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Marc Faber Expects Market Sell Off On QE2 Announcement

Tyler Durden's picture





 

With vacuum tubes expecting QE next Wednesday to come anywhere between $500 billion a $10 trillion, it falls upon Marc Faber to naturally take the other side of the bet, who, in this interview with Margaret Brennan (sadly without Mr. T by his side), tells the impeccably coiffed Bloomberg anchor that instead of inciting the mother of all flash dashes and hitting the BlackRock 12 month target of Dow 36,000, Faber instead anticipates that the Fed decision "could disappoint investors and may prompt a correction in US stocks." In response to Margaret's question if size does in fact matter, Faber responds that anything under a trillion will "disappoint." And with Goldman now throwing out bogeys as high as $2-4 trillion, it is almost inevitable that a sell the news type day will be virtual certainty on mid-term election day. "The markets are stretched: weak dollar, strong PMs and strong equities - I think a correction is overdue. But I wouldn't think that a bear market is around the corner." In fact the opposite: "Maybe we will have a crack up boom in stocks and commodities like between the end of 1999 and March 2000 when the markets went up very strongly."

Faber is once again mostly bearish on bonds (and cash), due to his long-running expectation that inflation, whether modest or hyper, will make all fixed paper investments lose value very fast. As for specific equity sectors Faber likes, he highlights agricultural commodities and "I continue to recommend the accumulation of precious metals, whereby I think they are overdue for some kind of a correction here and then we'll get the next move probably next year and then thereafter." Lastly, Faber touches upon China sharing his latest outlook on why he is not very, shall we say, optimistic on the country. No surprise there. Elsewhere, 13D.com had a very interesting perspective on why the Chinese stock market is not in a bubble while their stock market is. Time permitting, we will share our summary view from the report.

 


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Tue, 10/26/2010 - 14:38 | Link to Comment prophet
prophet's picture

Could it be that QEII and POMO are there to counteract the deleterious effects on our stock market when the dollar rallies strongly as risk off goes into overdrive due to the commencement of Phase II of collapse.  POMO and the dollar are duking it out today.

Tue, 10/26/2010 - 14:40 | Link to Comment uno
uno's picture

you beat me to the pomo talk.  Nov 10 the fed is to release the next pomo dates, i guess it depends on the stock market selloff.

I'll continue to monitor the liquidity out there, so far it says stay and play.

Tue, 10/26/2010 - 15:30 | Link to Comment mule65
mule65's picture

Selloff?  With the retail investor scared out, massive insider and hedge fund selling, who is left to sell?  Nobody.  We'll churn higher with some big short covering rallies.

Tue, 10/26/2010 - 15:43 | Link to Comment prophet
prophet's picture

$xT worth somewhere.  Perhaps, pensions repositioning.  Retail outflows can increase bunches. 

But I agree, it sure does look like up from here barring any "externalities".

Tue, 10/26/2010 - 17:54 | Link to Comment MachoMan
MachoMan's picture

QE and POMO are silver dollars sitting on the trap door that are meant to lure you into standing over it...  nothing more...  they have no possible way to move any treasuries sufficiently within their means other than to attempt to implement austerity.  Everything else is jaw boning.

Tue, 10/26/2010 - 18:51 | Link to Comment gkm
gkm's picture

I tend to agree and I've thought for some time, like Faber is suggesting, that QEII will be the trigger for a stock sell.  Think about how stocks are valued.  They are essentially valued based on DCF analysis.  If the implied interest rate of the market, irregardless of the manipulated t-bill rates, rises appreciably (because of a loss of confidence possibly), then the value of future cash flows in PV terms drops and the DCF calculated value drops for stocks that aren't a 100% flow through of those things which are increasing in price (i.e. commodity stuffs).  

How do higher sugar prices benefit IBM?  They don't.  Even if a company did get some benefit the net to the bottom line will never be as much as just buying sugar outright.  So sell IBM and buy sugar or whatever.  The notional lift that the stocks are getting right now is in the DCF analysis with falling rates, but once the thinking I've outlined starts to resonate it may be possible to see a panic sell of stocks and buy of commodities across the curve.

It's important to remember that the Fed blew the bubbles that caused the Great Depression 1.0 and 2.0 even though they didn't think they were doing it.  It caused the second greatest sell off in modern history in 2008.  Then, during that sell off, the geniuses there along with the SEC decided that eliminating short selling would be helpful and of course it created a cataclysmic sell off rather than just a slow and steady melt.  They, at some point, thought that would be helpful.  All the market needs for the next big meltdown is for the geniuses there to keep on thinking and they will see it through in time.  They have my complete confidence.

Tue, 10/26/2010 - 14:42 | Link to Comment HarryWanger
HarryWanger's picture

Everyone and their brothers are expecting the market to sell off on the announcement. Now according to logic I read on this forum every day, won't just the opposite happen? 

Could it be that today and the rest of this week will be flat to bring on the "maybe it's not priced in" crowd mindset? Therefore setting up for a big upward surge on the news? 

Contrarian would take the other side of this crowded expectation of a sell off.

Tue, 10/26/2010 - 14:47 | Link to Comment SheepDog-One
SheepDog-One's picture

What you mean is triple contrarian indicator it seems. 1,400 pump on the DOW due to wild hype about some massive QE2, (nevermind the fact that Bernanke has never mentioned any multi trillion QE2 ever) so that sets the stage for what exactly Harry? What will Bernanke announce, $7 trillion Q/E as the IMF said needs to happen? That will never happen, so whatever is baked in is about to get suddenly removed, that is 1,400 DOW points minimum.

