Marc Faber Fears 1987 Redux As "Markets Will Punish Interventionists"

Tyler Durden's picture




 

"Regardless of what the markets do near-term, a correction is overdue," Marc Faber tells Bloomberg TV's Betty Liu. From discussing Europe's 'apparent' stabilization - "anything can go up when you print money"; to US equity exuberance - "a correction is overdue and February is a seasonally weak month"; Faber sees no change from Geithner's handover to Lew as he opines: "The only thing I know is one day the markets will punish the interventionists, the Keynesians and the monetary policy that the Federal Reserve and ECB has enforced because the markets will be more powerful one day. How will this look like? Will the bond market collapse or equity markets become a bubble, which would be embarrassing for the Fed's sake if the U.S. market became a gigantic bubble and at the same time the economy does not recover."

 

 

 

Faber: on whether he agrees with George Soros that Europe has been stabilized:

"It has been stabilized for now, but the big question as he said is the imbalances have not been solved and these could come back and harm the markets and the euro at some point in the future. In terms of stock markets, I have advocated one year ago between April and June of last year to buy European stocks in Portugal, Spain, Italy, Greece and France because they were extremely depressed. Since then, the markets have rallied very sharply. Greece is up from the lows by 100%. That tells you anything can go up when you print money."

On whether he's getting out of European markets:

"Not really because we made the secular low roughly one year ago, but I have argued that it is the time right now to reduce equity positions. I think the markets are at the difficult juncture between overbought and a euphoric state. I am not ruling out that they could go up somewhat more like in 1987, going up 40% between January and August, but we also fell 40% in two months' time. So the gains were wiped out quickly. In March of 2009 we are close to 1500. We had already a huge bull market, and a lot of the good news has been discounted already."

On whether there will be a correction on the S&P:

"I think regardless of what the markets do, near-term, a correction is overdue and usually February is a seasonally weak month…It will be interesting to see how the correction unfolds."

On why he's not going big on any short in the market:

"The problem with shorting the markets nowadays is that you have this huge intervention by governments. Look at bonds of Italy Portugal and Spain--they rallied last year, there was a huge profit opportunity, and I admit that I missed it, but the profit opportunity came about as a result of government intervention. I feel the markets are -- some people say it is intervention. I can call it manipulation. If manipulation continues, you do not know how far they will go. The only thing I know is one day the markets will punish the interventionists, the Keynesians and the monetary that the Federal Reserve and ECB has enforced because the markets will be more powerful one day. How will this look like? Will the bond market collapse or equity markets become a bubble, which would be embarrassing for the Fed's sake if the U.S. market became a gigantic bubble and at the same time the economy does not recover."

On Tim Geithner's legacy and whether anything will change under Jack Lew:

"I doubt there will be much change. To be fair to Mr. Geithner, he inherited a colossal mess. he is involved in politics and he has to listen to what the politicians want to do. He did an ok job. Where it is not ok is that basically nobody that has committed financial fraud or contributed to the fraud was prosecuted."

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Fri, 01/25/2013 - 22:31 | 3187178 HoaX
HoaX's picture

I´m sorry but his remarks about Europe are just off:

From discussing Europe's 'apparent' stabilization - "anything can go up when you print money"

Sorry Marc but Europe is fuckin tightening the money supply right now, not printing more, unless you mean the UK (which doesn´t have the Euro but the GBP), FED and BoJ . The Euro is the one major currency not engaged in a race to the bottom at the moment.

Next he says:

I have advocated one year ago between April and June of last year to buy European stocks in Portugal, Spain, Italy, Greece and France because they were extremely depressed.

And two sentences later:

Look at bonds of Italy Portugal and Spain--they rallied last year, there was a huge profit opportunity, and I admit that I missed it.

So Marc thought peripheral European stocks were depressed but he failed to buy the fucking bonds of these countries at record yields?  

The only thing I know is one day the markets will punish the interventionists, the Keynesians and the monetary that the Federal Reserve and ECB has enforced..

If he was talking about BoE here, especially when looking at Camerons latest EU-referendum speech and their index finger pretty much fixed on the CRTL-P button, sure. As I said before though, ECB balance sheet is tightening, not expanding at the moment and Draghi only had to threaten unlimited OMT to bring yields down, the Bernank could learn a lesson there. Did Spain take it? Will they take it any time soon? Don´t think so Marc.

 

Fri, 01/25/2013 - 23:59 | 3187298 TruthInSunshine
TruthInSunshine's picture

The ECB is full steam ahead with the printing.

Do you actually think this isn't the case and has not been the case, and is the only reason (as in exclusive reason) why the EU hasn't actually come apart at the seams as of yet?

Sat, 01/26/2013 - 00:03 | 3187300 HoaX
HoaX's picture

They are? Show me their expanding balance sheet in comparison with the FED then?

You´re behind the curve today.

Sat, 01/26/2013 - 00:32 | 3187324 jimmyjames
jimmyjames's picture

They are? Show me their expanding balance sheet in comparison with the FED then?

