Wednesday, May 16, 2018

Debt levels around the world are even more burdensome than in 2007



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Monday, May 7, 2018

Marc Faber May 2018 Interview


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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." 

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.

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.

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

Tuesday, March 13, 2018

Marc Faber interview - Geopolitics and Empire


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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?"

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

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."


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."




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




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:


“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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