When Does Jim Rogers Like The US Dollar Case Analysis
Jim Rogers Sees 100% Chance of Recession
Times are changing. Since when does Jim Rogers like the U.S. dollar? For those of you who aren’t familiar with Rogers, he is a former business partner of George Soros, as well as a long-term commodity bull.
If Rogers is correct about the U.S. dollar appreciating, then commodities will take a further hit. This will not be a positive for emerging markets. It will have the biggest impact on emerging markets, including Brazil, Russia, India and China. If that list looks familiar it’s because it makes up the BRIC nations, which for investors was a great place to park money for many years. If you look at that list now, Brazil and Russia are in recession, India is holding its own but susceptible to contagion and …show more content…
But why does Rogers suddenly like the U.S. dollar?
U.S. Dollar
The simplest way to explain why Rogers likes the U.S. dollar is because he believes there will be a 100% chance of recession over the next year, and that there will be a flight to safety - the U.S. dollar. The next question: Why does Rogers see the U.S. dollar as a flight to safety?
The U.S. dollar is the safest currency in the world on a relative basis. We have added a lot of liquidity to our economic system, but not as much as the European Central Bank (ECB) and Bank of Japan (BOJ). Rogers is selling the Japanese yen and going long on the U.S. dollar. The Japanese yen used to be known as a safe haven, but the BOJ has been expanding its balance sheet to incredible levels. This weakens the value of the Japanese yen. A similar situation has played out in Europe, where the ECB keeps printing.
Even if the Federal Reserve doesn’t move at all, it’s not as dovish as its peers. This is bullish for the U.S. dollar. In regards to the potential for negative interest rates (which would hurt the U.S. dollar), the idea has been absolutely torched by economists, billionaire investors, Alan Greenspan and even some within the Federal Reserve. The thinking here is simple: If it hasn’t worked for five other central banks and their economies, why would it work
Times are changing. Since when does Jim Rogers like the U.S. dollar? For those of you who aren’t familiar with Rogers, he is a former business partner of George Soros, as well as a long-term commodity bull.
If Rogers is correct about the U.S. dollar appreciating, then commodities will take a further hit. This will not be a positive for emerging markets. It will have the biggest impact on emerging markets, including Brazil, Russia, India and China. If that list looks familiar it’s because it makes up the BRIC nations, which for investors was a great place to park money for many years. If you look at that list now, Brazil and Russia are in recession, India is holding its own but susceptible to contagion and …show more content…
But why does Rogers suddenly like the U.S. dollar?
U.S. Dollar
The simplest way to explain why Rogers likes the U.S. dollar is because he believes there will be a 100% chance of recession over the next year, and that there will be a flight to safety - the U.S. dollar. The next question: Why does Rogers see the U.S. dollar as a flight to safety?
The U.S. dollar is the safest currency in the world on a relative basis. We have added a lot of liquidity to our economic system, but not as much as the European Central Bank (ECB) and Bank of Japan (BOJ). Rogers is selling the Japanese yen and going long on the U.S. dollar. The Japanese yen used to be known as a safe haven, but the BOJ has been expanding its balance sheet to incredible levels. This weakens the value of the Japanese yen. A similar situation has played out in Europe, where the ECB keeps printing.
Even if the Federal Reserve doesn’t move at all, it’s not as dovish as its peers. This is bullish for the U.S. dollar. In regards to the potential for negative interest rates (which would hurt the U.S. dollar), the idea has been absolutely torched by economists, billionaire investors, Alan Greenspan and even some within the Federal Reserve. The thinking here is simple: If it hasn’t worked for five other central banks and their economies, why would it work