Now that the Federal Reserve has painted itself into a counter it will have difficulty getting out of, it's uncertain how long it will continue to stimulate and keep interest rates at artificial lows.
Also part of the larger problem is the decision for other major economies to print money as well, with ECB, Bank of Japan and China all using their central banks as an attempted means to boost their economies. None of it is working, and so the question now is where should investors place their money in a world of economic stimulus.
Marc Faber believes he has the answer, as he says the stimulus party is now over because asset prices will drop if stimulus efforts are stopped, and if the central banks continue stimulating, which they will for some time, the economies of the countries or regions will remain weak.
The problem is these countries refuse to allow the economy to heal itself; attempting to prop them up wit funny money while their respective currencies continue to plunge in value because of the resultant debasement. It's no different than the giant banks being allowed to fail when the opportunity arose for them to do so.
Faber recommends investors to look for areas where the Federal Reserve especially has minimum effect. Interestingly, one suggestion is telecom companies in Europe, and companies residing in places like Vietnam.
One the fallout comes from the stimulus measures, Faber sees nowhere to go for profits except places where there is lower impact from the actions of the central banks.
Showing posts with label China Stimulus. Show all posts
Showing posts with label China Stimulus. Show all posts
Wednesday, February 13, 2013
Thursday, August 30, 2012
Jim Rogers Says Commodities will Come Roaring Back
Some have wrongly believed that the end of the commodity super cycle is over, but Jim Rogers isn't one of them, as he says the recent downturn is only a temporary setback, and because supplies remain constrained, the upward move in prices will continue for some time.
Rogers stated in an interview with Mineweb, that "this is nothing more than a blip. The bull market will continue until a lot of supply comes on stream and the problems since 2008 ensure not a lot of supply is coming on stream."
Why it's different this time around as far as the length of the commodity bull market, is historically companies are starting to bring more supply online after about 8 or 9 years of higher prices. This time around, because of the crises in 2008, that temporarily halted much of the expected boost in production, resulting in a slow down in supply of commodities.
Rogers said concerning expansion of commodities companies, that "All these guys are delaying or suspending or cancelling new supply which is bullish. Until the supply comes we're not going to have an end to the bull market and, certainly in agriculture, my goodness, inventories are near historic lows, we have serious shortages of everything in agriculture developing, including farmers."
As for China, which is the major impetus behind commodity demand, Rogers sees them possibly loosening up their money supply, suggesting more demand for commodities, although he says that "China has loosened up too early every time in the last decade, which is why the real estate bubble has continued and it's gotten worse. So it looks as though China is going to loosen up again and in my view they're going to loosen up again too early this time around, and you'll probably have a continuation of the same old thing - more inflation and perhaps excesses in real estate again."
Concerning where investors should place their money in regard to commodities, Rogers concluded they should look for those commodities which have fallen the most in price for the place to begin.
Rogers stated in an interview with Mineweb, that "this is nothing more than a blip. The bull market will continue until a lot of supply comes on stream and the problems since 2008 ensure not a lot of supply is coming on stream."
Why it's different this time around as far as the length of the commodity bull market, is historically companies are starting to bring more supply online after about 8 or 9 years of higher prices. This time around, because of the crises in 2008, that temporarily halted much of the expected boost in production, resulting in a slow down in supply of commodities.
Rogers said concerning expansion of commodities companies, that "All these guys are delaying or suspending or cancelling new supply which is bullish. Until the supply comes we're not going to have an end to the bull market and, certainly in agriculture, my goodness, inventories are near historic lows, we have serious shortages of everything in agriculture developing, including farmers."
As for China, which is the major impetus behind commodity demand, Rogers sees them possibly loosening up their money supply, suggesting more demand for commodities, although he says that "China has loosened up too early every time in the last decade, which is why the real estate bubble has continued and it's gotten worse. So it looks as though China is going to loosen up again and in my view they're going to loosen up again too early this time around, and you'll probably have a continuation of the same old thing - more inflation and perhaps excesses in real estate again."
Concerning where investors should place their money in regard to commodities, Rogers concluded they should look for those commodities which have fallen the most in price for the place to begin.
