Monday, December 17, 2018
Monday, December 3, 2018
The coming asset price deflation will affect the global economy negatively
Marc Faber's latest Monthly Report December 2018 is out. See excerpt below from Gloomboomdoom
Last month I concluded my report by stating: “I should warn my readers that the Wind of Change may bring about the end of the Great Asset Inflation, 1981 – 2016/2018, which propelled all assets higher including bonds, stocks, commodities, precious metals, properties, art, collectibles, etc. We may enter a period where asset prices stagnate or decline. This would imply a change from asset inflation to asset deflation.”
I must warn my readers that major changes in asset markets are never obvious because they involve enormous turbulences and divergences at the time of their occurrences, which obscure the change in the long term trend and mislead the majority of investors. Moreover, major trend changes are rather rare occurrences.
In the 1970s, the best performing assets had been oil, gold, US coins, silver, stamps, Chinese ceramics, diamonds, etc. with compound annual rates of return respectively of 34.7%, 31.6%, 27.7%, 23.7%, 21.8%, 21.6%, and 15.3%. In the 1970s, the two worst performing assets were bonds and stocks with respective compound annual rates of return of just 6.6% and 6.1%.
This all changed after 1981/1982 when equities and bonds became the best performers. But even among stocks the Change of Wind was confusing. In the 1970s, the best performing stocks had been mining companies and energy related companies, as precious metals and oil prices soared. But after the oil and precious metals collapse in 1980, these stocks performed miserably while cyclical (including autos), food and brokerage stocks performed superbly.
As my readers will most likely have noticed, in 2018 asset prices around the world performed poorly. According to Deutsche Bank Data going back to 1901, a record share of asset classes have posted negative total returns in 2018 (In 2017, just 1% of asset classes delivered negative returns).
Now, the big question is this: In the past, the Fed and other central banks have always supported asset price declines with additional liquidity injections (QEs), which drove asset markets to new highs. But will it work this time?
I am leaning towards the view that this time it will not work and that the coming asset deflation will have a devastating impact on the global economy and on most asset prices.
Last month I concluded my report by stating: “I should warn my readers that the Wind of Change may bring about the end of the Great Asset Inflation, 1981 – 2016/2018, which propelled all assets higher including bonds, stocks, commodities, precious metals, properties, art, collectibles, etc. We may enter a period where asset prices stagnate or decline. This would imply a change from asset inflation to asset deflation.”
I must warn my readers that major changes in asset markets are never obvious because they involve enormous turbulences and divergences at the time of their occurrences, which obscure the change in the long term trend and mislead the majority of investors. Moreover, major trend changes are rather rare occurrences.
In the 1970s, the best performing assets had been oil, gold, US coins, silver, stamps, Chinese ceramics, diamonds, etc. with compound annual rates of return respectively of 34.7%, 31.6%, 27.7%, 23.7%, 21.8%, 21.6%, and 15.3%. In the 1970s, the two worst performing assets were bonds and stocks with respective compound annual rates of return of just 6.6% and 6.1%.
This all changed after 1981/1982 when equities and bonds became the best performers. But even among stocks the Change of Wind was confusing. In the 1970s, the best performing stocks had been mining companies and energy related companies, as precious metals and oil prices soared. But after the oil and precious metals collapse in 1980, these stocks performed miserably while cyclical (including autos), food and brokerage stocks performed superbly.
As my readers will most likely have noticed, in 2018 asset prices around the world performed poorly. According to Deutsche Bank Data going back to 1901, a record share of asset classes have posted negative total returns in 2018 (In 2017, just 1% of asset classes delivered negative returns).
Now, the big question is this: In the past, the Fed and other central banks have always supported asset price declines with additional liquidity injections (QEs), which drove asset markets to new highs. But will it work this time?
I am leaning towards the view that this time it will not work and that the coming asset deflation will have a devastating impact on the global economy and on most asset prices.
Monday, November 19, 2018
Monday, November 5, 2018
Multi month stock market rebound possible | Sell stocks on Strength
The markets have been wonderful for a while but Marc Faber thinks its time to get worried. In his latest November Market Commentary he states his cautious outlook.
"Under the heading First Phase of a Bear Market, Joe Granville writes that, “Bear Markets never visit by appointment, ringing your front doorbell during the daylight hours. They come like a thief in the night, sneaking in the back door while the public sleeps the slumber of confidence."
In my opinion, equities around the world have made an important high between 2016 and 2018. In the case of the US, the orthodox top was probably on January 26, 2018 (S&P 500 Index at 2872). Marginal new highs occurred among various indices between late August and early October 2018 but were not confirmed by the majority of stocks. A rebound lasting a few months is now possible given the oversold condition but new highs for the majority of stock markets around the world are most unlikely. The strategy should now be “sell on strength” and not “buy the dip,” which was the right thing to do since the March 2009 low.
I should warn my readers that the Wind of Change may bring about the end of the Great Asset Inflation, 1981 – 2016/2018, which inflated all assets including bonds, stocks, commodities, precious metals, properties, art, collectibles, etc. We may enter a period where asset prices stagnate or decline. This would imply a change from asset inflation to asset deflation."
"Under the heading First Phase of a Bear Market, Joe Granville writes that, “Bear Markets never visit by appointment, ringing your front doorbell during the daylight hours. They come like a thief in the night, sneaking in the back door while the public sleeps the slumber of confidence."
In my opinion, equities around the world have made an important high between 2016 and 2018. In the case of the US, the orthodox top was probably on January 26, 2018 (S&P 500 Index at 2872). Marginal new highs occurred among various indices between late August and early October 2018 but were not confirmed by the majority of stocks. A rebound lasting a few months is now possible given the oversold condition but new highs for the majority of stock markets around the world are most unlikely. The strategy should now be “sell on strength” and not “buy the dip,” which was the right thing to do since the March 2009 low.
I should warn my readers that the Wind of Change may bring about the end of the Great Asset Inflation, 1981 – 2016/2018, which inflated all assets including bonds, stocks, commodities, precious metals, properties, art, collectibles, etc. We may enter a period where asset prices stagnate or decline. This would imply a change from asset inflation to asset deflation."
Wednesday, October 24, 2018
This correction is not very meaningful yet
Click here if the above video does not play
"The financial markets were already very fragile at the beginning of this year and this fragility has actually increased because there is a tendency among central banks to step back from asset purchases, letting interest rates gradually adjust on the upside. And so this liquidity that we have in the world has been diminishing. It is not shrinking, but it is growing at the diminishing rate.
