Oil price crash not imminent despite bubble: Soros

By Chris Baltimore

WASHINGTON (Reuters) - The phenomenal rise in oil prices show signs of a bubble, but a crash is not imminent, billionaire hedge fund manager George Soros told U.S. lawmakers on Tuesday.

"We are currently experiencing the bursting of a housing bubble and, at the same time, a rise in oil and other commodities which has some of the earmarks of a bubble," Soros said in prepared testimony before the U.S. Senate Commerce Committee. "To be sure a crash in oil markets is not imminent."

U.S. lawmakers - mostly Democrats - are looking for legislative ways to rein in speculation in crude oil markets, which they see as the prime mover behind the rise in U.S. oil futures above $135 a barrel last month.

Hungarian-born Soros said commodity index trading "is still inflating the bubble," but oil prices have "a strong foundation in reality."

Rising oil prices are aggravating prospects for a recession, but only such a decline in economic growth would outweigh fundamental factors which have pushed oil prices higher, he said.

Soros said there was "a strong prima facie case against institutional investors pursuing a commodity index buying strategy," which is "intellectually unsound, potentially destabilizing and distinctly harmful in its economic consequences."

Raising margin requirements would have no effect on commodity index buying because they use cash to finance their trading, Soros said. But raising margins "would be justified because it would discourage speculation," he said.

(Reporting by Chris Baltimore; Editing by Marguerita Choy)

Comments

Post a Comment

Popular posts from this blog

I'm an accountant, I hate my job, but seriously, I wouldn’t know what else to do

I was born to be a lot of things, but being an accountant isn't one of them. In my heart of hearts I have always known this, but for some stupid subconscious reason, I have always ignored it. Why? Well...um...err...I didn’t know what else to do. How many people faced with the same predicament of deciding on a profession upon graduating used “not really knowing what to do” as their guiding compass? Blink. Ten years have passed and you’re left wondering, how did I get here? In this cubicle? Doing something I cannot stand (and I’m not even honestly good at), with people I quite frankly don’t really care about? For me that was accounting, a profession that conjures numerous clichés, such as boring, bean counting, personality not needed, number crunching etc etc. These have now evolved and have been replaced by repetition, reconciliations, long hours, fudging figures, high turnover, Enron and even more reconciliations. R-E-S-P-E-C-T But please don’t get me wrong, I have the utmost respe...
Read more

Three money managers who lived through the 1987 stock-market crash warn of danger today

Image
By  Philip van Doorn Published: Oct 31, 2017 1:49 p.m. ET SHARE   ‘I would take some money off now because ... there are clear signs of deranged valuations,’ says Gabelli fund manager Lawrence Haverty Getty Images A trader on the New York Stock Exchange on Oct. 19, 1987 — Black Monday. When the stock market crashed on Oct. 19, 1987, investors panicked. It was an unfamiliar event — the previous decline of a similar magnitude occurred 58 years earlier, in 1929. Now, 30 years after Black Monday in 1987, there are professional investors still at work who lived through that fateful day. In interviews, three of them talked about their experiences, offered insights into warning signs and gave advice on how to handle major downturns. They are: •  Lewis Altfest , president of Altfest Personal Wealth Management, which manages about $1.3 billion for private clients. Altfest founded the firm in 1983 after working as a general partner and director of research at Lord, A...
Read more

Have We Reached a Top?

By James Kostohryz It's never been my position that the flow of fundamental news would turn from positive to negative overnight and in a total fashion. The world simply doesn't work that way. When I terminated my core long position a couple of weeks ago for reasons explained in�Ten Reasons the Countertrend Rally May Be Over,�I outlined a series of factors I believe may manifest in the later half of 2009 and the first half of 2010. Indeed, most of these factors will be more back-end loaded, as negative factors tend to build on one another and gain momentum in time through the medium of psychology and social mood. It's my view that the flow of economically relevant events�-- and perceptions of these events --are in the early stages of a transition. In this case, a transition means the flow of relatively good news will tend to wane somewhat while there's an uptick in relatively bad news. This is what one would expect at a top. However, it's to be expected that during t...
Read more