*************

The Euro printing makes the Fed look fiscally responsible

http://www.acting-man.com/blog/media/2012/04/CBs.png

Sat, 01/26/2013 - 11:21 | 3187631 HoaX
HoaX's picture

If you don´t mind I prefer official sources over some dudes blog, no offense.

But first, a link to a recent zerohedge article with FED/ECB balance sheet correlation in a handy little graph, shows immediately that Euro balance sheet expansion is no way comparable to FED: http://www.zerohedge.com/news/2013-01-25/banks-return-%E2%82%AC137-billi...

And then the Eurozone aggregated balance sheet of Euro Area monetary institutions, now 2012 data is only until November and as above article points out, it has been tightened more recently. Let´s compare the Balance sheet of Nov 2011 to November 2012 though: http://www.ecb.int/stats/money/aggregates/bsheets/html/outstanding_amoun...

Nov 2011 Total (In billions): 33,393.7

Nov 2012 Total (In billions): 33,344.4

Cheers.

Sat, 01/26/2013 - 13:58 | 3187847 jimmyjames
jimmyjames's picture

If you don´t mind I prefer official sources over some dudes blog, no offense.

*************

No offense here either-but-if you're going to post something "official" then you should at least read what it represents-

Your ECB balance sheet data states--

'Aggregated balance sheet of euro area monetary (financial institutions) "excluding" the euro system

Cheers

*********

1. Prior to the start of the global financial crisis, the balance sheets of the Fed, the ECB and the BoJ as a percentage of nominal GDP stood at 6.5%, 14.0% and 21.7%, respectively

2. By September 2012, the Fed, ECB and BoJ balance sheets as a percentage of nominal GDP had grown to 17.8%, 32.4% and 31.5%, respectively.

Overall, the ECB has led in terms of balance sheet expansion followed by the BoJ and then by the Fed.

http://www.efxnews.com/story/15537/ecb-balance-sheet-expansion-outpacing-fed-and-boj-eur-positive-goldman-sachs

Sat, 01/26/2013 - 14:25 | 3187890 jimmyjames
jimmyjames's picture

Here's a good explanation of how ECB balance sheet expansion works-

 

 http://www.acting-man.com/?p=12870

Sat, 01/26/2013 - 18:42 | 3188039 HoaX
HoaX's picture

Interesting stuff, reading it now. I´m not trying to be a smartass here by the way, in the end we´re all in this together after all.

Right, I read it all and I think it´s a matter of when you start looking. There is no doubt The ECB balance sheet has expanded rapidly following the economic crisis, we also have to understand that the Euro as such only exists since late 1999, the ECB being established in 1998 by the Treaty of Amsterdam. The Fed has been established in 1913.

Now regarding my first comment, I was looking at data from the past months, compared to data from the past years (your line). When you look at the way FED balance sheet expansion is going compared to ECB balance sheet expansion (as pointed out on the zerohedge article in my previous comment as well) no way is the Fed right now not expanding its balance sheet while the ECB is indeed tightening. Here is another graph from the FT which points to this (you might have to log in to their site to see it though). http://ftalphaville.ft.com/files/2013/01/ECB-Fed-balance-sheets-SG.png

For those that can´t see the graph, ECB balance sheet hit around 3.1trn Euros around July 2012, before Draghi held his famous speech that he would do anything to save the Euro. After July 2012 the ECB balance sheet has flatlined for a while before starting to slowly tighten around Oktober, dropping even further now with the LTRO repayments. The Fed as far as I know is still expanding its balance sheet as we speak.

Is the ECB balance sheet compared to GDP (Eurozone GDP is around 9.5trn Euros for 2012, EU GDP above 13trn Euros) still very high? Of course, I´m the last one to argue that, but as stated by me, it is indeed tightening and has done so for the past months, being accelerated by the LTRO payoffs. We have to see how much of this money flows into MRO´s and the like though but that data as far as I know isn´t available at the moment.

Anyway, that is how I came to my conclusion that the ECB at the moment is indeed tightening its balance sheet.

Sat, 01/26/2013 - 07:16 | 3187482 falak pema
falak pema's picture

thats the question I asked ZH yesterday and the reply was in one of their posts: Comparison of ECB to FED BSheets.

3186305

Sat, 01/26/2013 - 08:22 | 3187492 BigDuke6
BigDuke6's picture

While digesting these comments I've been sipping an 18 yr old Bunnahabhain (scotch)
My god , it's like being whipped in your undies with tarry ropes on a Scottish beach as the salty sea spray laps at your ankles
Very nice!
Print away , scotch gets cheaper with every billion

Sat, 01/26/2013 - 09:00 | 3187514 falak pema
falak pema's picture

you sound like Andy Murray will when he plays Djoko tomorrow for the crown in Aussie land : Pain and whipping, to win that chalice! 

Bunna Bunna to you too! 

Sat, 01/26/2013 - 09:20 | 3187528 BigDuke6
BigDuke6's picture

A jock who plays tennis

Like an Indian rugby player, I've known a few....

More of the bottle tomorrow old pal

Sat, 01/26/2013 - 11:23 | 3187632 GMadScientist
GMadScientist's picture

You're thinking of Sam Groth (160mph serve)...the reincarnation of Roscoe Tanner.