Then came the announcement of the Trump administration. It is a really bad idea to pick on China and to launch not only a trade war but a confrontation with the US’ largest trading partner who also happens to be a large buyer of US assets, bonds, stocks and of course, properties. This idea has disturbed the financial markets around the world and so they are adjusting on the downside. Now, I would not call that the crash. A crash happened in 1987 when the Dow Jones dropped 21% in just one day. "
Monday, October 15, 2018
Tuesday, October 2, 2018
Top world cities positioned for long term success
The cities positioned for long term success does not include any from China or India. Marc Faber talks about current top cities vs future top cities on his latest October 2018 GloomBoomDoom report.
According to Jones Lang LaSalle (JLL), the cities which are best positioned for long term success are San Francisco, Silicon Valley, Boston, New York, London, Los Angeles, Paris, Amsterdam, Toronto, etc.
JLL further states that, "In an increasingly digital and global economy, cities must be able to attract high-end talent, foster innovation, and maintain competitiveness – and failing to do so can have dire consequences.
Which cities are prepared to adapt, and which will get left behind in the dust?"
In order to answer this question JLL produced a City Momentum Index, which tries "to identify the cities that are at the forefront of the innovation economy, by looking at key factors such as the number of tech firms, education, environment, transparency, infrastructure, and international patents." The cities that are at the top of the JLL Momentum Index are: Hyderabad, Bangalore, Ho Chi Minh City, Pune, Kolkata, Hanoi, Nanjing, Delhi, Hangzhou, and Xian.
Out of the 30 cities best positioned for long-term success, 12 are in the US and 3 in Canada, 2 in Australia, and 10 in Europe. Only three cities were located in Asia (Tokyo, Seoul and Singapore, but not one was located in either India or China).
Of the 30 cities with the highest growth momentum, only 5 cities were outside Asia (Nairobi, Lagos, Dubai, Seattle, and Bucharest).
I have to say, I found it bizarre that no cities in China and India were on the list for long term success.
As Herodotus opined already in the 5th century BC, "The cities that were formerly great, have most of them become insignificant; and such as are at present powerful, were weak in olden times. I shall, therefore, discourse equally of both, convinced that human happiness never continues long in one stay.”
According to Jones Lang LaSalle (JLL), the cities which are best positioned for long term success are San Francisco, Silicon Valley, Boston, New York, London, Los Angeles, Paris, Amsterdam, Toronto, etc.
JLL further states that, "In an increasingly digital and global economy, cities must be able to attract high-end talent, foster innovation, and maintain competitiveness – and failing to do so can have dire consequences.
Which cities are prepared to adapt, and which will get left behind in the dust?"
In order to answer this question JLL produced a City Momentum Index, which tries "to identify the cities that are at the forefront of the innovation economy, by looking at key factors such as the number of tech firms, education, environment, transparency, infrastructure, and international patents." The cities that are at the top of the JLL Momentum Index are: Hyderabad, Bangalore, Ho Chi Minh City, Pune, Kolkata, Hanoi, Nanjing, Delhi, Hangzhou, and Xian.
Out of the 30 cities best positioned for long-term success, 12 are in the US and 3 in Canada, 2 in Australia, and 10 in Europe. Only three cities were located in Asia (Tokyo, Seoul and Singapore, but not one was located in either India or China).
Of the 30 cities with the highest growth momentum, only 5 cities were outside Asia (Nairobi, Lagos, Dubai, Seattle, and Bucharest).
I have to say, I found it bizarre that no cities in China and India were on the list for long term success.
As Herodotus opined already in the 5th century BC, "The cities that were formerly great, have most of them become insignificant; and such as are at present powerful, were weak in olden times. I shall, therefore, discourse equally of both, convinced that human happiness never continues long in one stay.”
Monday, September 10, 2018
More fiscal and monetary accommodations are inevitable
The US stock markets are making all time highs with the S&P500 and DOW almost at record highs. There will be a decline at some point in the future, and when that happens, investors should be prepared.
"With respect to asset markets, I think the most important question investors have to consider is how central bankers will react when the global economy weakens and when asset markets decline. Furthermore, how will currencies, capital markets (stocks and bonds) and precious metals, and other asset markets (real estate, collectibles, cryptocurrencies, etc.) react to another round (inevitable in my opinion) of monetary and fiscal accommodations, and other interventions such as tariffs (in short further manipulations of free markets)?"
"With respect to asset markets, I think the most important question investors have to consider is how central bankers will react when the global economy weakens and when asset markets decline. Furthermore, how will currencies, capital markets (stocks and bonds) and precious metals, and other asset markets (real estate, collectibles, cryptocurrencies, etc.) react to another round (inevitable in my opinion) of monetary and fiscal accommodations, and other interventions such as tariffs (in short further manipulations of free markets)?"
Tuesday, September 4, 2018
Is it better to live in one of the most expensive cities or least expensive ?
Marc Faber in his latest market commentary talks about the various "cost of living" in various parts of the world and gives his take on what is being ignored in these rankings.
"Last month, I explained how challenging it was to make comparisons about the cost of living in different cities around the world and touched on the cost of health care and of education in various countries and specifically in the US. I mentioned at the time that Zurich and Geneva were deemed as the world's most expensive cities."
"While Zurich is the "most expensive" city with the UBS Cost of Living Index at 116.6, the world’s least expensive cities are New Delhi, Manila, Kiev, Lagos, and Cairo (Cost of Living Index respectively at 46.0, 45.2, 44.0, 40.6, and 34.6).
So, where should you live and work? This report fails to provide a definite answer but addresses numerous issues that need to be considered when taking a decision.
Safety is, in my opinion, an important consideration. You need to be careful about your own security everywhere in the world whereby the cost of protecting yourself, your family, and your property is far lower in some countries than in others. [I would rank Japan and Singapore as the world’s safest countries.] Furthermore, sleeping at night without worrying about yourself and your family being violently attacked is probably worth the price of living in one of the world’s more expensive cities."
"Last month, I explained how challenging it was to make comparisons about the cost of living in different cities around the world and touched on the cost of health care and of education in various countries and specifically in the US. I mentioned at the time that Zurich and Geneva were deemed as the world's most expensive cities."
