A Macro and Markets Deep Dive With Jim Rogers

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2:06Is the debt ceiling crisis just a prelude to a much bigger debt blow up? If so, how should you be thinking about risks and opportunities? Hi, everyone. Welcome to this deep dive conversation with legendary investor Jim Rogers. Hi, Jim. Thanks so much for being with us. Oh, Maggie, I'm delighted to see you again. It's been a long time. It certainly has. And we're so happy to have you because I feel like we're at this juncture where a lot of people are trying to look into the future, figure out what's going on. But there are a lot of cross currents. So let's start with what's on your mind as you watch or we all watch Congress and the president sort of go down to the wire again when it comes to the U.S.

2:45debt ceiling. Are you concerned about it? How are you thinking about it? We seem to find ourselves in this situation repeatedly. Maggie, I hope that you have figured out by now we should always be concerned about Washington. They don't have a clue what they're doing, and they prove it day in and day out. Of course I'm concerned. I'm more concerned about the fact that we have this gigantic debt. It gets bigger and bigger every day, and instead of talking about a temporary ceiling, they should be talking about what to do, because every country in history that's gotten into this situation has had serious problems eventually, and we will too.

3:25Yeah, and I think that's the overarching concern, and we're starting to hear more conversation about that, certainly not in Washington, but in investment circles. People keep talking about a sovereign debt bubble. Does it feel like we're at a tipping point now? Has it become unsustainable? Are we going to start to see fallout from that no we're not at a tipping point now you don't have to worry tomorrow afternoon we're still going to be so we're still here we're still going to be talking and for the most part us would be paying its bills but maggie you should be extremely worried because if you're not you don't know what's going on you need to watch the deep dive because this is this has never happened in history of the world and it's getting worse not better many countries are starting to look for alternatives to the u.s.

4:21partly because of this horrendous debt problem are they are is there an alternative now how is that i mean this this is something that's been talked about but are we are the efforts more serious is is there an alternative that is coming around the corner that might be a solution if that's what they want i'm sure there is i don't know what it is yet i haven't figured it out the alternative the obvious alternative would be the chinese currency but the renminbi is not convertible not completely convertible yet so you can't have a world's major currency that's not convertible so i don't know i'm but i assure you, Maggie, I'm looking every day because I got to find something that I know that something bad is going to happen in the currency markets in the next two or three years.

5:13When you say something bad, what do you think that looks like? What are you concerned about? I mean, conceive and I'm just, this is not a prediction. This is just saying, you know, if we have a collapse of the U.S. dollar, that means financial markets everywhere are going to collapse, including the American government bond market uh in the pan when the when the previous currencies lost their status there were lots of problems along the way 100 years ago britain was the number one currency in the world it wasn't number two but 50 years later maggie and that's not a typo only 50 years later britain went bankrupt imf had to bail them out so this has happened before and i hope we all live long enough to see it happen many times.

6:03Is it possible that this can be does it have to end in calamity? Do you think this can be unwound in an orderly fashion? This dealing with these high level of deaths? Well, you should go to Washington, they will love you. They would think, Oh, my gosh, this is our savior. I have been doing that for a long time, just as the British did. the british unwound it slowly and softly and badly for several years right and we have been doing it too it cannot last well let's put it this way it never has lasted forever every country that's had the currency on top has disappeared the currency has eventually disappeared and lost status.

6:53Maybe it's different this time. That's always a dangerous phrase, isn't it? It's an extremely dangerous phrase. That's why I used it. So if we assume that they come to some sort of agreement, which they usually do when it comes to the debt ceiling, and they do seem to be making some progress on talks, the Treasury is going to have to issue a hell of a lot of bonds. I think somebody estimated yesterday 500 billion worth of bonds north of six north of a trillion in six to 12 months that's a lot of issuance do you think there are enough buyers for u.s treasury bonds in this environment oh yeah they'll buy them themselves that's what they do you know they get other parts of the government to buy them you know and they fool you and me and everybody else and they fool themselves because it cannot be sustainable forever.

7:48So you think that if you had a situation where there weren't enough natural buyers, because some people are worried that maybe the interest rate's going to have to go higher. We're focused on kind of inflation and Fed policy, but that the 10-year interest rate will have to go a lot higher to attract buyers. Sounds like you think before that happens, the government buys themselves, again, some sort of QA. I know that the government will step in and buy it themselves if and when it happens. I also know that interest rates are going to go higher worldwide. You know, they were recently the lowest they'd been in recorded history.

