Jim Rogers: US Is Bankrupt

On CNBC: http://www.cnbc.com/id/44054257

• Jim Rogers: Don't See How US Can Ever Pay Off Debts
  Published: Sunday, 7 Aug 2011 | 9:51 PM ET
  By: Deepanshu Bagchee
  
  U.S. doesn't deserve a AA-plus credit rating, much less triple-A, commodity bull and noted investor Jim Rogers told CNBC on Monday.
  
  Rogers said the country was unlikely to be able to pay off its debt and Standard and Poor's rating cut had come too late and should have happened long ago.
  
  "It seems to me it's physically, humanly impossible for the U.S. to ever pay off its debt," Rogers said. "They can roll it over and continue to play the charade, but the U.S. is bankrupt."
  
  Rogers’ comments came during a CNBC interview with the head of sovereign ratings at Standard and Poor's, David Beers.
  
  Beers said that according to S&P's calculations, total U.S. public debt, which includes local, state and federal government debt, will be $11 trillion this year, and will rise to $14 trillion in 2015 and to $20 trillion by 2021.
  
  To put those numbers into perspective, according to the U.S. government's Bureau of Economic Analysis, U.S. annual gross domestic product (GDP) totaled $15 trillion in the second quarter of 2011.
  
  Rogers, who has been critical of the U.S. economic policies for some time, said he remains short 30-year Treasurys, emerging markets and U.S. technology stocks but was long safe havens such as the Swiss franc, the yen and the dollar.
  
  Rogers said he was also long commodities, especially gold and agriculture, and accepted that some of his long commodity positions may suffer in a selloff. Still, he won’t be selling.
  
  "You should nearly always buy into panic just like you should sell hysteria," Rogers said. "I own gold, I'm worried about gold, it's going so up so much, I'm not going to sell it but it looks like it's setting itself up for a nice correction. I hope so then I can buy more."

Jim Rogers: Beware Of Dollar Crisis - Do NOT Short The Market

On CNBC. Dollar Crisis Looming — Don't Short the Market: Jim Rogers

• By: Krystina Gustafson
  A currency crisis is imminent, so investors should avoid shorting the market, said Jim Rogers, chairman of Rogers Holdings.
  
  "I’m afraid they're printing so much money that stocks could go to 20,000 or 30,000," Rogers said. "Of course it would be in worthless money, but it could happen and you could lose a lot of money being short."
  
  Rogers typically holds both long and short positions, but his perception of global currencies' instability has led him to pull out all his shorts, he said. The last time he can remember doing so was before the market fiasco in 1987.
  
  Rogers called the US dollar a "terribly flawed currency," adding that it could be the starting point for the next currency crisis.
  
  "I would suspect that somewhere along the line...someone's going to say, 'I'm going to start selling mine before everybody else does,'" Rogers said. "That's when you have a currency crisis."
  
  But instead of pouring money into stocks, Rogers said investors should turn toward commodities. This sector will lead the recovery if the global economy improves, and if it doesn't, they'll still be the best place because of inflation, he said.

Yeah.. good old Jim Rogers still insisting that one should follow his vested positions. Long commodities.

Hmm.... but then most commodities have soared already, no?

Jim Rogers Warns On Stocks And Calls End To USD Rally

On Bloomberg: Dollar Rally Will End, Rogers Says; May Short Stocks

• By Chen Shiyin and Haslinda Amin
  
  May 12 (Bloomberg) -- The dollar’s rally is set to end in a “currency crisis,” investor Jim Rogers said, adding that he may bet on a slide in equities after they jumped 34 percent in the U.S. in nine weeks.
  
  The rally in the dollar has been driven by investors covering their short sales, Rogers, 66, said in an interview with Bloomberg Television in Singapore. He may consider adding to his holdings of the yen and prefers the euro to the dollar or the pound, the investor added.
  
  “We’re going to have a currency crisis, probably this fall or the fall of 2010,” Rogers. “It’s been building up for a long time. We’ve had a huge rally in the dollar, an artificial rally in the dollar, so it’s time for a currency crisis.”
  
  The dollar has rallied against all of the so-called Group of 10 currencies except the yen over the past 12 months, according to data compiled by Bloomberg. The U.S. currency was at $1.3576 per euro today from $1.3582.
  
  So-called short sellers borrow securities and sell them on hopes of capturing a profit by replacing them after prices fall.
  
  The rally in U.S. stocks also signals a “correction,” Rogers said. He’s avoiding equities for the next two to three years because prospects haven’t changed, he added.
  
  The Standard & Poor’s 500 Index has jumped 34 percent from its March 9 low, erasing its losses for the year. The gauge plunged 38 percent in 2008, its worst year since the Great Depression.
  
  ‘Time for a Correction’
  
  “The market in the U.S. went up very powerfully for nine weeks in a row so of course it’s time for a correction,” Rogers said. “Fundamentals haven’t changed if you ask me. I don’t see the stock market as a great place to be in the next two to three years.”
  
  Equity markets may dip below recent lows as more troubles lay ahead in the financial market, Rogers said in an April 13 interview with Bloomberg TV. Rogers is the author of “A Bull in China: Investing Profitably in the World’s Greatest Market.”
  
  Rogers owns some Chinese and Japanese stocks, and also continues to hold some shares of airlines, he said without naming any companies. Stocks in emerging nations that supply natural resources may also perform better than U.S. shares, Rogers added.
  
  Commodities are still among the best bets for investors because of constrained capacity, the investor said. He has been buying agriculture-related commodities and prefers silver to gold, palladium and platinum, Rogers added
  

Latest Comments From Jim Rogers

ps: where is the bow tie? :p2

Jim Rogers: 2009 Market Outlook

Here's 2009 Market Outlook from Jim Rogers

Jim Rogers Expects US Dollar To Fall And Remains Bullish On Commodities

Posted on Bloomberg.

• Nov. 25 (Bloomberg) -- The U.S. dollar will be “devalued” as policy makers seek to weaken it, undermining the greenback’s role as an international reserve currency, said Jim Rogers, chairman of Rogers Holdings in Singapore.
  
  “They think that if you drive down the value of your money, it makes you more competitive, now that has never worked in history in the long term,” said Rogers. The ICE’s Dollar Index has gained 18 percent since Rogers said in an interview on April 27 he expected a dollar rally “about now.”
  
  The U.S. dollar gained since June 30 against all the 16 most-traded currencies except for the yen as investors fled for the perceived safety of Treasuries after the global financial crisis struck, tipping the world into recession. U.S. politicians are seeking to reverse those gains to revive growth, Rogers said.
  
  The dollar is “going to lose its status as the world’s reserve currency,” Rogers said yesterday in an interview with Bloomberg Television. “It will be devalued and it will go down a lot. These guys in Washington, they want to debase the currency.”
  
  Rogers said that he is buying the Japanese yen. All of the 16 most-active currencies have weakened against the yen this year, with South Korea’s won falling 45 percent as the worst performer.
  
  The ICE’s Dollar Index, which tracks the greenback against the currencies of six major trading partners, fell to 86.028 as of 11:55 a.m. in Tokyo from 86.081 late in New York yesterday. It reached 88.463 on Nov. 21, the highest level since April 2006.
  
  Plan to Exit Dollars
  
  The U.S. currency’s rally has “already lasted several months” and “will probably go into next year,” Rogers said. “What I plan to do sometime during this rally is to get out of the rest of my U.S. dollars.”
  
