While a good number of Americans do not support the proposed government bailout of the U.S. financial system, PIMCO’s Bill Gross does not count himself in this group. In fact, the “King of Bonds” is highly-supportive of the $700 billion scheme. Reuters’ Jennifer Ablan wrote yesterday:

“Importantly this is a bill that will benefit Main Street and the U.S. economy,” Bill Gross, chief investment officer of Pacific Investment Management Co, told Reuters.

“The $700 billion-dollar program will help to unclog the hundreds of billions of subprime mortgages within the banking system, allowing for future lending to take place in housing, credit cards, car loans, student loans, and a host of other categories,” Gross said.

“In addition, the ability of the Treasury to make a profit will be enhanced by the issuance of warrants as well as oversight of the purchase price of these assets via reverse auction,” he said.

“Last, and critically, once these loans are purchased by the Treasury they will have the ability to reduce interest rates and modify the terms on all of the mortgages,” Gross said. “Main Street, the U.S. economy and the financial markets in turn will all benefit in this triple-win program.”

Source:

“Pimco’s Gross says bailout plan will help Main Street”
Jennifer Ablan
Reuters, September 28, 2008

Looks like the “Oracle of Omaha” likes green cars. And I’m not referring to the color. From Reuters’ Joanne Chiu and Alison Leung this morning:

Billionaire Warren Buffett’s investment in Chinese battery maker BYD has given the firm cash and credibility to pursue an ambition of making “green” cars, analysts said, helping its shares nearly double on Monday.

Shares in BYD, which began life as a maker of rechargeable batteries but now also makes mobile phones and automobiles, soared 90 percent at one stage after resuming trade following a morning suspension. They ended 42 percent higher at HK$11.90.

On Saturday, MidAmerican Energy — a unit of investment guru Buffett’s Berkshire Hathaway — agreed to buy a 10 percent stake in the company for $230 million, which investors took as an endorsement for a rapidly growing firm.

The deal gives MidAmerican a foothold in the Hong Kong-listed company, which is developing electric and electric-hybrid cars that can also run on petrol as a back-up fuel.

According to Chiu and Leung, BYD had planned to begin sales of its cars in the United States by 2011. With Buffett’s and MidAmerican Energy’s backing, it now hopes to move this date up.

The Reuters reporters also noted that MidAmerican is also interested in BYD’s research capability in rapid-charge and rechargeable battery technology, and power storage technology.

Source:

“UPDATE 2-Buffett’s BYD endorsement sends shares soaring”
Joanne Chiu, Alison Leung
Reuters, September 29, 2008

Marc Faber, also known as “Dr. Doom” by the press, lived up to his name while talking to CNBC this morning about what’s in store for the U.S. economy. From the CNBC website:

Liquidity will dry up even more, volatility will stay high and financial assets are going to suffer as the crisis continues to unfold. The bailout plan is unlikely to work and the global economy will take the hit, he predicted.

“People rely on the people in Congress, at the Fed, at the Treasury, people that brought us into this trouble, to take us out of trouble. I don’t think they will succeed,” Faber said. “We can have recovery rallies but a new high on the S&P is practically out of the question for a very long time. In real terms, equities are still very high and economically, I think the world will go into a slump.”

Dr. Faber, who publishes the monthly investment newsletter The Gloom Boom & Doom Report and is the author of several books, talked more about where he sees financial assets going. From the piece:

“Next year, if the economy in the U.S. is as weak as I think it would be, the trade and the current account deficit will continue to contract,” Faber said. “When global liquidity contracts, it’s not a good time for financial assets.”

Other sources of funding, such as foreign reserves of resources-rich countries, are also likely to dry up, Faber said. “I think sovereign wealth funds are going to be very busy supporting their own markets, they won’t have much money to buy assets around the world.”