8:25I'll repeat, the lowest in recorded history. So interest rates are certainly going to go higher over the foreseeable future. What is that in that environment, in a higher interest rate environment, where do you see trouble and who's best situated to cope with that? Well, there'll be trouble in all the markets, property markets, stock markets, bond markets, currency markets, everything. Because, Maggie, you're not old enough to remember, but in 1980 or 1979, when we had our last huge inflationary spiral, interest rates on short-term government, treasury bills, interest rates on treasury bills were over 21%.

9:11That's not a typo. Over 21 % because the situation was out of control and we had to do something. We did. It killed inflation, but it wasn't a lot of fun for a lot of people. Is that the policy option this time around? Can they even do that given the debt everyone's carrying? it won't it won't we're not able to get to 21 now but if we get up to nine or 10 or 13 you pick the number the whole thing starts collapsing no we can't get to 21 again unless it's in a panic because the mark the u.s market cannot handle it but other markets cannot handle it but Maggie wait I want to say something good news for you because it ensures job security for you somebody has to report all this so it's wonderful for you it's horrible for us I'm not sure that's yeah I'm not sure that gives me any comfort Jim at all I just want to remind you it's good for Maggie What are you expecting for inflation?

10:19Because we have a very divided camp on that. We have some people who really believe that we're in a structurally higher inflation environment. And we have other people who think there are forces that are going to come back in. Demand will fall. That will pull inflation down. And then you have some sort of technology that's also going to help on that, boost productivity at the same time. So they don't see inflation as sticky as others. where do you fall demand will certainly fall if you have interest rates going higher and higher and higher uh that's that's a given but i don't know how high they have to go to kill inflation this time around there's been staggering amounts of money printing in the last few years nothing is that the world has never seen the debt and the spending and the money printing like in the last few years.

11:10So it's something that's going to have to be very, very ruinous to solve this problem this time. I have no idea how high. Watch the deep dive. But it's going to be a big, big, big problem before this is over. You're going to have financial markets collapse. It's been a long time since we had a big, big, serious bear market in the world. In fact, in the U.S. has been the longest in recorded history. So, no, we're going to have some big problems before this is over. But I remind you, we've always had periodic bear markets. It's not as though this has never happened before. Yeah, they've sort of been managed, though, haven't they, in the last few years?

11:52So if that's coming from an investment point of view, especially because you've lived through them, how do you manage that risk? How are you wrapping your head around that? Well, I hope everybody's very worried. I hope everybody's scared. I hope everybody's watching the deep dive to figure out what to do about all this. Historically, bear markets, when they come, nearly everything, nearly all assets go down a lot. So if you don't know how to sell short, everybody should learn how to sell short and or should learn how to put their money in cash. But Maggie, when I say cash, wet cash. U.S. dollars, you know, you're wet cash because you could be ruined if you have your money in the wrong cash.

12:40So you have to learn about cash and or selling short in order to survive what's coming with the bear market. But again, this is basic freshman economics, freshman stock market economics. That's how you survive. Yeah. But you have a generation of people that have been kind of programmed to buy the dip, put their money in equities. You know, it's not an environment that many investors have lived through. well it's a sign that i can one of the signs happens at the end of bull markets you have all these new investors that suddenly hear about this wonderful new thing called the stock market and it's fun and you can make money and it's easy oh it's easy so they all come pouring in and it's happening now as you've probably noticed and it's another sign that we're getting closer to the bear market.

13:37So when you say what cash and you're so bearish on the dollar, how are you thinking about that? I mean, are you diversified in other, are you holding assets in other currencies? How do you, if you need cash, but you're bearish the U.S. dollar, how do you express that? Well, I am mainly long the U.S. dollar at the moment because in times of chaos, people look for a safe haven, and most people think, for historic reasons, that U.S. dollar is a safe haven. It's not for the largest detonation in the history of the world, but most people, when they think of a safe haven, they think of a U.S. dollar.