  “If I were doing it today and what I have done today is buy the yen,” Rogers said. “But, it is also an artificial move that’s going on. It’s a difficult problem to find out what is a sound currency.”
  
  Democratic lawmakers including Senator Charles Schumer of New York said this weekend they plan to design a package as large as $700 billion and deliver it to President-elect Barack Obama on his first day in office. Obama has called for a large economic-stimulus package, saying the U.S. faces the loss of “millions of jobs” unless immediate steps are taken to stimulate growth and rescue the nation’s automakers.
  
  Buying Commodities
  
  Rogers also is buying commodities, saying their “fundamentals have not been impaired and, in fact, are improved.”
  
  “In mid-October, I started buying commodities, I started buying China and I started buying Taiwan,” he said. “I bought them all, but I’ve been focusing more on agriculture. I mean sugar is 80 percent below its all-time high. It’s astonishing how low some of these prices are.”
  
  Sugar surged the most in two weeks yesterday amid speculation that higher crude-oil prices will boost demand for alternative fuels, including ethanol made from cane.
  
  Raw-sugar futures for March delivery rose 0.44 cent, or 3.9 percent, to 11.72 cents a pound on ICE Futures U.S. in New York yesterday. The gain was the biggest for a most-active contract since Nov. 4. Sugar has declined in each of the past three weeks.

Source: http://www.bloomberg.com/apps/news?pid=newsarchive&sid=axUDVSTZ1k3g

Jim Rogers Interview on Bloomberg

Enjoy!

Part 1.



Part 2.

These Bailout Are Simply Outrageous Blasts Jim Rogers

Jim Rogers certainly doesn't have any nice words to say on what has happened.

• We Are Facing an 'Inflation Holocaust': Jim Rogers
  
  Markets do not trust the governments' plans to keep struggling banks alive and investors will only calm down when the companies with bad assets are allowed to go bankrupt, legendary investor Jim Rogers, CEO of Rogers Holdings, told CNBC on Friday.
  
  "The way to solve this problem is to let people go bankrupt," Rogers said.
  "Then you will hit bottom and then you start over. The people who are sound will take over the assets from the people who aren't sound and we will start over. This is the way the world has worked for a few thousand years."
  
  The current rescue plans, which will force governments to issue more debt, print money and flood the markets with liquidity, will flare up inflation after the crisis is over and will create worse problems, Rogers warned.
  
  "We're setting the stage for when we come out of this of a massive inflation holocaust," he said.
  
  And the plans are unlikely to fend off a severe economic downturn, as the crisis starts affecting all walks of life.
  
  "We had the worst excesses we had in credit markets in world history. We're going to have to take some pain," Rogers said.
  
  "Many people bought 4-5 houses with no money down and no job… you think we'll just say well, that's too bad, we'll start over and nobody loses their job? Be realistic."
  
  People should not look to the upcoming G7 meeting with the hope that the leaders of the strongest economies will find a solution.
  
  "What they (G7 leaders) need to do is go down the bar and leave the rest of us alone," Rogers said.
  
  Economies who did not take part in the subprime bonanza are likely to suffer along with Wall Street and the developed economies as the crisis unfolds, he warned.
  
  "What about all the people in countries that minded their manners, saved their money, didn't get overextended and now all of a sudden they're being asked to bail out a bunch of guys on Wall Street who were incompetent at best and some of them crooks?"
  
  "I thought it outrageous that anybody has to step in a bail out a bunch of 29 year olds driving Maseratis," he said.
  
  There are not many safe havens in the volatile markets, he said.
  
  "I have an enormous amount of cash and I've been using it to buy more Japanese yen, more Swiss Francs, more agricultural products… there's a liquidation phase going on, where everything is being liquidated. They're selling everything in sight."
  
  "In a period like this the way you make money coming out of it is to own the things were the fundamentals have not been impaired," Rogers added.

Source: http://www.cnbc.com/id/27097823

Jim Rogers Calls Them Simply Incompetent!

Jim Rogers has some nasty opinions.. Incompetent people forced Lehman collapse:Rogers

• SINGAPORE: Global markets are in turmoil thanks to the unprecedented crisis brought about by the collapse of global financial giant Lehman Brothers and the bail outs of Merrill Lynch and AIG.
  
  But who is responsible for the fall of these banking giants? A set of incompetent people with Lehman Brothers, Merrill Lynch and AIG, says global investing legend Jim Rogers.
  
  In an exclusive interview to Commodity Online, Rogers—who is regarded as one of the top global commodities investors—said that "gigantic amounts of leverage caused by a few totally incompetent people within the firms" have led to the collapse of Lehman Brothers and problems plaguing Merrill Lynch and AIG.
  
  Rogers said investment firms like Lehman used to invest heavily on commodities and as the funds have moved out of commodities, it has hit the markets hard.
  
  ”Commodities and everything else are being sold in forced liquidations because of the financial situations at many firms,” Rogers said.
  
  He predicted that the US economy in particular and the economies in several countries across the globe will continue to suffer thanks to the crisis. “After this panic and forced liquidations, the economies will continue to worsen, but the sound investments will recover first after the panic,” Rogers added.
  

Jim Rogers says that US is More Communist Than China

Wow!

Jim Rogers is certainly NOT impressed with the bailout of Freddie And Fannie.

• US Is "More Communist than China": Jim Rogers
  
  The nationalization of Fannie Mae and Freddie Mac shows that the U.S. is "more communist than China right now" but its brand of socialism is meant only for the rich, investor Jim Rogers, CEO of Rogers Holdings, told CNBC Europe on Monday.
  
  "America is more communist than China is right now. You can see that this is welfare of the rich, it is socialism for the rich… it's just bailing out financial institutions," Rogers said.
  
  Stock markets jumped after the U.S. government's decision to launch what could be its biggest federal bailout ever, in a bid to support the housing market and ward off more global financial market turbulence.
  
  But Rogers said in the long term the move spelled trouble.
  
  "This is madness, this is insanity, they have more than doubled the American national debt in one weekend for a bunch of crooks and incompetents. I'm not quite sure why I or anybody else should be paying for this," Rogers told "Squawk Box Europe."
  
  European stocks soared on Monday, led by banks. UBS was up 11 percent, BNP Paribas up 8 percent, Credit Agricole up 11.1 percent and HBOS up 13.8 percent.
  
  "You certainly gonna see a huge jump in any financial institutions which owned a lot of Fannie or Freddie … because they don't have to worry about going bankrupt all of a sudden," Rogers said.
  
  "Bank stocks around the world are going through the roof, that's 'cause they've all been bailed out. You don't see the homeowners in Kansas going through the roof 'cause they're not being bailed out," he added.
  
  "A Huge Mess"
  
  However, despite the rally in Asian and European markets, the decision to take over Fannie and Freddie is likely to cause more volatility and needs careful consideration by investors, according to Rogers.
  
  It's rarely good to jump in a moving bus and right now you got a lot of buses moving. I might short some more investment banks in the US, depending on how they rally over the next week, but other than that, I'll just sit and watch," he said.
  
  Rogers, who is short on U.S. bonds, said these are likely to fall while commodities may rally. The two government-sponsored enterprises don't have good loans on their books, because "everybody else took the good stuff and dumped the bad stuff onto Fannie and Freddie," he said.
  
  From 2010, Fannie and Freddie will have to shrink their portfolios by 10 percent a year until they reach $250 billion, to reduce the risk to the taxpayer, according to the Treasury plan. But this may put additional pressure on the housing market, Rogers said.
  
