollar against hard currency in circulation. this at least guarantees that real money doesn't disappear like in the did in the first GD. that way everytime the Fed tried to pull a trick you could see the exchange rate between their fiat money and the hard currency, which could be gold but doesn't need to be. Secondly I would start to wean the Fed off the UST, right now the FED assumes that 100% of its balance sheet is backed by UST, I would slash that down in increments until the Fed and the UST were firewalled off.
I agree. M2 could rise for reasons other than an LSAP, and almost certainly has (Europeans bailing out of Europe, for example).
I am surprised he would short MSFT. They have tons of money, trade at a low multiple and don't really have a history of big price drops. Not saying I would buy some, but I would think there is lower hanging fruit. Maybe a quick call to Whitney Tilson would help....
What's the outlook for MSFT? Seems that everyone's moving to iStuff: up and until their credit lines get maxed and or cancelled. And as wages continue down and unemployment up retail is going to be further depressed. Leaves really only corporate buying, and this sector isn't growing: circular function- refer to retail issue.
MSFT has peaked as a company. Shorting would seem to make perfect sense. But then again, I'm shorting everything about this civilization...
Google is going to own the office app market (and everything else that MS does that can be served online). Their freemium pricing model is just too good to pass up for cash-strapped businesses looking at reducing IT costs. I expect our entire operation to move to Google over time, starting with the email/calendar/contact mgmt apps. Personally, I spend very little time on a PC anymore that I'm not using a browser-based app. Even much of the stuff I do use a stand-alone app for, has a web interface as well.
As for Windows, I spent yesterday installing Ubuntu on my PC, and it runs so much faster than my old XP install. The install was simple as well, running from Windows and automatically setting the PC up as dual-boot. Once the conventional wisdom coalesces that Google is a good business solution, I expect to see MS down-size to fill niche software markets.
It will also be interesting to see what database can take-down SQL Server, the other cash cow.
lets all trade our guess// up or down or stable..some how I feel everyone's bet will be wrong. NO debt, owning physical assets may help soften the fall..paper assets are rigged and you may never get paid for even a correct guess..good luck to those that bet these markets. MF Global investor bitchez.
He went long the dollar months ago and is doing just fine. He shorted Technology stocks at the same time and seems to be doing okay. He shorted treasuries months ago and got his face ripped off.
He went long the dollar according to him, 2 days ago and got his face ripped off.
He's not in the Kyle Bass league.
He's watching the velocity of M2 and not its acceleration. Fatal flaw.
There has been a concerted effort to take down Hedge Funds short this market. Short, squeeze, cover...ad nauseum. It's a gift to traders. You'll be reading about Soros soon.
MEA CULPA: A sincere apology to those who corrected me when I stated Ron Paul voted for QE1. I read that a year ago on a blog but checked yesterday the actual vote AND I was wrong. Again: MEA CULPA.
wow, someone on the interwebz who can actually admit he was wrong...i applaud you sir...
bass and rodgers, i like both, but i think rodgers has a different approach since he can ride out volatility with his billions...
fuck the fed, broke my nose yesterday on FAZ...to pissed to realize the loss...
Well played, sir.
At the very least, you are a man's man.
He knows that 4% daily up moves only happen during bear markets.