Sunday, July 31, 2011

Manager Jim Rogers: U.S. Headed For Default 'One Way Or The Other' -Barron's (blog)

Noted commodities fund manager Jim Rogers says that the United States will “default one way or the other” and that ongoing deficit reduction talks are “a sham” that can’t cover the fact that the U.S. dollar is a “terribly flawed currency.”
The remarks are set to be aired as part of an in-depth interview with the money manager tonight on America’s Nightly Scoreboard show that starts at 9 p.m. eastern time on cable’s Fox Business Network.
Rogers’ firm helped design the Elements Rogers International Commodity Agriculture ETN (RJA). It’s down 1.7% today. Rogers also put together the benchmark for the Market Vectors RVE Hard Assets ETF (HAP). It has dropped 2.2% so far.
In the wide-ranging discussion, Rogers continues to hammer away at big budget deficits and what he sees as a declining greenback in the face of the Fed’s easy monetary policies.
D.C. lawmakers will probably wind up raising the debt ceiling and “announce some kind of wonderful deal, which they will promptly ignore,” Rogers says in advance copy of the interview sent to the media this afternoon.
“It might be good for the world if the United States closed down for a while, but I can’t see that happening,” he said. “Something will happen, things will look better, but then in six months or a year, things will be worse again.”
In terms of investing, Rogers says he’s long commodities and short emerging markets and technology stocks in the U.S.
“I’m also long currencies, I am short a major American bank and short bonds,” he added.
Rogers likes prospects for Japan and owns the yen. He also says:
“I bought Japanese shares when the tsunami came, I think I am probably going to buy some more. I own the U.S. Dollar. It has been terribly beaten down. Everybody is bearish on the U.S Dollar including me. It’s fundamentally a terribly flawed currency. But when everybody is bearish on something it is usually a time to own it.”
The iShares Msci Japan ETF (EWJ) is down 1.2% on Monday. But it has gained more than 6% in the past month.
As to the U.S. Dollar ETF (UUP), it’s surging today by 1.1% and has gained 1.5% in the past month — a rather large move for a developed market currency fund.
On CNBC today, Rogers was talking about silver as “going to go much, much higher over the next decade.”
The iShares Silver Trust (SLV) is down 2% so far.

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Jim Rogers

Warren Buffett

Nouriel Roubini