Marc Faber on Bloomberg (23/8/11) – ‘Believe me, I’m as bearish as the greatest bear is, it’s just that I don’t believe that stocks will implode!’

Marc Faber was interviewed on Bloomberg TV yesterday. He spoke about the usual asset classes (equities, bonds, commodities & cash), the technical picture for the major stock indices as well as the course of monetary policy in the US. See below for the video and summary.

 

 

Summary:

 

  • Equities could rally for a while. A lot of people will say that the market formed a double low. However, the May 2nd high at 1370 on the S&P 500 is unlikely to be surpassed over the next 6-12 months.
  • There are the strategists who are bullish (forecasting 1400-1450 on the S&P by year-end) and there are the super-bears. Perhaps future market action will disappoint both parties.
  • If the market were to drop another 10-15% from here, there would be more quantitative easing measures.
  • The Fed’s promise to keep interest rates at zero until mid-2013 is an implicit QE3. It encourages banks to borrow short-term and buy the 10-year treasury note.
  • The recent collapse in equity prices should be regarded as a potential signal for future economic conditions.
  • When comparing bonds and equities, equities are still better on a valuation basis in the long-term.
  • We potentially have ten more years of negative real interest rates.
  • The mood is negative, so the contrarian can hardly enter a huge short position here. Insider buying has picked up recently.
  • Gold is still the best asset class. However, there has been too much enthusiasm lately and maybe we correct from here.
  • You shouldn’t short copper unless you believe there’s going to be a huge crash in China. In that case, you want to be short everything.

See here for our collection of rare historical economic data.

Posted Aug 24, 2011
by | Categories: Other