"Regardless of what the markets do near-term, a correction is overdue," Marc Faber tells Bloomberg TV's Betty Liu. From discussing Europe's 'apparent' stabilization - "anything can go up when you print money"; to US equity exuberance - "a correction is overdue and February is a seasonally weak month"; Faber sees no change from Geithner's handover to Lew as he opines: "The only thing I know is one day the markets will punish the interventionists, the Keynesians and the monetary policy that the Federal Reserve and ECB has enforced because the markets will be more powerful one day. How will this look like? Will the bond market collapse or equity markets become a bubble, which would be embarrassing for the Fed's sake if the U.S. market became a gigantic bubble and at the same time the economy does not recover."
Faber: on whether he agrees with George Soros that Europe has been stabilized:
"It has been stabilized for now, but the big question as he said is the
imbalances have not been solved and these could come back and harm the
markets and the euro at some point in the future. In terms of stock
markets, I have advocated one year ago between April and June of last
year to buy European stocks in Portugal, Spain, Italy, Greece and France
because they were extremely depressed. Since then, the markets have
rallied very sharply. Greece is up from the lows by 100%. That tells you
anything can go up when you print money."
On whether he's getting out of European markets:
"Not really because we made the secular low roughly one year ago, but I
have argued that it is the time right now to reduce equity positions. I
think the markets are at the difficult juncture between overbought and a
euphoric state. I am not ruling out that they could go up somewhat more
like in 1987, going up 40% between January and August, but we also fell
40% in two months' time. So the gains were wiped out quickly. In March
of 2009 we are close to 1500. We had already a huge bull market, and a
lot of the good news has been discounted already."
On whether there will be a correction on the S&P:
"I think regardless of what the markets do, near-term, a correction is
overdue and usually February is a seasonally weak month…It will be
interesting to see how the correction unfolds."
On why he's not going big on any short in the market:
"The problem with shorting the markets nowadays is that you have this
huge intervention by governments. Look at bonds of Italy Portugal and
Spain--they rallied last year, there was a huge profit opportunity, and I
admit that I missed it, but the profit opportunity came about as a
result of government intervention. I feel the markets are -- some people
say it is intervention. I can call it manipulation. If manipulation
continues, you do not know how far they will go. The only thing I know
is one day the markets will punish the interventionists, the Keynesians
and the monetary that the Federal Reserve and ECB has enforced because
the markets will be more powerful one day. How will this look like? Will
the bond market collapse or equity markets become a bubble, which would
be embarrassing for the Fed's sake if the U.S. market became a gigantic
bubble and at the same time the economy does not recover."
On Tim Geithner's legacy and whether anything will change under Jack Lew:
"I doubt there will be much change. To be fair to Mr. Geithner, he
inherited a colossal mess. he is involved in politics and he has to
listen to what the politicians want to do. He did an ok job. Where it is
not ok is that basically nobody that has committed financial fraud or
contributed to the fraud was prosecuted."
Source: Zerohedge
Contrarian Investor Dr.Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.
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