Thursday, February 25, 2010
Marc Faber: Will China Collapse?
Marc Faber on China
We've been talking about a lot of negative factors which could have a dramatic effect on the market and commodities lately, and all of them are important to keep in mind. That's the case with Marc Faber and his input on China.
Faber sees China as being at a tremendous risk of crashing, to the tune of about a 30 percent chance. He adds that whether it crashes or not it will definitely slow down.
With that in mind, it will have a significant impact on certain commodities, as the Chinese government, to a certain degree, is starting to tighten up some on its lending.
I'm not convinced on the motives of the Chinese yet though, as I think some of tightening is a move in relationship to negotiating on some of its commodity imports, specifically iron ore.
Even so, they do want to cool the economy down some, and that is probably a surety going forward.
The problem is where are they going to cut back on? It doesn't seem it will be in the area of iron ore or steel, as there is huge demand still in China for those, not only domestically but for exports too.
We do have to remember that China, even if it cuts back from its approximate 10 percent growth, down to 8 or 9 percent growth, it's still the biggest growth market on earth, and will drive the commodity market for years to come.
I think a small slowdown in China is more likely than an outright crash, as the elements involved in their are much different than their Western counterparts.
Marc Faber on China
We've been talking about a lot of negative factors which could have a dramatic effect on the market and commodities lately, and all of them are important to keep in mind. That's the case with Marc Faber and his input on China.
Faber sees China as being at a tremendous risk of crashing, to the tune of about a 30 percent chance. He adds that whether it crashes or not it will definitely slow down.
With that in mind, it will have a significant impact on certain commodities, as the Chinese government, to a certain degree, is starting to tighten up some on its lending.
I'm not convinced on the motives of the Chinese yet though, as I think some of tightening is a move in relationship to negotiating on some of its commodity imports, specifically iron ore.
Even so, they do want to cool the economy down some, and that is probably a surety going forward.
The problem is where are they going to cut back on? It doesn't seem it will be in the area of iron ore or steel, as there is huge demand still in China for those, not only domestically but for exports too.
We do have to remember that China, even if it cuts back from its approximate 10 percent growth, down to 8 or 9 percent growth, it's still the biggest growth market on earth, and will drive the commodity market for years to come.
I think a small slowdown in China is more likely than an outright crash, as the elements involved in their are much different than their Western counterparts.
Marc Faber on China
Thursday, February 11, 2010
Marc Faber on China Commodities
China Commodities
Marc Faber of the famous or infamous “Gloom, Boom & Doom Report" says the demand for commodities in China will decrease significantly in 2010 as the construction boom largely fueled by the Chinese stimulus isn't sustainable.
Chinese authorities concur with this with some raw materials, stating copper imports for 2010 should return to 2008 levels after so much construction was initiated but which has largely resulted in a ton of empty buildings all over China.
Two commodities where this probably won't be true will be with iron ore and molybdenum, which are used in steel, which looks like it will be in high demand in China for the next year at least.
This is because a lot of the steel will eventually be exported and isn't reliant upon the domestic Chinese market to sustain demand.
But for commodities related to domestic Chinese construction I believe Faber is right, and investors will need to take that into consideration for 2010.
China Commodities
Marc Faber of the famous or infamous “Gloom, Boom & Doom Report" says the demand for commodities in China will decrease significantly in 2010 as the construction boom largely fueled by the Chinese stimulus isn't sustainable.
Chinese authorities concur with this with some raw materials, stating copper imports for 2010 should return to 2008 levels after so much construction was initiated but which has largely resulted in a ton of empty buildings all over China.
Two commodities where this probably won't be true will be with iron ore and molybdenum, which are used in steel, which looks like it will be in high demand in China for the next year at least.
This is because a lot of the steel will eventually be exported and isn't reliant upon the domestic Chinese market to sustain demand.
But for commodities related to domestic Chinese construction I believe Faber is right, and investors will need to take that into consideration for 2010.
