MARC FABER: The Way Things Are Going, Bernanke Will Have To Give Us 96 More Rounds Of Fed Stimulus

On Wednesday, Federal Reserve Chairman Ben Bernanke told us that the U.S. economy could be strong enough for the Fed to begin tapering, or scaling back, it's stimulative quantitative easing (QE) program later this year.
However, the bears aren't convinced.
After Bernanke's comments, Peter Schiff said the economy was so weak that the Fed's next big announcement would actually be to increase QE.
Uber bear Marc Faber, embracing hyperbole, suggested that QE would basically be a part of everyday life for the rest of our lives.
"As I said already three years ago, we are going to go with the Fed to QE99," said Faber on Bloomberg Television with Trish Regan and Tom Keene on Friday.
We are currently on the third round of QE, aka QE3.
Here's a transcript of the interview via Bloomberg Television:

Faber on whether problems will continue for the equity markets:

"Well, right now equities, bonds and gold are very oversold. They can easily rally on the S&P. We could rally 43, 50 points, but I don't expect a new high. Just in case a new high would be achieved in the next two months or so, it would not be confirmed by the majority of shares. In other words, very few stocks would lead the advance. In terms of bonds, they are also incredibly oversold. Where the sentiment about equities is actually still rather positive and all of these super bulls still predicting the market to continue to rise into 2014, 2015. In bonds and gold, sentiment is by historical standards incredibly negative. As a contrarian, I would rather buy bonds and gold than equities."

On whether yields will be higher if Bernanke meant what he said on starting to taper sooner rather than later:

"If you say that if he means what he says, then you believe in Father Christmas. He said if the economy does not meet the expectations of the fed in one years' time, they will consider additional measures. In other words, if the economy has not fully recovered by mid-2014, more QE will be forthcoming. As I said already three years ago, we are going to go with the Fed to QE99."

On whether he's investing with a backdrop of no inflation:

"Well, I think investors have a misconception about what inflation is because it is essentially an increase in the quantity of money and credit. We have wage deflation in the world in real terms, for sure. In other words, real wages are going down and the cost of living everywhere are going up. That is why you have social unrest in North Africa, in the Middle East, in Turkey, in Brazil, and it will spread because the average person on the street hasn't participated in the huge asset inflation that has been going on in high-end properties, Mayfair properties, Fifth Avenue, Madison Avenue, the Hamptons and in equities and until recently in bonds and commodities."

On Laszlo Birinyi saying that gold is his biggest short:

"To that I respond there are many people out there, they never owned an ounce of gold in their lives. They were bearish about gold at $300, bearish about gold at $700, bearish about the stock market in 2009 when the S&P was at 666. Now, they are bullish about stocks and they are still bearish about gold. The commercial hedgers - these are professional miners, mining companies and people involved in gold trading. They have the lowest short exposure, since 2001 when gold was at $300. Similarly, in the silver market, the commercial hedgers, again, the professionals have the lowest short exposure since 2001. I would rather bet on the commercial miners, the commercial hedgers than on some forecaster who knows about the future of prices as little as I know. The only thing that I know is that I want to own some physical gold because I don't want all of my assets in financial assets."

"First of all, I believe that today we are talking about the global economy. The U.S. stock market has just about outperformed any other market around the world in the last 6 to 12 months. We have big trouble coming into emerging economies. The emerging economies are not performing well, There is no growth at the present time. The Chinese economy, maximum is growing at four percent per annum. We have multinationals in the S&P. Their growth and global growth came from the last four years from  the recovery in the emerging world. If the emerging world does not grow, the global economy will not perform well and corporate profits, as we just saw today from Oracle, will disappoint and stocks won't be the best investment in the world…Will not be a very good investment. I think the market is on the high side, corporate profits are inflated and we could easily, from the recent high, May 22 at 1687 on the S&P, drop by 20% to 30%, easily."

On where gold is heading by year end:

"Well, I think we will be higher by year end but I am not worried where we are. I have said that I buy gold regularly. I just bought today at $1300 and I will buy more at $1200 and I will buy more at $1100."

On whether gold will go down before going back up:

"I don't know, I am not a prophet, I don't know exactly where the price will be on a month by month basis, but I want to have some wealth, some of my assets in physical gold. I can see a lot of problems coming into the world including expropriation through taxation or through regulation or even through revolution and social strife."

On where 10 year yield is going:

"I am tempted to buy a 10 year treasury at a yield of 2.5%. I think we will rebound in the treasury market. Yields will go down first, and if they go up further, it will kill the economy including the housing market."

Source: http://www.businessinsider.com/marc-faber-father-christmas-bernanke-qe99-2013-6

Marc Faber: Gold a possible canary in the deflation coalmine

There was a lot of backing away from gold on Monday.
Goldman Sachs kicked it off by cutting its end-2013 and 2014 gold-price views, its first gold cut since April, to reflect the new post-Fed world reality. Goldman expects a stronger economy and less accommodative monetary policy, and hence lower prices for gold GCQ3 , which investors normally seek out as a hedge against inflation.
Credit Suisse, meanwhile, said gold investors maybe should be ratcheting down their expectations, or at least taking a harder look at them. Gold could get back to levels seen before the crisis, around $1,100 or $1,500 an ounce, Tom Kendall, head of precious markets research told CNBC. That’s because many of the so-called fear factors driving gold higher — such as inflation — have been removed from markets.
Finally, analysts at Citigroup did a little hedging on Monday, saying while they don’t expect gold under $1,100 an ounce, it’s “not an impossibility.”
But there might be something else investors should be considering where gold is concerned right now, especially at a time (at least on Monday) when global markets are collapsing like a house of cards (though gold was getting by with comparatively small losses). Here’s what Marc Faber, editor of Gloom Boom Doom report told MarketWatch in an email.

