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

Looks like “The Oracle of Omaha” is springing into action. CNBC Executive Producer Alex Crippen wrote this morning:

A subsidiary of Warren Buffett’s Berkshire Hathaway just announced a tentative agreement to buy Constellation Energy for roughly $4.7 billion in cash.

MidAmerican Energy Holdings is paying just $26.50 a share. Constellation’s stock closed at $58.37 last Friday and finished 2007 at $102.53.

Constellation’s stock has plunged in recent days after S&P put its debt rating on watch amid worries about the liquidity needs of its commodities trading business.

Crippen, who follows the legendary stock investor through his “Warren Buffett Watch” blog, added:

It appears Buffett is indeed taking advantage of the recent financial turmoil to pick up what he would call a good company at a great price. We assume he sees something in Constellation that he didn’t see in AIG, since he declined to come to that company’s rescue earlier this week after it suffered a similar, but more extreme, battering on Wall Street.

Source:

“Warren Buffett Picks Up Constellation Energy At Bargain Price”
Alex Crippen
CNBC, September 18, 2008

Jitendra Kumar Gupta from India’s Business Standard caught up with legendary investor Jim Rogers, who was in Mumbai for the launch of the Birla Sun Life Commodity Equities Fund. From the Standard’s website yesterday:

At the conference and in an interview with Jitendra Kumar Gupta, he shared his outlook on commodities and the world economy. Excerpts:

What is your view on global economy and inflation?
The world economy is in recession and the inflation is going to stay here, it is going to get worse. Some countries lie about it. But, inflation in all countries is going to get worse. The next decade is going to see lot more inflation, which is not good.

In this light, how can one beat inflation and generate higher inflation adjusted returns?
Commodities are the best inflation hedge, better than real estate better than anything else. Nothing can assure you better than commodities, but only if you are good at it. You have to pick the things that go up the most to make more money. Inflation does not cause prices to rise, price rise causes inflation.

Frequently, since the prices of the commodities go up before the inflation numbers, one can stay ahead of inflation. But, if you get it wrong you might do worse. So, investing in those commodities, which are going to go up first or selecting the right commodities, is the key to stay ahead of the inflation and make a lot of money…

Do you think Asian economies are decoupling from the rest of the world?
If you deal with the largest economy you are going to get affected by what is happening in America. If you are in the other sectors in Asia, such as water treatment and agriculture you have decoupled. You do not care what is happening in America.

But, if you sell to Wal-Mart, which is the largest retailer in America, you are going to suffer badly. So, some will decouple and some may not. Since India is such a closed economy, which is a negative as far as I am concerned, in this particular short term, India will suffer less probably than other countries which are more integrated with the world economy.

What is your view on the dollar?
Fundamentally, dollar is a terribly flawed currency. I am pessimistic about the future of the dollar; I expect it to continue to deteriorate over the next two or three decades.

The dollar is rallying at the movement because there are so many pessimists including me. But, I hope to use that rally some time in next year to get better of rest of my dollars. I do not want to own any US dollar. Also, I would not urge you to buy US dollar. Dollar is going to loose its status as world reserve currency.

Some of the OPEC countries have already started and no longer take dollar, like Venezuela no longer accepts dollar. Other countries, like Gulf, are already looking and may be taking a package of basket of currencies instead of dollar. I am not the only one who knows the dollar is in trouble. Anybody who watches the TV knows that the dollar is in trouble.

What is you assessment of the crude oil prices in the short and longer term?
I do not have idea as to where the oil prices are headed in the short to medium term. I do know over the course of the bull market, which perhaps has another 10 years to go, the crude oil price will be much higher.

Your bets in the commodity space?
Agriculture is one thing I will be looking for the next decade or so. Within commodities, I would not say these are the best, but may be sugar, coffee and cotton. I am also starting to look at some of the base metals they are down a lot; starting to look at some of these like silver, copper, zinc and gold.

Also, if you want to invest in Asia, commodities are the best way. Because, no matter what happens, the commodities have to be better, Asia has three billion people and is now involved in the world economy. Besides, in commodities you do not have to worry about corporate governance, central banks, unions, politicians or anything.