"While Zurich is the "most expensive" city with the UBS Cost of Living Index at 116.6, the world’s least expensive cities are New Delhi, Manila, Kiev, Lagos, and Cairo (Cost of Living Index respectively at 46.0, 45.2, 44.0, 40.6, and 34.6).
So, where should you live and work? This report fails to provide a definite answer but addresses numerous issues that need to be considered when taking a decision.
Safety is, in my opinion, an important consideration. You need to be careful about your own security everywhere in the world whereby the cost of protecting yourself, your family, and your property is far lower in some countries than in others. [I would rank Japan and Singapore as the world’s safest countries.] Furthermore, sleeping at night without worrying about yourself and your family being violently attacked is probably worth the price of living in one of the world’s more expensive cities."
Thursday, August 30, 2018
Growing trade deficits
On why the US has a trade deficit
“Trump is surrounded by number of economists and they think that American trade deficit [is] relative, relative decline of American labour force is due to import China. The import from China is symptoms of having become less competitive. Capital spending in U.S. has been low for 20-30 years. Economists have always argued to boost consumption in order to stimulate the economy. Obviously, one of the consequences of this is the growing trade deficit.”
“Trump is surrounded by number of economists and they think that American trade deficit [is] relative, relative decline of American labour force is due to import China. The import from China is symptoms of having become less competitive. Capital spending in U.S. has been low for 20-30 years. Economists have always argued to boost consumption in order to stimulate the economy. Obviously, one of the consequences of this is the growing trade deficit.”
Tuesday, August 28, 2018
Buying opportunities in Turkish assets
The recent sell off in Turkish stocks may have presented a buying opportunity for Bulls according to Marc Faber who spoke with Anadolu Agency.
“People always say they would like to buy low and sell high. Turkish stocks are valued in U.S. dollars. Now it’s in buying range. I think I will buy some Turkish stocks, ETF’s. I own some [Turkish] bonds. It’s not the huge portion of my portfolio but yes I own some Turkish debts. I think it’s the time to buy Turkish assets."
“People always say they would like to buy low and sell high. Turkish stocks are valued in U.S. dollars. Now it’s in buying range. I think I will buy some Turkish stocks, ETF’s. I own some [Turkish] bonds. It’s not the huge portion of my portfolio but yes I own some Turkish debts. I think it’s the time to buy Turkish assets."
Monday, August 13, 2018
Marc Faber on the possibility of stock market prices adjusting downwards
Marc Faber reflects in his latest Gloomboomdoom post on the possibility of stock market prices adjusting downwards
"If in an economic system prices in one or several sectors increase over an extended period of time far more than the overall price level, a reversion to the mean will sooner or later take place. The adjustment in prices can take place in two different ways. Prices in the inflated sector can stagnate for a while or increase more slowly than the overall price level.
Another possibility which is more likely is that grossly inflated sectors and assets revert to the mean by crashing altogether.
I believe that stock markets around the world are at an important crossroad: Growth (represented by the NASDAQ 100) is out and Value (real estate, REITs, Telecoms, food, consumer staples, financials, and energy (as represented by the Russell 1000 Value ETF – IWD) is beginning to outperform."
"If in an economic system prices in one or several sectors increase over an extended period of time far more than the overall price level, a reversion to the mean will sooner or later take place. The adjustment in prices can take place in two different ways. Prices in the inflated sector can stagnate for a while or increase more slowly than the overall price level.
Another possibility which is more likely is that grossly inflated sectors and assets revert to the mean by crashing altogether.
I believe that stock markets around the world are at an important crossroad: Growth (represented by the NASDAQ 100) is out and Value (real estate, REITs, Telecoms, food, consumer staples, financials, and energy (as represented by the Russell 1000 Value ETF – IWD) is beginning to outperform."
Tuesday, August 7, 2018
A Trade War now would be a mistake. Global economy is slowing.
The US may be losing its importance in the Global economy according to Marc Faber who spoke to RT news.
"The US as an empire against the rest of the world peaked in 1950s or 1960s. Then, there have been other countries that have become more powerful, in particular China and now increasingly India. The US empire and its influence on the world is diminishing and has been diminishing for quite some time."
Who would benefit from a US Trade War.
“The winners in a real trade war would be everyone except the US. The Europeans would trade more with Asia, and the Asians would trade more with Europe than the US. There would be more trade between the emerging economies and China and vice versa."
"The US as an empire against the rest of the world peaked in 1950s or 1960s. Then, there have been other countries that have become more powerful, in particular China and now increasingly India. The US empire and its influence on the world is diminishing and has been diminishing for quite some time."
Who would benefit from a US Trade War.
“The winners in a real trade war would be everyone except the US. The Europeans would trade more with Asia, and the Asians would trade more with Europe than the US. There would be more trade between the emerging economies and China and vice versa."
Monday, July 30, 2018
Capitalism is a more fair system than Socialism - Latest Marc Faber interview
Click here if the above video does not play
Topics discussed include
-Trade Tarrifs are negative in a sense they will increase cost of living specially among the poor.
-I have to praise Trump that he is trying to reduce regulation. He has done so in a number of regulations. These excessive regulations make the US less competitive compared to other countries with less regulations.
- The whole Social Security system and transfer payments discourage people from working. Many people make a better living doing nothing than coming to work. I know from a number of friends in Switzerland where they get unemployment benefits but they have a side job somewhere where they are moonlighting. So they get the benefits and they get some pocket money from occupation. They dont pay any tax except for Sales tax when they spend the money.
-Basic Income - Its a very controversial proposal. I am against all these programs because all these programs lead of colossal abuse. The moment the government runs it, there will be massive fraud.
-Socialism - I have seen the misery and inequalities and injustice that socialism and communism brings along.[in 1968 Eastern Europe, 1978 China, 1980 Russia]
-Capitalism has many shortcomings but its a relatively fair system.
-Deeply concerned about the Chinese economy. Chinese economy has a huge influence on raw material prices around the world.
-Debt levels in China has expanded a lot.
-Emerging economies are highly indebted.
-When Global liquidity tightens US Dollar gets stronger. Trump policies are indirectly tightening contracting global liquidity.
-Outlook for Emerging Markets currently are not particularly good.
-Cash is probably the most dangerous thing to own.
-You should never stop learning. Good education is very important and it doesnt necessarily mean university education. Problem in the US is you have less of an apprentice system than we have in Europe. In Europe you have a lot of vocational schools where you specialize in say Carpentering or Electrical Engineering.