Tue, 10/26/2010 - 15:58 | Link to Comment frankTHE COIN
frankTHE COIN's picture

A small example: in the 80s the Bonds factored in a money supply decrease of 3 billion. everyone expected this, and on the last day the mkt closed on its high around 66.28. The actual # was better than expected, it was 5 billion. The cash mkt rallied up half a point (16 ticks) and everyone was expecting the futures mkt to open sharply higher. Instead, it opened up 3 or 4 tics higher, made its high in the opening range and got lower on the day within 3 minutes of the opening. Within 10 minutes, it was below the previous day's low. This established an outside down day within 10 minutes and everybody is now caught Long. It collapsed and closed a point and a half lower and sank from there. I know this was a micro example, but the macro setup is similar." Bob Jenkins "

And remember, when David Tepper said QE2 will make everything go up the mkt skyrocketed and is still factoring in thru the govt and other buyers. You guys expect it to go higher. So the contrarian view that it will not go higher is not as big as you think. Everyone who was going to buy has bought. (there will be more POMOs). But when everyone has acted and there is no one left to buy, guess what happens.

Tue, 10/26/2010 - 17:09 | Link to Comment equity_momo
equity_momo's picture

Ba-da-bing.  And thats how we swing trade boys and girls. 

Wed, 10/27/2010 - 01:12 | Link to Comment NonAggressionPr...
NonAggressionPrinciple's picture

my thoughts exactly.  all the smart money that bought at lower levels needs to find a way to cash out of their positions.  this may provide the buyers to do it.  even if its not the day of the announcment, this news item presents the scenario for the big boys to sell.

Tue, 10/26/2010 - 14:53 | Link to Comment TumblingDice
TumblingDice's picture

You are quite right that logic and the markets do not mix well. However the market is overbought and there are no buts about it. QE2 is priced in with a two month 20% plus move in the NDX. Faber is right in that the announcement by the FOMC will disappoint. A big monetary intervention would anger America's trading partners.

This will be a play similar to when Turbo Timmy's stress test stunt pushed the market lower for the buyers to step in. The AUD needs a breather and it will bring the market down with it. Retail will sell the drop and the market will resume its upward trend once we go below the summer lows.

Tue, 10/26/2010 - 14:59 | Link to Comment traderjoe
traderjoe's picture

I think the realization is creeping in that money printing does not actually create wealth and that profit margins will likely get squeezed going forward....

According to RAN Squawk (to your trading partner point):

"Chinese minister says USD issuance by US "out of control", attacking China with inflation

Tue, 10/26/2010 - 15:14 | Link to Comment King_of_simpletons
King_of_simpletons's picture

They are scared that their $2T will be worth $500B in 10 short years...that's their fear. Not inflation. They decided to restrict Yuan's upward move and now they have to pay the price. Both countries will not change their stance. We keep printing money and inflation keeps going up there.

Tue, 10/26/2010 - 15:33 | Link to Comment Vampyroteuthis ...
Vampyroteuthis infernalis's picture

I think it is a great idea. They have a right to be afraid. F*ck China.

Tue, 10/26/2010 - 15:02 | Link to Comment citationneeded
citationneeded's picture

Everyone and their brothers are expecting the market to sell off on the announcement.

If that were true, where is the selloff now?

Tue, 10/26/2010 - 15:11 | Link to Comment HarryWanger
HarryWanger's picture

That's my point. Maybe it won't sell off at all. Market is waiting for something from the Fed. We have everything from $500B to $4T. There is hesitancy right now on the off chance nothing happens. So IMO the market is anticipating something but not exactly sure what. If they get it, I think it rallies rather than sells.

Tue, 10/26/2010 - 15:50 | Link to Comment SheepDog-One
SheepDog-One's picture

Oh right I get it now, nevermind the markets overpriced like mad, really theres only upside bias from here on out. Wow its a miracle, and we live in Candy Land.

Tue, 10/26/2010 - 15:56 | Link to Comment HarryWanger
HarryWanger's picture

Market is fairly valued with a slight richness with the S&P at 15 times based upon the stronger earnings and outlooks going forward. This is pretty much in line historically.

Markets are in an uptrend right now. There's really no reason for them to sell off. Yes, we will get pull backs but overall, when inflation is tossed in as well, there is an overwhelming upward bias.

Tue, 10/26/2010 - 16:35 | Link to Comment Howard_Beale
Howard_Beale's picture

Historically only relative to the onset of the 82 bull run. P/E's were much lower for 40 years prior running 6-8. So which one is right?

Tue, 10/26/2010 - 19:57 | Link to Comment Miles Kendig
Miles Kendig's picture

Harry's sense of history is contained within a 5 min chart Howard...

Tue, 10/26/2010 - 21:11 | Link to Comment FEDbuster
FEDbuster's picture

The initial Q3 GDP estimate (lie) will be released on Friday.  With everyone waiting for election results and the FED's erection results next week, GDP has been lost in the shuffle.  The growth chart from the Consumer Metrics Institute is very interesting, and negative GDP could well be the iceberg the USS Economy hits despite all the QE life boats.

http://dshort.com/charts/Consumer-Metrics-Growth-Index.html?Consumer-Met...

Tue, 10/26/2010 - 15:12 | Link to Comment TradingJoe
TradingJoe's picture

I can hardly wait for that "big upside" so I can sell into it!

Tue, 10/26/2010 - 22:05 | Link to Comment geminiRX
geminiRX's picture

There is no sell.......only zuul!

 

http://www.youtube.com/watch?v=vnTCajL7I_U&feature=related

Tue, 10/26/2010 - 15:34 | Link to Comment DosZap
DosZap's picture

I fully expect a Melt Up, I have gone all in with what's left of my stock,MOJO's rising.

As long as the Fed is staking this dude, the only lose is to be out, IMHO.

PM's ^, and Mkt ^,the number I heard is 2 Trillion, but in small doses, they cannot afford to DUMP their WHOLE load, and it not work immediately.

Either way, get ready for a MASS mad MF John Q Public.This is what the election is about, that and Healthless Scam,and the high handed ramrod tactics they use.

MORE DEBT= American rage.

