Jim Rogers warns: Trump and Clinton will lead to 'bankruptcy and war'
Few people on earth can be called a “legendary investor,” but Jim Rogers certainly fits the bill.
The chairman of Rogers Holdings was the co-founder of Quantum Fund along with George Soros in the 1970s. He now lives in Singapore and is a heavy investor in emerging markets. Rogers also holds two world records for going around the globe twice—once by motorcycle and once by car.
The world Rogers sees now is not so bright and sunny, at least economically. He holds steadfastly to his prediction three months ago on Yahoo Finance that Brexit would lead to something “worse than any bear market you’ve seen in your lifetime.”
“I’m not a very good market timer,” admit Rogers. “I don’t mean it is going to happen next week, but you will see in the next couple of years the worst bear market in your lifetime. It’s going to be very, very bad so I hope that you’re worried.”
He doesn’t expect Europe’s economy to get out of its tepid growth any time soon.
“Europe has problems,” Rogers said. “They have, just like we in America, very high debts, and the debts are getting higher and higher. And they’re not doing anything to solve their trade problems. It’s a mess. And now of course the U.K. is leaving. That’s going to cause more disruptions all over the world, especially in Europe. As I say, you should be worried. I’m worried, anyway.”
Rogers anticipates even China will see some trouble. The Bank of International Settlements recently warned about China’s credit-to-GDP gap. Loans in the country are at about $28 trillion dollars, larger than the U.S. and Japan combined.
China’s increasing use of leverage came about in the wake of the global financial crisis of the past decade, notes Rogers. That could have dire consequences in the event of another economic crisis.
“In 2008, the Chinese had a lot of money saved for a rainy day, and they spent it and helped bail out the world,” he said. “Since 2008, even China has debt. It’s amazing. For decades, they didn’t have debt for many historic reasons. Now they have debt. So the next time around, you’re going to see bankruptcies in China which is going to shock a lot of people—including the Chinese—and they’re not going to be able to help us like they did before.”
Rogers is long Chinese equities despite having dire expectations. “There are going to be bankruptcies,” he added. “Many companies that do business with the West and have leverage are going to suffer.”
Yet there are segments of the Chinese market that are inoculated from turmoil in the rest of the world, he maintains. One industry is environmental cleanup.
“China is filthy, but now China is spending a lot of money trying to clean it up,” Rogers said. “If you’re in the pollution business in China, you don’t care if Europe disappears. You don’t care if America goes bankrupt, because you’re too busy trying to clean up China.”
He is also investing in the country’s health care sector. “If you’re in the health care business in China, you’re in good shape,” he said.
Russia, Kazakhstan, Nigeria and Rwanda are other countries where Rogers is either invested in or plans to put money to work in the near future.
On the commodities front, investors may have taken a shine to gold’s (GC=F) glittering 26% year-to-date rise, but Rogers is sweet on sugar (SB=F). The agricultural product is up 49% since the start of 2016 and has just about doubled in the past 12 months after spending years on the downtrend.
There are securities Rogers is not bullish on. He is short US equities, particularly large names like Apple (AAPL), Amazon (AMZN) and Netflix (NFLX)—a position he said has turned out poorly for him thus far. “They are the basic stocks which never go down and go higher and higher at my expense all the time,” he said.
But the US political situation may cause Rogers’ bearish bets to pan out.
“If Mr. Trump wins—which I would suspect he will—and does what he says—these are his words, not mine—it will lead to bankruptcy and war,” predicted Rogers, who said he will likely vote for Libertarian candidates Gary Johnson and Bill Weld. “As history shows, serious trade wars with everybody has always led to bankruptcy and that has often led to war. If Mrs. Clinton wins, same thing—it’s just going to take longer. She’s just as bad. She has no clue about world economics, and she has no is no clue about American economics.”
“I have said, you should be worried.”