-I would diversify- Real Estate, Equities, Physical precious metals.
Tuesday, July 24, 2018
Investors have become more aware of India as an investment destination
India could face a 20 percent correction after its continued bull stock market run over the last few years according to Marc Faber's remarks in LiveMint.
"Let’s put it this way, when I travel around the world and I visit financial institutions, first time India is really a subject. For the first time, investors think that India has an experience and a meaningful fundamental improvement due to the Modi government. They are not sure if it is the right time to invest now in India. Over the next 10 years, we want to have some money in India, regardless."
"If you look at the S&P (500), and Indian stock market over the next 10 years, you will make more money in India than American shares. This has been my view for the last three years, and this remains my view."
"Of course, if the global stock markets are going down— all the major markets, except India are going down. When everything is weak, and India is still strong, I will be reluctant to buy the market which is strong. It (rally) may last a little bit longer but it doesn’t mean it is good value. Valuations are not attractive other than a few exceptions."
"Let’s put it this way, when I travel around the world and I visit financial institutions, first time India is really a subject. For the first time, investors think that India has an experience and a meaningful fundamental improvement due to the Modi government. They are not sure if it is the right time to invest now in India. Over the next 10 years, we want to have some money in India, regardless."
"If you look at the S&P (500), and Indian stock market over the next 10 years, you will make more money in India than American shares. This has been my view for the last three years, and this remains my view."
"Of course, if the global stock markets are going down— all the major markets, except India are going down. When everything is weak, and India is still strong, I will be reluctant to buy the market which is strong. It (rally) may last a little bit longer but it doesn’t mean it is good value. Valuations are not attractive other than a few exceptions."
Monday, July 16, 2018
Trade War is a negative impact for the markets worldwide
"There is less or hardly any growth in Europe. The Chinese economy has been slowing down, as well as other Asian economies. The US stock market by any measure is highly priced. We have recessions in Argentina, Brazil and Turkey. We have currency weaknesses around the globe in dollar terms, which is a sign of monetary tightening, and now we have also this so-called trade war. Some people may suffer more, and some less but a trade war cannot be beneficial for anyone. In general, it is not a positive for the global economy or the financial markets."
Thursday, July 5, 2018
Dark side of convenience
Marc Faber is thinking philosophically and shares the questions posed by two people of the benefits of modern machines, computers and electronics designed to make life better for humans.
"Tim Wu, a law professor at Columbia, recently penned an essay entitled The Tyranny of Convenience in which he argues that, "In the developed nations of the 21st century, convenience - that is, more efficient and easier ways of doing personal tasks - has emerged as perhaps the most powerful force shaping our individual lives and our economies….Though understood and promoted as an instrument of liberation, convenience has a dark side. With its promise of smooth, effortless efficiency, it threatens to erase the sort of struggles and challenges that help give meaning to life. Created to free us, it can become a constraint on what we are willing to do, and thus in a subtle way it can enslave
us."
"Tim Wu, a law professor at Columbia, recently penned an essay entitled The Tyranny of Convenience in which he argues that, "In the developed nations of the 21st century, convenience - that is, more efficient and easier ways of doing personal tasks - has emerged as perhaps the most powerful force shaping our individual lives and our economies….Though understood and promoted as an instrument of liberation, convenience has a dark side. With its promise of smooth, effortless efficiency, it threatens to erase the sort of struggles and challenges that help give meaning to life. Created to free us, it can become a constraint on what we are willing to do, and thus in a subtle way it can enslave
us."
Tuesday, July 3, 2018
More signs of world economy slowing down
Marc Faber's latest commentary is now out. He writes about what he sees as an elevated slowdown in the world economy. He thinks this could be a warning sign to reduce long stock market exposure.
"Concerning my negative views about equities I would like to add that an important technical signal has turned down badly: the Smart Money Flow Indicator (SMART Index), which is calculated according to a special formula.
The broader point I want to make is that we can see an increasing number of signs and indicators that point to a major slowdown in the global economy and to disappointing corporate earnings. Therefore, I reiterate my previous recommendation that investors who are overweight equities should really reduce their heavy exposure. "
via GloomBoomDoom
"Concerning my negative views about equities I would like to add that an important technical signal has turned down badly: the Smart Money Flow Indicator (SMART Index), which is calculated according to a special formula.
The broader point I want to make is that we can see an increasing number of signs and indicators that point to a major slowdown in the global economy and to disappointing corporate earnings. Therefore, I reiterate my previous recommendation that investors who are overweight equities should really reduce their heavy exposure. "
via GloomBoomDoom
Monday, June 18, 2018
Marc Faber June 2018 interview
Click here to download the audio interview
Topics discussed
-US policy makers
-Chinese steel producers
-Trade discussions are distorted
-Most people want more government (not less government) according to statistics/polls.
-High Rents in certain US cities
-Standards of living West vs East
Tuesday, June 12, 2018
Monday, June 4, 2018
Why precious metals can go much higher longer term
Gold has been seen as a hedge against inflation and some have some have considered it as an "insurance" hedge. Recently crypto currencies such as Bitcoin, Ether, Ripple have been making headlines among investors. Marc Faber believes crypto's will end badly and that precious metals such as Gold will go much higher.
"We had a total neglect of gold and other commodities in 1999, and then gold rose from $255 to a peak in September 2011 of $1,921. At that time, there was a lot of speculation in gold and in other precious metals and other commodities. And since then we've been at a bear market until December, 2016, when gold approached $1,000.
Since then, as you know, we've been up something like 30 percent, and it is true, there is some speculative interest in gold, but nothing compared to crypto-currency. People that look for an alternative to paper assets like bonds and equities, they're all gambling on cryptos. I don't think that cryptos are safe. Now they may move up and they may move down but I, as an investor for the ultimate crisis, I prefer to be in physical precious metals, gold, silver, platinum.
I think, eventually, these precious metals will come back into the investment portfolios of major institutions and individuals. The major institutions of the world, they hold practically no gold. They have more money in Apple, they have more money in Amazon, than, say, in gold. And I think that will change over time, but I don't know whether it will be tomorrow or in three years’ time, but my view would be that if you really look at the financial situation, the unfunded liabilities, the government deficit, the inflated asset prices, the conclusion is central banks will have to continue to print money, otherwise the system collapses. That, in my opinion, will boost precious metals prices."
via www.moneymetals.com/podcasts/2018/04/27/can-us-be-trusted-to-hold-everyones-gold-001465
Friday, June 1, 2018
The Neo-cons have created a foreign policy that may be harmful for the US
Is the US crazy or stupid to push Russia and China closer ? Read Dr Faber's thoughts below on what the Neo-cons have done.
