Sunday, February 12, 2012

Rogers wary of US equities despite roaring markets - Investment Week

The Nasdaq reached an 11-year high last week as investors piled into US equities, but Jim Rogers has cautioned on the prospects for the asset class.

In recent months, reported improvements in the US economy have dominated headlines, and stock markets have rallied accordingly. Global fund managers in particular have been increasing their allocation to US equities on better than expected macro data

According to Rogers, the US could see an improvement last throughout 2012, but would then be due a correction. He stressed he is particularly concerned about the next two years.

"Things look better, but whether it is actually real or not is the question. I am worried about the US, especially in 2013 and 2014," he said.

He warned the recent optimism could be prompted by the government's attempt to boost the economy pre-election.

"In the US, they are going to continue printing money and sending out good news to win votes this year," he added.

Rogers recently told Investment Week he plans to short US treasuries as he sees a bubble forming in the asset class.

"US T-bills are at historic lows. To lend money to the most indebted nation in the world is incomprehensible to me. This is a bubble," he said.

Rogers said he is encouraged by progress made regarding Greece's debt restructuring programme, but reiterated his view some European countries need to accept major losses before any real resolution to the crisis can be found.

"Europe needs to stop bailing out Greece. The real issue is are they going to change their ways in future? If they do that, the situation will improve. Just sorting out Greece is not enough, if they were to address the problems in other countries then that would be exciting. But I do not think they will," he said.

Rogers added he expects European countries will continue to overspend, and warned accepting huge losses is the only answer.

However, the chairman of Rogers Holdings remains long the euro, and ultimately does not expect the single currency to break up.

A well-known commodities bull, Rogers holds gold and has warned of a correction in the past. However, he told Investment Week he does not expect the metal to pass the $2,000 per ounce mark as some commodities analysts have forecast this week.

"I do not think it will go to $2,000 this year, no. I own it and I am not planning on selling it. It will go over $2,000 one day, but not this year," he added.


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Jim Rogers

Warren Buffett

Nouriel Roubini