Dr. Marc Faber: Editor & Publisher of the Gloom Boom & Doom Report – Dr. Faber Famous for his contrarian approach to investing, Marc Faber does not run with the bulls or bait the bears but steers his own course through the maelstrom of international finance markets…
Transcript : Dr. Faber what are you seeing on your travels have 0:14 you been seeing lately and you travel 0:16 all over the world what's going on out 0:17 there yet 0:18 in general I have to say that basement 0:22 is not in the resection maybe some 0:25 textures are or have been in recession 0:28 but overall there is very little gross 0:33 or no girl if you're traveling in Asia 0:36 and you look at the tourist trade in 0:41 general it is flat to down and the 0:46 income of people in the hospitality 0:49 industry is rather flat to down the 0:54 corporate sector is doing ok but the 0:57 earnings in Asia have been down because 1:00 costs have gone up but revenues have 1:04 kind of disappointed for prizes have 1:07 been on the pressure due to competition 1:10 so the earning seven expanded very much 1:13 in the meantime very significant amount 1:18 of bad take in the system and we have 1:22 very elevated states in the system 1:26 anyway how your fate as a percent of the 1:29 economy then before the last Christ in 1:33 2007 veto or the same for the US Senate 1:38 for europe so in general I think that 1:43 one shouldn't be overly optimistic about 1:46 the economic outlook in the world with 1:49 always out to me to come 1:51 that's a big question for 2017 many 1:54 people have in the United States maybe 1:55 around the world to some degree but what 1:57 is he going to do to make America great 2:00 again because the structural problems 2:02 that we have in place the united states 2:03 are very serious as you know what do you 2:05 see happening with the trump presidency 2:06 but i personally I was in favor of mr. 2:11 from being elected 2:13 it in the sense that I thought that mrs. 2:17 Clinton were simply not the suitable 2:20 candidate and that the Clinton dynasty 2:24 should be out of politics for good but 2:29 quite frankly i think that the trump 2:33 presidency will be characterized by more 2:38 intervention ism in other words 2:41 management of the economy which is 2:45 precisely what ails the global economy 2:48 or certainly the Western democracies 2:52 these continuous interventions into the 2:55 free market and I think air from policy 3:00 team orders from cabinet is going to 3:04 intervene repeatedly into relatively 3:07 small issues such as say your 3:11 corporations such as for General Motors 3:14 it should really be back to you where 3:18 you assemble cars where you build a new 3:22 factory and the police should tell you 3:25 that you have to do it in the u.s. your 3:28 event so one set of problems will be 3:32 replaced by another set of problems and 3:36 in my view is there a relatively harsh 3:41 trade policy that makes the compact 3:44 embarked upon is going to be very 3:47 negative for global growth either some 3:51 of the United States and I no other goal 3:53 watchers around the world mark have been 3:55 looking at the price in the action and 3:56 gold and saying well again we have Trump 3:58 coming in he's going to make America 3:59 great again and all these things are 4:01 going to turn around and you know 4:03 perhaps there's some truth to that but 4:05 when you look at the gold market what do 4:07 you see happening in 2017 because we 4:09 came off the loans in terms of dollars 4:10 from a thousand fifty when you're 4:11 fourteen hundred came back to 11 20 or 4:14 so and here we are wobbling around here 4:15 twelve hundred dollars but just was 4:17 curious on what you thought was going to 4:18 happen in terms of the gold market for 4:20 2017 4:22 well the first question i'd really like 4:23 to i'm very making America great 4:26 Kate I think if you look at the history 4:30 of civilization and the history of 4:34 concrete and empires in particular they 4:39 become powerful and then eventually they 4:41 start to decline a relative to other 4:46 countries and eventually they crumble 4:49 so I don't think that one man alone or 4:52 his policy team can make a comfy crate 4:56 again it has to come from always people 4:59 and I'm sorry to say that the US will 5:03 not manufacture certain goods that they 5:06 import any longer they will be 5:10 manufactured elsewhere at the same way 5:14 so the Arabia will not have semi 5:17 conductor plan and large-scale assembly 5:22 industry that they will produce oil and 5:26 petrochemicals fertilizers and divorce 5:28 but they will import goods from other 5:32 parts of the world and so each country 5:34 has some natural advantages and the US 5:39 will depend on imports from other 5:42 countries now they can shut off all the 5:45 import if they like to