Jim Rogers On Whether China Is In Trouble

Mamta Badkar

Jim Rogers, chairman of Rogers Holdings Inc. stopped by the Business Insider office yesterday to chat about China, commodities and his work life balance.

In this segment, he shares some fascinating thoughts on the transition of power to the fifth generation, the biggest mistake Chinese officials are making, and why he watches the Chinese stock market instead of Chinese data.

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China officials like yelping dogs: US senator

WASHINGTON ? The top US Senate champion of legislation to punish China for its alleged currency manipulation compared officials in Beijing on Wednesday to a "pack of dogs" yelping in anger at the bill.

"Where I come from, they say when you throw a rock at a pack of dogs, the one that yelps is the one you hit," Democratic Senator Sherrod Brown said in a speech on the Senate floor.

"Of course the Chinese are going to yelp because they don't like this," Brown said of the legislation, which envisions retaliatory duties on Chinese goods if the yuan is found to be unfairly "misaligned."

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Marc Faber's October Outlook: Forget EU Debt Crisis, A China Meltdown Is The Real Threat

by Nathaniel Crawford

Marc Faber is out with the latest issue of his famous Gloom, Boom and Doom Report, which is always a must read for serious investors. Unlike most of the other talking heads, Faber has an excellent track record. He correctly predicted the top in the equity markets in Nov. 2007, and caught the bottom in March 2009, making his subscribers a lot of money. Here is a summary of his October 2011 report:

Stocks--Yes, stocks are very oversold, but that does not mean they cannot go lower. The dreadful price action in both Copper and the Shanghai Composite points to new lows for the equity markets. After US stocks make a new low below 1100 on the S&P 500 (SPY), there could be a year-end rally followed by a more meaningful decline into 2012. Investors should use any bounce in stocks as an opportunity to reduce their equity exposure. At this point, Faber advises no more than 25% of your portfolio be in stocks.

Gold--At $1900 gold was extremely overbought, and a correction was necessary. However, Faber now believes that gold could undergo a significant correction similar to what happened between 1974-1976, when gold fell 40%. Faber notes that a large decline in gold is now a distinct possibility. The first support level for gold is at the 200 DMA around $1500. Despite the potential for a pullback, Faber still likes gold and believes it will trade significantly higher.

Dollar--It's true that the dollar has no intrinsic value and is being printed into infinity, but the US dollar will be your best friend for the next few months. As global liquidity contracts on EU debt concerns and a possible hard landing in China, Faber advises investors to be long the dollar. Note this is a short-term call; longer term the dollar is going to zero.

Treasuries--Despite being bullish on the US dollar, Faber does not reccomend treasuries, noting that they are overbought and susceptible to a large correction.

China and Copper--If you think the market is falling because of incompetent EU bureaucrats you are behind the curve. According to Faber, the price of copper is signaling a very serious slowdown (if not complete collapse) in China. This is what is really behind the move down in all commodities. A hard landing in China would be devastating for the global economy. The Shanghai composite is making new lows along with copper, which is very bearish. Also stay away from the Australian and Canadian currencies. If China crashes, these markets will get massacred.

Emerging Markets--Stay away from these at all costs. All emerging markets are falling and making new lows. Even though Faber likes these longer term, they could still fall another 20%-30% before they would be good buys. These markets could even fall to their 2009 lows. However, this will represent a good buying opportunity because these markets will be the first to bottom.

Short Opportunities--There is no doubt about it; shorting in this kind of manipulated market is dangerous, but if you must, here are a few ideas: Apple (APPL), Amazon (AMZN), and Salesforce.com (CRM). Only short these with very tight stops.

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The Case for Free Trade, Not Imperialism | Walter Block (Watch This If You Support Schumer & Reid's China Trade War Bill)

Dr. Walter Block, an Austrian school economist and anarcho-libertarian philosopher, is Harold E. Wirth Eminent Scholar Chair in Economics and professor of economics at Loyola University New Orleans and senior fellow with the Ludwig von Mises Institute. He is the author of the books Defending the Undefendable, Labor Economics From A Free Market Perspective, Economics and the Environment: A Reconciliation, and his latest, The Privatization of Roads and Highways.

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You really don't miss anything!

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China to 'liquidate' US Treasuries, not dollars

By Ambrose Evans-Pritchard

The debt markets have been warned.

A key rate setter-for China's central bank let slip ? or was it a slip? ? that Beijing aims to run down its portfolio of US debt as soon as safely possible.

"The incremental parts of our of our foreign reserve holdings should be invested in physical assets," said Li Daokui at the World Economic Forum in the very rainy city of Dalian ? former Port Arthur from Russian colonial days.

"We would like to buy stakes in Boeing, Intel, and Apple, and maybe we should invest in these types of companies in a proactive way."

"Once the US Treasury market stabilizes we can liquidate more of our holdings of Treasuries," he said.

To my knowledge, this is the first time that a top adviser to China's central bank has uttered the word "liquidate". Until now the policy has been to diversify slowly by investing the fresh $200bn accumulated each quarter into other currencies and assets ? chiefly AAA euro debt from Germany, France and the hard core.

We don't know how much US debt is held by SAFE (State Administration of Foreign Exchange), the bank's FX arm. The figure is thought to be over $2.2 trillion.

The Chinese are clearly vexed with Washington, viewing the Fed's QE as a stealth default on US debt. Mr Li came close to calling America a basket case, saying the picture is far worse than when Ronald Reagan and Margaret Thatcher took over in the early 1980s.

Mr Li, one of three outside academics on China's MPC, described the debt deals on Capitol Hill as "just trying to by time", saying it will not be enough to stop America's "debt dynamic" turning dangerous.

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