  "That's going to also ensure that house prices continue to go down. It's going to be harder and harder to get a mortgage."
  
  Investors should not pin their hopes on this year's presidential election for a solution to the problems, as none of the candidates is likely to find one, Rogers said.
  
  "This is a big huge mess and neither one of them has a clue what to do next year. It's going to be a mess."

Source: http://www.cnbc.com/id/26603489/

Jim Rogers Maintains His Bullish Stance On China In Exclusive Interview

Blogged last week, Value Hunting the SSE and Commodity Markets?

On today's MoneyMorning, Jim Roger's is featured in an exclusive interview, Exclusive Interview: Jim Rogers Continues to View China as the World’s Best Long-Term Profit Play

• VANCOUVER, B.C. - Despite its many problems, China remains such a strong long-term profit play that giving up on that country now would be like selling all your U.S. stocks at the start of the 1900s - before America created massive wealth by evolving into a world superpower, global investing guru Jim Rogers said in an exclusive interview with Money Morning.
  
  "I have never sold any of my Chinese companies," Rogers said. "You know, selling China in 2008 is like selling America in 1908. Sure, let’s say the market goes down another 40% - so what! You look back over 100 years, you look back from the beauty of 1928, or even 1938 [in the depths of the Great Depression], and there is somebody who bought shares in 1908. He was still a lot better off having not sold in 1908."
  
  During a 40-minute interview during a wealth-management conference in this West Coast Canadian city last month, Rogers also said that:
  
  (1) The anti-travel policies China has put in place to reduce gridlock and slash pollution during the Summer Olympic Games may actually have created a "bottom" in China stocks - possibly creating a great entry point for long-term investors.
  
  (2) The 34-day worldwide Olympic torch relay leading up to the opening ceremonies likely re-awakened China’s deeply felt nationalism - which will be key as that country strives to build demand for its domestically produced products.
  
  (3) And noted that the country must still deal with such problems as pollution, rising inflation and an overheated economy.
  
  A long-time China bull, Rogers first made a name for himself with The Quantum Fund, a hedge fund that’s often described as the first real global investment fund, which he and partner George Soros founded in 1970. Over the next decade, Quantum gained 4,200%, while the Standard & Poor’s 500 Index climbed about 50%.
  
  It was after Rogers "retired" in 1980 that the investing masses first really got to see him in action. Rogers traveled the world (several times), and penned such bestsellers as "Investment Biker" and the recently released "A Bull in China." He also made some historic market calls: Rogers predicted China’s meteoric growth a good decade before it became apparent to everyone else, and he subsequently foretold of the powerful updraft in global commodities prices that’s fueled a year-long bull market in the agriculture, energy and mining sectors.
  
  Rogers’ candor has made him a popular figure with individual investors, meaning his pronouncements are always closely watched. Here are some of the highlights from the exclusive interview we had with the author and investor, who now makes his regular home in Singapore:
  
  Keith Fitz-Gerald (Q): There’s a lot of talk that the Chinese will use the Olympics to launch a new wave of nationalism and to move ahead. Are the Olympic Games as relevant as some people think?
  
  Jim Rogers: They’ve already got tremendous nationalism. But the international reactions about Tibet and the Olympic torchbearers re-awakened it.
  
  And the politicians, of course, need it because they’ve got their own problems with inflation and overheating and [pollution and] the rest of it. So, like politicians throughout history, they fan it - do their best to say: Hell, it’s not our problem. It’s the evil farmers. It’s the French. See that store over there: It’s their fault. It’s the Americans."
  
  So that is happening, anyway.
  
  As far as the Olympics themselves, they’re irrelevant.
  
  America had the Olympics in ‘96 and it had no effect on the American economy - before or after. Some people in Atlanta were affected before and after. And some people who were involved with the Olympics were affected before and after.
  
  America at that time had 270 million people. China’s got five times as many people, and it’s a much bigger country geographically.
  
  Sydney, Australia had the 2000 Olympics. It had virtually no effect on the Sydney, or on the Australian economy - even though Australia had 18 million people. It’s tiny … nothing. Yes, it had an effect on some people.
  
  Greece, in 2004, had the Olympics. You haven’t heard stories of a major collapse or a major revival of Greece in 2005, because the fact is that the Games didn’t have much of an effect - not a noticeable effect, anyway. It had spot effects only, so I ignore the Olympics as far as the Chinese economy - and its stock market - is concerned.
  
  (Q): Are you still bullish on China?
  
  Rogers: Oh, yeah. I never sold anything in China. In fact, I bought more. I bought Chinese Airlines (PINK: CHAWF) last week. I flew one coming here. Maybe I made a mistake [with the investment], because it was emptier than I thought it would be.
  
  (Q): Any thoughts why?
  
  Rogers: One thing, you know, is that China’s made it extremely difficult to get a visa right now. In the past, it’s been hard to get a seat because Chinese airlines were so full. On this flight there were empty seats.
  
  That brought home to me that they are cutting back enormously on visas right now. Discouraging travel, trying to clean the air, trying to protect against somebody blowing up the Forbidden City, et cetera. So the fact that planes are empty right now may be smarter than I thought.
  
  Maybe I did get the bottom on the airlines, because if they are going to reissue the visas again, after all this, after September [after the Olympic Games have concluded], then the planes are going to fill up pretty quickly again. I would have picked the stock up at a bottom.
  
  (Q): Yes.
  
  Rogers: Anyway I’m still around China. I have never sold any of my Chinese companies. You know, selling China in 2008 is like selling America in 1908. Sure, let’s say the market goes down another 40% - so what! You look back over 100 years, you look back from the beauty of 1928, or even 1938 [in the depths of the Great Depression], and there is somebody who bought shares in 1908. He was still a lot better off having not sold in 1908.

Source: http://www.moneymorning.com/2008/08/20/jim-rogers-interview/

China And Its Consumption of Oil Will Continue To Grow

On today's FinancialSense market wrap, market commentator, Tony Allison wrote an interesting passage on China and its automobile market in his essay, The Great Oil Bubble? Supply and geopolitical issues will not go away in global recession

• It’s 1915 in China
  
  The year was 1915 and a young and growing America was just beginning to fall in love with the automobile. That year there were 9 privately owned vehicles per 1,000 Americans. That is precisely where we find China today as it begins its own love affair with the automobile. The difference of course is rate of change and scale. China recently passed Japan as the second largest automobile market after the US. Astoundingly, China did not begin encouraging private car ownership until 1994. Even more amazing, 37% of people driving in China today did not know how to drive 3 years ago! (The death rate from accidents per 100,000 cars is 4.5 times the US rate.)
  
  With a middle class already estimated at nearly 300 million people (21% of total population), it is only a matter of time before China will have more cars than any country on the planet. On the luxury side, China is already the #1 Rolls Royce market in the world, with the most popular model selling for a cool $397,000.
  
  As the financial system grows and gains acceptance in China, it will open up more opportunities for Chinese citizens to buy cars on credit. In a Chinese car ownership survey, 96% of respondents said they paid cash for their cars. As this nation of hardworking people begins to taste the convenience and freedom of automobile ownership, there is no turning back, even at higher fuel prices. The global demand for gasoline will grow rapidly as car ownership becomes more commonplace in China.
  
  China now imports over 4 million barrels of oil a day, roughly the same as Japan. Despite a major production effort, China’s crude oil output is forecast to rise only 1.1% in 2008 to 189 million metric tons. This is down from a 1.6% increase in 2007, according to the Chinese Petroleum and Chemical Association. The implication is for continued growth in imported oil, even if the economy slows from its current double digit growth.