Any doubts now, we have an Raging ideolouge for a so called leader?.

He would not piss on you if you were on fire.

Wed, 10/27/2010 - 01:13 | Link to Comment 66Sexy
66Sexy's picture

hell just go to vegas and put your money on black... at least you get free drinks.

Tue, 10/26/2010 - 14:52 | Link to Comment etrader
etrader's picture

We need some serious bank debt forgiveness before inflation is really off to the races.

A swift equity deflationary event would speed up debt forgiveness via QEIII

The  genie out of the bottle & she's not going back in.

http://blog.jinni.com/wp-content/uploads/2008/10/idreamofjeannie.jpg

Tue, 10/26/2010 - 14:44 | Link to Comment SheepDog-One
SheepDog-One's picture

Hmmm whats that giant sucking sound?? Oh, I didnt mean to imply the executive washroom at Goldman Sachs...I meant the vacuum of insiders selling and 24 weeks of exits from the markets. 

Nov 3rd should be interesting indeed, as all the media whores and Wall St anal-cysts have set the stage for no less than a massive Bernanke announcement. He's got nothin, bupkis.

Tue, 10/26/2010 - 14:50 | Link to Comment jus_lite_reading
jus_lite_reading's picture

Either outcome, November 3rd will be a day for the history books. Insider sales continue to mount. I like to look at a company called TOLL Brothers- a company that has a fake market cap of $3 Billion- and one who's top dog has collected almost $1 BILLION in total compensation in just 5 years time- all the while, the stock has lost about 75% of its value during that same period. Fraud, lies, corruption; a house built on sand. That is Wall Street today.

Tue, 10/26/2010 - 15:40 | Link to Comment DosZap
DosZap's picture

Toll Bros WAS one of the Elite Homebuilders in the USA, with a 3 year backlog of UPSCALE homes, and they were selling them as fast as they could build them.

Before the Meltdown, they were a premier stock amongst the builders, and they made a fortune.

 

Tue, 10/26/2010 - 15:52 | Link to Comment SheepDog-One
SheepDog-One's picture

Yep McMansions'R'Us may as well have been Troll Bros name.

Tue, 10/26/2010 - 18:37 | Link to Comment Ned Zeppelin
Ned Zeppelin's picture

Faux Chateau

Garage Mahal

Tue, 10/26/2010 - 14:53 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

Very well stated SheepDog.

The End is near.  Doom is near.  

Tue, 10/26/2010 - 14:45 | Link to Comment lynnybee
lynnybee's picture

.... luv Dr. Faber, he's cool.  

Tue, 10/26/2010 - 14:44 | Link to Comment Buttcathead
Buttcathead's picture

who cares...  robots can sell it off and then Benny will throw more in the rabbit hole.

Tue, 10/26/2010 - 14:48 | Link to Comment SheepDog-One
SheepDog-One's picture

Throw more of what in the rabbit hole, Hormel chili?

Tue, 10/26/2010 - 15:05 | Link to Comment Village Idiot
Village Idiot's picture

has anyone here ever heard the term "like throwing a hot dog down a hallway" that lol chili comment made me think of it.

Tue, 10/26/2010 - 15:25 | Link to Comment schoolsout
schoolsout's picture

uh, yea, but that is usually said when talking about a promiscuous female

Tue, 10/26/2010 - 15:41 | Link to Comment Village Idiot
Village Idiot's picture

hot dog - chili - hole.  never mind.  good catch, though. that term is a tad bit age dated (juvenile) for this site.  some of the more "elder" commenters on this site rely on me for the more juvenile stuff. it's my contribution.

Tue, 10/26/2010 - 16:06 | Link to Comment schoolsout
schoolsout's picture

I'm fairly young, so I don't mind a bit...

Tue, 10/26/2010 - 15:54 | Link to Comment SheepDog-One
SheepDog-One's picture

Ive heard that hot dog down a hallway in reference to Ms Burnett.

Tue, 10/26/2010 - 21:34 | Link to Comment Ted K
Ted K's picture

I think it covers 90% of the female CNBC anchors. Probably a couple men too.

Tue, 10/26/2010 - 14:47 | Link to Comment Caviar Emptor
Caviar Emptor's picture

There will be disappointment for a short while, but that's the idea. The Fed has been worried about not waking the animal spirits. But just placing a put under the market isn't really news anymore and isn't cause for wild celebration. Money will still be flying out the window as fast as they can print it, supporting Korean electronics shops, Chinese parts factories and Italian tailors. As fast as they can pump, biflation will devastate the domestic economy since prices will rise while employment, incomes and housing deflate. US corporate margins will erode, just look at today.

Tue, 10/26/2010 - 14:52 | Link to Comment SheepDog-One
SheepDog-One's picture

Right, it will disappoint, but only for a short while of course as endless baseless optimism is a bottomless well, magically refilling no matter what the reality of anything is. I see! Then it will be back to rally daily time, never looking back as markets surge to all time highs in destroyed USA. COOL!

Tue, 10/26/2010 - 14:59 | Link to Comment Caviar Emptor
Caviar Emptor's picture

Yup. If the markets were allowed to plunge it would screw the entire international brotherhood of banksters all over the world. There's more to it than just Wall Street greed. The whole ball of yarn could unravel.

Tue, 10/26/2010 - 16:45 | Link to Comment LowProfile
LowProfile's picture

They have protective puts in place.

Tue, 10/26/2010 - 18:38 | Link to Comment Minion
Minion's picture

......... from before 2008, which bankrupted the counterparties.  :D

Tue, 10/26/2010 - 16:16 | Link to Comment Walter_Sobchak
Walter_Sobchak's picture

It's bad news either way.  I hope there is a sell-off so i can increase my PM's.  

we're entering a world of pain, dude.

