Makes You Want To Sell All Your Dollars
Veteran investor Jim Rogers said on Wednesday he plans to short US bonds and sees more currency turmoil in the markets this fall.
“I will be shorting US bonds,” Rogers told a conference in Edinburgh. “I would probably be doing it today if I weren’t here,” he said.
Bonds in the US have been in a bull market for 30 years, Rogers said.
“In my view that’s coming to an end…the bond bulll market is coming to an end. If any of you have bonds I would urge you to go home and sell them. If any of you are bond portfolio managers I would get another job,” he said.
Addressing one bond portfolio manager among conference delegates, Rogers said: “If I were you I would think about becoming a farmer. You buy land and learn how to farm.”
“In my view it’s going to be a spectacular way to make money,” he said, adding: “This is where the great fortunes are going to be made in the future.”
Rogers also said he expected to see more currency turmoil in the markets this fall.
“One of the safest investments I see is the renminbi,” he said.
“Longer term the US dollar is going to be a total disaster,” Rogers said, urging investors to “think about getting out of US dollars before it’s too late.”
Many investors say the Chinese yuan is a good place to invest, but China’s capital controls make it hard for foreigners to buy the currency.
Dollar in Danger
“I would expect to see some serious problems in the foreseeable future….By 2011, 2012, 2013, 2013, I don’t know when, we’re going to have an economic slowdown again,” he said. “This time it’s going to be a real disaster because the US cannot quadruple its debt again. Dr Bernanke cannot print staggering amounts of money again.”
“How much more can they print without a serious collapse of the US dollar?” he said.
Rogers said he owns the dollar for the moment but he may have to sell it.
“There’s been a huge amount of good news for the dollar and you think it would be strengthening by now…it hasn’t been,” he said.
Rogers said the world was facing an ongoing bull market in commodities and said it hadn’t run its course yet. “Commodities are totally underowned,” he said.
“This bull market in commodities has a long way to go,” he said, pointing to supply constraints. “If the world economy does not get better I’d rather own commodities than stocks.”
Agriculture is going to be one of the great sectors over the next 30 years, according to Rogers.
Rogers said he had not invested in rare earth commodities. “I missed the whole move in rare earth…I wasn’t paying attention, it’s very clear that somebody is making a lot of money,” he said.
Source: CNBC
Market News: AIG, HSBC, Toyota, Disney, Google…
- Government and AIG lower sale expectations. The Treasury and AIG (AIG) hope to sell about $9B worth of shares in the insurer’s upcoming offering, near the bottom end of a range envisioned at $7B-$25B, sources said. The low expectations follow a slump in AIG’s share price to $29.62 yesterday from $50 in January. The government’s break-even price is $28.70 a share, and if shares fall too low, the plans could be changed. The issue is due to be priced and sold around May 24, with more sales over time. The offer is likely to consist of up to 300M shares, of which the government will sell two thirds and the company the rest. AIG is due to hold its annual meeting today and begin its “roadshow” soon afterwards.
- HSBC to cut costs by up to $3.5B. HSBC (HBC) intends to reduce expenses by $2.5B-$3.5B by 2013, to direct investment in faster-growing markets and businesses, and to close or sell non-strategic or underperforming businesses, new CEO Stuart Gulliver said today. The plans are part of a strategic review, and the bank is also now assessing its U.S. credit card business – which a Barclays Capital analyst has said could free $25B if sold – and part of its branch network in the country. HSBC reiterated that it seeks a return on common equity of 12%-15%.
- Earthquake hits Toyota Q4. Toyota’s (TM) profit collapsed by over 75% to ¥25.4B ($314M) in FQ4 2011 as sales dropped 12% to ¥4.6T, with earnings hurt by the massive disruption following the earthquake in Japan in March. However, a doubling in annual profit to ¥408.1B suggests that Toyota was on the way to recovery from its recall crisis when the earthquake struck. The automaker said efforts to ramp up production, including using other plants and finding replacement parts, were going better than initially expected, and reiterated that output would be back at pre-disaster levels by November or December at the latest.
- ‘Mars’ movie flop hurts Disney’s earnings. Walt Disney’s (DIS) FQ2 earnings came in below expectations as net income slid to $942M from $953M a year earlier. Although revenue grew 6% to $9.08B, earnings were hit by the poor box-office performance of the film ‘Mars Needs Moms,’ charges related to Disney’s acquisition of social game maker Playdom, and the temporary closure of theme parks in Japan following the earthquake and tsunami. ESPN and ABC grew due to higher advertising revenue, and the TV networks continue to account for the vast majority of Disney’s operating earnings. Shares slipped 2.4% in after-hours trading. (Earnings call transcript)
- Google earmarks $500M for government probe. According to regulatory filings, Google (GOOG) has set aside $500M related to a “potential resolution of an investigation” by the Justice Department into the company’s online advertising business. The company expects no material adverse effect, whatever the resolution. Separately, in a congressional hearing yesterday, Google defended its collection of personal location information from mobile phones, saying users are told about the data collection and offered ways to disable it. Apple (AAPL) was also a target of the hearing.
