Back to the inflation/deflation/hyperinflation debate.
Marc Faber raised a lot of fuss last week with his bold warning on Bloomberg TV that US hyperinflation will approach Zimbabwe’s levels. His warning - as Credit Writedown’s Edward Harrison noted - raised the question: Is this headline-seeking exaggeration or serious punditry?
We suspect a bit of both. Faber struck a chord with his evocation of the “Z word”, setting off frenzied debate.
This week, things look different, as unexpectedly strong US output data and other economic figures elsewhere drove equity prices higher as risk appetite improved and the dollar plunged against both the euro and the pound.
And lo and behold, Faber’s latest monthly client newsletter takes a far more - er, sanguine - view of things, relatively speaking. In fact, we’re wondering if it’s the same Marc Faber doom-meister of last week.
It’s not that the uber-bear has become a mega-bull. Indeed, citing a variety of factors including the overbought condition of stocks, “heavy insider selling” and an increase in the supply of equities due to debt to equity conversions, Faber warns that the buying of equities right now “does not seem to be particularly timely”.
It’s rather that Faber is more tempered than he has been in a while. No mention of Zimbabwe at all. Equities could go either way but more likely bottom out. US inflation will be irksome, of course, as a result of the disastrous economic policies of Tim Geithner and Ben Bernanke. But US government bonds have tumbled and the US dollar has been weak. Both are near-term oversold and should shortly rebound, he says.
As for equities, a correction should “unfold” in the short term, he says, but market lows reached either towards the end of last year (in most emerging markets) or in March of this year (in most developed markets) also should hold.
Any such correction, he adds, could take the shape of a sideward movement in the major averages, “or even not occur at all”.
Read entire article:
Marc Faber raised a lot of fuss last week with his bold warning on Bloomberg TV that US hyperinflation will approach Zimbabwe’s levels. His warning - as Credit Writedown’s Edward Harrison noted - raised the question: Is this headline-seeking exaggeration or serious punditry?
We suspect a bit of both. Faber struck a chord with his evocation of the “Z word”, setting off frenzied debate.
This week, things look different, as unexpectedly strong US output data and other economic figures elsewhere drove equity prices higher as risk appetite improved and the dollar plunged against both the euro and the pound.
And lo and behold, Faber’s latest monthly client newsletter takes a far more - er, sanguine - view of things, relatively speaking. In fact, we’re wondering if it’s the same Marc Faber doom-meister of last week.
It’s not that the uber-bear has become a mega-bull. Indeed, citing a variety of factors including the overbought condition of stocks, “heavy insider selling” and an increase in the supply of equities due to debt to equity conversions, Faber warns that the buying of equities right now “does not seem to be particularly timely”.
It’s rather that Faber is more tempered than he has been in a while. No mention of Zimbabwe at all. Equities could go either way but more likely bottom out. US inflation will be irksome, of course, as a result of the disastrous economic policies of Tim Geithner and Ben Bernanke. But US government bonds have tumbled and the US dollar has been weak. Both are near-term oversold and should shortly rebound, he says.
As for equities, a correction should “unfold” in the short term, he says, but market lows reached either towards the end of last year (in most emerging markets) or in March of this year (in most developed markets) also should hold.Any such correction, he adds, could take the shape of a sideward movement in the major averages, “or even not occur at all”.
Read entire article:
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