but we'll need to 5:49 to consumer prices in the US and two 5:53 standards of living in the US the 5:56 Millennials are not particularly 5:57 interested to work in assembly factory 6:00 and if you then the one to hire people 6:04 for assembly work in factories in 6:07 America you will have to pay a 6:10 relatively high salary much higher than 6:12 saying bhangra based Vietnam China 6:14 Indian divorce and so the good prizes 6:18 will be much higher in the US and the US 6:22 will be excluded from World Trade and 6:26 become essentially close that from 6:29 development outside the US and don't 6:33 forget the u.s. is no longer such a 6:36 large country even terms 6:40 industrial production in terms of 6:42 economy relative the rest of the world 6:45 the way to stay in the 1960s oh I think 6:51 actually that from policies may 6:54 accelerate the relative decline of the 6:58 US the relative to the rest of the world 7:02 secondly concerning gold 7:05 I mean we have a huge bull market in 7:08 gold which investors tend to forget it 7:11 in 1999 and 2011 when the price rose 7:16 from less than three hundred dollars to 7:19 / 19 on the dollars and then we have the 7:22 correction which ended essentially at 7:24 the end of 2015 and last year 7:29 aside from some currencies that have 7:32 been in a steep decline before namely 7:35 the ruble the Russian ruble and the 7:38 Brazilian rail gold was essentially 7:41 based performing currency because it 7:44 went up against the US dollar equally 7:47 what from the managers will not tell you 7:50 in all the service that you see nowadays 7:54 about the best performing sectors of the 7:56 US in 2016 gold shares are never 8:03 mentioned why because the fund managers 8:07 hate gold they hate gold share and so 8:12 this is a sec because they didn't 8:14 already and this sector by and large 8:18 gold shares were up eighty percent last 8:20 year and yet despite being the best 8:25 before being grew gold silver platinum 8:30 are some of the most hated assets that 8:35 you can imagine everybody talks it down 8:39 and the from the managers are 8:42 underweight gold shares and I think the 8:46 sentiment actually today is more 8:49 negative than it was when it was when 8:52 gold was at the flow 8:53 in october november december 2015 it's 8:59 very negative sentiment the weight is 9:02 very negative sentiment about problems 9:05 and very optimistic sentiment about gold 9:10 there's a huge optimism that suddenly 9:13 miraculously mr. Trump will make America 9:17 again the leading economy in the world 9:21 and let America grow at the fast pace 9:24 but unlike mr. rake and miss the Trump 9:27 blue face numerous head wins including 9:31 one which is if the economy begins to 9:35 grow at a faster pace will also have 9:37 higher interest rate and how your 9:39 interest rate mean lower p/e ratios let 9:44 me ask you then mark as we had in 2017 9:46 kick it off your water your major 9:48 predictions for 2017 we always have some 9:50 fun with this we see happening 9:52 well for the full year I don't know but 9:54 because we have volatility in markets 9:56 that mean we've had in 2016 at the worst 10:01 start of the year in about 50 years when 10:05 the market went down sharply into 10:08 favorite 10-cent be low was 18 10 and 10:14 then we have this huge rebound and we 10:17 have the trump rally at the end of the 10:19 year so the vega forecast for holy sir 10:22 mr. difficult but i'd like to say for 10:26 that they say three months i think we'll 10:30 have a rebound in bond price is because 10:34 the economy has actually be the 10:36 weakening cars players have been 10:38 weakening housing has been slowing down 10:42 and the bed level is extremely high and 10:48 short-term interest rates have gone up 10:50 so it's hurting as some sectors of the 10:54 market which are in straight dependent 10:57 and i think that the economy by a larger 11:01 will disappoint in the next three months 11:04 and therefore 11:05 one of the prediction that I have or one 11:08 of the positions i have used to be long 11:11 treasury bonds also if you compare state 11:14 treasury bonds in the US and two 11:17 European bolts so the consensus in the 11:22 world among investors is that the US 11:25 dollar will train them so in theory is 11:30 that consensus East widespread and 11:33 correct then European government bombs 11:37 should have a higher yield than US 11:40 government bonds but say today the 11:44 10-year treasury is that 2.4 five 11:48 percent but the Italian government 11:52 phones are at 1.8 six percent and 11:57 spanish government forms at 1.43 percent 12:00 now I would hold that say the financial 12:04 condition of the u.s. is somewhat better 12:08 than that of Italy and Spain so you can 12:13 see already how the markets are being 12:15 distorted by central bank