Wed, 10/27/2010 - 01:18 | Link to Comment 66Sexy
66Sexy's picture

right, thats the plan. the best way to collapse the dollar is to keep food, oil, and housing cheap i.e. china.

everything else, JSP is priced out.

so we invade middle eastern countries, enourage fast food corporate compettition (its cheaper to eat @ del taco than to cook), and damage the housing market even more via cloud on title issues to discourage forclosure buyers.

its all by design.

hell, if you own gold, vote for democrats and obama.

Tue, 10/26/2010 - 14:50 | Link to Comment Milestones
Milestones's picture

Hell, this isn't a casino, this is the Carney runway. Knock over three bottles win a panda bear. Step right up there little lady--win yourself a prize. Hot damn, we gonna have a hot time in ole town tonite (11-2&3-10) Fuck a duck!!   Milestones

Tue, 10/26/2010 - 15:13 | Link to Comment Cpl Hicks
Cpl Hicks's picture

Funny, sure!

Got an image of the obese and bearded lady in one tent- except the lady has Bennie B's face. Curiosities and sports of nature in another...a dusty jar with a withered, twisted fetus inside- Timmy G!

Waaaay out back is the donkey show, adults only now!.. with Nancy and Harry on stage and down on their hands and knees waiting for Senor Burro.

Tue, 10/26/2010 - 14:50 | Link to Comment Apostle of Unknown
Apostle of Unknown's picture

dude does that guy ever wear anything else than this pink tie and blue shirt???

Tue, 10/26/2010 - 14:54 | Link to Comment Caviar Emptor
Caviar Emptor's picture

Gives him that offbeat guru look though

Tue, 10/26/2010 - 15:34 | Link to Comment UGrev
UGrev's picture

saves him time from having to figure out what to wear..no?

Tue, 10/26/2010 - 14:55 | Link to Comment Turd Ferguson
Turd Ferguson's picture

Turd Ferguson agrees.

Buy rumor. Sell news.

Tue, 10/26/2010 - 14:54 | Link to Comment traderjoe
traderjoe's picture

Look at the sell-off in the long-bond today. Anyone got a reason why? I use the TLT to benchmark prices of the long bond (just a quick easy metric). Double top at 108.50, retrace to 101 or so, then a rise to 106 (failing to break out) and now testing support at 100. Is the top in for the long-bond? That's an 8% decline or so from the peak. Would have been a great levered short...

Tue, 10/26/2010 - 16:33 | Link to Comment Panafrican Funk...
Panafrican Funktron Robot's picture

It's actually plausible to me that the dollar goes all the way back up to 85-87 and yet see the 30 year go down to the 112-115 range.  This is looking increasingly likely, particularly if, say, certain entities suddenly had to find a bunch of stuff to sell in order to make margin calls, which of course tends to also be accompanied by dollar strength via less fantasy bucks in the system.  I realize it's all ultimately fantasy, but you get the point.

Tue, 10/26/2010 - 18:44 | Link to Comment Minion
Minion's picture

I'm seeing the same thing.  It is definitely the contrary play since the world expects the dollar to go to zero, same as with the Euro last July when Merkel was on the news about it.

Tue, 10/26/2010 - 14:55 | Link to Comment HarryWanger
HarryWanger's picture

Faber sounds pretty optimistic, relatively speaking, in that interview. He actually expects stocks to rally quite strongly after an "expected" sell off on QE2. 

He also never said anything about the "end of the US" or the "stupidity or consequences" of all this printing. Interesting to hear a much lighter side of the Doomster.

Tue, 10/26/2010 - 15:05 | Link to Comment Caviar Emptor
Caviar Emptor's picture

Harry, you're tuning in late. Faber has said many times he thinks that the market will rise because of explosive HYPERinflation, preceding total collapse of the dollar. He's one of the gloomiest economists of all. His biggest bet is Gold, but he also has bets on equities because he thinks they'll rise early then crash when the economy collapses into chaos.

Tue, 10/26/2010 - 15:08 | Link to Comment Max Hunter
Max Hunter's picture

Yeah.. He's been talking up equities for a year..  But reminds about the structural flaws.. He didn't mention the structural flaws this time.  Maybe that's the only way he will be invited back..

Tue, 10/26/2010 - 15:08 | Link to Comment HarryWanger
HarryWanger's picture

No, I get that. I keep saying equities will rise with inflation as well. I've heard him many times but this is one of the most upbeat interviews I've ever heard from him. 

Tue, 10/26/2010 - 15:08 | Link to Comment Shameful
Shameful's picture

Faber also likes farmland.  IIRC one of his suggestions was to get land, a doberman and a machine gun.

Tue, 10/26/2010 - 15:13 | Link to Comment Caviar Emptor
Caviar Emptor's picture

I would add bottled water, shipwreck biscuits, chemical toilets, Radiac Wash, Iodine tablets, Napalm and motion sensors. 

Wed, 10/27/2010 - 00:27 | Link to Comment Charlie Bravo
Charlie Bravo's picture

...all of which can be found at your local Army-Navy store.

Except for shipwreck biscuits. I have no clue where you can find those at.

Charlie Bravo

Tue, 10/26/2010 - 15:18 | Link to Comment HarryWanger
HarryWanger's picture

Also, I believe he used the term "investment" when referring to stocks long term. That just seems odd to me - the grandaddy of all doomsters talking about long term "investments" in stocks over a ten year period. Interesting...

Tue, 10/26/2010 - 15:26 | Link to Comment Caviar Emptor
Caviar Emptor's picture

His thesis rests on the notion that inflation will be pure liquidity driven, straight out of the Fed's pockets and into Wall Street. There are major holes in that thesis. Equities will rise, but the real question is will they rise fast enough to offset the eroding buying power of the dollars they're denominated in. If you make a million and a million only buys a Twinkie, you're in trouble.

Tue, 10/26/2010 - 16:00 | Link to Comment No Mas
No Mas's picture

You're in greater trouble if you didn't make the million to begin with.  Pity the fool who didn't get into this market and make a million; won't even be able to afford a twinkie!