- Banks open to $5B robo-signing settlement. The country’s biggest banks are reportedly willing to pay as much as $5B to settle allegations of improper mortgage-servicing practices, though that’s still considerably less than the $20B-plus in penalties being sought by some state and federal officials. Negotiations continued yesterday between bank representatives and officials, and included such topics as recent revisions to proposed changes in mortgage servicing, and revisions to how penalties would be allocated for past offenses.
- Buyers circle RBC Bank, warts and all. Potential buyers are lining up for RBC Bank, Royal Bank of Canada’s (RY) U.S. operations, even though the bank has several unattractive features, including lots of bad loans and a tendency to lose money. Sources say that despite its defects, the unit is expected to fetch around $3B, because interest in buying U.S. banks is high but there aren’t many banks for the taking at the moment. RBC declined to comment on the auction, which represents a significant retreat from RBC’s decade-long goal of building a significant U.S. presence. BB&T (BBT) is seen as the most logical buyer.
- Mississippi deluge could cost billions. The historic flooding along the Mississippi River is expected to cause billions of dollars in damages, with one economist putting the figure at up to $4B. Another said jobless claims may rise if flooding prevents people from working, while disrupted shipping lanes could hurt manufacturing. The farming, casino and hotel sectors are also among those affected. The waters crested in Memphis yesterday just inches below its all-time record, and forecasters said that the worst of the flooding is headed towards the Gulf Coast, where many of the U.S.’s biggest refineries are located. The flooding has sent gasoline futures soaring and is hastening the return of $4-a-gallon pump prices.
- China inflation eases to 5.3% as tightening starts to take effect. China’s CPI fell to 5.3% in April from 5.4% in March, which, along with other data, suggests that the central bank’s increased interest rates and additional tightening measures are beginning to cool the economy. Growth in industrial output slipped to 13.4% year-on-year in April from 14.8% in March, outstanding bank loans and the expansion of the M2 money supply hit 29-month lows, and the growth in retail sales weakened as well. The figures indicate that inflation, which usually lags money supply trends, may continue to moderate.
- China to ease trade rules, allow U.S. fund sales. China has pledged to remove barriers for U.S. companies in its huge market for government contracts, and to provide foreign firms with greater access to its financial sector by letting them sell mutual funds and provide custodial services. The promises come after two days of high-level talks between the U.S. and China in Washington, although some commentators were skeptical that the undertakings would bring concrete benefits. “They let you in the market under conditions where you cannot be a real competitor,” said one at the conservative Heritage Foundation. “That’s what they’ve done every single time.”
Source: SeekingAlpha
Earnings: Las Vegas Sands, Applied Materials, CBS Corp…
Among the companies whose shares are expected to actively trade in Wednesday’s session are CBS Corp. (CBS), Las Vegas Sands Corp. (LVS) and Varian Semiconductor Equipment Associates Inc. (VSEA). CBS Corp. (CBS) swung to a first-quarter profit, beating analysts’ estimates, as the company’s entertainment and cable businesses showed particular bottom-line strength. Shares rose 4.6% to $26.40 premarket.
Las Vegas Sands Corp.’s (LVS) first-quarter earnings soared as the company’s revenue was again sharply boosted by its Marina Bay Sands resort that opened in August. But adjusted profit was far below analysts’ estimates, and revenue missed, too, sending shares down 6.7% to $42.80 in premarket trading.
Applied Materials Inc. (AMAT) signed a definitive agreement to acquire Varian Semiconductor Equipment Associates Inc. (VSEA) for $4.9 billion in cash, a move that will expand the semiconductor equipment maker’s wafer-fabrication offerings. The bid, worth $63 a share, represents a 55% premium to Tuesday’s closing price. Varian’s stock surged 52% to $61.30 and Applied Materials’ shares rose 2.4% to $15.60 premarket.
Green Mountain Coffee Roasters Inc.’s (GMCR) fiscal second-quarter profit more than doubled and core results topped its upbeat expectations amid blistering sales growth. Shares jumped 19% to $76.19 in premarket trading.
Comcast Corp. (CMCSA) reported a 9% increase in first-quarter earnings and provided its first glimpse of results from NBC Universal, the media company it acquired a majority stake in from General Electric Co. (GE) early this year. Shares of Comcast climbed 3.9% to $27.65 premarket.
ConAgra Foods Inc. (CAG) publicly disclosed a $4.9 billion offer to buy Ralcorp Holdings Inc. (RAH), sweetening a previously rejected offer, in an attempt by ConAgra to create the third-largest U.S. packaged-food company by sales. Shares of Ralcorp jumped 6.6% to $88.80 while shares of ConAgra slipped 0.3% to $24.67 premarket.
First Solar Inc.’s (FSLR) first-quarter earnings fell 33% because of lower sale prices, higher costs and a slowdown in Europe’s solar market, prompting the U.S. solar-panel maker to aim for new markets. Shares fell 7.5% to $124.50 in premarket trading.
Avis Budget Group Inc. (CAR) swung to a surprise first-quarter profit, helped by revenue that climbed higher than analysts had expected. Shares rose 5.2% to $19 premarket.
