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. 


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.

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."

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."


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."

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