With gold prices correcting, do you still advocate buying gold?
I am trying and want to buy some gold. However, whether this is the low in the gold, I have no idea, but if gold goes lower, I will add some more. Gold is something I do not plan to sell. Gold is something I will gift to my children.

How will alternative fuels play?
Many politicians around the world are advocating bio fuel now. It is going to happen whether it is good or bad. There is going to be much more demand for the bio fuel going forward. This is also a reason that I am optimistic about the outlook of agriculture.

Your views on the water potential in Asia?
India and China have huge water problems. Water could be the next big investment. And, the best way is to invest in water companies which clean it, transport or pump it. Find the water companies that solve the water problem and you could be the richest person in India.

Source:

“’The US dollar is in trouble’”
Jitendra Kumar Gupta
Business Standard (India), September 15, 2008

Dr. Doom, Marc Faber, spoke to India’s CNBC-TV18 this morning. Here are some notable excerpts from the exchange:

CNBC: Do you expect a bigger slide in commodities from here after what has happened already?
FABER: Over the last six weeks or so, the dollar has been very strong and commodities have been weakening including gold. Some foreign currencies have been very weak like the New Zealand dollar, Australian dollar, euro, pound sterling. Now the dollar is overbought, the S&P 500 and commodities are oversold and we can have a counter trend rally. In other words, the S&P 500 can recover 100-points or so and the dollar could correct here from 1.40 against the euro to 1.50. The pound could rebound the Australian dollar, New Zealand dollar. At the same time, we can have rally in commodities but new highs in commodities won’t happen anytime soon.

The contraction of liquidity in the world will continue. We will need a base building period around this level before we start recovering in asset markets or at worst we will have another major slide in 2009, 2010.

CNBC: In the past few weeks and months there have been a lot of growth concerns. What is the likelihood that both equities and commodities underperform over the next few months?
FABER: Most countries I visit are in recession. In other words, growth is still there but it is not as strong as it was a year ago. A lot of countries have negative growth rates at the present time. But, the markets are already down very substantially. India is down from 21,000 to 14,300 or so. So to some extent, the markets have already discounted slower economic growth or a recession. The question is to what extent have they discounted profits that are not going to recover for several years and the market has not discounted that. Having said that when I look at markets in the US and also in Asia, we have reached a relatively oversold condition right now and sentiment is quite negative and the news coming out of the US is very negative. So in general, when the news is very negative, markets can temporary bottom out and rebound.

CNBC: When you say that we may not see new highs for commodities in a hurry, is it crude that you are referring to?
FABER: You may not see a new high for many asset classes including the Indian Sensex for many years. The oil price is unlikely to go up very substantially unless you have a geopolitical confrontation, which is really possible once Mr. McCain is elected in US.

CNBC: The earlier feeling was that if commodities get into a bear market then equities will get out of theirs. Is it possible that both these markets remain in bear phases?
FABER: If you look at the direction of asset classes since 2001 and October 2002 then equities and commodities have moved in the same direction. All other asset classes like real estate in developed markets, emerging markets and even bond prices have moved up and that is the very famous Bernanke bubble. You can say Thank You to Bernanke, he has created the greatest bubble in the history of mankind. Now the consequences will be felt and they will be felt for quite some time because credit growth has de-accelerated in an unprecedented fashion and that leads to falling asset prices and recession.

CNBC: What commodity looks most likely to rebound form here between precious metals, base metals and even what’s been happening with crude?
FABER: A lot of commodities have become oversold because they are down 50% or more in some cases but I don’t think a new bull market is getting underway any time soon. Commodity prices will be higher in 2015 because all Central Banks are money printers and they do nothing else but print money. When their economies don’t do well, they just go out and print more money and cut interest rates which leads to competitive devaluations. So, if the US dollar is strong then the likelihood is that the Fed will cut interest rates increases and if the US dollar is weak, their hands are tight. If the Australian dollar or the pound sterling is very strong, then the tendency for these Central Banks is to cut interest rates.

At the end of the day, the whole world will end up with interest rates around zero and we will get into a very highly inflationary environment. When everything goes up, the price of TV, bread, and stocks but in real terms the stocks will go down.