interventions 12:19 and i would rather as a fund manager on 12:22 us treasuries then they eat Italian or 12:26 Spanish phone and equally the bounds of 12:30 market in the u.s. is extremely and have 12:34 to repeat extremely oversold near-term 12:38 so I think that for the next three 12:41 months you can have a significant 12:44 rebounds in bombed prices in the US 12:47 where by after point out one thing 12:50 people have been talking down high-yield 12:54 bombs for the last two years that high 12:58 yield bonds or junk bonds would collapse 13:00 but since peppery 2016 but junk bond 13:06 markets and the emerging market bonds 13:10 markets have been very strong returns 13:14 have been around twenty percent in 2016 13:18 feet 13:19 out but the Treasury market has been 13:22 weakening so you have a very interesting 13:24 the situation treasuries weekend but 13:29 junk bums rally why because junk bums 13:34 depend more on the market action of 13:37 stocks they are like Doc more than they 13:42 are like Treasury and so we have this 13:44 rally and junk bonds and Treasury market 13:48 has performed poorly in the last six 13:50 months certainly students to write so my 13:53 view would be now to go into something 13:56 relatively safe like Treasuries and 13:59 interestingly enough for the love they 14:03 take nine-month Treasury have correlated 14:07 with precious metals very closely they 14:11 know it from prices went down in the 14:14 last that takes seven month and the gold 14:18 price went down in the last six seven 14:20 months and now I think that also 14:23 precious metal can rebound and my 14:26 favorite precious metal is actually 14:28 practicum what is the biggest danger in 14:31 the financial system as you see it today 14:34 well some people talk to repeatedly 14:38 about the beautiful deleveraging and so 14:41 forth 14:42 I don't see any be labeled fake at all 14:45 in the world i just see larger state as 14:50 a percent of the economy that in 2007 14:54 and worst of all I the government states 15:00 having exploded on the upside whereby 15:04 easily distinguish as the classical 15:09 economy states between productive states 15:12 and unproductive state then government 15:15 states that is used for transfer 15:18 payments in other words food time and 15:22 for all kinds of benefits have to be the 15:26 most unproductive state you can imagine 15:28 so i would say that actually 15:33 the big danger and this is also applies 15:37 at two other financial crisis the big 15:40 danger if that we have paid doing like 15:45 excessive state then when people talk 15:49 about from the baked in America great 15:52 the game and they think in the back of 15:55 the mind of this the reagan became 15:58 president in a he did 1980 was elected 16:02 in November became president in 81 first 16:06 he had a two years bear market until 16:09 August 82 and number two when he got 16:16 elected he only had a tail wings the 16:19 record high incidence rate and depressed 16:23 asset prices makes the Trump he faces a 16:28 huge head winds in terms of inflated 16:32 asset prices that is the key that people 16:36 should consider he is not becoming 16:38 president with the dow jones below 800 16:42 in 82 when the Dow was already at the 16:47 thousand in 1964 he's becoming president 16:51 with a very elevated evaluation of 16:55 equities in the u.s. in fact the highest 16:59 graduation of us equities relative to 17:03 the rest of the world ever since 2011 17:07 the rest of the world including emerging 17:10 markets and europe as perform poorly and 17:13 the US has gone up strongly including 17:16 the dollar so we have this divergence in 17:20 the performance and I believe that will 17:23 be a reversion to the mean either by all 17:26 markets going up and then emerging 17:28 markets and Europe outperforming the US 17:32 or more likely all markets going down 17:36 with the u.s. going down more than 17:39 emerging economy 17:40 let me ask you this mark what do you 17:42 think may surprise 17:44 investors around the world in 2017 17:47 something they just don't see coming 17:48 I mean I would say some people think 17:50 that breaks it was a surprise and some 17:53 people think that the election of Trump 17:56 was a surprise but if you analyze the 17:59 crowds they it wasn't a surprise for 18:02 many people because there is a very 18:06 strong and the establishment and the 18:09 elite sentiment in europe and the 18:13 government sentiment and the corruption 18:17 sentiment and the same happens we strum 18:21 i think a lot of people didn't tell four 18:25 days of the same the service that they 18:28 would vote for Trump because they were 18:31 afraid to speak out but basically a lot 18:35 of people they just thought that Lisa's 18:38 Clinton is unelectable and so exactly 18:43 what the surprise