Tue, 10/26/2010 - 19:47 | Link to Comment Bow Tie
Bow Tie's picture

Faber has used some good historical examples of people avoiding severe currency depreciation by being invested in domestic equities. however, he's also quick to point out that foreign currencies and by extension equities are better long term options in a money printing environment. i guess the problem now is that nigh on everyone is printing money. the strategy would be very careful currency selection, strategically shifting asset classes/currencies when most advantageous or GOLD!!!

Tue, 10/26/2010 - 21:27 | Link to Comment rocker
rocker's picture

He likes Singapore, Taiwan and China without any doubt.

Tue, 10/26/2010 - 16:13 | Link to Comment HarryWanger
HarryWanger's picture

Which returns me to my thesis: Why would any sane person even think of shorting this market??

Tue, 10/26/2010 - 18:11 | Link to Comment equity_momo
equity_momo's picture

Because all the insane people are long of it?

Wed, 10/27/2010 - 01:52 | Link to Comment sushi
sushi's picture

+ 3600

Wed, 10/27/2010 - 07:06 | Link to Comment Snidley Whipsnae
Snidley Whipsnae's picture

I am infinitely short stocks as of 2005. A shift to commodities and especially gold and silver have served me well.

Plus, I don't have to pick up coins in front of a scarifier; ie, the machine that cuts grooves into old road surface prior to repaving. Gotta love that word....scarifier. :)

A large QE will be accompanied by more dollar inflows into emerging markets driving up inflation abroad plus lots of slosh money fleeing into commodities. Since fuel/food are excluded from CPI Ben is not worried about rising commodity prices, plus Ben certainly does not give a whit about public opinon after the election.

We have seen this movie before.

Tue, 10/26/2010 - 15:10 | Link to Comment jus_lite_reading
jus_lite_reading's picture

It is simply amazing- every poster that I have ever come across with an American flag as an avatar, is an obnoxious liberal/democrat SOB. "Everything is great" they chant. "Green shoots abound" they scream as the system crumbles. Simply amazing. I must do some research into this interest field of psychology and discover the connection.

Tue, 10/26/2010 - 15:15 | Link to Comment HarryWanger
HarryWanger's picture

Well I for one am not saying "everything is great". On the contrary, IMO everything is not great but just slogging along. What I AM saying is things aren't terrible and we're not going to fall off a cliff - metaphorically, that is.

Tue, 10/26/2010 - 15:18 | Link to Comment economicmorphine
economicmorphine's picture

Actually $14 trillion of debt in a $20 trillion economy with a new Congress that will have an austerity mandate has "falling off a cliff" written all over it.  Not that I want to dispense with the rainbows you're blowing up everybody's azzes.  Party on, cheerleader.

Tue, 10/26/2010 - 15:32 | Link to Comment jus_lite_reading
jus_lite_reading's picture

There are enough people like you, that believe we are "slogging along" but will not fall off a cliff "metaphorically speaking" for me to conclude, the correct "ingreedients" are there.

 

You will only find individuals such as myself, that are fully astute of the current crisis, on websites such as ZH. The other 90% of the population is far too busy watching Dancing With the Stars and Jersey Shore or focusing on what party Paris Hilton is planning for the weekend, to realize the enormity and severity of the coming collapse. I do pity those individuals to a large degree; I don't pity those who decide to ignore the facts.

 

 

Tue, 10/26/2010 - 15:39 | Link to Comment UGrev
UGrev's picture

LOL.. I had to go look up what Jersey Shore was. Never heard of it before. People actually watch those shows? and LIKE THEM at the same time?  no wonder a person like Obama made it to the WH.

Tue, 10/26/2010 - 16:08 | Link to Comment No Mas
No Mas's picture

Seems the facts are that you and yours have been calling for this collapse for a very long time, yet things actually improve.

Pray tell, when will said collapse occur?  Could it be your powers of logic and intellect allow you to deduce the what but not the when?

As the Church Lady used to say: How convieeeeeeenent!

The universe will decay, that I believe.  But the idea the we are going to collapse into chaos prior to the nuke events (which I also believe will occur) strikes me as lazy thinking.  But it must be comfortable to fantasize about how "they" are going to get "theirs".

News flash.  "They" are getting away with murder now and "they" will do just fine no matter how many bunkers you dig or bottles of water you stash away. 

Another news flash:  Life is very much unfair.

 

Tue, 10/26/2010 - 16:32 | Link to Comment Walter_Sobchak
Walter_Sobchak's picture

Life is very much unfair.  Doesn't mean that "they" will consider what happens to "them" to be fair.  Long lead.  They're entering a world of pain.

Tue, 10/26/2010 - 16:40 | Link to Comment Panafrican Funk...
Panafrican Funktron Robot's picture

One could argue that the "lazy thinking" label applies to just getting along to go along, as you often seem all to eager to do. 

Tue, 10/26/2010 - 16:21 | Link to Comment HarryWanger
HarryWanger's picture

You will only find individuals such as myself, that are fully astute of the current crisis, on websites such as ZH.

No, actually what I find are individuals such as yourself obsessing over some "crisis" that will bring down the economy/country/world that never seems to materialize. It always turns into, "the shit's gonna hit the fan when (fill in the blank with whatever "crisis" story du jour appears).

Things aren't great - we get it. But we're a hell of a lot better off than we were a couple years ago. And slow growth, is growth no matter how slow. 

Your Dancing with the Stars reference is also what I use when people here like to talk about how "the citizens are not going to take this/stand for it and will riot, et." nonsense. They won't. Put them in prison camps with reality tv shows and junk food and they'll be in a perpetual state of bliss.

Tue, 10/26/2010 - 16:50 | Link to Comment Panafrican Funk...
Panafrican Funktron Robot's picture

"But we're a hell of a lot better off than we were a couple years ago. And slow growth, is growth no matter how slow."

