Marc Faber CNBC Interview on US Markets, Gold Miners, Emerging economies

Watch the above video for CNBC Interview from April 2014

Marc Faber interview with GoldCore

Marc Faber interview on youtube

India inflation to continue higher

My sense is the [Indian] central bank doesn't have a monetary policy that will lead to a significant drop in inflation. The interest rates probably in real terms are still very low, and over the time, the pattern of the rupee has been weak.

It's so that capital has flown into India, but equally, a lot of capital has flown out of India. 

For India, oil is a very important commodity and I think oil prices will go up, which will be negative for India. 

This may come as a surprise to you that global oil stocks may perform strongly. 

Inflation and Agriculture

There are supply issues particularly with global agriculture commodity. I think agriculture commodity will continue to rebound, which will have an impact on India and also on its inflation rate.

China to have open forex market

It's very clear that China over time will have an open foreign exchange market and capital market. It's a step in the right direction, but it's a very small step.

Generating returns from investments not always easy

Frontier markets are relatively risky assets. Five years ago, all the German dentists were investing in Vietnam, and then it collapsed. More recently, they all wanted to buy Myanmar assets.

But investors must understand, yes, long term, they will grow, but there is an execution risk. I'm the chairman of a fund in Cambodia, and I'm not managing the fund, I'm just the chairman of the board, so I look after investors' interests, but the manager so far has really failed to perform particularly well, given the strong growth rate Cambodia has, for the simple reason that they invested money in numerous assets that didn't work out.

So this is not such a simple game. We always have to consider, optically China had macroeconomically the best growth anyone could imagine for the last 15 years. But I wonder who has made money in Chinese stocks. Not many people.

Vietman a better investment than China at the moment

It [China] hasn't been a good place to invest for stock investors since 2006, whereby this is a comment based on the market index. If you bought Internet-related stocks in China—like Baidu and so forth—a few years ago, you've done very well. So we have to distinguish in the world that some stocks have done well and some have done badly.

In general, I would say that the stock market in China is now not particularly expensive. It's been going down since 2006, essentially. At the same time, we have very questionable accounting standards. We have had a huge credit bubble in the last five years. How this credit bubble will be deflated and what the impact will be on the economy, we don't know yet for sure. I can hardly think that it will be particularly favorable. I think that Chinese stocks may not go necessarily much lower, but I doubt that they'll go up substantially.

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.




Article via http://www.etf.com/sections/features/21845-faber-long-china-via-hong-kong-premium.html

QE will not stop ever

When the US started quantitative easing, I said right away it will not end before we have QE-99. Usually, when government introduces a program, they don't end it, and my sense is though they have implemented some tapering, the moment US stock markets drop 10 per cent-20 per cent, they will actually increase active bond purchases, and I don't think they will ever stop buying assets. 

Marc Faber says Ben 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.

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.

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, I suppose the next m .. 

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. 

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. 

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.

Free markets no more

In a free market economy, you will always have price fluctuations. Today, the Federal Reserve artificially manipulates asset prices up. It’s a huge mistake — but that’s what they are doing.

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.

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.

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.