Wednesday, May 11, 2016

Jim Rogers May 2016 interview with Bloomberg TV

You have been really bearish about global growth and you thought 2016-17 is going to see commodities prices find a complicated bottom. We have seen a comeback from there. What are you making of the comeback of the commodities?

Rogers: Well yes, many of the commodities have made a complicated bottom. That does not mean there won’t be corrections from here. Commodities got banged a great deal and when anything gets banged a great deal, it often has a big rally. And that’s what’s happening.

From sub $30 a barrel, Brent is now at $45. Do you see this as a rebound or re-rating of crude?

Rogers: Normally, when you have a big drop in markets, there is a rebound and then there’s a dead cat bounce if nothing else. And then you have a test of the lows. I expect we would have a test of the lows sometime later in summer or may be sooner. But we are in the process of making complicated bottoms in nearly all commodities.

Do you see a sub $30 a barrel level on Brent again?

Rogers: I am not sure of any disaster. If Italy suddenly goes bankrupt, then who knows? But no, I don’t think we would see a sub $30 level on Brent again.

So what is the range that you see on Brent?

Rogers: Oh, I am not smart enough. I go day-to-day and week-to-week. I don’t have a set target in mind. I watch the markets and react to them as things go along. If there is a gigantic spike, I might sell something. If I see a sudden collapse, I’d probably buy something.

What are the surprises that have been with the weakness of the dollar suddenly?

Rogers: Well, I still own my dollars. So it is correcting and the dollar needs a correction because it was so strong for so long. I suspect that we are probably going to see the metals going down now and we have not bought any metals. And I told you before, I was suspecting that these rallies on metals are pretty much over and there’ll be a better chance to buy precious metals maybe even next year.

What about the industrial metals? The China factor was a big sword hanging over the metals but since then domestic consumption has been picking up in China. Things turning out have been not so bad after all. Is it just a bounce back?

Rogers: Well yes, that is what is happening. There is a bounce back and this is the justification, you know. Apparently, China is spending a lot of money again, which is a mistake. China has a lot of debt build-up in the last seven years and this is going to cause it a lot of problems as well as to the world. I don’t think China is doing the right thing by popping their economy again.

They are talking about a shift to domestic consumption, soft-landing, a U-turn for the economy and looking inwards and saying that this is a structural adjustment from China. What do you make of it?

Rogers: No, all the economies are adjusting all the time. China is putting emphasis on trying to rebuild the economy but there are going to be some very big surprises in China in the next couple of years. You’re going to have people going bankrupt because there is a debt build-up in China.