This is the piece at NZZ I was going for before getting sidetracked by the risk of the shadow banking system ending everything.
Two quick points on Mr Rogers and commodities: 1) he has been early, sometimes very early in his calls and 2) he seems to treat commodities as an investment class when they are actually a class of "trading" instruments. Except for farmland, which he has advocated owning and which because of its hybrid nature, income producer and (sometimes) inflation hedge seems more of a "long ain't wrong" asset.
From Neue Zürcher Zeitung's TheMarket.ch, March 21:
After the collapse of Silicon Valley Bank and Signature Bank, financial markets have become very jittery again. Stress is also surfacing in Europe: In Switzerland, over the weekend, Credit Suisse was taken over by larger rival UBS, in order to stabilize fragile markets.
Despite these stress signals, legendary investor Jim Rogers is not worried about the very near term, «central bankers are scared after the collapse of Silicon Valley Bank, so things will be okay for a while». For the moment, the Fed will probably pause with rate hikes. Longer-term, however, he is convinced that inflation will come back with a vengeance, which will cause a painful bear market.
In an in-depth interview with The Market, which has been edited for clarity, Jim Rogers gives his view on the global economy, says which asset classes are still attractively valued and explains why there is no longer a sound currency anywhere in the world – not even the Swiss franc.
What is your assessment of the global economy and financial markets?
We had a big crisis in 2008 and to fight it, for several years governments printed, borrowed and spent money like never before. So, the world economy for a few years has been strong and continues to be somewhat strong because governments keep spending money. And it’s not over yet. We probably won’t have many more interest rate hikes, as central bankers are scared after the collapse of Silicon Valley Bank, so things will be okay for a while. However, when inflation comes back central banks will have to raise interest rates again and then markets will collapse.
Is the Fed done with interest rate hikes in this cycle?
No, I think for the moment they are done. However, when inflation comes back – and it will come back – further interest rates hikes will be necessary. In the 1970s we had such a big inflation problem that the Fed had to increase interest rates to the highest level in history. In the 1980s yields on United States Treasury bills rose to over 21%. And it worked! The president got re-elected, the economy went into recession but inflation come down.
Isn’t the stress in the banking sector a signal that monetary policy has become too tight?
It’s a signal that some market participants were overextended and yes, there will be more problems like that at a later stage. Right now, things will calm down, as Washington is terrified and the Fed probably won’t raise interest rates much further or not at all. But inflation will come back and interest rates will start moving higher again and then we will have a serious bear market....
....MUCH MORE
A question we posed introducing another TheMarket.ch interview in January: "Has the world seen the high water mark for inflation in this decade? In this century? "
