China Trade Figures are Out of Whack

While Faber generally seems to be a long-term bull on China, he had some disquieting things to say about the extent of malinvestment in China due to the recent round of government stimulus and infrastructure-oriented investment.

Faber told Trish Regan and Matt Miller “I think that we had a colossal credit bubble in China and that this credit bubble is now being gradually deflated…if I look at export figures from China, and they are very closely correlated to overall economic growth, then there is a huge discrepancy between what China reports and what China’s trading partners are reporting.”

He said, “There’s lots of funny things that are happening in China. And when the whole thing unwinds it will be a disaster.”

His view is that the trade figures out of China do not correspond with the aggregated trade figures coming out of China’s trade partners. He believes the economy has slowed markedly and that GDP growth is more in the 4% region than the 7.5% region. - Source, Credit Writedowns:


Contrarian Investor Dr.Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.

The Federal Reserve Artificially Manipulates Asset Prices

In a free market economy, you will always have price fluctuation. The Federal Reserve today, artificially manipulates asset prices up. It’s a huge mistake, but that is what they do. To answer your question specifically, we had a bear market that ended March 6th, 2009 (S&P at 666). We are at 1800 now, almost three times higher. Over the last 2 years, most equity markets around the world, most markets have been down (they are not following to the upside), but in the US an increasing number of shares are breaking down, we have had very heavy insider selling recently, high valuations and extremely high corporate profits from historical standards. My view is that in a month time, the bull market will be 5 years old. That’s the second longest bull market in the last 100 years. I would not buy shares. Can the market go up another 20%? It’s like the Nasdaq in late 1999, where the Nasdaq went up another 30% between January and March. People were crying afterwards with their losses.

So markets go up and down. I think that the upside potential now is very limited and there is considerable downside risk, probably much more downside risk than most investors consider.



Contrarian Investor Dr.Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.

Buy Hong Kong and Vietnam shares instead of Chinese shares

If you want to play a recovery in China, then I think you're better off buying Hong Kong shares, because in Hong Kong, you have reasonably good corporate governance, you have very-well-managed companies, which are owned largely by families. So the families are ready to be conservative in their dealings. They have low leverage. So if you believe that China is bottoming out and going up, I would own some Hong Kong shares, as I do.

Another recovery play—a market that has a similarly poor performance to China over the last few years—is Vietnam, which is very cheap, which has deleverage and improving fundamentals in terms of growing trade surplus, rising exports and so on. So I think Vietnam is better than China itself, if you believe in the Chinese recovery.



 Contrarian Investor Dr.Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.

The Chinese economy is highly vulnerable

My view is this. We wouldn’t have a conflict in Asia if there was no intervention by the US. The US has the security pact with Japan and military and naval bases all over Asia. The Chinese economy is highly vulnerable in the interruptions in the supply of metals and oil, because 47% of global metals consumption is nowadays coming from China (up from 4% in 1990 and 10% in the year 2000). It has become a huge factor; for their industry, they need iron ore from Australia, copper from Australia, oil from the Middle East, etc. The Chinese are very concerned about interruptions of supplies. Over time, the Chinese would want to control the East and South China Sea. I do not think that they have any aggression plans. The US would not be particularly happy if the Chinese or the Russians would have military bases in the Carribean, Mexico, Canada, The Chinese cannot accept to be encircled by military bases by the US in Central Asia, in North East Asia and in South Asia. So I believe the tensions will increase over time. - in ETF Daily



 Contrarian Investor Dr.Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.

The FED Could Give Up Tapering

“Basically, what they are usually saying is that everything is data dependent. In other words, since October 2011, we have not had a significant correction in the market. The largest corrections were those of less than 11% and actually, over the last three to four months, we have gone up very strongly. Now if the data deteriorates and if the stock market declines by 20% over a given period of time, I think the US Fed would actually increase asset purchases and actually give up the tapering that they propose.”

Contrarian Investor Dr.Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.

A Chinese Slow Down is on the Way

“Well, I have talked about a meaningful slowdown in the Chinese economy for more than a year. Now the government had been very good at hiding the slowdown, but it is now becoming clearer that the slowdown is on the way. I suppose that China has been and will grow at 4% per annum at the most, which is a relatively a slow growth rate, but it is a very high growth rate compared to, say, that in the US or Europe.”

Contrarian Investor Dr.Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.

Bad market crash warning

I think there are some groups of stocks that are highly vulnerable because they're in cuckoo land in terms of valuations. They have no earnings. They're valued at price-to-sales. And this is not a good metric in the long run.
I think it's very likely that we're seeing, in the next 12 months, an '87-type of crash. And I suspect it will be even worse.


Contrarian Investor Dr.Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.

