Jim Rogers Speaks

May 12, 2011

Interesting forecasts from Jim Rogers in this CNBC article. Some of the excerpts are rather striking:

Veteran investor Jim Rogers said on Wednesday he plans to short US bonds and sees more currency turmoil in the markets this fall. ”I will be shorting US bonds,” Rogers told a conference in Edinburgh. “I would probably be doing it today if I weren’t here,” he said.

Addressing one bond portfolio manager among conference delegates, Rogers said: “If I were you I would think about becoming a farmer. You buy land and learn how to farm.”

“Longer term the US dollar is going to be a total disaster,” Rogers said, urging investors to “think about getting out of US dollars before it’s too late.”

It’s not clear if his forecasts are going to be more accurate than anyone else’s, but it is interesting that both he and Bill Gross of PIMCO are short US bonds. When I look at our global asset class rankings, US Treasurys and the US dollar are very weak and commodities are still quite strong. If you are a relative strength asset allocator, you’d be positioned the same way as Jim Rogers, at least for the time being.

Farmer Jim

Source: Business Insider

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Posted by Mike Moody

Wholesale Prices

May 12, 2011

According to Bloomberg, wholesale prices are now climbing at a pretty rapid clip.

Compared with a year earlier, companies paid 6.8 percent more for goods last month, the most since September 2008…

Consumer prices have not been rising that fast, since producers have found it difficult to pass on the price increases so far. At some point, though, producers may decide they have had enough of margin contraction and the wholesale prices increases may begin to flow through. It will be interesting to see if that eventually happens, especially in light of the recent pullback in commodity prices. The Fed has their fingers crossed that consumer prices stay subdued!

Here was the part of the article that I found most surprising:

Imported food costs were up 20 percent from a year earlier, the biggest 12-month increase since records began in 1977.

Wow! I don’t think the US is a net food importer, so this big price increase should have a muted effect here, but it’s got to be very painful for consumers in many countries that are net food importers.

All of this data has global investment implications. It’s basic beanbag economics: when you smush down a beanbag chair in one spot, it poofs out somewhere else. Changes that are negative for one sector are often positive for another sector. Relative strength can help distinguish who’s benefiting and who isn’t.

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Posted by Mike Moody

Fund Flows

May 12, 2011

The Investment Company Institute is the national association of U.S. investment companies, including mutual funds, closed-end funds, exchange-traded funds (ETFs), and unit investment trusts (UITs). Members of ICI manage total assets of $11.82 trillion and serve nearly 90 million shareholders. Flow estimates are derived from data collected covering more than 95 percent of industry assets and are adjusted to represent industry totals.

Volatility in the markets over the last few weeks has led to noticeable flows. Taxable bond funds continued to attract the most new money last week, doubling their numbers from the week before. Domestic equity outflows also surged.

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Posted by JP Lee