Jim ‘Bowtie’ Rogers is famous for suggesting we leave the United Steaks for a farm in Indonesia. Not only is he a regular Benedict Arnold, but a prospective war profiteer on the inflationary panic that is to come. The only problem with Mr. I think it’s a good idea to get teeth braces at the age of 70 is that the exact opposite has occurred.
Everyone is watching oil now, as it stuns people with downside pin action. The acquisition of BHI by HAL might stem the wave of margin calling selling in the interim. However, let it be known, oil is in an impenetrable ‘fag box‘ and Jim Rogers is stuck inside of it.
Here are some returns for raw commodities over the past 3 years.
Silver -55%
Coal -53%
Sugar -52%
Uranium -51%
Wheat -46%
Coffee -40%
Natty -36%
Corn -36%
Gold -35%
Cotton -33%
Oil -26%
Lithium -23%
Copper -20%
You get the picture?
At the same time, the equity markets have been hitting new highs and the dollar is up 8%.
Quite a conundrum isn’t it?
This is the question that keeps me up at night:
Is the current trend suggestive of chicanery or does it represent the normalization of commodity prices, deflating prices to realistic post war levels?
Let’s be honest with one another, oil doesn’t belong anywhere near $75 based upon supply vs demand. Hell, it was trading under $30 before the Iraq war. Would it be so terrible if the dollar continued to rally versus the euro and commodities fell? Aside from the Bakken being screwed and oil stocks going lower, wouldn’t everyone else benefit from this sort of deflation?
I can only recall the beginning of the dot com era, when oil prices collapsed and stocks roared. Back then, people thought energy was going to be made on the internet and viewed the collapse of oil as a major tax cut, rightfully so. What’s horrendous for Texas is stupendous for New York.
Everyone is so scared of the deflationary boogieman, they are failing to see the potential upside in such a terrific tax cut.
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My gf tried to buy me a bowed tie. It’s bad enough I’m moderated for commentary on this site. I hate bow ties. I got my raptor to pluck the putrid fabric from my person and burn it upon the steps of Satan.
I apologize for this morning, Mr. Fly. I owned a number of commodity sensitive assets that made me go into a fevered rant.
I think the drop in commodities is really a signal of decreased demand not just increased production (especially since all commodities were hit). In 2008, oil crashed from 140 to 40 when all 3 big economies slowed. Today, oil is at ~73 with 2/3 big economies slowed (China & Europe).
Everyone believed in decoupling in 2008, but that actually wasn’t true. When the US crashed, everyone crashed (China had to resort to massive stimulus). This time around, everyone else is crashing, but we’re growing. The question is, is the US consumer still healthy and able to lift the world.
I think the answer is yes — we’re probably going to see moderate growth and low inflation (since everyone else is exporting deflation) for a very long time. US-focused consumer discretionary should do well. Multi-nationals will get slammed by strong-dollar & decreased demand. US Oil might be toast — or at least the ones with high cost / barrel (All those Dakota boomtowns might shut dow now).
Funny how the media doesn’t ask Rogers about FABU (formerly FU), which is allegedly a fraud and is down about 99%. HE WAS ON THE BOARD!
As for oil, low prices aren’t as unambiguously good for US as they would’ve been a decade ago. It’s not just the ND economy that’s at risk — there’s active oil & gas production in well over a dozen states: http://maps.fractracker.org/latest/?webmap=b26c43968bf8435388cbd4b33f2c4b3d
Wow – really informative map. Actually – I think Jim Rogers was a commodity bull because he was an Asia bull. If you really believed that China would grow at 10% in perpetuity, it becomes obvious that commodities will spike. Take that assumption away though……..
So if Putin were pissed about sanctions and cheap oil and felt pressured into responding… He’d attack the oil areas to pump up prices. Louisiana and Texas and maybe Alaska is probably where he’d attack first considering the easy in and out. Considering he will be conducting “training missions” in Gulf of Mexico and northern arctic I’d be on high alert.
I’d concur with this.
$30 oil is great when you’re picking it off the corpse of some foreign government that has a price point of $5 and doesn’t care about their own people.
But the US has more skin in the game now. Any benefit from having cheaper input cost would be fighting against this new industry imploding.
I also think you’d see central banks and governments step in hard. They gambled big on inflation because that’s the best indirect way to get tax receipts higher. Without permanent higher tax receipts, we’re back to 2010-11.
Long THE KING DOLLAR.
Attacking that folksy, snake oil hustler Jim Rogers is sacrilege, Fly, sacrilege.
There was a time when Mark Haines would tell you, oil over $30 would kill us.
Jim Rogers Commodity Fund…I bought in a few years back..went belly up. I was lucky to get my principal back Fuck him and his commodity jibberish
“Mr. I think it’s a good idea to get teeth braces at the age of 70” – physically loled
Headline of the day: Californians may Drink More Toilet Water in 2015. http://www.bloomberg.com/video/california-s-drought-fix-toilet-to-tap-water-KWvbRWh1QiaX8FsEvDrpCw.html
Enjoy your poo water coffee LA!!