will be AC i don't 18:46 know i think it's a surprise for many 18:48 investors is that the stock market will 18:51 go down and don't forget I March 2017 in 18:58 other words in three months the bull 19:00 market will be eight years old in June 19:05 2070 the economic recovery will be eight 19:10 years old by any standard of this is a 19:15 full market and the economic recovery 19:17 that has been longer than most 19:23 bull markets and economic recoveries in 19:25 the u.s. in the 20th century so i would 19:30 say a bear market is a over duel and the 19:35 recession is over to you now the one 19:39 thing that we need to consider which is 19:41 important for say precious metals 19:43 investors is the following 19:45 let's say the Fed realize is that a 19:52 deficits of the u.s. go up and that 19:57 interest rate increase and that the 20:01 economy throws down 20:03 do you really think that they will 20:05 increase the Fed fund rate feet x in 20:08 2017 never what they'll aim at instead 20:15 to essentially bring interest rates down 20:17 especially by then the dollar II still 20:20 strong and so they'll launch is probably 20:25 in 2017 qe4 I think that would be a 20:30 surprise for many people not for me but 20:32 I think for many people it would be a 20:34 surprise so I was surprised i would say 20:37 a stock market that goes down the 20:41 professional and three bom the market 20:45 rally and precious make those going up 20:47 markets have two final questions for you 20:50 here but I wanted to start with what's 20:51 unfolded in India the chaos there it has 20:54 to do with this global central bank war 20:56 on cash 20:57 it's obviously headed to India and that 20:59 crackdown is pretty severe there it's 21:01 caused enormous turmoil i don't have to 21:03 tell you and then they're trying to 21:04 crack down the gold market as well I can 21:06 you talk about what's happening in India 21:08 because it seems insane 21:10 well first of all I think the 21:11 implementation of was poor number two 21:15 even if you disregard the poor 21:18 implementation the result has been very 21:22 disappointing is basically what they 21:25 didn't you stop exactly a war on cash it 21:29 was a war on the old bank notes because 21:33 they thought that people had huge stash 21:37 of cash that were ill acquired and to 21:44 some extent that they have been the case 21:45 but basically the old banknote could be 21:50 extended at are still being exchanged 21:53 for new banknotes in fact with a larger 21:58 denominations than the old bank note but 22:02 the bank's basically are in charge of 22:05 asking the person that wants to change 22:08 the banknote we're there 22:11 spare money come from and they look take 22:13 the kind of fact the receipt and divorce 22:17 but eighty-six percent of the money 22:20 first few patients had already been 22:23 converted and as you can imagine they 22:27 even I have a lot of cash from that has 22:31 been illegally acquired and I know in my 22:35 little village hundred people that have 22:37 no cash and for sure in India among the 22:41 1.2 billion people there's lots of 22:43 people that have no cash that you can 22:46 just buy a few people you keep the my 22:49 commission and you ask them to go and 22:51 change the money because there was a 22:53 limit how much where they are no 22:56 questions are in fact instead of 23:00 fighting corruption that this move in my 23:05 view have actually encourage corruption 23:08 and so in general i think is the 23:13 complete sailor 23:14 it's a huge inconvenience for many 23:17 people and a temporary gdp growth will 23:23 slow down considerably and many people 23:26 have been hurt very badly by in the long 23:30 run I don't think you will make much of 23:31 a difference now the war on gold hasn't 23:35 been implemented yet and I think mother 23:40 he also has to be re-elected a war on 23:44 gold would really be a very very 23:47 unpopular move and I'm brigade it would 23:52 probably trigger more corruption that 23:56 life a the tax official comes to my 23:59 office and say you have gold and then 24:03 they checked would have gold in my 24:05 office or in my almonds divorce when I 24:07 tell him straightaway yes have gold I'll 24:10 give you ten percent and you walk out of 24:12 the door and going in tax collector 24:16 still do that in closing market just 24:18 wanted to ask you because you do meet 24:20 with some of the wealthiest people on 24:21 the planet for private consultation what 24:23 are they doing with their 24:24 money and what are they concerned about 24:25 these days is a government staff to me 24:27 what are you hearing out their wealthy 24:30 people are always worried about the 24:32 party that the universe for but in 24:36 general I have to say very wealthy 24:40 people have their to some