14:18I'm there. I hope that I'm smart enough. If and when the gigantic panic comes, the dollar will have a big rally, And I hope I'm smart enough, if it happens that way, to sell. Now, your next question, you know, you've already asked it is, where do you put the money then? Maggie, that's an extremely good question. And I don't have an answer at the moment. Yeah, that's what makes, I think, this a difficult environment. So you're sitting in Singapore. You've long, I think we were reminiscing when I saw you in New York many years ago. I think you were just about to make the move to Asia. from looking at the world from that region?

14:57What's underappreciated? Well, I think what's underappreciated in the U.S. is the strength of Asia. You know, Asia has millions of people, and most of them are reasonably well-financed, reasonably well-capitalized. I mean, the largest debtor nations in the world are in the West, unfortunately. and most of the asian nations are somewhat better situated than we are and unfortunately that's not recognized in the u.s but again i don't have an answer one could put your money in japan or china or singapore or many places where one could put one's money but i can see problems with all of the above and others as well.

15:47Yeah. It sounds like when that you're you're worried about a crisis coming, but it sounds like you don't think any place will be able to outperform or remain unscathed if we have this sort of dislocation in global markets. I know we're going to have it. I don't know where to put my money yet. Somebody is going to be OK. North Korea, Maggie, North Korea is going to be okay but so what you know they're not going to collapse because nobody will lend their money nobody will take their money including me but i don't know where to put my money at the moment have you ever country is concerned have you ever been in a position where you where you felt like that before most of my life clearly my entire life not and even before my investing career I wish it were simple wouldn't it be wonderful if all this were easy it's never been easy for me maybe it's been easy for you Maggie but it's never been easy for me and yet you managed to make some good calls and you shifted things around you've always been looking at emerging markets it sounds like you're sort of more concerned now than you've been in the past well I'm certainly I know we're going to have the largest bear market the biggest bear market in my lifetime In 2008, we had a big bear market because of too much debt.

17:11Maggie, look out the window. Since 2008, the debt everywhere has skyrocketed, gigantic increases in debt. So I think it's a simple statement that the next bear market will be the worst in my lifetime because the debt has gone up by such staggering amounts in the past 14 years. But you're not sure where the opportunity is in that dislocation. because that's the general even in 2008 you know there were some people who made out very well they were on the right side of certain bets and there was opportunity well i hope i'm smart enough to sell short when the time comes i hope i'm so smart enough to sell short the right things but that's a fine that's great wonderful hooray but then what do i do you got to cover those short somewhere along the line and then where do you put your money i don't see the u.s dollar it might be the u.s dollar may have a while longer but i can certainly see after the next collapse more and more people are going to be very skeptical of the u.s dollar i mean washington is driving people away from the u.s dollar by saying you know if we don't like you we'll put sanctification many people in the world now or even our friends say well wait a minute that's not the way it's supposed to be the reserve currency the international currency is supposed to be neutral anybody can use it for anything but now the u.s if u.s gets angry at you they say no we won't let you use our money we will take it away from you and that is making many including our friends look for an alternative yeah so i'm looking for an alternative too i have to are you looking at all in um in at crypto or anything blockchain related or digital assets do you think that's an alternative well blockchain and crypto are two different things i have not bought nor sold crypto uh many people have done so and traded it profitably uh it's been wonderful But as far as the currency is concerned, and many countries are working on electronic currency, cryptocurrency, call it computer money, call it what you will.

19:32And we're going to have it. The world's going to have it eventually. But I don't see the U.S., for instance, since we're both U.S., I don't see the U.S. when they say, okay, this is money now. i don't see you i don't see washington saying but if you want to use that money over there you use that money over there we don't care that's fine with us that's not the way bureaucrats and governments think and work so whatever the currency is going to be it's going to be government currency somewhere if it were today it would be u.s dollars out of washington uh but who knows going to be in a few years.

20:11I don't think that the world is going to convert to Bitcoin. It will be computer money, but it will be government computer money. Have you ever wanted to trade Bitcoin but haven't dared try? With Plus500 Futures, you can trade crypto without the hassle of opening a wallet. With just a few clicks, you can register and start practicing with their free and unlimited demo. See a trading opportunity? You'll be able to trade it in just two clicks. Feel ready? You can move to real money with as little as$100 once your account is approved. And the great thing is that in addition to crypto, Plus500 gives you access to a wide range of instruments.

