“I am buying stock index in India, stock index in Russia. I am long on fertilisers and agriculture commodities as I expect prices to go up. I am overweight on the U.S. dollar. I am overweight on Japanese blue chips as pension funds there are adjusting their portfolios. I am overweight on China as the government is emphasising its economic plans for the next 20 years.” – Jim Rogers
Summary of Jim Rogers Interview With The Economic Times & With Biswajit Baruah – Full article HERE
Biswajit Baruah: What will be the impact of interest rate hikes by the U.S. Fed next year on markets?
Most central banks follow the market, and the market dictates what has to happen. In the U.S., interest rates have already started going up a bit, and they will continue to go higher, in my view. The U.S. central bank will be forced to cut back its bond purchases and probably they will, and that will lead to higher interest rates.
At some point, we are going to have interest rates that will affect markets, though that may not happen for a while. But when it happens, central banks will panic, the U.S. central bank will panic and then they all will again start buying bonds in order to calm down the markets. Then again, interest rates will come down for while, and there will be bubble in the markets.
You have been a big Gold Bull for a while. What is your view on it (gold prices have tumbled to its lowest level in 15 months to below $1,200/ounce)?
I have not been buying gold for a long time. I hope that I may get another chance to buy gold some time this year or next. If gold prices drop below $1,000/ounce, I hope to buy a lot more gold. Meanwhile, I have not bought nor sold gold though I have hedged some of my gold.
Why are you buying U.S. dollars now? Are you betting on the U.S. economic recovery?
The U.S. dollar is partially gaining strength because there is turmoil in the markets; people are worried about the Middle East, Russia, and when people are worried, they quickly resort to the U.S. dollar to make payments. The U.S. dollar is not safe haven anymore, but people don’t understand that. As long as there is turmoil in the world, the dollar will go higher and higher, and this will hurt many countries and economies. And my plan is when the dollar goes higher and higher, I will sell the dollars. Having said that, currently I am long on dollars.
Do you think Brent crude oil will fall further from the current levels (it has fallen over 20% since June this year to hit a 27-month low)?
We are going to have a bit more correction in crude oil prices and some commodities. I hope to buy some commodities when this correction goes far enough. The world is running out of oil in most countries, and the bull market in crude oil is still not over in my view. When crude oil goes down further, I would rather buy the commodity than sell.
Some of the emerging economies, including India, are showing signs of recovery. Is it sustainable?
Well, that has been true for most part of the world because a vast amount of money has been pumped into Japan, America, Europe, and the U.K. Whether the recovery will last or not, I don’t know. But these are all artificial money which has been pumped in to rest of the world.
Do foreign portfolio investors share your view? What is the mood among these investors because their inflows have slowed in the last two months?
The mood about India is still somewhat exuberant because Modi is still very popular since the last elections. But some people have begun to worry about how long this honeymoon period will go on.
Modi has not done much to change the economic outlook of India. People are waiting to see when Modi is going to change its economic policy, or start opening up India to the outside world. The expectations are very high because Modi at some point of time has to come up with some concrete proper actions.
How do you see emerging markets like India getting impacted from the U.S. Federal Reserve interest rate hike?
Emerging markets will be impacted by the interest rate hike. Last year, it scared lot of people, including the best of the emerging markets, when the tapering of quantitative easing was announced. When the market goes down by a fair amount, central banks will panic, and they will say “Don’t worry, we will help you.” Yes, it’s going to affect everybody, especially the emerging markets.
Biswajit Baruah: How do you rate the performance of the new government under Narendra Modi?
Jim Rogers: So far, Modi does not seem to have produced results, which we all expected him to do. He said a lot of wonderful things, but so far nothing has happened, other than a lot of public relations.
About Jim Rogers:
Jim Rogers co-founded the Quantum Fund with George Soros (Trades,Portfolio) in the 1960s. The Quantum Fund went on to gain 4200% in the next 10 years, compared to the S&P 500 that gained 47%, and the fund was the first truly international fund. After making record profits for 20 years, Jim Rogers decided to retire from the Quantum Fund to spend time with his family and travel. He’s a regular guest on multiple business news shows where he discuss his thoughts from Federal Reserve policy, to gold prices, and emerging markets like China and India.
