Consensus: Outlook Is Bleak Save Commodities, Asian Emerging Markets

Our commodities event yesterday at the NYSE was arguably our best ever on meatiness of content, but also one of our most bleak.

By about midmorning at the NYSE yesterday, the packed room was despondent. The reality is that while we booked this event when commodities were booming, we could not possibly have picked a better time to drill into serious substance than the current trying market.

Peter Schiff was devastating, and crystal-clear in his observations. He thinks we're going to hell in a handbasket. He's got a couple of new books out that must be worth reading. His 2007 book was called Crash Proof: How to Profit from the Coming Economic Collapse. Jim Rogers, Derek Van Eck, John Brynjolfsson, Jon Nadler and others were not exactly cheery in their tone either.

And what were the takeaways?

• We're headed for a money-printing binge and a highly inflationary environment.
• The dollar could collapse (after continuing to rise in the ongoing de-leveraging).
• Gold is likely to rise ferociously (after potentially falling further, near term).
• China is the future.
• Asian currencies are the future.
• Emerging markets are a good place to be.
• Commodities are a great place to be in the coming inflationary environment.
• Your children should all learn Mandarin.

So that was the story. I really learned some things at this event ... both my panels on currency and gold taught me things I didn't know ... and I follow those two areas very closely. It was really fun, and a great venue at the NYSE. Consensus was that it was a good experience for all, if a somewhat frightening one.

Here's the Web site if you're interested in seeing the agenda.

Comments

[baloney:]

Why can't I see the comments unless I enter a comment myself? This makes for unnecessary clutter.

2008 Nov 04 11:09 AM

[ArtfulDodger:]

I'm sure this was an exciting event, but it's a fact that Rogers and Schiff have been negative on America for years.

Back when the DOW was under 5000 Rogers was warning about investing in America. I like him but he always sees the negative. Moreover, he was still high on Chinese stocks when the market was 6000.

Schiff has been similarly averse to investing in the US.
He's hated most stocks throughout the last DOW run from 7000 up.

Granted Rogers was right about commodities, but he was years early.

I agree with both of them about the surge of fiat money causing inflation, but there are two things that may change that, and it’s enough to make me wait before plunging back into commodities: the Fed can just as easily suck these dollars back out of the economy, as it did by cutting back on the money supply and raising rates 17 straight times from 1 to 5 1/4 at the first sign of rising gold prices.

Population is the other caveat—with hundreds of million more people on the planet wanting dollars, can that alone not hold up the dollar’s value? I never hear anyone addressing this. I would like to, though.

And what would happen to the dollar if the Chinese and Europeans are successful in banishing it as the world’s major currency? This they clearly stated they wanted to do last week.

Would they follow through? Where would that put the dollar?

2008 Nov 04 11:56 AM

[NOWHEREMAN:]

If it means the survival of their currencies? Of course they will, China is maintaining its close dollar correlation. This means their currency has jumped 20% against everyone else except the Yen, doesn't help exports. The Yen has appreciated about 25%, that means that the value of their currency reserve has dropped a similar amount.

The Euro has been reamed as well, purchasing power has dropped dramatically, inflation is on the rise even as prices drop for us and they enter a recession.

Will they follow through? I don't know. They must be pretty preturbed though.

2008 Nov 06 03:53 AM

[NOWHEREMAN:]

make that perturbed. And dollar repatriation should be slowing if not ending soon.

2008 Nov 06 03:55 AM

[fluffy:]

Deleveraging is only part of the dollar story. If Americans don't buy imported goods, less dollars leave the country, the trade deficit falls, and the dollar strengthens. So the strong dollar story should continue for awhile. However, the US must sell bonds to service debt and to pay off maturing bonds. We must have currency. We cannot get it through taxes (as the tax base is disappearing), and we cannot count on trade surpluses. Thus there is upward pressure on rates. We are essentially bankrupt, so far living off the kindness of strangers. Our only hope is that other countries degrade their currencies more than we have ours. Rates will go up to protect the dollar, way up. Inflation is another name for currencies losing value. When people stave, will they buy gold or food? And what will be the medium of exchange?

2008 Nov 11 06:31 PM