China Commodities
Monday, January 11, 2010
Jim Rogers | No China Bubble
Jim Rogers China Bubble
Jim Rogers seems to be exasperated by a number of so-called experts who seem to be calling bubbles on anything that rises in price; including countries like China.
As Rogers educated Nouriel Roubini in concerning gold lately, a bubble isn't a bubble because prices rise. A bubble in gold will happen, according to Jim Rogers, when everybody starts to start investing in gold, without knowing why. At this time very few people are investing in gold, and until that dramatically changes, there won't be a gold bubble.
Rogers maintains sometime in the next decade gold will probably hit somewhere around $2,000 an ounce.
As far as China goes, Rogers is striking out at global hedge fund manager Jim Chano, who claims China is also in a bubble, and that the bubble will burst sometime soon.
The China economy is built on a solid foundation according to Rogers, and the country is a great place to invest in.
As far a Chanos goes, who is a notorious short-term trader, you have to wonder how much of China he has shorted in a variety of companies, which is probably what caused him to make his remarks in hopes of making a quick killing.
Of course Chano may have made those trades for some time, and could be in danger of losing a lot of money betting on China being in a bubble that he thought would burst, but hasn't.
Rogers probably knows the Asian and Chinese investment sector as well as any Westerner, and if he says China's not in a bubble, I tend to believe him more than anybody else.
As far as commodities go, China seems to continue to be buying them up, but now it looks like it'll be not just for domestic consumption, but to feed the export industry, which may be starting to grow again.
Jim Rogers China Bubble Burst
Jim Rogers seems to be exasperated by a number of so-called experts who seem to be calling bubbles on anything that rises in price; including countries like China.
As Rogers educated Nouriel Roubini in concerning gold lately, a bubble isn't a bubble because prices rise. A bubble in gold will happen, according to Jim Rogers, when everybody starts to start investing in gold, without knowing why. At this time very few people are investing in gold, and until that dramatically changes, there won't be a gold bubble.
Rogers maintains sometime in the next decade gold will probably hit somewhere around $2,000 an ounce.
As far as China goes, Rogers is striking out at global hedge fund manager Jim Chano, who claims China is also in a bubble, and that the bubble will burst sometime soon.
The China economy is built on a solid foundation according to Rogers, and the country is a great place to invest in.
As far a Chanos goes, who is a notorious short-term trader, you have to wonder how much of China he has shorted in a variety of companies, which is probably what caused him to make his remarks in hopes of making a quick killing.
Of course Chano may have made those trades for some time, and could be in danger of losing a lot of money betting on China being in a bubble that he thought would burst, but hasn't.
Rogers probably knows the Asian and Chinese investment sector as well as any Westerner, and if he says China's not in a bubble, I tend to believe him more than anybody else.
As far as commodities go, China seems to continue to be buying them up, but now it looks like it'll be not just for domestic consumption, but to feed the export industry, which may be starting to grow again.
Jim Rogers China Bubble Burst
Wednesday, November 19, 2008
Commodities: Jim Rogers TV - Future and China
Talking on China: commodities, stocks, investment, stimulus - infrastructure key at this time
Part One, Part Two, Part Three, Part Four
Even though growth in China has slowed from its recent heady days, demand for natural resources will continue to push commodity prices higher over the long term.
Part One, Part Two, Part Three, Part Four
Even though growth in China has slowed from its recent heady days, demand for natural resources will continue to push commodity prices higher over the long term.
Friday, November 14, 2008
Commodity: China's Stimulus Plan and U.S. Dollar
What will be the effect of China stimulus plan on U.S. dollar as commodity?
A number of analysts have commented on the large number of factories that have closed in China, and think this will have such a negative impact on the country that it will lead to a depression there.
With that in mind, let's look at the recent announcement they're going to offer a stimulus package worth about $585 billion.
The reason the stimulus package of China is important to the U.S. dollar is money which would in the recent past been invested in the greenback through buying up U.S. treasuries, will now be put aside for Chinese domestic infrastructure projects.
China has been behind the available money for the U.S consumer to continue indulging in their reckless spending, that will start to change as China spreads its risk out more through now focusing on building up its domestic economy. The idea is to decouple from the export reliance it has had in order to put its people to work in factories and build up national wealth.