Marc Faber issues market crash warning

I believe that the market is slowly waking up to the fact that the Federal Reserve is a clueless organisation. They have no idea what they're doing. And so the confidence level of investors is diminishing, in my view.
I think there are some groups of stocks that are highly vulnerable because they're in cuckoo land in terms of valuations. They have no earnings. They're valued at price-to-sales. And this is not a good metric in the long run.
This year, for sure - maybe from a higher diving board - the S&P will drop 20 per cent. I think, rather, 30 per cent. Who knows? But all I'm saying is that it's not a very good time, right now, to buy stocks.


Contrarian Investor Dr.Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.

Marc Faber : Bernanke a disaster

He’s [Ben Bernanke] been a disaster. Under his tenure at the Federal Reserve and under his intellectual influence when working for Mr Greenspan, they created the gigantic housing bubble.
When you drop dollar bills into the economy it won’t lift all prices and assets equally at the same time.



Contrarian Investor Dr.Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.

Emerging markets are looking slightly better

There is some optimism about the Indian markets because the current account deficit (CAD) is shrinking, and the rupee, which was very weak until about five months ago, has been strengthening. Though, I think the rupee will weaken again. The global investors look at valuations, they have their models, they see Turkey, Russia, Brazil, India, Vietnam and China as relatively depressed markets, and so they have moved some money into these markets. If have to choose between US and India for investing all your money today, I think I will probably choose India. The corporate sector is run quite well in India.

Contrarian Investor Dr.Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.

US Bonds have bottomed

It appeared US bond markets or interest rates had bottomed out in July 2012, before US Federal Reserve implemented the QE3 and QE4 programme. Since then the yield on 10-year treasury note has risen from 1.43 per cent to over 2.7 per cent, so, in other worlds, interest rates have already started going up.

My sense is in 10 years, interest rates based on long US bonds will be higher than they are today... Since we have a huge rally in the US stocks since October 2011,

Contrarian Investor Dr.Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.

Marc Faber worried about Bubble in China

This credit bubble in China is going to burst. The question is will it burst now or can they postpone the problem once again? Possibly, but at some point growth will slow down considerably.

Contrarian Investor Dr.Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.

Not much upside for India Sensex

In dollar terms, the Indian equity markets are still down 40 per cent from their highs adjusted for the weakness of the currency. I think markets may rally somewhat further.

I think investors must realise about India that index stocks are not that cheap; they are quite expensive from a valuation point of view. You have many sectors in the economy that are depressed in valuation, I think the index will not do that much going forward, but some of the stocks will do well.

Contrarian Investor Dr.Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.

Marc Faber: Gold inexpensive compared to other asset classes

Expect US dollar to rally against the Euro and Dollar has been strong against EM currencies says Marc Faber.



Contrarian Investor Dr.Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.

Marc Faber worried about China bubble

This credit bubble in China is going to burst. The question is will it burst now or can they postpone the problem once again? Possibly, but at some point growth will slow down considerably.


Contrarian Investor Dr.Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.

Dubai housing market can still do better

I don’t think we’re [Dubai housing prices] yet in a bubble stage but we had a big rise in property prices already. We have not reached the 2007 peak yet.
We’re not in a bubble yet, but it may become a bubble in the future.

Contrarian Investor Dr.Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.

Balance of power shifted to emerging economies

Wealth doesn’t come from consumerism, it comes from capital spending. 

We live in a new world. We live in a world where the balance of power has shifted to emerging countries. This is the new world, where the old world is largely bypassed.


Contrarian Investor Dr.Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.

China to see 4% growth

Marc Faber appears on CNBC where he explains why he see's China's economy growing at only 4% going forward.
 




Contrarian Investor Dr.Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.

Marc Faber: April 2014 Commentary

Marc Faber notices an shift in stock market leadership. He writes in his latest April 2014 Market commentary via GloomBoomDoom.com
"I also examine an ongoing shift in the stock market’s leadership away from high flying concept and momentum stocks into more defensive sectors."
Faber suggests that Stocks may be near a top by adding the following comments in the end of the report.
I am enclosing two reports. The first report Break-even inflation – reflation time, and longer-term opportunities is by my friend Laeeth Isharc who is one of the smartest and most intellectual individuals that I know of. Isharc opines that, “The consensus narrative is ….that inflation is not an immediate problem, and that the central bank knows very well how to defeat inflation once it becomes evident.” He, however, believes that, “these concerns over deflation and weak growth will turn out to be mistaken, that it will be more difficult to control inflation than most anticipate, and that tactically the timing and entry level are right to take the other side of the trade and bet on reflation by entering a long break-even inflation position.”
The second report is by Jawad Mian who is a fund manager living in Dubai. In his most recent reflections he discusses the possibility of shorting US internet and biotech stocks and his views about inflation.