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