extend missed 24:45 the bull market in equities around the 24:48 world and they own a lot of cash they 24:52 also don't use some too but most do not 24:56 own suspicions precious metal they own a 25:00 lot of real estate and wealthy people 25:03 have shares in their own businesses 25:06 so desu coburg he owns the facebook 25:11 games of course but he in general people 25:16 have been very cautious and I know 25:19 people they went into the trump rally 25:21 with a very negative view about equities 25:26 is very concerned and so they didn't own 25:30 any shares as you know my favorite 25:33 that's that location is to have 25:35 something government bonds some money in 25:38 equities somebody and precious metals 25:41 and some money in real estate 25:44 so the bonds that I only know mostly 25:47 high-yield bombs they have an equity 25:49 character as i explained and real estate 25:52 these are assets so I'm quite exposed to 25:55 acid market but a lot of wealthy people 25:57 they were underweight asset and 26:02 overweight cash and some have done okay 26:06 with cash because it was all the US 26:08 dollars but some didn't do well because 26:11 it was in malaysian ringgit the hook 30 26:14 Slayer up for euros or British Pound an 26:17 event so the it's difficult to tell 26:20 there's not the universal theme but I 26:23 think in general wealthy people have 26:27 been surprised by the strength of the US 26:30 market and they've all 26:32 little being surprised by the very 26:35 strong rebound we had in some emerging 26:39 markets and by the way as that as the 26:41 complex that the sector emerging markets 26:43 outperformed the u.s. love beer so 26:46 Brazil in dollar terms wassup sixty-six 26:49 percent Russia 55-percent kazakhstan 26:54 also 56% thailand nineteen percent and 26:58 tours in addition to that at last year 27:04 was to some extend already a comeback of 27:08 active managers compared to index funds 27:12 because I know a lot of active managers 27:15 they weigh outperformed the EDC 27:18 basically limited they were in oil 27:21 stocks or oil servicing companies or in 27:25 gold shares that way outperformed the 27:28 index in the US or in Thailand they were 27:31 in leasing companies in financial stocks 27:34 that way outperformed the index so i 27:37 think that this trend to disregard the 27:42 in DC but focus more on individual 27:45 sectors is going to be the theme of 2017 27:49 and as I said my favorite sectors are 27:52 basically precious metals agricultural 27:57 commodities and plantation companies and 28:00 fertilizer stock and to some expend 28:03 energy related company Marcus said there 28:06 was a final question but you hit on 28:07 something I was talking to James talked 28:09 about earlier today and it was the 28:10 mining shares in the fact that you 28:12 brought this up earlier in the interview 28:13 the fact that they were the number one 28:14 performer last year in the money 28:17 managers and people were just not in 28:19 them and even today when you look at the 28:21 sector it's so hated the reason bringing 28:23 this up as i know you've seen this in 28:24 your career where bull market kicks off 28:26 its been a protracted bear market and 28:28 nobody wants to own it and nobody wants 28:31 to get near it and it just remains hated 28:32 and her own and when you've seen that 28:35 things just keep kind of melting up and 28:37 melting up we've had this setback but is 28:39 2017 gonna be another monster year for 28:42 the mining shares well you know if you 28:44 look at American bury your barrack 28:47 newmont mining and freeport basically 28:52 from the lows to the recent eyes love to 28:55 try August they went up in some cases 28:59 four times I don't think they'll go up 29:02 four times this year but i think they 29:05 can easily go up fifty percent hundred 29:09 percent no problem and then you have 29:13 smaller mining companies they can easily 29:17 double trouble from the present level 29:20 because they're even stock drops from 29:22 the hundred 210 and it goes up to stay 29:27 18 it still down 29:29 eighty percent from the feet that's the 29:32 situation of essentially the mining 29:34 industry they've come off the lows but i 29:38 think it's probably the first leg in a 29:41 new bull market because I'm really a 29:45 believer that with all the fiscal 29:48 spending expansion in the world the 29:52 central banks will have to continue 29:54 buying government state and eventually 29:58 this monetary inflation will be very 30:02 favorable for precious metal Mark barber 30:05 editor and publisher of the gloom and 30:08 doom report website www boom dot-com
Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.Dr. Doom also trades currencies and commodity futures like Gold and Oil.
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.