"I think for the first time in Bretton Woods, we have less confidence or less faith in the U.S. dollar as a reserve currency. I think the U.S. policymakers, especially the Neo-cons, had the talent to antagonize Mr. Putin and also Mr. Xi in China.
By doing that, they have actually managed to get them closer into an economic and political alliance. And the goal of these two countries, Russian and China, is probably to gradually move away from a dollar system. I'll tell you, I personally, I'm not a U.S. citizen, I'm just an international observer of economic, financial, and political trends. I cannot imagine a foreign policy that would be worse for the U.S. itself than what the Neo-cons have engineered. I just can't imagine."
via www.moneymetals.com/podcasts/2018/04/27/can-us-be-trusted-to-hold-everyones-gold-001465
"I think for the first time in Bretton Woods, we have less confidence or less faith in the U.S. dollar as a reserve currency. I think the U.S. policymakers, especially the Neo-cons, had the talent to antagonize Mr. Putin and also Mr. Xi in China.
By doing that, they have actually managed to get them closer into an economic and political alliance. And the goal of these two countries, Russian and China, is probably to gradually move away from a dollar system. I'll tell you, I personally, I'm not a U.S. citizen, I'm just an international observer of economic, financial, and political trends. I cannot imagine a foreign policy that would be worse for the U.S. itself than what the Neo-cons have engineered. I just can't imagine."
via www.moneymetals.com/podcasts/2018/04/27/can-us-be-trusted-to-hold-everyones-gold-001465
Thursday, May 31, 2018
A US trade war would cause the US Dollar to rally
President Donald Trump is attempting to change US trade policies and it is causing some tension around the world. If President Trump actually causes a Trade War, it may hurt the US more because it would cause the US inflation rate to rise.
"My view is that, actually, the Trump administration, for which, I would have voted for Mr. Trump, but he proves every day that he's a completely clueless individual. He says one thing and then does something totally different. He changes his view all the time. And I think, quite frankly, there is a trade war which maybe won't happen, but if there is one, the U.S. will be the big loser, because consumer prices in the U.S. will go up and that is not desirable at the present time, as the Fed is already tightening and interest rates have been rising, so what it will mean is, if there is a trade war, initially the dollar will actually rally. But this is precisely what the U.S. shouldn't have, a very strong dollar."
via www.moneymetals.com/podcasts/2018/04/27/can-us-be-trusted-to-hold-everyones-gold-001465
Monday, May 28, 2018
Markets could disappoint very badly
There is a saying in Wall Street that says, one should buy when there is 'Blood on the Streets'. Investor sentiments can play a big role in market turning points. Marc Faber thinks the markets have a good chance to disappoint bullish investors.
"I have maintained that the January 26th high for the S&P up 2,872 was like a mirror image of the low on March 6th, 2009 when the S&P was at 666. At that time, everybody was bearish and leading strategy and I don't want to name who, but they were predicting for the S&P to fall to 400. And what happened is that, because sentiment was so negative, and the market was so oversold, the market turned around and actually on very poor earnings, started to go up. And now, we have, in January, a high, when everybody felt that the market would go higher and what then happened is that on good earnings, stocks didn't move up, but started to go down.
So, I think we are in a situation where it is likely, it's not yet a hundred percent sure, in order to get a clearer picture, if a major bear market has started, we would have to make a low below the February low, but that hasn't happened yet. But looking at the market and the market action and the momentum and the number of stock that are actually making new lows, I'd say there is a fair probability that the market will disappoint point very badly."
via www.moneymetals.com/podcasts/2018/04/27/can-us-be-trusted-to-hold-everyones-gold-001465
"I have maintained that the January 26th high for the S&P up 2,872 was like a mirror image of the low on March 6th, 2009 when the S&P was at 666. At that time, everybody was bearish and leading strategy and I don't want to name who, but they were predicting for the S&P to fall to 400. And what happened is that, because sentiment was so negative, and the market was so oversold, the market turned around and actually on very poor earnings, started to go up. And now, we have, in January, a high, when everybody felt that the market would go higher and what then happened is that on good earnings, stocks didn't move up, but started to go down.
So, I think we are in a situation where it is likely, it's not yet a hundred percent sure, in order to get a clearer picture, if a major bear market has started, we would have to make a low below the February low, but that hasn't happened yet. But looking at the market and the market action and the momentum and the number of stock that are actually making new lows, I'd say there is a fair probability that the market will disappoint point very badly."
via www.moneymetals.com/podcasts/2018/04/27/can-us-be-trusted-to-hold-everyones-gold-001465
Wednesday, May 16, 2018
Monday, May 7, 2018
Marc Faber May 2018 Interview
If the above video does not play click here
Topics discussed
US Dollar - Dollar may strengthen a bit, but the strength will not last.
Stock Market - Not likely to see a crash but could still see major market declines
Gold could go up relative to other assets..
and more discussed.....
Thursday, May 3, 2018
More signs that the US markets may have peaked in January 2018
Marc Faber thinks the market may have made some kind of peak earlier this year.
"Based on the recent market action of stocks around the world and in particular in the US, I am growing increasingly confident that the January 26, 2018 high at 2,872 for the S&P 500 was a major top indeed."
"Based on the recent market action of stocks around the world and in particular in the US, I am growing increasingly confident that the January 26, 2018 high at 2,872 for the S&P 500 was a major top indeed."
Monday, April 9, 2018
Volatility likely to remain high for 2018
Marc Faber discusses about the bubbles that may have popped and recommends a reduction of long stock market positions. Below excerpt from Gloomboomdoom.
In earlier reports I mentioned two conditions that were needed for the formation of a major stock market top: Excessive speculation and heavy participation by the public, and the revelation of a major fraud. The speculation in Crypto-currencies over the last six months fulfills the condition of heavy speculative activity by the public. The potential disclosure of massive irregularities in the online space, and accounting and other fraud at quite a few other companies, crypto currencies, and government agencies are likely to shortly fulfill the condition of fraud disclosure, which usually shakes investors’ confidence badly. [Kindleberger calls the moment where investors realize that the time to withdraw from the market has arrived “revulsion.”]
