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Jim Rogers: A 'positive development' in Ukraine 'in the next few weeks' could cause a big rally, before a huge crash in stocks
(Kitco News) - Jim Rogers, Chairman of Rogers Holdings and Co-Founder of the Quantum Fund, is forecasting "the worst" bear market in his lifetime. Rogers, who is 79 years old, added that he expects a "big rally" in stocks if there is a peaceful resolution to the ongoing Ukraine conflict.
"My outlook is that if we have peace… if something happens in Ukraine, there will be a big rally," he said. "Oil will go down, grains will go down, and stocks will go up for a while."
Rogers spoke with Michelle Makori, Editor-in-Chief and Lead Anchor at Kitco News, at the FreedomFest 2022 conference in Las Vegas.
The 'worst' bear market?
Rogers said that he expects the coming bear market to be the worst in his lifetime, based on the "staggering debt" levels in the United States.
Rogers has previously claimed that his ideas best fit the Austrian School of Economics, which places debt at the center of its business cycles theory.
The theory states that during an economic boom, debt builds up, investors become reckless, and companies are valued far above their intrinsic worth. When investors realize they are over-leveraged, and that companies are over-valued, then a selloff begins and the market crashes.
"It's been thirteen years since we've had big problems in [debt]," explained Rogers. "It's the longest in American history… it's already overdue [for a correction] on a historical basis… and [the market] always goes down a lot."
Currently, the U.S. federal debt exceeds $30 trillion, and the debt-to-GDP ratio is 125 percent. According to Harvard economists Ken Rogoff and Carmen Reinhart, debt beyond 90 percent of GDP is harmful to economic growth.
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A possible rally?
A "positive development" in diplomatic relations between Russia and Ukraine, and a move towards ending the Ukraine conflict, could cause a "big rally" in stocks, said Rogers.
However, he added that even if a rally were to occur, it would be followed by a major market crash.
"If there were peace [in Ukraine], we might make new highs, but still that would not negate the [coming] bear market," he said.
Saying that the Ukraine conflict is a "foolish war," Rogers hoped for a quick resolution to the military operation.
"I would suspect some positive development in Ukraine in the next few weeks, if not before," he predicted. "And that would trigger a big drop in grains and a big drop in oil, which would cause a big relief rally in stocks, because everybody would say inflation is okay now."
To find out Rogers' thoughts on gold and agriculture, watch the above video.
Follow Michelle Makori on Twitter: @MichelleMakori
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