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21:24So what's your outlook for the Chinese economy? What's happening in China? well china closed off for their virus closed down pretty uh harshly strongly um they've opened up and so things are getting better there uh a problem of that of course is many of their neighbors are have opened up too but they cannot be as nearly as strong as china would like them china is getting better i expect china to continue to get better i own chinese shares if i find some more i'll buy more of them but the whole world you know it's been 14 years since we had a big bear market in the u.s and that's the bellwether so it's been a while and we're going to have more problems in the next year or two which means china will too how do you feel china has debt now by the way china did not have debt 15 20 years ago very little debt but now even china has a lot of debt too and both China and the US are both struggling with real estate problems.

22:32You know in the US we see the commercial real estate issue that a lot of people think is still going to unfold. We haven't seen the worst of it yet and China has its own real estate issues. Oh my God. Yeah China has a wild property bubble that they tried to do something about for a long time. They couldn't control it didn't control it. But now it's controlling itself. Well, maybe the government is Somebody is controlling it finally, and it's beginning to pop. So yes, China's certainly got problems, even though they're probably less bad than some other countries. So you think they're in a better situation, perhaps, than the U.S.?

23:12Can they support global growth, or is this going to be a slower growth China? I would say they're less bad. I won't say they're better, but they have, as we just discussed, problems. And if their customers, if the countries they trade with have problems, I mean, they are not as wildly prosperous as they would like to be. No, I certainly see China having problems. But the world's going to have problems. I mean, Japan may be less problematic than most other countries now just because they had such a huge disaster so long ago. But everybody's going to have problems. We have a question from Powell.

23:55Do you think we've already entered the commodity super cycle? How are you thinking about commodities? Well, throughout history, when everybody's printing money or whenever people are stimulating the economy, it has always led to inflation. It has again. It will lead to more inflation. And the best place to be when you have inflation is real assets, and real assets are commodities. I mean, I own some silver right here. buy more if it goes down more and gold and other things as well but you know bonds have are in a bubble and have been in a bubble for a while we've never had such expensive bonds in the history of the world property in many places korea new zealand many places are certainly a bubble parts of china and stocks have been bubblish if not bubbles and depends on the country so the cheapest asset that i know is still commodities i mean silver is down 60 from its all-time high those are not bubble numbers maggie but something's down 60 from its all-time high so are you are do you own the physical commodity is that how you like that or or etfs acceptable that's real silver you're gonna need suitcases to carry all those coins around But you like the commodity.

25:24You never can tell when you need a little silver in your pocket, Matthew. So, yes, I do have some. I have some various places. Yes. But you can buy futures. Many ways to invest in commodities. Futures, stocks. It depends. I mean, it depends on what you are best at. If we are in this situation where things are going to crater, though, doesn't demand. So you're not talking. Are you talking all commodities? or precious metals? Because if demand craters, doesn't that hurt some other commodities like energy? Historically, when demand, when you have a crater, everything goes down, including gold and silver, at least for a while.

26:06So no, yes, you're exactly right. But when people look around and they see everything collapse, they say, oh, better buy some silver, better buy some gold. And that's one of the first things that people then revert to. and whether it's cotton or the pens, whatever it happens to be, natural gas, people then usually, one of the first things they turn to are real assets, commodities. But you're price sensitive because you said you have some and if the price goes down, you'll buy some more. Well, I hope so. I hope I'm smart enough. Maggie, you want to hear about my mistakes? I've made many mistakes in my life.

26:49you want to hear about my first wife oh my god what a mistake that was i'm good at mistakes for my life of four trades jim i'm sorry what i we like to hear about the mistakes as well um the trading ones are probably better for this show though right but you're being very honest saying you don't know what to do i mean usually you know we we expect people to roll up with a with a firm plan but you you sound like you're being very honest that you're just not sure how this is going to play out well i own various assets you see my silver i can show you gold if you want to see it i own various and sundry commodities real assets agriculture's agriculture has been a disaster for years and usually if you buy a disaster you will get things turn out okay i do not own russian and ukrainian shares i i'd like i mean you cannot i cannot buy them now i'm an American.