Myriad Genetics Inc.’s (MYGN) fiscal third-quarter profit fell 16% as the maker of molecular diagnostic tests booked a higher tax charge that masked higher revenue and improved margins. The results beat analysts’ expectations as the company raised its full-year earnings forecast. Shares jumped 4.5% to $22.29 in premarket trading.
Great Plains Energy Inc.’s (GXP) first-quarter profit declined 88% on lower demand, especially among residential customers, while the company said the regional economy remains sluggish. Shares slipped 2.6% to $20.30 premarket.
XL Group PLC (XL) swung to a first-quarter loss on wide catastrophe losses from recent natural disasters, and the property and casualty insurer’s core loss was deeper than expected. Shares slipped 14% to $16.42 in recent premarket trading.
Oplink Communications Inc.’s (OPLK) fiscal third-quarter earnings more than tripled as the company’s margins improved and revenue increased. But shares dropped premarket, falling 11% to $17.05, as the company issued a weak current-quarter forecast.
Century Aluminum Co.’s (CENX) first-quarter profit soared on higher sales and gross margins, as well as a prior-year charge, although results missed analysts’ expectations. The weaker-than-expected results sent shares down 6.3% to $18.50 in premarket trading.
FEI Co.’s (FEIC) first-quarter earnings surged more than fivefold as the scientific-instruments company’s revenue beat its already upbeat guidance and costs rose only moderately. Shares were up 10 at $35.01 premarket as the company also forecast strong results in the current quarter.
ValueClick Inc.’s (VCLK) shares were up 13% at $18.69 premarket after strong 1Q results late Tuesday. Both Jefferies and Needham raise ratings to buy. Jefferies notes higher growth potential in core businesses, strengthening advertising and ecommerce environment and “solid execution following the return of Jim Zarly as CEO.”
THQ Inc.’s (THQI) fiscal fourth-quarter loss widened, though earnings surged for the period after factoring in the effect of deferred revenue from its top-selling combat shooter, “Homefront,” which was released during the quarter. Shares of THQ slipped 4.1% in premarket trading to $3.95, after the company predicted lower-than-expected revenues for the current quarter.
AOL Inc.’s (AOL) first-quarter profit plummeted 86% as advertising and subscription revenue continued to decline, but core results topped analysts’ expectations. Shares gained 2.9% to $21 premarket.
Garmin Ltd.’s (GRMN) first-quarter earnings soared as sales increased across its business segments and the navigation-device maker benefited from a weaker dollar and a sharply lower effective tax rate. The results beat analysts’ expectations and shares jumped 5.1% to $35.21 premarket.
TRW Automotive Holdings Corp.’s (TRW) first-quarter earnings rose 38%, beating analysts’ estimates, as the auto-parts company’s margins and sales continued to benefit from a recovering automotive industry. Shares rose 2.7% to $57 premarket.
Kellogg Co.’s (K) first-quarter earnings fell a bigger-than-expected 12% as higher costs offset sales growth. The company also revised its forecast of full-year sales growth to 4% from its February guidance of 3% to 4% and backed its per-share earnings estimate. Shares declined 1.8% to $56.40 premarket.
Devon Energy Corp.’s (DVN) first-quarter earnings plunged 65% as the oil and gas explorer was hurt by the impact of derivatives, but the bottom line beat analysts’ expectations. Shares shed 1.5% to $86 premarket.
Cephalon Inc.’s (CEPH) first-quarter profit nearly doubled as sales surged and a gain related to the fair value of investments boosted the bottom line of the drug maker.
Charles River Laboratories International Inc.’s (CRL) first-quarter earnings jumped 80% on higher margins and a tax benefit. The drug-research company’s adjusted results topped Wall Street’s expectations.
Convergys Corp. (CVG) first-quarter loss fell 1.1%, but the provider of back-offices services reported the expected bottom line after adjusting for items as margin improved.
Dole Food Co.’s (DOLE) first-quarter earnings slumped 91% amid unrealized losses from the refinancing of the company’s yen cross currency swap, though the fruit and vegetable producer posted improved revenue on higher pricing and adjusted results that beat expectations.
Genworth Financial Inc.’s (GNW) first-quarter earnings fell 54% from a year-earlier quarter boosted by tax benefits, while revenue increased, but the company’s U.S. mortgage operations continued to struggle.
Quest Software Inc.’s (QSFT) first-quarter earnings dropped 77%, with adjusted results falling well short of analysts’ estimates, as the company’s operating costs increased and margins declined. Sterne Agee & Leach Inc. has raised its unsolicited offer to buy SWS Group Inc. (SWS) by 20% after the company rejected an earlier offer that it said undervalued the company’s potential. But Tuesday, SWS rejected the increased bid as well, calling it “highlyconditional and opportunistic.”
Universal Technical Institute Inc.’s (UTI) fiscal second-quarter profit rose 16% as average student enrollment grew and margins improved amid an uncertain regulatory future in the industry. The results topped expectations.
Yamana Gold Inc.’s (AUY, YRI.T) first-quarter profit jumped 13% as revenue jumped on stronger gold, silver and copper prices and production increased, although results missed analysts’ expectations.
-By Dow Jones Newswires; write to hotstocks@dowjones.com