UBS on yesterday’s PPI data:
Whilst Bernanke took centre stage, macro data showed the
increasing problems we face. Producer prices rose by 9.2% y/y, the highest by
quite a margin since July 1981 when U.S. interest rates were still at 15.5%.
the same stage retail sales growth, which is not adjusted for price changes,
slowed to just 0.1%. This stagflation mix will I believe get worse as high
energy prices turn whole economic models such as the free trade doctrine of
comparative advantage, on its head, reversing globalisation.
-UBS Macro Derivatives Sales Daily–
Wednesday 16/7/08 London
To reiterate, the last time Producer prices were this high, the Fed had rates up in the double digits — not at 2% . . .
"I don’t know where these guys get the audacity to take our money, taxpayer money, and buy stock in Fannie Mae,” Rogers, 65, said in an interview from Singapore. “So we’re going to bail out everybody else in the world. And it ruins the Federal Reserve’s balance sheet and it makes the dollar more vulnerable and it increases inflation.”
The chairman of Rogers Holdings, who in April 2006 correctly predicted oil would reach $100 a barrel and gold $1,000 an ounce, also said the commodities bull market has a "long way to go” and advised buying agricultural commodities.
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The U.S. Treasury Department’s plan to shore up Fannie Mae and Freddie Mac is an "unmitigated disaster” and the largest U.S. mortgage lenders are "basically insolvent,” according to investor Jim Rogers.
Taxpayers will be saddled with debt if Congress approves U.S. Treasury Secretary Henry Paulson’s request for the authority to buy unlimited stakes in and lend to Fannie Mae and Freddie Mac, Rogers said in a Bloomberg Television interview. Rogers is betting that Fannie Mae shares will keep tumbling…
"These companies were going to go bankrupt if they hadn’t stepped in to do something, and they should’ve gone bankrupt with all of the mistakes they’ve made,” Rogers said. “What’s going to happen when you Band-Aid and put some Band-Aids on it for another year or two or three? What’s going to happen three years from now when the situation’s much, much, much worse?” . . .
The U.S. economy is in a recession, possibly the worst since World War II, Rogers said.
"They’re ruining what has been one of the greatest economies in the world,” Rogers said. Bernanke and Paulson "are bailing out their friends on Wall Street but there are 300 million Americans that are going to have to pay for this.”
Fannie Plan a `Disaster’ to Rogers; Goldman Says Sell
Carol Massar and Eric Martin
Bloomberg, July 14 2008
Don’t Bail Out Fannie, Freddie: Jim Rogers
CNBC.com | 15 Jul 2008 | 05:02 AM ET