27:47But normally, if you buy something during a war, you make a lot of money down the road. But unfortunately, I'm an American, so I cannot buy Ukraine shares right now, Russian shares. But buying during wartime has often been a smart thing to do. So when you're talking about food commodities, again, how are you, what does that look like when you hold it in your portfolio? A lot of people, when we get questions, look at DBA or an ETF, a food basket of equities. Is that what you're looking at? Are you more the futures, the commodity? Many studies have shown that for most investors, most of the time, buying an index is the best way.

28:33Index investing outperforms most active managers year after. It's a bad statement about us, about our profession, but it happens to be true. So I, too, partly because I'm lazy and partly because I know it's a good way to do it, I invest in ETFs or indexes. Let's put it that way. When you're looking at things like food commodity, Jim, what's your time horizon? Like, are you making a longer bet on this as opposed to six months, a year? What's the sort of time horizon you use? I always hope that everything I buy I can own forever because I'm lazy. I know selling is hard. It's hard work. So I hope that I can own it for a long time.

29:18And the way I see the future of commodities in 2023, when we have the bull market, it should probably last for a fairly long time. There are many things that have been happening in the world. So yes, ideally, I'll own the commodities the rest of my life. i'll take that as long term jim i hope that's very long term but the silver i hope my children own my silver someday and my gold i hope that someday they say he must have been smart look at all this silver we have thanks dad yes i hope so a question from jordan who says love you jim how does a mid-30 year old invest and create cash flow uh from the rogers become a farmer invest in farmland theme when the big boys keep buying up all the farmland well you said a couple of interesting things one the big boys keep buying it up so normally if you put your money where the big boys are going to be you'll probably come out okay come out ahead yes i mean there's some very big boys that are huge owners of agriculture around the world but there's a lot of agriculture I don't know the questioner.

30:38I don't know who you are or much about you, but there are many places you can buy agricultural land in the U.S., Canada. Argentina, the world is full of agricultural land if you are diligent enough to find it and pursue it. But I don't know where you live. I don't know anything about you. I can tell you. Go to Siberia and buy farmland. And that's not practical for many of us, including me right now. Yeah. A while back we had, I'll have to dig that up and maybe we'll put the link in for everyone listening. There are a couple of companies who are doing things like fractional farmland because of the difficulty in trying to secure it on your own.

31:20We'll have to dig that up and rerun that, Jordan. We'll put it in the link for you. So, Ralph asking, do you have any thoughts about the U.S. and Singapore's relationship with China? Well, two entirely different questions, nations and locations, etc. Yes, I mean, the population of Singapore is like 75 % Chinese, ethnic group, not passports. But, oh yes, and if you look at a globe, you see that China's not far away. But, you know, the American Navy is here too. And China knows the American Navy's here. So that colors any relationship that Singapore has with anybody. But Singapore and China get along famously.

32:16They're great pals, great friends. They have been for a few decades, and that is continuing. if there's a war in asia i mean if america and taiwan american china go to war over taiwan oh my gosh look at your globe this is not a good place to be this is the most important port in the world in the world especially in an asian war but at the moment anyway asia i mean sorry china and singapore are pals they get along with each other they do a lot of things together lots of Chinese invest in Singapore and vice versa, including me. So at the moment, that situation, that relationship is good. If there's no war over Taiwan, China loves Singapore and vice versa.

33:07And I hope that would continue. America loves Singapore. I've said American Navy. Go to the point, you'll see the American Navy. So America and China get along extremely well, too. The Chinese Air Force trains in America. So we like each other. But if there's a war, Maggie, if there's a war in Asia, all bets are off. Yeah, well said, well said. Sebastian asking, I'm jumping around here because we have a lot of different questions on different topics. Sebastian asking your thoughts about renewable energy, specifically companies providing services and materials for renewables. Well, Sebastian, yes, we all want renewable energy.

33:54We all want clean air. I mean, I don't know anybody who's saying, hey, let's have more dirty air, let's have more dirty water, et cetera. No, it's got a great future. And if you can find companies or processes that are economically efficient, and economically competitive, I would suggest you probably should put a lot of money there because the world is going to have solar, wind, whatever kind of clean energy you can come up with as long as it's efficient and competitive. A lot of it is not. A lot of it has to be, it survives only by subsidies. So be sure that if you get involved, you get involved with people that are efficient on their own and competitive on their own.