Taps Coogan – May 25th, 2023

Mark Mobius, Mobius Capital Partners founder, legendary emerging markets pioneer, and John Templeton acolyte, recently spoke with India broadcast Editorji about China, India, emerging markets generally, and the odds of a recession in the US. Mr. Mobius, who has been fairly accurate in his market calls over the last few years, doesn’t see a recession coming in the US and remains particularly bullish on India.

 

Mark Mobius on the overall outlook and the US:

“The overall picture is pretty good actually because in the US you are seeing the inflation rate come down which will mean that the pressure on the Fed to keep raising interest rates will be less and that will give more confidence to the market… not only the US market but the global market…”

“I don’t see a recession coming in the US simply because of the end of higher interest rates and, of course, the move by the Federal Reserve to rescue banks… We’ve seen a number of banks go under but the Fed was very fast to react and bailout all of the depositors in those banks and arrange mergers with the likes of JP Morgan… I don’t see the specter of a recession anytime soon in the US…”

On China:

“If you look at China, they have actually been reducing interest rates pretty dramatically in an effort to get the economy and China growing and that’s generally good news for countries around the world.”

“You’re going to see companies diversifying their base of manufacturing and their base of supply away from China and into India, Vietnam, Thailand, and a number of other countries in the world. In the US, some of the companies are brining the manufacturing back home because with automation they’re able to di that without raising the costs too dramatically…”

India:

“We’ve done very well in India and India is very high on my list in terms of the future. We look at India not as a short term kind of investment but as a long term investment… You’ve got a young population, you’ve got a government that’s moving into the digital age very quickly, and you’ve got companies coming into India to replace some of the manufacturing they had in China… So you have a combination of these things which are really good for India and which will result in a continuing fast growing India economy. We’re very bullish on India. 

On the Dollar:

“The Americans made a big mistake in using their Dollar dominance to punish Russia… That put a lot of people off Dollars because any other country around the world will look at this and say “wait a minute, if I get in trouble with  the US government, they’ll grab our reserves or do something to interrupt our trade in Dollars. So, I think that was a big mistake on the part of the US government and I think more and more people around the world are thinking about alternatives… However, it will not be easy. The Dollar is still widely accepted around the world and the thing about the Dollar is its a free currency. You can trade it anywhere accept if you happen to be Russian.”

At this point, Mr. Mobius’s ‘no recession’ call is pretty much a contrarian one. 

There is much more to the discussion so enjoy it above.