An honest analysis of the government's own data tends to disagree with your assumption here.  For example, the unemployment rate in September 2008 was 6.2%.  In that same month, food stamp participation was a mere 31.2 million.  So unless you've been part of the group that has profited from this collapse, or see rapid growth in government dependance as "growth", I'm not sure you're argument is holding up here.

Tue, 10/26/2010 - 18:44 | Link to Comment Ned Zeppelin
Ned Zeppelin's picture

I tend to agree with Harry that reasoned and seemingly accurate predictions of imminent doom keep being proved dead wrong. Even though I understand the reasoning for the predictions, you should ask the "why?" question when it does not occur.  Perhaps there is wisdom, of a sort, there.  Certainly since October 2008 we've learned that crime at a certain high level pays, and handsomely; that illegal foreclosures are being given the silent blessing by the authorities; and that supposed rage of the populace seems destined never to appear.  Maybe that's just the way it is in this village.

Tue, 10/26/2010 - 21:51 | Link to Comment samsara
samsara's picture

 

And slow growth, is growth no matter how slow. 

Harry, 

That's the point.  We are at the "End"  of growth (within the general definition we have experienced for the last few hundred years.)

Between the debt and Peak Oil kicking in big time(with Peak Export Quantity) 

 

 

Please take a couple of minutes and understand how absurd "Growth and small Growth" is.

Albert Bartlett.

http://www.youtube.com/watch?v=fG_PL-dRMA0&feature=related

and the next part

http://www.youtube.com/watch?v=V3LryW47B_M&feature=related

Take a moment to watch and you will see what I mean.

 

btw,  are you the one who wrote him the letter mentioned at 1:30ish in. ?????

Watch the two and hopefully you will think twice before making such an idiotic statement as that again.

Respectfully.

 

 

Wed, 10/27/2010 - 00:32 | Link to Comment Charlie Bravo
Charlie Bravo's picture

Well said.

Charlie Bravo

Tue, 10/26/2010 - 15:56 | Link to Comment Temporalist
Temporalist's picture

So you think Faber is predicting what is happening, is correct, you predict the same, then you must also believe that it is going to fall off a cliff as he does.  Your perspective is a long way off from recognizing the fraud and manipulation by Central Banks, Government, Judiciary, Regulators and Corporations involving real estate, equities, soverign debt, derivatives, unfunded liabilities, commodities, pensions, monetary system...you and Leo can get together and make a Rainbow and I'll take the pot of gold.

Wed, 10/27/2010 - 07:20 | Link to Comment Snidley Whipsnae
Snidley Whipsnae's picture

"Patriotism having become one of our topicks, Johnson suddenly uttered, in a strong determined tone, an apophthegm, at which many will start: "Patriotism is the last refuge of a scoundrel." But let it be considered, that he did not mean a real and generous love of our country, but that pretended patriotism which so many, in all ages and countries, have made a cloak of self-interest."

Samuel Johnson

Leo Tolstoy had another comment on the same subject:

"patriotism as the principle that will justify the training of wholesale murderers."

What I have noticed about all those draping themselves in flags is that they have little comprehension of history....and, no clue about intrigue at court.

Tue, 10/26/2010 - 16:39 | Link to Comment Saxxon
Saxxon's picture

Faber has a great life IMHO; sitting up in Chiang Mai with a pile of money, a teak mansion and all the native gals I man could possibly want.

Tue, 10/26/2010 - 14:56 | Link to Comment notadouche
notadouche's picture

Heads I lose tails I lose

Tue, 10/26/2010 - 15:06 | Link to Comment Sudden Debt
Sudden Debt's picture

So while expecting inflation... he goes cash...

That just sounds... very... very... veryvery STUPID to do.

Go long on anything real estate related!

Go long Banks!

Go long Silver and gold!

Go long Smith & Weston!

Tue, 10/26/2010 - 15:09 | Link to Comment huggy_in_london
huggy_in_london's picture

theres no problem owning cash...not at all.... as long as its not USD !!!  Any other ccy will do just fine

Tue, 10/26/2010 - 15:13 | Link to Comment dbradsha
dbradsha's picture

Dont forget NFLX

Tue, 10/26/2010 - 15:33 | Link to Comment Cpl Hicks
Cpl Hicks's picture

In America, the Revolution WILL be televised.

Where can I watch the French version- with subtitles?

Tue, 10/26/2010 - 23:37 | Link to Comment StychoKiller
StychoKiller's picture

Unfortunately, everyone will "think" it's just another "reality show."

Wed, 10/27/2010 - 10:56 | Link to Comment Cpl Hicks
Cpl Hicks's picture

Are you saying it's not real?

The fighting in the streets of France, I mean.

 

Tue, 10/26/2010 - 15:21 | Link to Comment Cheesy Bastard
Cheesy Bastard's picture

I suspect he is in cash because there will be a deflationary window opened before the hyperinflation starts.  Cheaper real estate and pm's might be available for those with cash to buy, for a little while.   First a crash, then the overreaction to the crash by the fed.  Yes long on things you can hold, but buy them when there is blood in the streets.  Notice how silver is tracking the dow?

Tue, 10/26/2010 - 15:26 | Link to Comment notadouche
notadouche's picture

FYI Faber probably has more gold than any one on this site.  Silver as well. 

Tue, 10/26/2010 - 15:42 | Link to Comment Cruel Aid
Cruel Aid's picture

I'm long SWHC 3.6 as well as physical SWHC.

Tue, 10/26/2010 - 16:09 | Link to Comment Cheesy Bastard
Cheesy Bastard's picture

long 32 long!  Nice!

Wed, 10/27/2010 - 07:30 | Link to Comment Snidley Whipsnae
Snidley Whipsnae's picture

"Go long on anything real estate related!"

Not, for the tax man cometh. Prime CRE is the exception

"Go long Banks!"

