Marc Faber: Expect Markets to Stabilize and Rebound (Somewhat) in the Short Term

Marc Faber: Expect Markets to Stabilize and Rebound (Somewhat) in the Short Term

Marc Faber’s observations on a CNBC interview from January 19, 2009:

  • The corporate credit markets have improved somewhat
  • He expects government bond markets to weaken, due to the increasing unlikeliness they will be able to pay off their mounting deficits – believes this may be the “next shoe to drop”
  • There’s a very good chance the 2nd half of 2009 could be even worse than the 1st half of 2009
  • At 850-900, the S&P is not particularly inexpensive, because corporate earnings continue to dissolve
  • There are some pockets of value in Asia, and many stocks have attractive dividend yields at 3 to 4 times the bond yields

Faber on Commodities

  • The bull market in commodities is still relatively young (started in 2001) – while the bull market in stocks started about 20 years earlier
  • Supply of many commodities will suffer greatly due to this credit crisis
  • When the global economy recovers, many commodities will rise substantially as a result

Faber on Inflation vs. Deflation

  • While there has been a deflation in asset prices, he has not noticed any deflation in consumer prices
  • Doesn’t know who “in their right mind” would buy a 30-Year US Treasury that is yielding less than 3%…in a structurally weak currency

Faber’s Current Investments

  • Thinks the markets became very oversold in November
  • Anticipates the markets will stabilize and rebound somewhat over the next couple of months
  • Has some shares in Asia, mining stocks, exploration companies, physical gold, and a basket of currencies
  • Thinks the dollar could strengthen further in the short term

Part I: Marc Faber on CNBC – January 19, 2009:

Part II – Marc Faber on CNBC – January 19, 2009:

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