Crude Oil Bubble Burst? Commodities Guru Jim Rogers Is Still Keeping The Faith!

Quoted on theAustralian Oil dives, and you can mention the war

• Commodities bull Jim Rogers insists he isn't losing faith.
  
  "I've been hearing the commodities bubble is dead for seven years," he says. "Maybe it will end, but I don't think it will be for another" several years. The market is simply consolidating, Rogers says.
  
  He points out that investors wrote off gold because it reversed a climb upwards in the 1970s for two years. But then it went on to much greater heights.

And of course not everyone would agree. Quoted on that same news article.

• Citigroup analyst Tim Evans, who has repeatedly argued that oil was overpriced, says that the momentum has swung to the bears.
  
  "The petroleum markets are considering a swing back to the upside, but seem to be having difficulty fighting off the ongoing flow of selling."

Last night the crude oil closed much lower. Demand concerns send oil lower

• U.S. crude for September delivery fell 99 cents to settle at $115.01 a barrel on the New York Mercantile Exchange.
  
  Oil fluctuated wildly in the day, spiking as high as $117.42 earlier in the session, then falling as low as $112.59 before rebounding some. Oil rose nearly $3 Wednesday.
  
  Demand concerns: Concern about slowing demand weighed on oil after two reports pointed to further economic weakness in the United States, the world's largest oil consumer.
  
  A report from the Labor Department showed that consumer price inflation jumped to 5.6% in July. A second report showed that jobless claims fell last week, but were still well above economists' forecasts.
  
  "I think the numbers that came out today suggest that demand weakness in the U.S. could continue," said Brendan Fogerty, commodities research analyst with Lehman Brothers.
  
  A weaker U.S. economy affects not only demand from drivers, but it can also weigh on commercial fuel use if consumers buy fewer goods.

How?

Would you be Keeping the Faith like Jim Rogers?

Me? All I know is I love Bon Jovi's Keeping the Faith! :D

Value Hunting the SSE and Commodity Markets?

Just recently, on May 2008, I posted the following posting, Would you be Bullish On the Chinese Stock Markets?

And Jim Rogers was still bullish and he was mentioned in a Bloomberg news article stating his bullish stance, Investor Jim Rogers Buys Chinese Shares as Market Hits `Bottom'

• April 27 (Bloomberg) -- Investor Jim Rogers is buying Chinese shares, among the world's worst performers this year, as the market has bottomed, and he's focusing on agriculture, tourism, airlines and education.
  
  ``All my new money goes to commodities and China,'' said Rogers, who co-founded the Quantum fund with George Soros in the 1970s and correctly predicted the start of the commodities boom in 1999. He spoke at a seminar in Beijing yesterday.
  
  ``All the panic looks like a bottom,'' he said. ``I have bought in the last four to five weeks. I've been buying shares in China for the first time in a long time.''

I wasn't.

I wrote the following passage in that blog posting,Would you be Bullish On the Chinese Stock Markets?

• At this moment of time, the SSE is only at 3604 pts. Which is LOWER than what it was on May 17th 2007 when the SSE was at 4048 pts. In my opinion, the decline was rather deadly. I mean, the SSE did NOT fall off the cliff but instead it was like rolling off a hill. And because it was rolling off the cliff and not falling off the cliff, I reckon that many did not realise how drastic the fall could be. And sadly, the longer the time pass, the decline eventually turned severe!

And yesterday the SSE closed at 2457.20 pts! The below is a screenshot of the interactive chart loaded on cnbc website, http://www.cnbc.com/id/15837290?q=CN%3bSHI

In almost 3 months time the SSE has lost 1146.8 pts!

And the scariest thing is that if you look at the above chart, it still appears as if the SSE is only rolling down the hill!

However, the bigger picture now shows the exact deadly plunge in this market!

Now of course such a plunge would create curiosity. Contrarians and Value investors surely would be curious if there now exist investing opportunity in the SSE.

Yesterday, John Mauldin's Outside the Box, featured an important essay from Vitaliy Katsenelson, called A Value Investor Looks At China

Here's a rather interesting passage.

• Oh wait, the story about the shopping mall is not a figment of my imagination (I am not that good) but has already taken place. In 2005 NY Times ran an article titled China, New Land of Shoppers, Builds Malls on Gigantic Scale, it talked about the biggest shopping mall in the world that happened to be in Dongguan, China. The article said:
  
  "Not long ago, shopping in China consisted mostly of lining up to entreat surly clerks to accept cash in exchange for ugly merchandise that did not fit. But now, Chinese have started to embrace America's modern "shop till you drop" ethos and are in the midst of a buy-at-the-mall frenzy.... by 2010, China is expected to be home to at least 7 of the world's 10 largest malls... Already, four shopping malls in China are larger than the Mall of America. Two, including the South China Mall, are bigger than the West Edmonton Mall in Alberta, which just surrendered its status as the world's largest to an enormous retail center in Beijing." (emphasis added)
  
  Fast forward three years and you find a very different story: the biggest mall in the world - the South China mall, with space for fifteen hundred stores, only has a dozen stores open for business - it is empty. Shoppers never materialized. Billions of dollars have been wasted.
  
  Analyzing the Chinese economy while it is growing at superfast rates is like analyzing a credit card company or a mortgage originator during an economic expansion - all you see is reward - the growth. But the defaults - the risk - are masked by a healthy economy and constantly increasing new business that is profitable at first. The true colors of that growth only appear after the economy slows down and new accounts mature. (In fact, the banks or credit card companies in the U.S. that showed the lowest loan growth during last expansionary cycle have a lot fewer credit problems than those that did - U.S. Bank Co comes to mind here.)
  
  The consequences of LSGO are likely to be very painful for China. As of today we don't know how much of the recent growth came from wasteful, unproductive growth. Only after a slowdown will the true problems surface.

And Mr. Vitaliy wrote his opinion on the commodities market and China.

• It gets worse: high commodity prices
  Chinese demand for stuff (oil, metals, machinery etc...) has a tremendous impact on commodities, driving their prices many fold. High (and rising) commodity prices are negative for developed world economies but they are catastrophic to developing economies - they bring comparatively higher inflation and often stagflation. Here is why:
  
  Inflation is sourced from two broad categories: commodities (stuff) and wages. Emerging markets are twice as cursed when it comes to inflation:
  
  1. Commodity prices (less shipping costs and government controls - the Chinese government limits price increases on certain commodities, but we know that doesn't work in the long-term) are the same around the world. Thus the U.S. and China will see a similar increase in commodity prices (at least in dollar terms). But the commodity component represents a larger portion of the total product cost in China than in the U.S., as wages in China are a less significant component of a total cost. For instance, bread baked in the U.S. and China will require the same amount of wheat and wheat will cost as much. But baker wages will be significantly larger in the U.S. than in China and will result in a much higher cost of the finished product. Therefore, a spike in wheat prices will have a larger impact on the loaf of bread in China than in the US.
  
  2. Wage inflation: the US and Europe have little wage inflation, as rising unemployment has diminished the already weak bargaining power of the labor force, keeping wages in check. Economic expansion has put significant upward pressure on wages inflation in China (and India as well).
  
  In combination, these two factors were responsible for inflation in high single digits in China, double the rate of inflation in the U.S.
  