According to Thomson Reuters, “The overall tech sector now has a 27% weight in the S&P 500, making it by far the largest component.” Therefore, considering all the fundamental and technical factors which could potentially become very negative, I reiterate my recommendation to reduce equity positions. Furthermore, I strongly recommend to underweight FAANG and related stocks, which account for a high percentage of equity index funds’ assets.
Last month, I explained that higher interest rates were far from certain and that Treasuries could rally. I opined that it was possible that higher interest rates already had a negative impact on the over-leveraged and asset-price driven US and global economy.
It is likely that 2018 will bring about plenty of turmoil in asset markets and that volatility will remain very high.
In earlier reports I mentioned two conditions that were needed for the formation of a major stock market top: Excessive speculation and heavy participation by the public, and the revelation of a major fraud. The speculation in Crypto-currencies over the last six months fulfills the condition of heavy speculative activity by the public. The potential disclosure of massive irregularities in the online space, and accounting and other fraud at quite a few other companies, crypto currencies, and government agencies are likely to shortly fulfill the condition of fraud disclosure, which usually shakes investors’ confidence badly. [Kindleberger calls the moment where investors realize that the time to withdraw from the market has arrived “revulsion.”]
According to Thomson Reuters, “The overall tech sector now has a 27% weight in the S&P 500, making it by far the largest component.” Therefore, considering all the fundamental and technical factors which could potentially become very negative, I reiterate my recommendation to reduce equity positions. Furthermore, I strongly recommend to underweight FAANG and related stocks, which account for a high percentage of equity index funds’ assets.
Last month, I explained that higher interest rates were far from certain and that Treasuries could rally. I opined that it was possible that higher interest rates already had a negative impact on the over-leveraged and asset-price driven US and global economy.
It is likely that 2018 will bring about plenty of turmoil in asset markets and that volatility will remain very high.
Monday, April 2, 2018
America has lost a lot of prestige due to failed interventions in foreign nations
Marc Faber talks about how the world has moved away from an American facing model. China has been gaining prestige and importance along with a declining US importance to the global economy.
via economictimes
The tariffs are going to backfire on the US very badly because you have to understand that the US was economically very powerful until the early 1980s. The same was the time in the 70s and early 80s. If America sneezes, Asia catches the cold because all the exports went to America. But this is no longer the case nowadays. Take steel. 2% of US steel imports are from China and only 1.5% of Chinese production of steel is exported to the US.
Even if the US would not buy any steel at all from China, it would not matter to the Chinese. At the time of Davos in February, a Chinese owner of the world’s largest bus company was interviewed and they asked him about US tariffs and chances of trade war with US. He said we really do not care. We export our buses to 150 different countries in the world, what do we care about the American market and that is true for many companies. The American market is no longer that relevant. China exports more to commodity producers than to the US and the same applies to the South Korea.
What has changed in the last 30-40 years is that whereas Asia and the world was American-centric before, the world has become much more China-centric in Asia and it is a much more multi-dimensional global economy where the US has lost a lot of its importance, relatively speaking. It has also lost a lot of prestige because of their failed interventions in Iraq, in Syria, in Libya, in Afghanistan, everything they touched, they messed up.
via economictimes
Wednesday, March 28, 2018
On historically low interest rates and world trade
Dr Marc Faber talks about Interest Rates and how they have never been so low for so long.
In terms of interest rates, historically, our standards have been at the lowest level in the history of mankind from say 3000 BC up to now. So, in 5,000 years of history, we have never been this low. In the US, the low for the 10 years treasury was at 1.37% in July 2016 and in Europe, in many cases, there have been negative interest rates.
Recently, that has moved up a little bit but in Switzerland and in Japan, basically we still have negative interest rates and we have had them essentially for the last eight-nine years. This is a very unusual situation. I do not think anyone could expect interest rate to stay this low for much further. There is a rising tendency but recently the treasury bonds in the US have sold off quite considerably and I believe that we could have one more decline in interest rates as a result of a recession that may happen later on this year or next year. So, I actually went long on some treasury bonds in the US.
On the original aim of Global Trade and why it may have been unsuccessful for the Western multinational companies.
Concerning global trade, .... the idea was that multinationals in Europe and especially in the US could open up new markets like China and then sell their goods into these markets. But conditions have somewhat changed in the sense that it is the Chinese and other emerging economies that sold their goods into the US.
So to some extent, it backfired on the US and as you know the US is not the fair player and they reacted negatively. These trade sanctions or trade barriers, in my view are not very negative for China and other countries. Rather they are very negative for the US. This is my assessment of the situation.
Monday, March 26, 2018
The correction has not happened yet
The Markets may be overdue for a correction
"I was expecting a correction a long time ago. It has not happened but when it happens, it happens in a more severe manner. So far, it has not happened very severely in the US. We are down not even 10% from the January 26 high. A correction would be a 20% decline and the bear market would be something like a 40% decline. It is nothing very serious yet but it may become very serious in future."
via economictimes
"I was expecting a correction a long time ago. It has not happened but when it happens, it happens in a more severe manner. So far, it has not happened very severely in the US. We are down not even 10% from the January 26 high. A correction would be a 20% decline and the bear market would be something like a 40% decline. It is nothing very serious yet but it may become very serious in future."
via economictimes
Tuesday, March 13, 2018
Marc Faber interview - Geopolitics and Empire
Click here if the video does not play
Topics discussed are
- Stock market
- Housing and bond bubbles, central bank manipulation,
- Gold
- Investors should be diversified.
- Average salaries vs Asset prices
- Investor sentiment
- US no longer the dominant economy (adjusted for Purchasing power)
- Chinese applying for more patents around the world than the US
- US economy could go into a recession which could trigger a war to divert attention. That is a possibility. In that situation, Physical Gold and crypto currency could be a good thing to own.
Tuesday, March 6, 2018
Possibility of a credit crisis between July and December 2018
Excerpt below from Marc Faber's latest commentary on Gloomboomdoom
Justice Clarence Thomas recently opined that, "at some point we’re going to be fatigued with everybody being a victim." Clarence Thomas was influenced by economist and social observer Thomas Sowell’s Race and Economics, which criticized social reforms by government.
Instead Sowell argued for individual action to overcome circumstances and adversity. According to Sowell, "The vision of the anointed is one in which ills as poverty, irresponsible sex, and crime derive primarily from 'society,' rather than from individual choices and behavior. To believe in personal responsibility would be to destroy the whole special role of the anointed, whose vision casts them in the role of rescuers of people treated unfairly by society."