The head of Marc Faber Limited also shared a disturbing prediction with CNBC viewers. The Swiss-born investor said:

The next emergency measure will be that Americans are not allowed to buy foreign currency and transfer money overseas, and the next measure will be not permitting Americans to buy gold and so on and so forth… It creates even more uncertainty in the market place when you continually change the rules.

Evangelos Vlasopoulos, stock.xchng

Source:

“Fed Acted Like a Liquidity Drug Dealer: Economist”
CNBC, September 23, 2008

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Looks like legendary oil investor T. Boone Pickens, Jr., is not budging from his prediction for higher crude oil prices. From Bloomberg this morning:

Mr. Pickens told the National Press Club that he expects crude oil prices to hit $150 a barrel in 2009. He said supply forecasts show a shortfall that will drive prices up. Crude rose more than $25 a barrel to as much as $130 before settling at $120.92 Monday.

“I’m not so sure your demand isn’t now pretty well fixed,” Mr. Pickens said. “You’ve knocked out a lot of stuff. You’ve cut our demand by a million and a half barrels a day. Your demand is pretty well wrung out. You can’t cut much else.”

Source:

“T. Boone Pickens ‘ready to go along’ with bailout plan”
Bloomberg, September 23, 2008

Earlier today, Richard Milne from the Financial Times (UK) wrote about the economic outlook for Europe. He spoke of emerging markets veteran Mark Mobius, and what the legendary investor thought about increasing concerns regarding low growth in the European economies. Milne wrote:

But not everyone agrees. Mark Mobius, managing director at Templeton Asset Management, will today say: “This crisis remains in the mind, rather than in reality. The likelihood of a Europe-wide recession is very small and any downturn in the markets will be short-lived.”

European Central Bank
Frankfurt, Germany

Source:

“Business calls for attention to growth”
Richard Milne
Financial Times (UK), September 22, 2008

The credit crunch will continue, according to well-known money manager Jeremy Grantham. Forbes’ Sandra Ward wrote this morning:

“We’re on the downside of the credit boom,” says Jeremy Grantham, co-founder and chairman of Boston-based investment manager GMO with $120 billion under management. “Acquiring leverage for any purpose will be made harder.”

For the first time, he points out, a global credit crisis has coincided with asset prices that have been overpriced around the world and that will exacerbate the problem.

“There’ll be a material slowdown in global growth,” he says, and “this is going to echo around for a long time.”

Source:

“Bailout or Not, Credit Will Be Crunched”
Sandra Ward
Forbes, September 22, 2008

Warren Buffett Now Second Richest American

From CNBC Executive Producer Alex Crippen this past Wednesday:

After six months as the reigning “World’s Richest Billionaire,” Warren Buffett has lost his title, and a few billion dollars.

The Forbes 400 list of the richest Americans has just been released, and Buffett’s friend Bill Gates, the former Microsoft Chairman, is at the top of the rankings, with an estimated net worth of $57 billion.

That tops Buffett’s $50 billion, although he’s still number two out of 400 on the Forbes list of the nation’s super-rich.

The magazine notes that Berkshire Hathaway shares are down 15 percent since Buffett was named the world’s richest billionaire six months ago with an estimated $62 billion. They had soared to an all-time high late last year, lifting him into first place.

Jim Rogers Working On New Book About Commodities

From Commodity Online (India) on September 14:

When it comes to the finest books on commodities, people always turn to Jim Rogers, the global investing legend on commodities. Some of the books that he has written are worth reading, if you want to play in the global commodities market.

Jim Rogers continues to write on commodities. May be we can expect another great book on commodities from him soon. When Commodity Online met Jim Rogers in Singapore recently, he said he is working on a new book on commodities.

“Reading, traveling and writing are my passion. I write about everything I do on commodities,” he told Commodity Online.

Sources:

“Warren Buffett Loses Title of World’s Richest Billionaire”
Alex Crippen
CNBC, September 17, 2008

“Jim Rogers and his books on commodities”
Commodity Online (India), September 14, 2008