Marc Faber on Bloomberg (9/8/11) — ‘The long-dated treasuries are essentially the short of the century here!’

Marc Faber was interviewed by Bloomberg TV yesterday about the Fed’s decision not to engage in QE3, equities, bonds and commodities. An interesting interview, see below for the video and summary.

 

 

Summary:

 

  • The Fed did the right thing because they didn’t announce QE3.
  • ‘I think the market is likely to move still lower, we’re very oversold … In general we’ll test the July lows of last year (the S&P 500 at 1010), and then we’ll get a QE3 announcement’.
  • The Fed is probably underestimating the severity of the coming economic downturn.
  • It’s very difficult to follow through with QE3 right here; with gold prices soaring, a QE3 would have unintended consequences.
  • The best thing that Fed officials could do would be to collectively resign.
  • Everyone has become a Keynesian with policy prescriptions for everything, sometimes it’s best is to do nothing!
  • QE1, QE2 have done nothing for the labour market, but have increased the degree of wealth inequality.
  • From 1981-2007, the economy was living beyond its means. Debt accumulation created higher GDP growth.
  • As for stocks, we’re very oversold, but ‘you can forget about a new high for this year’.
  • Just as during the Nikkei bubble, the Nasdaq bubble, the Housing bubble etc. Marc Faber is puzzled by the Treasury market at present. ‘The long-dated treasuries are essentially the short of the century here’.
  • Gold is not a bubble, but a correction is overdue.
  • Right now, the technical picture is so horrible, that Marc Faber views rebounds as selling opportunities. At some point, he will consider moving into Emerging Market stocks.
  • Because of the speed with which the market has sold off, we could see something really bad in a few months.
The US 10 Year Note Chart

The 10 year note spikes higher. Is this the ballistic move that marks the end of the secular bull market? - Click to enlarge. Source: FINVIZ.com

See here for our collection of rare historical economic data.

Posted Aug 10, 2011
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