  China is not the cheapest place in the world to manufacture, not anymore. To its benefit, cheaper countries (Singapore, Vietnam etc...) are not big enough to steal a significant amount of capacity and the US in many cases doesn't have the needed infrastructure to bring manufacturing back. Appreciation in the renminbi and high oil prices (which are driving shipping rates up, placing a significant premium on the distance factor) are making Chinese produced goods even less attractive. Something has to give: either the U.S. will consume less or China will keep prices low to stimulate the demand, swallowing the loss, or a combination of both.

Do give that article a read. Here's the link again: A Value Investor Looks At China

And regarding commodities, FinancialSense market commentator wrote the following piece Commodity Correction - Coming Into an Important Bottom?

How now?

Would you dare go bargain hunting for some Chinese Stocks and do you think the grand commodity bull run is truly dead?

Oh Freddie Mac

There were many who were clearly unhappy to see the bailout of Freddie Mac and Fannie Mae.

Jim Rogers was clearly annoyed. Published on the UK Telegraph, Jim Rogers attacks Fannie Mae and Freddie Mac bail-out

• Reaction to the Treasury and the Federal Reserve's bail-out plan was mixed but Mr Rogers was the most vocal. He argued that Fannie and Freddie, America's largest mortgage finance companies which own or guarantee some $5 trillion of mortgage debt, are "basically insolvent".
  
  He said: "I don't know where these guys get the audacity to take out money, taxpayer money, and buy stock in Fannie Mae." He added that the US government should instead have allowed Fannie and Freddie to go bankrupt.

And here is a link to a Bloomberg video, http://www.bloomberg.com/avp/avp.htm?clipSRC=mms://media2.bloomberg.com/cache/vIQvD7yNni2I.asf

George Soros wasn't too impressed either.

• "Freddie Mac and Fannie Mae have a solvency crisis, not a liquidity crisis," said Soros. "There's no problem in their borrowing. And in fact, insofar as there is a problem, the Fed is there to provide the liquidity."
  
  That said, both Fannie and Freddie are "extremely leveraged," he said.
  
  "The deterioration in the housing market, the foreclosures, are going to cause losses which exceed their equity," said Soros, whose famous bet against the British pound earned his Quantum Fund $1 billion in 1992.
  
  In afternoon trade on Monday, Fannie Mae shares were down 3.75 percent while Freddie Mac shares were down 12 percent.
  
  "This is a very serious financial crisis and it is the most serious financial crisis of our lifetime," Soros said. "It is inevitable that it is affecting the real economy. It is an idle dream to think that you could have this kind of crisis without the real economy being affected," he added.

The ideal dream mentioned by Mr. Soros, reminded me of the following passage I had read from iCapital.

• While the current US housing contraction has caused plenty of fears and worries, not just in the US but throughout the whole world, most do not realise that the direct impact of the housing contraction on the broad US economy has actually been rather limited. A lot of the damage has been at the psychological level. This is due partly to the fact that house prices, which have risen substantially, have been dropping recently. Another factor has been the constant media attention given to scary forecasts that the current housing contraction is the worst since the 1930 Great Depression and that this time round, it could be headed that way. Fortunately, the facts of the matter do not support such a negative view.

Facts of matter do not support such a negative view? Hmm.. I wonder if George Soros is referring to such ideal dreams from iCapital.

And yes, Warren Buffett used to own Freddie Mac. And the following passage from this past WashingtonPost article is most interesting.

• Buffett said he was troubled in part by a Freddie Mac investment that had nothing to do with its business.
  
  "I follow the old dictum: There's never just one cockroach in the kitchen," Buffett said.
  
  The government is trying to show that Brendsel's promises of double-digit earnings growth set Freddie Mac on a dangerous path, and Buffett said they were another key reason he sold.
  
  Sometimes, when executives offer earnings projections and cannot make the numbers, "they start making up the numbers," he said.
  
  Trying to deliver smoothly increasing earnings "can lead to a lot of trouble in any company," and it is "unachievable" at a company like Freddie Mac, whose business is inherently unpredictable, Buffett testified........
  
  Buffett said he bought stock in Freddie Mac in the 1980s because "it looked ridiculously cheap." He said his company became one of Freddie Mac's largest shareholders before it began liquidating its stake in the late 1990s at an eventual profit of about $2.75 billion.
  
  Buffett said he met with Brendsel and former Freddie Mac president David W. Glenn five or six times over the years at Brendsel's request, initially at a summer house Buffett had in Laguna Beach, Calif. Brendsel requested and followed some of his recommendations on whom Freddie Mac should appoint to its board, Buffett said.
  
  Buffet said he became troubled when Freddie Mac made an investment unrelated to its mission. He wasn't clear on the specifics but said he "didn't think that made any sense at all" and "was concerned about what they might be doing . . . that I didn't know about."
  
  Achieving "mid-teens" earnings growth "seemed to become more and more a mantra of the organization," giving him greater cause for concern, Buffett said.
  
  Buffett said he reviewed Freddie Mac's annual reports every year he held stock in the company. Presented with excerpts from reports for as early as 1992, he agreed with Brendsel's lead attorney, Kevin M. Downey, that he held onto his shares while Freddie Mac repeatedly affirmed its earnings goals.
  
  Buffett said he thought he expressed his concern to Brendsel in several conversations but added that he didn't keep notes or a diary and couldn't recall details.
  
  Downey said the specific wording about mid-teens earnings growth did not appear in a disclosure Freddie Mac filed in 2001, but Buffett rejected the implicit suggestion that Brendsel was responding appropriately to his concern.
  
  "He may have seen the writing on the wall," Buffett said.
  
  Downey suggested that Freddie Mac properly tempered its projections, pointing to warnings in an annual report that its earnings could be affected by various adverse developments. Buffett said the cautionary words were merely legal boilerplate.
  
  "I would not be particularly impressed by them," he said.
  
  Asked by the judge, William B. Moran, whether he felt his concerns were vindicated, Buffett said, "I think they were fully vindicated."

Jim Rogers Blasts The Insanity Of the Feds while remains bullish on Oil & Commodities

Here are some latest comments from Jim Rogers.

• Jim Rogers: Oil Bull Market Has Years to Go
  
  Thursday, June 12, 2008 5:18 PM
  
  The bull market for oil has many years to go before it peters out, says billionaire Jim Rogers, chairman of Rogers Holdings.
  
  There are several factors for this view, but the primary one is that "known sources of petroleum are dwindling," Rogers told Bloomberg in an interview.
  
  Global oil supplies could fall far short of need and expectations in the next 20 years, reported the International Energy Agency in mid-May. The agency long expected supply to rise to meet demand of 116 million barrels a day by 2030.
  
  It now expects oil output to struggle to reach 100 million barrels in that time frame.
  
  These market conditions will make life difficult for airlines — and airline stocks — well past 2010 and will also impact Federal Reserve policy in the coming months, Rogers said.
  
  Rogers has proved astoundingly prescient since suggesting that investors buy into the older, industrial economy back in 1999 when gold and oil were coming off 25-year lows and when the Internet stock market was soaring.
  
  Now in his mid-60s, Rogers retired from full-time work when he was 37, and invests for fun. ( source of article: here )

And fresh on Forbes.

• "We think the bull market in commodities still have a long way to go, especially when you look at growth rates in China, India, the Middle East, North Africa and throughout most of the developing world, where demand for just about every commodity is rising at unprecedented rates," Rogers said. ( Taken from Forbes article here )

Do note that Jim Rogers made them comments when he announced he is teaming up with S-Network Global Indexes to launch The Rogers Van Eck Hard Assets Producers Index. Unlike the Rogers International Commodity Index, the new index tracks the performance of companies that deal in commodities--rather than performance of the commodities themselves.

