Jim Rogers, the chairman of Rogers Holdings who famously co-founded hedge fund Quantum with George Soros before retiring at age 37, says he’s bullish on China, bearish on the U.S. and is looking for investments in emerging markets.
U.S. stock gains are too dependent on a handful of companies, which he says is a warning sign, according to interview with the Financial Times
“Stock market recoveries are getting narrower. The breadth on the New York Stock Exchange peaked on August 2014,” the newspaper quotes the 72-year-old investor as saying. “Last year, only 40 percent of stocks on Nasdaq were up, and only one-third of stocks on NYSE were up. The market already sees that something is wrong.”
The S&P 500 fell more than 10 percent from its May peak to a February close of 1,829.08 as China showed signs of slowing growth and oil fell to a 13-year low. The stock benchmark has rebounded since then, but hasn’t broken any new records.
Rogers sold short stocks of Facebook, Amazon.com, NetFlix and Google, the so-called “FANG” stocks that helped drive last year’s rallies. Short selling is the process of borrowing shares from a brokerage, selling them and buying them back later. The trade is profitable when the stock declines in value.
He is bullish on China’s agricultural industry, although he worries that the country has taken on too much debt in its push for rapid commercial development.
“China will do just about everything to support agriculture,” he tells the FT. “The government is providing lots of incentives to farmers.”
He is also wary of central bank intervention to support economic growth. The Federal Reserve has struggled to raise interest rates more than 0.25 percentage points, while the Bank of Japan and European Central Bank have introduced negative interest rates in an effort to push banks to lend.
Fed Chair Janet Yellen on Tuesday said the central bank foresees a gradual pace of interest rate increases as signs of global economic weakness pressure the U.S.
In prepared remarks to the Economic Club of New York, she said the central bank is monitoring the effects of a global economic slump, lower oil prices and stock market turbulence. She said that given the risks, the Fed will "proceed cautiously" in raising rates, according to the Associated Press
Most economists expect no hike at the Fed's next policy meeting, to be held April 26-27.
© 2024 Newsmax Finance. All rights reserved.