“Maybe gold is signaling a deflationary collapse of all asset prices. If this were indeed the case I suppose I would rather own gold than government bonds, high yield bonds and equities. If this scenario were to pass it would lead to even more money printing around the world,” says Faber, who was talking about asset price deflation and gold back in March.

Peter Hug, global trading director at Kitco, agrees with this possible scenario. He believes the dangers to the global recovery are on the deflationary, rather than the inflationary side. He doesn’t expect the Fed will move on rates until 2014, but says the central bank is likely to jaw-bone those potentially policy changes to prepare investors.

“The trial balloons are meant to gauge market reaction and so far the selling in the equity markets as been somewhat disciplined. If the damage here accelerates the Fed will suggest that the retraction of bond purchases is not imminent,” says Hug, noting fresh comments from New York Fed President William Dudley who says the Fed still isn’t accommodative enough.
“You would suspect that this would be price supportive for metals and I think it will be, with the caveat that we do not have a major deflationary collapse, which would be harmful to all hard assets in the short term. This would result in increased ( dramatic) stimulus by all central banks which should then propel the metals higher,” says Hug.

Last month (when gold was around $1,467 an ounce), Jim Rickards of Tangent Capital predicted deflation would eventually start pushing up by the end of the year, and if the Fed’s monetary policy is successful and deflation prevails, it’s going all the way back up.
“Deflation is something Japan and the US monetary policy makers fear most,” said Jon “DRJ” Najarian, Senior Economic Analyst at Capital Gold Group in emailed comments.   “If they see either economy backing into a deflationary spiral I think they would, through words and deeds, apply all available stimulus. As I have held for months now, I think the weak hands will be flushed out of GOLD by the end of this quarter, which now is just four days out,” he added.

Source: http://blogs.marketwatch.com/thetell/2013/06/24/marc-faber-gold-a-possible-canary-in-the-deflation-coalmine/

Marc Faber: More S&P downside, commodities ‘horrible’…except gold

With the S&P 500 SPX down 2.4% after the Fed laid it on the line, it shouldn’t come as too much of a surprise to see the bears out there growling away.
Noted contrarian Marc Faber told CNBC on Thursday that he sees further downside for the S&P.

“…not because of Fed’s statements because, like always, they hedged their bets in the sense that this tapering off would not neccesarily stop. Mr Bernanke said if the economy does not improve along the lines that we expect we will provide additional support. I think the markets are worried about something else,” says the publisher of the GloomBoomDoom report.

And that something else he says, is the fact that interest rates have been rising for a year, noting that yields on 10- 10_YEAR  and 30-year 30_YEAR  Treasury notes bottomed out last July, and interest rates have been trending up since.
Emerging markets are also becoming an increasing worry for investors, with those outside of China basically flat and even Singapore, where he notes statistics can largely be trusted, not very cheery, said Faber. But China remains a major worry in this realm:

“The Chinese economy is much weaker than the official statistics suggest. At the present time, the Chinese economy is, at the very best, growing at 4% per annum. Without huge credit expansion there would be no growth at all.”

Faber has been consistently warning of a market meltdown, saying back in March that bubbles across markets were coming and there was nowhere to hide, not even gold.
While gold GCQ3  has tumbled to levels not seen in two and a half years in the wake of expectations the Fed may trim its monetary policy stimulus later this year,  (though gold rebounded some on Friday), Faber did indicate there could be some respite on the horizon.

“Technically, commodities look horrible…precious metals look bad. But tech factors would suggest we’re approaching at least an intermediate low. The commercials, which are essentially hedgers, people who produce gold and so continuously hedge, at the present time they have an extremely low short exposure, basically they’re accumulating gold.
“Whereas gold is close to $1,300 compared to say $700 in 2008, conditions in the mining industry are horrible. The exploration companies are running out of money and industry conditions are worse than they were in 2008. So I think that a lot of supply that potentially comes to the market through new exploration will simply not be there. In emerging economies sovereign funds, central banks and individuals will continue to accumulate physical gold.”

 Source: http://blogs.marketwatch.com/thetell/2013/06/21/marc-faber-more-sp-downside-commodities-horrible-except-gold/

Marc Faber: Bull in the short term, bear in the long term

It can be tough to sift through the rubble of the most recent market carnage to find buying opportunities, so perhaps it’s best left to someone who has historically said “sell.” Marc Faber, author of the ”The Gloom, Boom & Doom Report,” and often called “Dr. Doom” because of his bearish sentiment, says there are buying opportunities — at least in the short term. He told CNBC Tuesday morning:

“Near term, Treasury bonds, gold and equity markets are oversold and they can rebound for, say, the next ten days or even the next month. New highs in emerging markets and high yield bonds, out of the question.”

Faber told MarketWatch Monday that in a deflationary environment, he would prefer gold to government bonds and equities.
But he hasn’t ruled out government debt yet. He said if he was a trader he would be trading Treasurys over equities (in contrast to BlackRock, which said the opposite yesterday). Here is why:

“As a trade, I would rather buy the 10-year U.S. Treasury, which is very oversold, where everybody is bearish, where sentiment is terrible, compared with the S&P, where sentiment is still relatively optimistic.”

He noted that he expects the 10-year Treasury note yield 10_YEAR , which is currently trading at 2.50% Tuesday, to end the year around this level, or slightly higher, but not before dipping back down to about 2.20%.
That outlook on the 10-year note seems to embody his longer-term outlook on the markets: while some markets are oversold in the short term following signals from the Federal Reserve that it may act to wind down its bond-purchase program later this year, markets as a whole are still overbought in the long term. In that sense, he appears to have retained his bearish sentiment. Here he is on CNBC again:

“Longer term, the market is far from oversold. It still has considerable downside risk everywhere.”