And in another article on MoneyNews, Rogers blasts the insanity of the US Fed

• Jim Rogers: Helicopter Ben Bernanke 'Insane'
  
  Friday, June 20, 2008 2:40 PM
  
  The Fed, explains commodities bull Jim Rogers, has made things worse by printing huge amounts of money, causing huge inflation, and driving the dollar down.
  
  Plus, American taxpayers will have to pay off the $400 billion spent on Bear Stearns.
  
  "If the system is so fragile that the collapse of the fifth-largest investment bank in America could bring the whole thing down, what’s going to happen in a few years when the No. 2 or No. 1 banks go bad?" Rogers asks.
  
  "What’s Bernanke going to do, get in his helicopter and fly around the country repossessing cars and houses? This is insane."
  
  So, Rogers say he's buying airlines.
  
  It's counterintuitive: Twenty-four airlines went bankrupt last year, and five of the seven largest U.S. air carriers went bankrupt during the past decade.
  
  "That’s great news," Rogers says. "Bankruptcies are signs of bottoms, not signs of tops."
  
  "I fly a lot and planes are full," Rogers notes. "You read every day that the airlines are cutting capacity and raising fares. How much more bullish can you get?"
  
  Rogers' current investment picks also include Swiss francs, Japanese yen, agriculture and oil — but no financials right now.
  
  "I'm short on the investment bank ETF, which means I’m short on all of them," Rogers observes.
  
  "Some of these companies have horrendous balance sheets."
  
  Financials go for unbelievably low prices in bear markets, he points out, but this bear hasn’t hit bottom yet.
  
  Rogers — who is also short Citibank and Fannie Mae — says the excesses in financial markets have been far too great.
  
  "You don't see any 29-year-old cotton farmers driving Maseratis," Rogers says.
  
  "But a lot of 29-year-olds on Wall Street are driving them. This is not the way the world is supposed to work."
  
  However, the oil bull market has years to run, Rogers says, even though big market reactions can still occur.
  
  He points out that the price of oil has dropped by 50 percent twice since 1999.
  
  "Unless someone discovers a lot of oil very quickly in accessible areas, we’re running out of known oil reserves," Rogers says.
  
  "If the price of oil goes high enough, they’ll be drilling on the White House lawn and Buckingham Palace."
  
  And because food reserves are at their lowest level in 50 years, unless someone starts bringing on a lot more capacity soon, Rogers believes the agricultural bull market has got a ways to go, too.
  
  Meanwhile, prices for nickel, zinc and silver are down 50 percent to 80 percent from their historic highs, yet Rogers is waiting to add more of these commodities to his portfolio.
  
  "It looks like Congress is about to do something that will drive commodity prices down, and that will create a fantastic buying opportunity," he says.
  
  Rogers advises investors, however, not to panic in bear markets.
  
  "Bear markets perform a necessary service by cleaning out the system," he says.

Buying Opportunity for Planters?

Highlighted on the Business Times: Commodity Roundup: CPO futures sharply lower

• CPO FUTURES
  
  CRUDE palm oil (CPO) futures prices on Bursa Malaysia Derivatives ended sharply lower on weak demand yesterday, dealers said.
  
  Market sentiment was also subdued ahead of the public holiday today, one of the dealers said.
  
  The fall in soyoil futures on the Chicago Board of Trade also weighed down market sentiment for CPO, he said.
  
  At close, April 2008 declined RM89 to RM3,344 per tonne, May 2008 eased RM105 to RM3,345 per tonne, June 2008 went down RM120 to RM3,330 per tonne and July 2008 dropped RM119 to RM3,320 per tonne.
  
  Turnover was lower at 17,935 lots from 21,356 lots on Tuesday while open interest declined to 41,228 contracts from 43,406 contracts.
  
  On the physical market, March South was lower at RM3,400 per tonne from RM3,450 per tonne previously.

However, highlighted on the Star Business: 2nd-tier planters in for a rebound

• Second-tier plantation stocks on Bursa Malaysia are expected to rebound soon on short-term speculative buying, analysts said.
• The major beneficiaries of the recovery include Sarawak Plantations Bhd, Sarawak Oil Palms Bhd (SOP), Rimbunan Sawit Bhd, TH Plantations Bhd, IJM Plantations Bhd, Tradewinds Plantation Bhd and TSH Resources Bhd.
• The price of crude palm oil (CPO) has retraced by about 30% to RM3,390 per tonne to date from a record RM4,486 per tonne. However, Aseambankers, in a recent report, said it is “not ruling out the possibility of another round of speculative buying stemming from the US Fed interest rate cut.”

Two issues.

1. Does the current sell down creates a buying opportunity, given the fact that despite the current plunge in the CPO futures, based on the current ASP (Average Selling Price) sold by our planters , represents insane profits?

2. If so, why 2nd-tier planters? If this indeed is a buying opportunity, why don't one focus on market leaders? Market leaders lead. 2nd-tier will be 2nd-tier.

How?

Which brings me to this article posted on Singapore Business Times, Can plantation stocks hold out?, which I feel is an excellent second opinion on this issue!

• FIRST came the spillover effect from market fears that the assets of Indonesian oil palm producer First Resources would be auctioned off. Now, plantation stocks - and these include First Resources - have been dealt another blow as the price of crude palm oil (CPO) plunged on Tuesday.
  
  It seems that the earlier optimism surrounding these stocks has quickly dissipated upon a loss of support from CPO prices. But is the selldown really justified, or are short-term fears clouding the good growth stories that these stocks offer?
  
  Though most of these counters have recovered some ground from Tuesday's plunge, it now seems that the earlier knee-jerk reaction has thrown ice on previous propositions that this sector could weather a market downturn well.
  
  Some analysts, however, believe that the valuation of Singapore-listed CPO players has gone down to levels where investors can start to do bargain-hunting. There are good reasons for their optimism. After all, should investors peek through the smoke of market volatility and fear and look at the fundamentals, this sector has some compelling stories.
  
  Before the CPO price shock, some good news appeared to be surfacing at Wilmar, which has submitted a request to the Chinese government to raise its branded cooking oil price. The Chinese government wants to increase supplies after price controls imposed in January cut the retail stockpile and has asked Wilmar, among other companies to increase consumer sales.
  
  For Indofood Agri, the integration with Lonsum, a listed company in Indonesia in which it bought a majority interest, is expected to provide a significant near-term catalyst for the company, given the possibilities for cost savings and the pooling of expertise, according to Macquarie Research.
  
  Things are also looking brighter for First Resources now, after fears of an output cut this year were allayed when it clarified that its founder and former shareholder Martias had fully paid off damages of US$38.3 million and that Indonesia's Corruption Eradication Commission has withdrawn its intention to auction off three of First Resources' plantation and milling assets that were deemed to be related to Martias.
  
  In addition, the earnings growth outlook for these CPO players remains robust. For instance, analysts' mean earnings estimate for First Resources stands at 1.19 trillion rupiah (S$177.7 million) for FY08, up from 431 billion rupiah for FY07. For Wilmar, the estimate is US$870.9 million, up from US$580.4 million for FY07. And for Indofood Agri, it's 1.66 trillion rupiah for FY08 compared to 889.1 billion rupiah a year ago.
  
  But in the face of fears and a loss of market confidence, these prospects can end up being overlooked.
  
  That is the disconnect happening in the plantation sector - even if CPO prices and earnings are still on the rise, fears of heightened risks can continue to choke share prices.
  
