Why Jim Rogers rejects notion of U.S. dollar as safe haven

(MarketWatch) Stocks ended with a flourish higher last week, thanks to weaker-than-expected jobs data that didn’t derail expectations for more easy money from the Fed but weren’t weak enough to signal a looming recession. 

“Until we see a clear sign that the majority of economic data has deteriorated significantly, we do not foresee a recession dragging equities lower in the fourth quarter,” Adam Kobeissi of the Kobeissi Letter tells clients in his latest newsletter. Of course, clearing one hurdle for a market seemingly beset by them doesn’t mean investors should get too giddy. 

While the S&P 500’s SPX, -1.06% Friday rally brings it back within 2.5% of a July 26 record, a report that China isn’t keen on a broad-scale trade deal when it meets with the U.S. later this week has triggered early losses for stock-index futures. 

Our call of the day is focused elsewhere — on the fate of the dollar. Enter Jim Rogers, the chairman of Rogers Holdings, who says dollar fundamentals are “horrible,” but he’s buying it to prepare for the currency’s last-gasp rally.

“People would think the U.S. dollar is a safe haven, it’s not. The fundamentals are horrible. Nobody in his right mind would buy the U.S. dollar, but I own a lot…because I’m not in my right mind. I’m assuming that the rest of the world is not in its mind either and they’re all going to buy it,” Rogers told Real Vision in a recent interview.

He predicts the dollar will eventually get overpriced and turn into a bubble, and then the veteran investor, who founded the Quantum Fund with billionaire George Soros in the 1970s, will sell. “I’m not very good at market timing but I would expect it to be in the next period of turmoil, which will be coming in the next two or three years,” he said.

The dollar headwinds are numerous he says, given such factors as the U.S. is “the biggest debtor nation in the history of the world,” and countries such as China, Russia and Brazil are hard at work to find an alternate international currency.

Rogers says he’ll switch to the Chinese renminbi and/or gold when he senses it’s over for the dollar. But he doesn’t own any U.S. stocks, and is only really interested in Russian equities. That is as he’s still predicting the “worst bear market in my lifetime.”


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