The culture of victimhood has inevitable been accompanied by a culture of "entitlement," for which incidentally, nobody wants to pay. Sowell explains that, "One of the consequences of such notions as ‘entitlements’ is that people who have contributed nothing to society feel that society owes them something, apparently just for being nice enough to grace us with their presence."
An informed investor opined that, "a recession could knock down asset values in the short term but expect them back up heavily in the long term."
I tend to agree with this investor, but remember that in times of monetary inflation asset prices move up irregularly. Despite still loose monetary policies a large number of luxury property prices are down by more than 20% from the peak while the Hagerty Market Index of vintage automobiles is down 17% from the all-time high in August 2015.
Over the last 12 months the growth rate of TMS has been deccelerating, which could bring about the next credit and liquidity crisis in the second half of 2018, with an economic recession and asset price downturn to follow. In this scenario, I would expect risky assets (real estate and stocks), to come under pressure because investors will likely shift funds into (so-called) risk-off assets such as Treasuries with medium term maturities.
I am pleased to include a report by my friend John Goltermann entitled, "Twelve Reasons You May Want to Fire Your Investment Advisory Firm If It Compares Itself to the S&P 500."
Thomas Sowell futher thought that, "There is usually only a limited amount of damage that can be done by dull or stupid people. For creating a truly monumental disaster, you need people with high IQs."
He also asked, "Since this is an era when many people are concerned about 'fairness' and 'social justice,' what is your 'fair share' of what someone else has worked for?"
Justice Clarence Thomas recently opined that, "at some point we’re going to be fatigued with everybody being a victim." Clarence Thomas was influenced by economist and social observer Thomas Sowell’s Race and Economics, which criticized social reforms by government.
Instead Sowell argued for individual action to overcome circumstances and adversity. According to Sowell, "The vision of the anointed is one in which ills as poverty, irresponsible sex, and crime derive primarily from 'society,' rather than from individual choices and behavior. To believe in personal responsibility would be to destroy the whole special role of the anointed, whose vision casts them in the role of rescuers of people treated unfairly by society."
The culture of victimhood has inevitable been accompanied by a culture of "entitlement," for which incidentally, nobody wants to pay. Sowell explains that, "One of the consequences of such notions as ‘entitlements’ is that people who have contributed nothing to society feel that society owes them something, apparently just for being nice enough to grace us with their presence."
An informed investor opined that, "a recession could knock down asset values in the short term but expect them back up heavily in the long term."
I tend to agree with this investor, but remember that in times of monetary inflation asset prices move up irregularly. Despite still loose monetary policies a large number of luxury property prices are down by more than 20% from the peak while the Hagerty Market Index of vintage automobiles is down 17% from the all-time high in August 2015.
Over the last 12 months the growth rate of TMS has been deccelerating, which could bring about the next credit and liquidity crisis in the second half of 2018, with an economic recession and asset price downturn to follow. In this scenario, I would expect risky assets (real estate and stocks), to come under pressure because investors will likely shift funds into (so-called) risk-off assets such as Treasuries with medium term maturities.
I am pleased to include a report by my friend John Goltermann entitled, "Twelve Reasons You May Want to Fire Your Investment Advisory Firm If It Compares Itself to the S&P 500."
Thomas Sowell futher thought that, "There is usually only a limited amount of damage that can be done by dull or stupid people. For creating a truly monumental disaster, you need people with high IQs."
He also asked, "Since this is an era when many people are concerned about 'fairness' and 'social justice,' what is your 'fair share' of what someone else has worked for?"
Friday, February 9, 2018
Market conditions to get tougher for investors
In an interview with Zee Business, Marc Faber outlines the reasons why markets are facing some headwinds but is unclear on whether it means the bull market since 2009 has ended.
In US, a bull market started essentially nine years ago in March 2009. We are up close to 4 times since then, and in the last two years we never had a correction of more than 5 percent. After these conditions, it is not unlikely that the market will face some tough time. Market may decline by 40 per cent. I'm not saying it will happen. I say it could happen.
In 1987, we have had a 40% correction, followed by recession, then market continued to go up until 2000. My sense is we had a nirvana condition for financial assets over the last 8-9 years. Bonds, stocks and practically every sector has rallied. Dollar was firm. All these conditions will change. It will be more challenging for investors.
via www.zeebiz.com/india/news-rbi-deserves-positive-marks-for-keeping-rupee-stable-marc-faber-36578
In US, a bull market started essentially nine years ago in March 2009. We are up close to 4 times since then, and in the last two years we never had a correction of more than 5 percent. After these conditions, it is not unlikely that the market will face some tough time. Market may decline by 40 per cent. I'm not saying it will happen. I say it could happen.
In 1987, we have had a 40% correction, followed by recession, then market continued to go up until 2000. My sense is we had a nirvana condition for financial assets over the last 8-9 years. Bonds, stocks and practically every sector has rallied. Dollar was firm. All these conditions will change. It will be more challenging for investors.
via www.zeebiz.com/india/news-rbi-deserves-positive-marks-for-keeping-rupee-stable-marc-faber-36578
Thursday, February 1, 2018
Its been more than a year since the S&P500 had a 5 percent pullback
Marc Faber's latest commentary is out which he discusses the Regulations, Society and the rising stock markets. Read the commentary below.
Hugh Smith then discusses the theories of Peter Turchin. Peter Turchin is a Russian-American scientist, specializing in cultural evolution and the statistical analysis of the dynamics of historical societies.
His 2016 book Ages of Discord explains why we should be worried about the current course taken by American society and how we can use history to plan a better future. According to Turchin, "something happened to American society during the 1970s. Several previously positive social, economic, and political trends suddenly reversed their direction."
Turchin further explains that, "there were two periods in American history that were remarkably free of political violence: the Era of Good Feelings (the 1820s) and the post-war prosperity of the 1950s, which I termed the Era of Good Feelings II. After the quiet 1950s, however, incidents of political violence again became more frequent and now we may be in the middle of another wave of sociopolitical instability.
Waves of sociopolitical instability are characterized by
1. An over-supply of labor that suppresses real (inflation-adjusted) wages
2. An overproduction of essentially parasitic Elites
3. A deterioration in central state finances (over-indebtedness, decline in tax revenues, increase in state dependents, fiscal burdens of war, etc.)"
