MARC FABER in CBNC TV 18 on July 8th 2013
Below is the verbatim transcript of his interview to CNBC-TV18
Q: What did you make
of the jobs report and the takeaways from there which is that the taper
program may begin sooner than most expected?
A: I don’t know because the
Federal Reserve (Fed) does not know either when they will slow down
their bond purchases. First of all on a closer analysis the jobs report
was not particularly good. A lot of full time jobs were lost and part
time jobs were added.
So, I would not call now the jobs report as a supportive of say tighter
monetary policies. I have to say that the Fed basically believes in
money printing and they will continue to print money in my view. The
question is at what pace they will continue to print money.
Q: What did you make
of the very sharp spike in the US bond yield on Friday to about 2.74,
that got the emerging markets worried this morning? Would you expect to
see further rise in the US bond yield from here?
A: Well basically its
interesting that since they initiated Quantitative Easing (QE) unlimited
a year ago, bond yields have been rising regardless. It will be
interesting to see in the months ahead what the impact of the increase
in interest rates is on say the housing market, and on asset prices.
So, I would say looking actually at the past predictions by the Federal
Reserve they have no clue themselves. I think the view at the Fed is it
will cause less damage. That would be my assessment of their thinking.
It is not that I would agree with it, but that is the way they think.
Q: This news flow
has been bad news for the Indian currency in specific, there is a bit of
panic situation on where it could be headed. Do you think all these
macro issues, the currency, the deficit needs to be addressed urgently?
A: Yes, the better deal soon
visits otherwise the currency will continue to weaken. Let me just
remind you the Indian market is still lower than it was in January 2008.
In the US dollar, the Sensex is down precisely 41 percent because in January 2008 USD 1 still was Rs 39 and now its 60.
Maybe the stock markets don't go down, but the currency goes down or
stock markets go up. The currency goes down even more. When the currency
weakens, it hurts the average household much more than the few well to
do people.
Q: What about
emerging market equities, do you see more pain ahead for all these
markets even more than what we have experienced over the last few
months?
A: In general, I think that
most stock markets peaked out some in 2011. Some didn't even make a new
high above the 2007 highs. I believe that there is further downside risk
in all market including the US.
Q: There has also
been a big surge on crude prices, 5 percent up last week. Is this just a
geopolitical one-off that is happening with crude or do you think
something fundamental is changing with that commodity?
A: Yes, actually I believe
that crude is one of the very few commodities that look attractive from a
longer term perspective. Between last November and February of this
year was five times in the Middle East on five different journeys. My
impression is that the whole Middle Eastern problems will get much worse
before they get better. Maybe it will take years until they improve.
However, again as I mentioned to you, for you think money printing is
the greatest things on earth. Money printing has a very destructive
impact on economic life and on social conditions. When you print money,
some assets and some goods and services go up in price. The increase in
the prices exceeds the wage to salary.
So, most people actually suffer under money printing. But money printing
benefits a few and so whilst income inequality increases and it leads
to social and geopolitical tensions. - in moneycontrol
Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.
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