  This is reflected in UOB KayHian's view on the sector. Despite higher CPO price assumptions and earnings forecasts, it is keeping an 'underweight' rating on Malaysia's plantation sector, citing political uncertainties, higher sector risks from high CPO prices, huge inventories and government intervention, as well as demand risks from biodiesel losing its shine.
  
  Rising risks in this sector would naturally point to lower PE valuations and hence, further downside. But it remains to be seen if such a lacklustre view of the Malaysian plantation sector will trigger a reassessment of Singapore-listed plantation plays as well.
  
  While earnings visibility remains clear and balance sheets remain fundamentally sound, these factors could pale in the face of further knee-jerk reactions to volatile CPO prices and fears of heightened risks.
  
  And it is unclear if good news from this sector is now enough to make jittery investors take another look. But if analysts' buy calls can still be counted on, it may pay to take a closer look at stocks that are trading below or close to 10 times forward PE - stocks such as First Resources, Indofood and Golden Agri.

More worrying is the immediate weakness in several commodities. Gold Leads Commodities Plunge on Outlook for Dollar, Economy

• March 20 (Bloomberg) -- Gold headed for its biggest weekly drop in 25 years, leading a drop in commodity prices, after the dollar rallied and concern mounted a U.S.-led slowdown in the global economy will reduce consumption of raw materials.
  
  Oil fell below $100 a barrel for the first time since March 5, soybeans dropped for a second day and copper had its biggest two-day decline in seven months. The UBS Bloomberg Constant Maturity Commodity Index of 26 raw materials is having its worst week since at least 1997, led by declines in soybeans, cocoa and cotton.
  
  There is ``a glaring divergence between escalating commodity prices and waning world economic growth,'' James Steel, an analyst with HSBC Securities in New York, wrote in a report e- mailed today. It is ``no longer assured that commodity price appreciation is a safe one-way bet.''
  
  Gold in London has plunged 12 percent from its record $1,032.70 an ounce on March 17 after the Federal Reserve cut its overnight-lending rate less than expected by 75 basis points to 2.25 percent. The dollar has recovered 2.8 percent from an all- time low against the euro and rallied 4.6 percent from a 12-year low against the yen.
  
  Commodities have advanced in each of the past six years, driven by demand from China seeking to feed its population and power its expanding economy. The dollar's slide has boosted demand for raw materials, which become cheaper for buyers holding other currencies, while some investors are seeking higher returns following a slump in equities

How?

If commodities all over are correcting or plunging in a drastic manner, then perhaps isn't it much better to adopt the side lines approach?

As mentioned in the Bloomberg article.

• `Absolutely Enormous'
  
  The money flowing into commodities is ``absolutely enormous,'' James Proudlock, commodity product head for Europe, Middle East and Asia at JPMorgan Securities Ltd., said at a sugar conference yesterday in Geneva.
  
  There are 361 commodity funds that had $98 billion in assets as of Feb. 28, compared with 345 funds with $80 billion at the end of 2007, he said.
  
  The rally, according to Paul Touradji of the $3.5 billion hedge fund Touradji Capital Management LP, was a ``buying orgy'' that had inflated prices and increased the risks of a collapse.
  
  Commodities ``have all gone parabolically higher on frenzied money flow,'' New York-based Touradji wrote to clients March 10. ``Unless that money flow continues ad infinitum, in which case prices would go to infinity, then the fundamentals had better be improving as quickly as prices have been, otherwise there is nothing else to keep the markets at these levels.''

Which is rather confusing for most. A Falling Dollar Should Contribute More Strength to Commodities

• A falling dollar should also contribute more strength to commodities. But yesterday gold and oil fell quite a bit. What gives?
  
  The dollar had a rare moment of inspiration. It was delusional inspiration, though...it won't last. Besides, commodities have other reasons to go up than dollar weakness. Our French technical and currency guru, Gabriel Andre, explains:
  
  "Commodities are negatively correlated with the US dollar, and in the short-term the US dollar is oversold. Many traders feel the Fed has played its hand fully, and see this as a reason to buy back into the dollar…in the short term, that is.
  
  "But with cheaper commodities, there are likely to be bargain-hunting investors looking for a good entry point into the market. Further down the track, strong demand from Asia for real goods is likely to continue. Tangible assets still have the wood over financial assets…so cheaper commodities will generate more buyers, particularly in gold.
  
  "A fall in gold gives it buying strength, technically…and it will enjoy fundamental demand from those wishing to hedge against an inflation and the long-term dollar weakness."

Posted on cnbc.com, Commodity Market's Roiling Riptides Of Prices

Posted on Reuters. COMMODITIES-Crumble on Global Flight from Risk

And the following posting is worth reading: DELEVERAGING- Gold and Commodities Teetering on the Brink of a Bear Market?

The author, Nadeem Walayat, asks the following.

• Gold and other commodities plunged below key short-term support levels following Tuesdays US Interest rate cut to 2.25%. The consensus seems to see this as a healthy correction or is this a signal for a potential end of the commodities bull market?

He continues.

• Gold and Commodities are NOT immune to the impact of deleveraging, as evident by the sharp drop in Gold yesterday

Are we seeing deleveraging?

What say you?

Jim Rogers Would Abolish The Fed And Resign!

The day after the Fed calvary came and the markets having their best day in five years , Jim Rogers is mighty annoyed!

Speaking to CNBC Europe

• Asked what he would do if he were in Bernanke's shoes, Rogers, who slammed the Fed for pouring liquidity in the system and accepting mortgage-backed securities as guarantees, said: "I would abolish the Federal Reserve and I would resign."
  
  If this happened, "we don't have anybody printing money, we don't have inflation in the land, we don't have a collapsing U.S. dollar"

Jim Rogers blasts the Fed by defining its actions as socialism for the rich!

• "No country in the world has ever succeeded by debasing its currency," he said. "That's what this man is trying to do. He's trying to debase the currency as a way to revive America. It has never worked in the long term or the medium term."
  
  The Fed's move to accept risky collateral is not part of the central bank's business, he added.
  
  "What is Bernanke going to do? Get in his helicopter and fly around the world and collect risk? That's absurd," Rogers said.
  
  A recession may be a good way to clean up the economy, while trying to prevent one may cost more and actually worsen the recession, Rogers said. Also, investment banks should be allowed to fail.
  
  "Listen, investment banks have been going bankrupt since the beginning of time. If people make mistakes -- if you bail out every investment bank that gets in trouble, that's not capitalism, that's socialism for the rich," he said.
  
  The weakest financial institution is Fannie Mae, in Rogers' opinion, "but all of them have problems."

Crucialy, he states his vested current interest and makes recommendation on agricultural commodities.

• He said he had a short position on all investment banks and is buying agricultural commodities such as cotton, wheat, coffee and sugar and was also buying the Chinese yuan and the Japanese yen.
  
  "Buy agriculture. Agriculture is one of the few places where you're going to make a fortune in the next years," Rogers said. ( source of article here )

By the way, Slowday asked me, Who Wants To Be A Billionaire!

HwangDBS goes Overweight on Planters

Got this copy of report on HwangDBS commentary on the plantation sector from a pal.

