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Marc Faber says global recession is now a certainty
By Catholic Online (NEWS CONSORTIUM)
May 29th, 2012
Catholic Online (www.catholic.org)
May 29th, 2012
Catholic Online (www.catholic.org)
Marc Faber, author of the Boom, Gloom & Doom newsletter is heavy on
the doom as of late. He says that the stock market appears to be at a
critical inflection point. In a live on CNBC's Fast Money Halftime
Report, Faber warned that economies of the world may be on the brink of a
serious slowdown.
"As an observer of markets - whenever everyone focuses on one thing - like Greece and Europe - maybe they miss issues that are far more important - such as a meaningful slowdown in India and China," Faber says.
The latest news from Beijing supports Faber's assertion. The HSBC Flash Purchasing Managers Index, slipped to 48.7 in May from 49.3 in April, marking the seventh straight month that the index has been below 50, a level which indicates economic activity is contracting.
Faber cited weakness in the high-end as another key catalyst that's very negative.
"There are more and more stocks that are breaking down - economic sensitive stocks and companies that cater to the high-end," he said. "That suggests to me the economy is likely to weaken and the huge asset run is likely to come to an end with significant asset deflation."
Fast Money trader Dan Nathan simultaneously warned that results such as these were ominous and suggested the high-end was starting to crack.
Faber says all the economies of the world could take a hit from these negative developments.
"I think we could have a global recession either in Q4 or early 2013." When asked what the odds were, Faber replied, "100 percent."
However, Faber also sees potential for a market rally, saying the bullish catalyst would be Greece exiting the EU.
"I think the market would be relieved if finally Greece exited the euro. There would be some clarity. Although it wouldn't be good for banks and insurance (stocks) in general I think markets are oversold and with an exit - markets would rally."
Faber says that he is talking hypothetically and does not think Greece exits the EU in the near future.
"What I think will happen is that Germany will show more flexibility and issue more euro bonds.
"More bonds will challenge the quality of the euro. That's why the euro has been very weak, lately."
Faber says the best thing to do now is keeping personal the portfolio in U.S. dollars and own gold, "knowing that sentiment is negative and in the near-term it could trade down to the Dec 29 low of $1522."
© 2012, Catholic Online. Distributed by NEWS CONSORTIUM.