Source:

“Sensex may not see a new high for many yrs: Marc Faber”
Moneycontrol.com (India), September 12, 2008

Jim Rogers, the CEO of Rogers Holdings who correctly predicted the start of the commodities rally in 1999, spoke with Bloomberg’s Betty Liu from Singapore yesterday. Rogers talked about his investment activity regarding U.S. financial stocks, crude oil, airlines, and long-term U.S. Treasuries.

U.S. Financial Stocks

I am still short all the investment banks. I haven’t covered any investment banks. I short them through the ETF. This chaos has further to go…

I’ve covered Citigroup. So, I’m no longer short it…

The balance sheets of many of these financial institutions are still terribly impaired. And there are more problems to come. Betty, we had the worst credit bubble we’ve had in world history. You don’t clean that out in a year or two or three. I wish you could, but it’s not going to happen.

Crude Oil

The bull market will not end until somebody finds a lot of oil, or unless we have worldwide economic collapse, perpetual economic collapse…

I will tell you I’ve not sold any oil. Even if it goes to $75, I don’t plan to sell any oil.

Airlines

I have not sold a single airline. I would hope to be able to buy more airlines if I can find some more that are cheap enough or they go down for some reason.

Long-Term U.S. Treasuries

I am still short Treasuries. Long-term U.S. Treasuries.

You can listen to the 9 minute 7 second interview here.

Source:

Jim Rogers Interview
Bloomberg, September 10, 2008

Legendary investor Jim Rogers spoke to Bloomberg’s Catherine Yang this morning about commodities, currencies, and his investments:

Commodities

In response to a question by Bloomberg’s Catherine Yang about whether or not the bull market in commodities will be intact 10 to 15 years from now, Rogers replied:

Bull market for commodities? Absolutely… I’d much rather own commodities than just about anything.

Oil:

Oil, the bull market started in 1999. Three times in the last nine years oil has gone down 40 or 50 percent. All the skeptics said- see, we told you it wasn’t a bull market. And every time it came back up and kept going higher. Oil could go down 50 percent again, that’s not a projection, I’m just explaining, that’s how markets work. There’s nothing to stop oil from going to $75, but it’s not the end of the bull market, because nobody’s discovered any oil.

Currencies

Dollar Recovery:

The dollar recovery is certainly taking place and it has a ways to go. Maybe a few weeks, few months, I don’t know, maybe another year or so that the dollar could recover because it was beaten down so much…

But the dollar recovery, I still plan to get out of my dollars sometime during this recovery, but I have no idea how long the recovery will last.

Carry Trade, Japanese Yen, Swiss Franc:

I’m buying currencies which have been the victims of the carry trade, on the assumption that the carry trade will end someday, and when it does, the yen and the Swiss franc are the main victims, will go up for a while.

Australian, New Zealand Dollars:

The Australian dollar and the New Zealand dollar were two of the main beneficiaries of the carry-trade… this reversal of the carry-trade will not last forever, it will last for a while. The Australian and New Zealand currencies are still two of the better currencies in the world longer-term.

Chinese Renminbi, Signapore Dollar:

I‘d rather own the renminbi than just about anything… the renminbi is one of the better investments one can make, and the Singapore dollar as well. The Singapore dollar is something else I own. I’m not buying it at the moment, because, as I’ve said, I’m focusing on these other currencies that have been victims of the carry-trade.

Other Investments

Airlines. I’ve been buying airlines for the summer, for a while now. Airlines, renminbi, Swiss franc, Japanese yen.

You can view the 4 minute 54 second segment here.

Source:

Jim Rogers Interview
Bloomberg, September 10, 2008

Back on September 2, Zoe Hughes of Private Equity Real Estate magazine reported that private international real estate investment firm Colony Capital, LLC, is looking to diversify into energy and infrastructure. Hughes wrote:

Colony Capital is considering long-term plays in the energy and infrastructure fields as part of a bid to diversify the private equity real estate firm’s brand, according to president Richard Saltzman.