Now that it is accomplished, they will now change that overall strategy to focus within. They are also employing a similar strategy in Brazil, as they recently received permission for the Bank of China to have a direct presence in the country in order to offer financing for Chinese businesses who want to work of Brazilian infrastructure projects.
As this begins to play itself over the next two years (the Chinese stimulus time frame), it should put downward pressure on the U.S. dollar. Couple that with having to pay back the outrageous and ignorant stimulus package in the U.S., and we'll see heightened inflation and a weaker dollar going ahead.
Add all that to the current deleveraging of American funds at this time which has helped strengthen the U.S. dollar, and we could see a tremendous plunge in its value. It's a matter of when, not if.
A major question is whether the U.S. dollar will remain the denominated currency for commodities.
A number of analysts have commented on the large number of factories that have closed in China, and think this will have such a negative impact on the country that it will lead to a depression there.
With that in mind, let's look at the recent announcement they're going to offer a stimulus package worth about $585 billion.
The reason the stimulus package of China is important to the U.S. dollar is money which would in the recent past been invested in the greenback through buying up U.S. treasuries, will now be put aside for Chinese domestic infrastructure projects.
China has been behind the available money for the U.S consumer to continue indulging in their reckless spending, that will start to change as China spreads its risk out more through now focusing on building up its domestic economy. The idea is to decouple from the export reliance it has had in order to put its people to work in factories and build up national wealth.
Now that it is accomplished, they will now change that overall strategy to focus within. They are also employing a similar strategy in Brazil, as they recently received permission for the Bank of China to have a direct presence in the country in order to offer financing for Chinese businesses who want to work of Brazilian infrastructure projects.
As this begins to play itself over the next two years (the Chinese stimulus time frame), it should put downward pressure on the U.S. dollar. Couple that with having to pay back the outrageous and ignorant stimulus package in the U.S., and we'll see heightened inflation and a weaker dollar going ahead.
Add all that to the current deleveraging of American funds at this time which has helped strengthen the U.S. dollar, and we could see a tremendous plunge in its value. It's a matter of when, not if.
A major question is whether the U.S. dollar will remain the denominated currency for commodities.
Monday, November 10, 2008
China to Offer Stimulus Package of $585 Billion over Next Two Years
While China will continue to grow at a rate enviable by most other nations, it has decided to offer their own version of a stimulus package in their own country worth over $585 billion.
China's growth is estimated to be at about 8.5 percent next year, down by 3 percent from last year.
Most of the package will target ten key areas in the country, and will focus on "transportation, rural infrastructure, low-income housing, electricity and water. Some of the funds will also be used to build up areas ravaged from natural disasters, particularly the May earthquake in the Sichuan province."
This is being done in an effort to strengthen the domestic market, as the country has primarily relied on exports for the majority of their past growth. That is what is slowing down, so they're going to prop things up until exports start to perform strongly again, which could take a couple years.
In an effort to generate more liquidity in the markets, China is also removing commercial bank ceilings in order to loosen up credit for rurul areas, technological innovation, small business and industrial mergers and acquisitions.
Another area they're targeting is their value-added tax, which will dramatically cut back on business costs to the tune of about $17.5 billion.
China's growth is estimated to be at about 8.5 percent next year, down by 3 percent from last year.
Most of the package will target ten key areas in the country, and will focus on "transportation, rural infrastructure, low-income housing, electricity and water. Some of the funds will also be used to build up areas ravaged from natural disasters, particularly the May earthquake in the Sichuan province."
This is being done in an effort to strengthen the domestic market, as the country has primarily relied on exports for the majority of their past growth. That is what is slowing down, so they're going to prop things up until exports start to perform strongly again, which could take a couple years.
In an effort to generate more liquidity in the markets, China is also removing commercial bank ceilings in order to loosen up credit for rurul areas, technological innovation, small business and industrial mergers and acquisitions.
Another area they're targeting is their value-added tax, which will dramatically cut back on business costs to the tune of about $17.5 billion.
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