Marc Faber on CNBC (August 5th) – The market has experienced huge technical damage

Marc Faber was interviewed by CNBC yesterday. The interview was similar to his Bloomberg interview earlier in the day. The video and summary are posted below.

 

 

Summary:

 

  • The market has experienced huge technical damage.
  • As of Friday, the markets were extremely oversold. We might see a bounce soon.
  • The technical damage is so great that a rebound (with or without a QE3) would probably not take the S&P 500 beyond its May 2nd high.
  • Perhaps we’ll see an S&P 500 at 1050-1100 in October/November, then maybe we’ll see QE3/4…
  • Rebounds should be viewed as selling opportunities.
  • US Treasuries are still regarded as a safe haven. Everyone knows that they can print money and that the interest payments will be met. However, governments can default in two ways; by restructuring or by paying back in worthless currency. The US will probably use in the latter option.
  • Gold & Silver are overbought and due a correction. Likewise, the US dollar is oversold.
  • Gold isn’t expensive compared to current government debt and monetary base figures.
  • Weakness in gold should be viewed as a buying opportunity.
  • The global economy will need to reboot (like when your computer occassionally needs to be rebooted). Central bankers will print money beforehand to postpone (and unintentionally enlargen) the crisis.
  • In a total collapse, you don’t want to be in government bonds and cash. Equities would go down but they would still be better. Precious metals and commodities would be a good place to be.
  • We’re unlikely to go below the March 2009 low of 666 on the S&P 500 (due to the amount of money printing that would occur on the way down). Weakness in asset prices can either be felt in nominal terms or through the currency. For example, now US equities are down 20%+ on the year in Swiss Franc terms despite being only down 1-2% in dollar terms.

See here for our collection of rare historical economic data.

Posted Aug 6, 2011
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