In an exclusive interview published in the September issue of PERE magazine, Saltzman spoke about the firm’s strategic push, revealing energy and infrastructure were two spaces that could have “deep opportunities” for the firm in the future. He also spoke about Colony’s opportunistic investments, notably in the distressed arena.

Fukuoka Dome Baseball Stadium
Acquired by Colony Capital in 2004

Source:

“Colony gears up for diversification drive”
Zoe Hughes
Private Equity Real Estate, September 2, 2008

CNBC interviewed legendary oil investor T. Boone Pickens, Jr., yesterday down at the NYMEX. CNBC’s Melissa Francis asked the CEO of BP Capital about the direction of crude oil in coming days:

CNBC: Where do you think we’re going from here? Are we going to hit $100 or are we going to go below $100?
PICKENS: I don’t think we’ll go below $100. I think they’ll start to support it, is what will happen, and they’ll cut production. They like it, they, OPEC, likes it up here. It’s fun. You know, their revenues this year will be one-trillion two-hundred fifty billion dollars.
CNBC: You think they’re going to cut and defend $100 on September 9? You think they’ll cut production?
PICKENS: Yeah, I do, I do. I think they will.

You can view the 4 minute 55 second interview here.

Source:

T. Boone Pickens, Jr., Interview
CNBC, September 2, 2008

Marc Faber, known as “Dr. Doom” by the media, appeared on Bloomberg Television this morning from Bangkok and shared his short-term outlook for stocks and commodities. The editor of The Gloom Boom & Doom Report told Bloomberg viewers:

Global Economy:

For everyone, business is down. And in the U.S., if the statistics were compiled properly, the economy would be in recession also. The same in Europe. I travel extensively around the world. Compared to a year ago, all businesses are down.

Stocks:

I can see that stocks can rally because of psychological reasons. They’ve been oversold.

Crude Oil:

The oil price coming down is precisely a symptom of economic weakness. Not a symptom of strength.

Airlines:

Maybe there is a recovery going. I think one, in investing money, you should not look only at your personal experience. You can buy stocks of companies that are of poor quality. If they’re low enough, they can rebound. It’s like now the financial stocks. They have been hit very hard. Maybe they stabilize around this level and maybe they even rebound by 30 to 40 percent. I don’t think that they’re attractive from a longer-term perspective. I don’t think that stocks are attractive in real terms from a longer-term perspective. But I think that they can rebound somewhat.

U.S. Economy:

We have a tightening of global liquidity, and that tightening comes essentially from a diminishing U.S. trade and current account deficit. And I think that if the oil price continues to go down, as I think it’s very likely in the near-term for the next three to six months, as well as other commodities, then the trade and current account deficit of the U.S. could decline more than is perceived. And that would strengthen the dollar further, and in my opinion, if there is a contraction in consumption in the U.S., it is not a disaster for the U.S. because they don’t produce much anymore, but it would be very bad for the producing countries, the manufacturing centers of the world, that are mostly emerging economies.

Commodities:

The second half of 2008 of this year would not be favorable for commodity prices… As far as I’m concerned, we peaked out in commodity prices, and later on we will have to see whether it’s a longer-term peak or a short-term peak. But we don’t know yet.

You can view 9 minute 14 second Faber segment here.

Source:

Marc Faber Interview
Bloomberg, September 2, 2008

Legendary oil investor T. Boone Pickens, Jr., has a new forecast for the price of crude oil. According to CBS News yesterday:

In town for the Democratic convention to promote his “Pickens Plan” for alternative energy, billionaire oilman T. Boone Pickens predicted $200 a barrel oil within three years.

“In two or three years, we’re going to be at $200 a barrel—could be $300 a barrel for oil,” Pickens said inside the “Big Tent,” a complex outside the Pepsi Center set up for bloggers. “And consequently, our economy is going to struggle and our security is just—it’s a disaster.”

In an earlier post, I noted that back on July 22, Pickens told U.S. lawmakers that oil prices would hit $300 a barrel in 10 years if the United States failed to reduce its dependence on foreign imports.

Source:

“T. Boone Pickens Predicts $200 A Barrel Oil”
CBS News, August 27, 2008

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