Not, for the financial innovation phase has run it's course. Trade barriers cometh, finance will return to it's original reason for existance; finance of the real productive economy

"Go long Silver and gold!"

Excellent idea

"Go long Smith & Weston!"

A little S & W goes a long way

Tue, 10/26/2010 - 15:06 | Link to Comment Max Hunter
Max Hunter's picture

tells the impeccably coiffed Bloomberg anchor

MB has hair?... Didn't notice.. ;) 

Tue, 10/26/2010 - 15:06 | Link to Comment Wyndtunnel
Wyndtunnel's picture

Flip a coin Bitchez!

Tue, 10/26/2010 - 15:16 | Link to Comment Sudden Debt
Sudden Debt's picture

OMG!!

THIS EXPLAINS HOW BENNY B. IS WORKING ON THE QE2!!!

http://ifound.com/

 

BEST SITE ON THE WEB!!!

And I almost never promote a site, BUT THIS ONE IS GOOD!!

 

Tue, 10/26/2010 - 15:14 | Link to Comment prophet
prophet's picture

@ Turd

I prefer "buy the expectation, sell the fact". 

 

Tue, 10/26/2010 - 15:16 | Link to Comment Doctor Detroit
Doctor Detroit's picture

I expect Bernanke to be like the MDs at GS on bonus day: don't give the analysts more than they expect, but just so that they don't leave for a competitor.

Tue, 10/26/2010 - 15:23 | Link to Comment Unlawful Justice
Unlawful Justice's picture

DISCOVERY......................GO TO THROTTLE INFINITY

Tue, 10/26/2010 - 15:33 | Link to Comment prophet
prophet's picture

roll sequence complete, go for throttle up

(remember to check for foam impacts once we are in orbit)

Tue, 10/26/2010 - 15:23 | Link to Comment economicmorphine
economicmorphine's picture

Pretty clever of Faber to say that the market's going to go down and then go up.  Wow, I wish I would have thought of that.  No, I think the new congress will castrate the bull, turning it into a steer.  I trust that those of you who come from rural backgrounds know about steers.  My years on the western slope of Colorado taught me that Rocky Mountain Oysters can be mighty tasty with a gallon of beer.  Never trust a guy like Faber who has to be on TV all the time, I say.  Never.

Tue, 10/26/2010 - 16:46 | Link to Comment the rookie cynic
the rookie cynic's picture

I tend to agree with you. I agree with Faber on some counts, but this interview threw me off. A month or so ago he was saying Dow could go down to 1000. Now he says equities are going up. He's been all over the map. Now, whatever happens he can point back to "the sage prediction" he made "back in (insert year of comment) I said that (insert A or B prediction) would happen...and low and behold it did."

No one "knows" what the market is going to do. Not Faber, nor anyone else, but if you throw a hundred darts, at least one is going to hit the bulls-eye.

Tue, 10/26/2010 - 20:57 | Link to Comment mtguy
mtguy's picture

don't you mean, tasty AFTER a gallon of beer?

Tue, 10/26/2010 - 15:27 | Link to Comment Rodent Freikorps
Rodent Freikorps's picture

So Ben is gonna do something to whack the market very soon after Republicans sweep the House?

And the narrative will be...?

 

Tue, 10/26/2010 - 17:04 | Link to Comment Cpl Hicks
Cpl Hicks's picture

And the narrative will be....Barry the Bomber made me do it.

Tue, 10/26/2010 - 15:28 | Link to Comment plocequ1
plocequ1's picture

The market is up today. Its over Johnny.

Tue, 10/26/2010 - 15:28 | Link to Comment johngaltfla
johngaltfla's picture

He's right. Faber is remding everyone that the Fed never, ever, ever meets expectations unless they leak the info to their Primary Dealers (August 2007, I'm just sayin') and they take positions designed to ramp the markets up in a hurry. If huge short and put positions are placed before the Fed announcement that day, watchout below. Right GS?

Tue, 10/26/2010 - 15:30 | Link to Comment prophet
prophet's picture

GDP print is decent, Dems maintain both "houses", QEII is tepid. 

Big money has been buying puts (VIX is cheap) and high beta stocks.  Seasonality creates a tailwind.  Last three QEs (Japan, UK, US) jumped markets 40P.  

MID(mortgage interest deduction) gets nixed - price of mortgages goes up at least 28 percent for most folks.  Tax cuts not extended.

Countervailing forces are building and the number of accidents waiting to happen keeps hitting new all time highs.

Be nimble.  Be agile.

Last time I flipped a coin it landed on its edge.

-profd

 

 

 

   

Tue, 10/26/2010 - 15:35 | Link to Comment Rodent Freikorps
Rodent Freikorps's picture

I forsee a federal coin flipping tax, as well as a local property tax on any real estate said coin lands on.

Tue, 10/26/2010 - 15:32 | Link to Comment Hook Line and S...
Hook Line and Sphincter's picture


Faber gets the PM markets and that most of Wall Street have been really trading Beanie Babies since 1913.

1913-1972 Wall Street trades trinkets and bobbles with limited value.

1972-?  Wall Street trades trinkets and bobbles with perceived value.

2008 Perception is kicked in the cahones, but unbeknownst to those who believe they are master of the game (and are of the one they've been playing), 

Meanwhile, 1% of Wall Street trades Beanie Babies for Gold (although Gold here is just one step higher on the Beanie Baby Perception chart).

Gold is the monopoly board upon which smaller games of monopoly are played.

Tue, 10/26/2010 - 15:36 | Link to Comment stoverny
stoverny's picture

I doubt there will be a massive selloff on QE2.  In listening to money managers on Bloomberg and elsewhere, there seems to be a pretty broad consensus that stocks are currently fairly priced if not a little cheap.  I really don't see the entire recent rally from Dow sub-10K based on the prospect of QE2.

