Posted on 07/01/2010 9:10:41 AM PDT by TigerLikesRooster
Jim Rogers: Bond Market Bubble Headed for Disaster
Thursday, 01 Jul 2010 08:33 AM
By: Julie Crawshaw
The bond market is a bubble ready to burst because central banks have flooded the world with cash and harmed the world economy, says investing guru Jim Rogers.
"I'm watching the bond market, I have no longs and no shorts," Rogers told CNBC. "It is a bubble which is developing; it's one of the few bubbles in the world which is developing."
"I think it's going to be a disaster and I plan to be selling them short sometime in the foreseeable future," he said.
"The people who receive the money think things are better, and they are better for them, but the rest of us have to pay the price," he warned, adding that his investment strategy is long commodities and short stocks.
Prices are creeping up all over the world but some governments "lie" about inflation, Rogers warns.
(Excerpt) Read more at moneynews.com ...
P!
Who would imagine a 2 handle on the ten year. Got to 2.85% earlier today. Amazing.
bttt
more bigger bubble; money market, tee bills
Just like pinball................Game over!!
I would postulate that it is not possible to have a market that does not have either long or short positions. If you bought and hold, you are long. If you are selling, you are short. If you are in cash ... well, you are not in at all.
If no one is “in”, then you dont have a market.
Jim Rogers is someone who knows what he’s talking about - just wish he would give a few more details to those of us out here... like should we get out of money market accounts? Sell bond funds? Can we get into short term treasuries? A few hints would go a long way...
Bookmark!
Hmmmm
Not to quibble, but if you bought shares you are long. If you sold shares you own, you're out. If you borrow someone elses shares and sell them, you're short.
Most, if not all of these "gurus" have already established their positions before they go on television to tell the world what they are going to do. The sheep who watch CNBC then go do what "investing guru Jim Rogers" has already done which makes "guru Jim Rogers" more of a "guru" and quite wealthy in the process.
I have been calling CNBC relentlessly to inform them that I am an "investing guru" and if they'd give me 90 seconds during market hours to prove it, they could help me with my son's college fund.
Every market maven has their moment in the sun...that doesn't make them right most of the time.
Good point
For those who are in one of the following camps:
1. Inflation hawks.
2. Bulls on the overall economy
The bond market is vastly over-bought. The yield on 10 year T’s is, as Mr. Attention NB’d above, starts with a “2” — as in “2.90%” when only a week ago, it was still over 3%. This is a BIG move for the bond market - it takes one snootful of money to move the 10 year yields that much that fast.
Now, that’s what the bulls and inflationista think. Jim Rogers is not a bull, but he is an inflationista, and his call for everyone to become a farmer is part of his outlook that either inflation or currency devaluation (via inflation) will make ag commodities soar in price.
Re: Rogers’ call for everyone to become a farmer - I’ve been a farmer, and Jimmy Rogers has not. I’ve got a couple things to tell people before they buy farmland or start dabbling in ag commodity futures and such as Rogers keeps touting, but let’s stick to the bond market here.
The reason why the bond market yields are going down and the 2-10 year curve is flattening is because more and more people no longer believe EITHER the bull story OR the inflation story. Until, oh, May, people were certainly starting to believe the economic recovery story - even money managers who are not dope-smoking Democrats were believing the recovery story. Even I was starting to look for, and *find* early signs of sustainable economic activity in the manufacturing and comm/tech sectors. Financials, no one can trust as far as they can throw them, so let’s disregard financials and the usual nostrums of “financials lead a bull market” and so on. I assure you that I’m not a dope-smoker, Democrat or otherwise. I’m a hard-bitten guy who follows where the numbers lead. In the manufacturing/industrial sector, there were some signs of life earlier this spring. There’s still a couple of bullish indicators, but lots of indications are rolling over rapidly.
So we take away the recovery bulls from the “sell bonds!” call. What about inflation?
Inflation just ain’t happening. The PMI showed (again) that inflation ain’t happening. The PPI, CPI have shown for the last two months that inflation ain’t happening. We have mortgage rates continuing to FALL, even after the Fed ended their QE program - and even I thought that conforming mortgage rates would go up after the QE program ended. I expected to see at perhaps a 20bp increase in the rates on conforming mortgages. Instead, the rates are going *down*.
Now, I’m starting to think that if the 15 year conforming rate gets closer to 4.zip, I might re-fi our house.
The brutal truth is this: there not only is no inflation, we’re primed for deflation. I maintain that we are in a slight deflation, when I look at prices paid and consumer behavior. Call it “disinflation” if you want to use the new-fangled terms that were invented to keep Federal Reserve governors from dropping a load in their BVD’s.
Consumers are being conditioned to wait to make purchases - because merchants are rewarding those who wait with sales and lower prices.
The data coming out in the last two weeks shows that the so-called recovery is not only tepid at best, creating few, if any, private sector jobs... we’re continuing the trend started in the recession of the early 90’s of each “recovery” creating fewer jobs than the recession shed, and it takes longer in every recovery cycle than the previous one to re-start job creation. We’re looking at all these people who are unemployed being re-employed right along about, oh, 2014 to 2016.
So the “recovery story” is taking on serious water in the last two weeks. And now we have people like Krugman, running around pronouncing a “Third Depression” unless the Keynesian clowns in this administration spend even more of our grandkids’ money on propping up this extend-n-pretend economy. The financial regulation bill does only one thing to prevent this charlie-foxtrot from happening again. Krugman’s hysteria means that they’re seeing the signs too - and the reason why they’re using such apocalyptic language is to try to make the clowns in DC do something to keep the DNC from being wiped off the map in this election and in ‘12.
Have you noticed the articles on the feedback to the Obama administration from the Business Roundtable? Have you noticed Hillary and Bill getting a little more press in the last two weeks? I don’t believe this is a coincidence.
In a deflationary environment, I want cash put back into my pocket. I want to see cash on balance sheets, I want to see cash used for purchases instead of debt, etc, cash dividends. I want cash yields on my investments and I want to preserve capital instead of worrying about growing capital. I think the yields on longer (10 to 30 year) Treasury paper could go lower yet if this trend continues.
Put option paradise underway on domestic and international stock indexes -— and will only get better $$$$!
'"You should all become farmers," Rogers says.'
That's code for "it could get so bad" there will be disturbances in food supplies. Disturbances bad enough starvation might be an outcome... Spooky stuff.
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