Marc Faber: Precise Outcome Unknown, But It Will Be Negative
from The Daily Bell:
Introduction: Dr. Marc Faber was born in Zurich, Switzerland. He went to school in Geneva and Zurich and finished high school with the Matura. He studied Economics at the University of Zurich and, at the age of 24, obtained a Ph.D. in Economics magna cum laude. Between 1970 and 1978, Dr. Faber worked for White Weld & Company Limited in New York, Zurich and Hong Kong. Since 1973, he has lived in Hong Kong. From 1978 to February 1990, he was the Managing Director of Drexel Burnham Lambert (HK) Ltd. In June 1990, he set up his own business, MARC FABER LIMITED, which acts as an investment advisor, fund manager and broker/dealer. Dr. Faber publishes a widely read monthly investment newsletter, “THE GLOOM, BOOM & DOOM Report,” which highlights unusual investment opportunities. A regular speaker at various investment seminars, Dr. Faber is well known for his “contrarian” investment approach. He is also associated with a variety of funds.
Anthony Wile: Hello, Marc. The Dow industrials and other market averages recently saw the worst first week ever. Let’s start with your overview of what’s happening in the US markets and beyond right now.
Marc Faber: Basically, the US market is an expensive market. We’ve been going up since March 2009 very strongly. The orthodox top in the market was probably some time in late 2013 or somewhere in 2014 when the majority of stocks reached new 12-month highs. 2015 was a very weak advance in the sense that only very few stocks moved up, whereas the majority of stocks – in other words, the average stock, the median stock – was already in a bear market.
But this weakness under the surface, as we call it, was not obvious to the typical investor because he just looks at the S&P 500 or the Russell Index, which can be driven, as I said, by very few stocks whereas the majority are going down.
So the current selloff that we have experienced is an adjustment of the few strong stocks on the downside and also the realization by investors that the Federal Reserve monetary policies aside from lifting assets have basically failed to stimulate the real economy. We are in a cycle where it’s more likely that we will be or are already in recession than that we have this so-called global healing that the central banks have been telling us about all the time.
I think that Ms. Yellen will go down in history in the museum of failed central banking interventions as having increased interest rates precisely at the time when she shouldn’t have.
Anthony Wile: The media is focused on China. Why?
Marc Faber: Basically yes, because the strategists and the economists in the US and the media of course cannot accept the fact that they completely mis-predicted economic activity in the US and so they have to blame something else for the decline in the stock market.