Companies are making big profits thanks to "increased productivity".  The typical money manager does not think or even consider the type of Black Swan type events often discussed on ZH.  That is not to say we won't get one... but a disappointing QE2 announcement sure ain't it.

 

Tue, 10/26/2010 - 15:45 | Link to Comment Eureka Springs
Eureka Springs's picture

two things seem certain -

 

The lame duck session will likely pass retroactive impunity for the banksters of some sort. (Telcos got theirs last lame duck session, iirc)

And the cat food/deficit commission report will prompt the vote/further looting of Social Security.

 

What will billionaires with hedge funds like Pete Peterson and friends do to make that happen? Will they do it through market action, or fear fear fear a terrorist action?

Tue, 10/26/2010 - 15:51 | Link to Comment treemagnet
treemagnet's picture

MERS is still here.  We've asked him to leave....he won't.

Tue, 10/26/2010 - 15:51 | Link to Comment bullwhip29
bullwhip29's picture

He is bang on unless we end up with something so utterly ridiculous that it isn't even measurable using today's technology. Anyway, bullish sentiment has never been higher in recent memory. Whatever good news were supposed to get appears to be baked into the cake already. To me this rally is reminiscent of what we saw during the weeks right after the '08 election leading up to the day Obama gave his Inaugural address where markets rallied 25% or more on nothing but hope.

The S&P is up/down 1 lousy point (for now anyway) on what is another POMO day. Uh oh... When the trap door finally opens, remember not to hit your head and/or chin on the way down like Greg Louganis did. Ouch...

Tue, 10/26/2010 - 16:27 | Link to Comment Miles Kendig
Miles Kendig's picture

 "Maybe we will have a crack up boom in stocks and commodities like between the end of 1999 and March 2000 when the markets went up very strongly."

Yes indeed.  A nice 5-10% correction to consolodate in November with a nice Santa rally is just what is needed to keep pension/401K plans looking right for the year end household decision cycle so what remains of retail can be properly focused.  So, a roundabout S&P print of 1180-1220 at year end looks entirely realistic after a visit to the 1085/1062 level.

Tue, 10/26/2010 - 20:41 | Link to Comment rocker
rocker's picture

Normally I would believe that the market is ready to crash. But, Bernanke is prepared to destroy the dollar in order to keep his version of the economy, (the stock market), alive and well. Henceforth, I'll bet on Marc Faber all the way.

And for those who wonder. Faber often says he will not sell his gold because of a pullback. He will add.

Tue, 10/26/2010 - 16:36 | Link to Comment tom
tom's picture

Today's numbers on 3q mortgage inits from the Mortgage Bankers Association are worth looking at. They imply that the real pace of home sales is around 2.5m/year, not 4+m as the National Association of Realtors counts.

According to the MBA, there were just $104b of mortgage inits for purchases in 3q. That's less than half of the 3q08 amount, and comes to a bit more than half a million mortgage-financed home purchases during the quarter. 2q & 3q are peak homebuying quarters, so we're looking at an annual pace of less than 2 million mortgage-financed home purchases. Cash sales are about a quarter of sales.

http://www.mbaa.org/ResearchandForecasts/EconomicOutlookandForecasts

Tue, 10/26/2010 - 17:10 | Link to Comment Panafrican Funk...
Panafrican Funktron Robot's picture

NAR takes all-cash sales into account, which has been fairly gigantic this year due to completely fucking terrible liquidity.  Yes, this frustration comes from personal experience.  And of course, now sales in general have ground to a complete halt.  I'd be amazed if we hit that annualized print, 4Q is already shaping up to be completely awful.  Like generationally bad.  My numbers are retardedly good, and I can't even get a deal done with 30% down AT ANY RATE.  I literally told them "Name your rate" and they apparently can't do it.  This used to take me a month tops with 10 points down.  I'm not even doing risky shit, we're talking recycling centers/pharmacies/oil change shops/fast food.

Tue, 10/26/2010 - 16:58 | Link to Comment Saxxon
Saxxon's picture

So many moves lately have been overnight gaps, it is tempting to put a position on before the open on 11/03; or if not then, a position right on the initial spike up/down.

Neither have been good to me.  I'm waiting for the second spike if I trade 11/03 at all; but more likely a trade the day after. 

Who knows what noise they will throw into the air on November 3; or not.

Tue, 10/26/2010 - 17:09 | Link to Comment themacronavigator
themacronavigator's picture

The sell off will likely be of deflationary nature. 

otherwise government bond yields will go up, up and more up!

 

http://themacronavigator.blogspot.com

 

 

 

Tue, 10/26/2010 - 18:04 | Link to Comment Adrian Monk
Adrian Monk's picture

After watching this and reading through the posts, my take on this is......

Margaret Brennan is HOT!

 

Tue, 10/26/2010 - 21:35 | Link to Comment laosuwan
laosuwan's picture

No, she's big, wears a pantsuit, dies her hair and points her foot at the person she is talking to. These are the flashing warning signs screaming, "western woman man hater" my man. I pity the fool who gets into bed with that.

Wed, 10/27/2010 - 23:06 | Link to Comment risk.averse
risk.averse's picture

dunno about her being a "man-hater". Maybe she's just being pre-emptively defensive!! After all, Faber always has a twinkle in his eye for the ladies who interview him. Ahhh...to be a rich European living in Thailand, sampling its "delights"--and I don't mean the cuisine.

Tue, 10/26/2010 - 21:32 | Link to Comment laosuwan
laosuwan's picture

impeccably coiffed?

 

Come on, she has a Jane Curtain SNL 80's cut and she is wearing a pantsuit with high heels.  

 

Faber's rugged classicist look and little pony tail bun, now that is impeccably coiffed.

Wed, 10/27/2010 - 07:49 | Link to Comment nathan1234
nathan1234's picture

Hopefully with each. And when one goes bankrupt the other will too. :)

 

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cheap uggs for sale's picture

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senthil456's picture

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