I love the expression of "overproduction of essentially parasitic elites," which includes an oversupply of bureaucrats.
Fortunately, the pace of new regulation has visibly slowed in the Trump administration. A search of OMB’s database reveals that, between January and December 2017, the Office of Information and Regulatory Affairs concluded review of 21 ‘economically significant’ regulations - those with impacts (costs or benefits) expected to be $100 million or more in a year. There are indeed far fewer rules than previous presidents have issued in their first years.
The most impressive part is that some of these "significant" rules are actually designed to reduce red tape.
The S&P 500 has made history on a seemingly weekly basis with its record highs, but this unprecedented feat is about longevity. The index has gone for over 400 days without a 5% pullback, putting it at the longest streak on record, dating back to 1929, an infamous year no doubt.
But as Valerius observed in the first century A.D.
"The divine wrath is slow indeed in vengeance, but it makes up for its tardiness by the severity of the punishment."
via gloomboomdoom.com
Charles Hugh Smith recently penned an essay entitled Social Change Will Upend the Status Quo: The nation is fragmenting because the Status Quo is failing the majority of the citizenry.
According to Hugh Smith, "The core narrative of the Status Quo is that nothing fundamental needs to be changed: all the problems can be solved with more ‘free money’ (borrowed from the future at low rates of interest) and a few policy tweaks such as Universal Basic Income.
This core narrative is false: everything needs to change, from the bottom up. And that of course terrifies those gorging at the trough of status quo wealth and power."
His 2016 book Ages of Discord explains why we should be worried about the current course taken by American society and how we can use history to plan a better future. According to Turchin, "something happened to American society during the 1970s. Several previously positive social, economic, and political trends suddenly reversed their direction."
Turchin further explains that, "there were two periods in American history that were remarkably free of political violence: the Era of Good Feelings (the 1820s) and the post-war prosperity of the 1950s, which I termed the Era of Good Feelings II. After the quiet 1950s, however, incidents of political violence again became more frequent and now we may be in the middle of another wave of sociopolitical instability.
Waves of sociopolitical instability are characterized by
1. An over-supply of labor that suppresses real (inflation-adjusted) wages
2. An overproduction of essentially parasitic Elites
3. A deterioration in central state finances (over-indebtedness, decline in tax revenues, increase in state dependents, fiscal burdens of war, etc.)"
I love the expression of "overproduction of essentially parasitic elites," which includes an oversupply of bureaucrats.
Fortunately, the pace of new regulation has visibly slowed in the Trump administration. A search of OMB’s database reveals that, between January and December 2017, the Office of Information and Regulatory Affairs concluded review of 21 ‘economically significant’ regulations - those with impacts (costs or benefits) expected to be $100 million or more in a year. There are indeed far fewer rules than previous presidents have issued in their first years.
The most impressive part is that some of these "significant" rules are actually designed to reduce red tape.
The S&P 500 has made history on a seemingly weekly basis with its record highs, but this unprecedented feat is about longevity. The index has gone for over 400 days without a 5% pullback, putting it at the longest streak on record, dating back to 1929, an infamous year no doubt.
But as Valerius observed in the first century A.D.
"The divine wrath is slow indeed in vengeance, but it makes up for its tardiness by the severity of the punishment."
via gloomboomdoom.com
Monday, January 22, 2018
Precious metals are an attractive investment for 2018 | Market overview
Marc Faber in the interview with GoldSeek talks about Central Banks balance sheet and how the market has become very vulnerable.
Other topics discussed as follows
-Previous metals could move up huge this year.
-Cryptocurrencies boom could be over. The main reason cryptos has gone up is pure speculation.
-Stock market is overbought.
-Possibly not a bad time to raise cash. This is the asset class that is most neglected at the present time. Everybody wants to hold real estate, stocks, cryptos. Marc Faber makes the bullish case for cash by saying, "I would say why dont you hold some cash."
-The Japanese Yen and Japanese Shares could rally.
-The Euro could go higher.
-The bond market is clearly manipulated otherwise the interest rate in Europe and US would not be this low.
-Young people may be the losers with the loose monetary policies. Dr Faber says, "I benefit from this money printing."
Wednesday, January 17, 2018
Tuesday, January 2, 2018
2018 to see market leadership changes and downside volatility
"Asset markets enjoyed a superb 2017. It is doubtful that in 2018 all asset markets will appreciate in concert as they did in 2017."
"Rather, I expect that some diverging trends among asset prices will emerge and that the expected change in leadership will bring about some painful downside volatility."
Related Article
Market Forecast for 2017
via gloomboomdoom
"Rather, I expect that some diverging trends among asset prices will emerge and that the expected change in leadership will bring about some painful downside volatility."
Related Article
Market Forecast for 2017
via gloomboomdoom
Monday, January 1, 2018
China's success does Not come from stealing foreign trade secrets
Excerpt from Gloomboomdoom
Under the title E Pur Si Muove, Sam Altman who is a successful investor in new technologies wrote:
Altman further observed that,
I am quoting Altman because there are so many people that believe China's economic success is due to its violations of property rights and the blatant theft of Western trade secrets. The fact is, however, that China as well as other countries have developed their own home bred technologies and knowledge based industries, which was a consequences of the multinationals' process of outsourcing.
Under the title E Pur Si Muove, Sam Altman who is a successful investor in new technologies wrote:
“Earlier this year, I noticed something in China that really surprised me. I realized I felt more comfortable discussing controversial ideas in Beijing than in San Francisco. I didn’t feel completely comfortable - this was China, after all - just more comfortable than at home.
That showed me just how bad things have become, and how much things have changed since I first got started here in 2005.
It seems easier to accidentally speak heresies in San Francisco every year. Debating a controversial idea, even if you 95% agree with the consensus side seems ill-advised. This will be very bad for startups in the Bay Area.”
Altman further observed that,
“Restricting speech leads to restricting ideas and therefore restricted innovation - the most successful societies have generally been the most open ones. Usually mainstream ideas are right and heterodox ideas are wrong, but the true and unpopular ideas are what drive the world forward. Also, smart people tend to have an allergic reaction to the restriction of ideas, and I’m now seeing many of the smartest people I know move elsewhere."
I am quoting Altman because there are so many people that believe China's economic success is due to its violations of property rights and the blatant theft of Western trade secrets. The fact is, however, that China as well as other countries have developed their own home bred technologies and knowledge based industries, which was a consequences of the multinationals' process of outsourcing.
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