• OVERWEIGHT KLCI : 1,173.2
  
  A dichotomy in the making
  Trading at a deep discount. Plantation stock movements have recently been more akin to the broad market indices rather than their intrinsic values. This, we believe, might be due to reassessment of market risks and to a certain extent, fears that a weak US economy could translate into a correction in commodity prices. The fact is palm oil price momentum had remained strong relative to our assumptions. YTD CPO futures prices for March 2008 delivery averaged RM3,471/ton, even after accounting for the sharp correction in the past week. CPO prices may need to drop further to around RM2,800 to match our full year average of RM3,100/ton. But even based on these assumptions, plantation stocks are still trading at a deep discount. While it is true that most of the other stocks are also trading at attractive levels relative to our target prices, we believe that the gap for plantation stocks is too big to ignore.
  
  Well timed correction in CPO prices. We believe CPO futures’ recent surge past the RM4,200/ton mark had more to do with speculation of a jump in Chinese demand – largely following the soybean complex – rather than a significant jump in demand. Indeed, over the past six months, protests against rising food prices in several countries meant two things:
  
  1. The governments of consuming countries would have to better manage supplies of oilseeds and vegetable oils to cushion the external price shocks (refer to our Plantation Sector report dated 14 February 2008); and
  
  2. Excessive price drops are unlikely, since demand should pick up again as soon as that happens. In the near term, CPO and soybean oil prices may have some more room to correct because their prices have moved ahead of other vegetable oils. But to the same level of YTD appreciation of competing oils, primarily rapeseed oil.
  
  IOI Corporation is an integrated plantation with one of the highest yields in Malaysia, one of the largest oleochemical manufacturing capacities in the world, and recently expanded into Indonesia. IOI is favored for its active capital management and ROE in excess of 20%
  
  IJM Plantations is a large-cap pure plantation play operating in Sabah. It has 57,472 hectares of plantation landbank – around 26,500 hectares of which are located in Kalimantan, Indonesia.
  
  KL Kepong’s management is known to be conservative. Growth for this stock had been gradual but steady. KLK has a strong balance sheet and is expected to have net cash of RM720m (67 sen per share) by end FY08F for future expansion.
  
  Sime Darby is a GLC conglomerate with businesses in plantations, property, heavy equipment, motor vehicle, energy and utilities. It is the largest listed by planted area, largest property by landbank and potentially the owner of Bakun Hydroelectric Plant
  
  TSH Resources is a small cap play benefiting from aggressive acquisitions in Indonesia since 2004 that provided immediate volume growth. TSH earnings are also from wood flooring, cocoa processing, carbon credits, and a 800k MT p.a. refinery (50:50 JV with Wilmar).

Here is a snapshot their price targets.

• Reiterate Overweight call. We are keeping our CPO price forecast of RM3,100/ton for this year, RM2,800/ton for next year and RM2,650/ton for 2010. Bear in mind that our valuations are based on DCF from FY09F onwards. This means that the current share prices are implying bleak CPO price outlook and ignores long-term earnings expectations from volume growth.
  
  We maintain our Overweight rating for the sector, as we do not expect plantation operations to be affected by the outcome of the election; the main drivers remain global pricing and export-driven volume growth.
  
  Following the recent drop in share prices, all the plantation stocks under our coverage are trading at deep discounts to their respective fair values. IOI Corporation’s valuations are undemanding, while KL Kepong and IJM Plantations look attractive given that they should book good earnings over the next four quarters. We also upgrade Sime Darby to Buy (from Hold) as the share price has dropped by 21.7% since we downgraded the stock to Hold on 28 February. Our price target is now adjusted to RM12.40 from RM12.60, after factoring in lower multiples for property (down to 10x from 13x) due to potential delays in project launches and the impact of its current litigation case in Indonesia, which we estimate could cost the company RM122m (c. 4% of FY08F earnings). We believe the discount that Sime Darby is trading at now is too large to ignore. For small caps, we still like TSH Resources.
  
  For Singapore, we are reiterating our Buy call for Wilmar International; and for Indonesia, we recommend Bakrie Sumatra Plantation and London Sumatra Indonesia for significant upsides to our target prices

Game of Love - Santana featuring Tina Turner!

And What Does Jim Rogers thinks Now?

Famed investor, Jim Rogers, gave another interview on Fortune magazine saying 'It's going to be much worse'!

First Jim Rogers slams the Fed for doing what it did.

• "I'm extremely worried," he says. "I have been for a while, but I just see things getting much worse this time around than I expected." To Rogers, a longtime Fed critic, Bernanke's decision to ride to the market's rescue with a 75-basis-point cut in the Fed's benchmark rate only a week before its scheduled meeting (at which time they cut it another 50 basis points) is the latest sign that the central bank isn't willing to provide the fiscal discipline that he thinks the economy desperately needs.
  
  "Conceivably we could have just had recession, hard times, sliding dollar, inflation, etc., but I'm afraid it's going to be much worse," he says. "Bernanke is printing huge amounts of money. He's out of control and the Fed is out of control. We are probably going to have one of the worst recessions we've had since the Second World War. It's not a good scene."
  
  Rogers looks at the Fed's willingness to add liquidity to an already inflationary environment and sees the history of the 1970s repeating itself. Does that mean stagflation? "It is a real danger and, in fact, a probability."

And he still believes in China. And yes, he would prefer Chinese stocks than American stocks.

• "I'm delighted to see what's happening in Shanghai and Hong Kong," he says. "As I've said, if things hadn't cooled off, the Chinese market was in danger of turning into a bubble. I find this most encouraging. The government's been doing its best to try and cool things off. Mainly they've been trying to deal with real estate but it's having an effect on stocks, too. I would suspect the correction isn't quite over in China. But I'm gearing up. I didn't put in any orders for tomorrow but I'm starting to prepare my list of things to buy in China. Whether I buy this week or this month or this quarter, who knows. But I'm starting to think about buying new shares in China for the first time in a while. And I'm not thinking about buying in America."

And he's still bullish on the commodities markets

• The pullback in commodity prices on recession fears hasn't dampened his enthusiasm for resources investments, either. More like a cyclical correction in the middle of a long-term bull market. "Certainly some commodities are going to be affected," says Rogers. "But it's not as if the markets haven't figured this out. Remember the old expression: 'Dr. Copper is the best economist in the world.' Well, Dr. Nickel and Dr. Zinc figured out a few months ago what I thought I had figured out, that we were going to have a recession. Nickel is already down 50%. Other commodities may fall more. But I don't see the economics of agriculture being much affected at all. Maybe there will be a few less cotton shirts bought. Maybe there will be a few less tires bought. But the supply is under more duress than the demand."
  
  Once again Rogers draws on the 1970s in his analysis. "Think about the story of gold in the '70s," he says. "Gold went up 600%, and then it started correcting. It went down nearly every month for two years, nearly 50% from the high point. And everybody said, 'Well, that's the end of the gold market. It was just a fluke. It's over.' It scared everybody out. And then gold turned around and went up 850% from that level. This is what happens in markets. But the fundamentals of the secular bull market in commodities are not over any more now than they were for gold in the '70s."

And he expects intense pain on Wall Street!

• Where he expects the pain to be most intense is on Wall Street. He says he hasn't covered his short positions on the investment banks or Citigroup (C, Fortune 500) and won't for a while. "Those things are going to go way, way, way down," says Rogers. "The investment banks are down now because of the problems in the credit market. Wait until the effects of the bear market come along. If you just go back and look at other bear markets, investment bank stocks have gone down enormously. We haven't gotten to that stage yet. It's going to bring their balance sheets under duress. This is going to get much worse. But that's where there have been excesses for the past decade or so. And whenever you have a bear market come along the great excesses of the previous period are the ones that get cleaned out the most."