Sat, 01/26/2013 - 09:21 | 3187529 BigDuke6
BigDuke6's picture

Dup

Sat, 01/26/2013 - 11:18 | 3187626 GMadScientist
GMadScientist's picture

Mmm...that Islay stuff sure is peaty (of course, the entire UK is one glorified bog, if we're honest).

Ahoy me hardies! ;)

Fri, 01/25/2013 - 23:23 | 3187259 CheapBastard
CheapBastard's picture
Illinois credit rating sinks to worst in nation

 

SPRINGFIELD — Illinois fell to the bottom of all 50 states in the rankings of a major credit ratings agency Friday following the failure of Gov. Pat Quinn and lawmakers to fix the state’s hemorrhaging pension system during this month’s lame-duck session.

 

“It’s absolutely bad news for taxpayers,” said Dan Rutherford, the Republican state treasurer.
Illinois received its bottom-of-the-pack ranking when it fell from an “A” rating to “A-minus.”

 

 

http://www.chicagotribune.com/news/politics/clout/chi-illinois-credit-ra...

Sat, 01/26/2013 - 01:07 | 3187356 Arthur
Arthur's picture

yep Illinois is a mess.  Moved out of state a year ago andhave watched as things only get worse.

 

 

 

 

Sat, 01/26/2013 - 11:15 | 3187623 GMadScientist
GMadScientist's picture

At some point, they'll admit that its bad news for pensioners too.

Don't worry my proletariat brethren, we're getting screwed just as badly in 401k land!

Fri, 01/25/2013 - 23:25 | 3187262 ebworthen
ebworthen's picture

And at the end Faber says "No one who committed the fraud was prosecuted."

Exactly. 

Sat, 01/26/2013 - 01:26 | 3187375 Joe moneybags
Joe moneybags's picture

Marc Faber is one of those people who is famous for being famous, like Paris Hilton or Kim Kardashian. Somewhere he achieved just enough notoriety to get on the T.V. talking head shows, where he goes into his bear/gold bug act.  Almost any ZHer could do the same thing, except we don't have the ponytail, and underage concubines hidden in our back rooms (well, maybe some here do have at least a blow up doll and old Hustler magazines).  At any rate, here he is again, saying absolutely nothing new, nor presenting a different perspective.  Yawn.

Sat, 01/26/2013 - 06:36 | 3187473 absente reo
absente reo's picture

Almost any ZHer could do the same thing

 

 

You're right, but it goes further than that.  Because not only could "any ZHer do the same thing" as Faber, "any ZHer could do the same thing" as most of the assemmbled so-called experts who line up on these shows day after day after day to give us their penetrating insights as to what is going to happen in the markets.

At the end of the day, everybody has his opinion, and like a stopped clock everybody will be right at some point, which is pretty much all you can say about most of, probably all (because who gets it right all of the time?  even most of the time?  Only a long term bull can say that, over the very long term, he is always right) of the talking heads that we see on CNBC, Bloomberg, etc.  I speak of analysts, fund managers, investment managers.  Fuck it, it doesn't matter who you are, you have no better insight with all your back-rooom boys than the rest of us with merely a broadband connection and an affliction for bad news.  Bill Gross gets big calls wrong, but that doesn't stop him being the big cheese (alonside El Erian) at PIMCO.  Jim Rogers gets things wrong.  Soros gets things wrong.  Hugh Hendry gets things wrong.  Faber gets things wrong.  Schiff gets things wrong.  They all fuck up, but they do it with other people's money and are none the worse for it.  That's probably what winds people up....there's a lot of jealously going on (and sure, who wouldn't be jealous) because all we see are a bunch of egotistical incredibly well paid fuckwits (I'm not calling any of the aforementioned fuckwits by the way...I speak here in general terms about the typical CNBC bulltard brigade) whose calls are no better than our own, but who get to parade themselves on TV and draw huge salaries whilst all the while making money in fees on assets under management regardless of how often or even whether they get their macro calls right. 

Sat, 01/26/2013 - 01:36 | 3187383 neutrinoman
neutrinoman's picture

Exactly. Faber is Swiss BTW not German.

Sat, 01/26/2013 - 11:13 | 3187621 GMadScientist
GMadScientist's picture

Faber is a garden gnome.

Sat, 01/26/2013 - 04:41 | 3187448 silverdragon
silverdragon's picture

The US is out of silver Eagles and now the Canadians are short as well.

Nice red flag to the Silver bulls.

Guess everyone is just gunna pile in Silver again.

Sonner or later normal people will question why the price keeps going down even when their is no supply.

 

Sat, 01/26/2013 - 05:19 | 3187459 Yen Cross
Yen Cross's picture

 The markets are on the cusp of major pain. Mark my words...

Sat, 01/26/2013 - 06:11 | 3187468 falak pema
falak pema's picture

more on the increasing chasm between the Oligarchy run "markets" and the people fed "economy" :

If our statist leaders, crony polticians of old, now get bold and want to burn those Oligarchs in the bonfire of statist "repentence" for having led the capitalist world astray it is inevitable to see the Oligarchs "knee jerk" and say : we have enuff fire power in Caymanista Land/City to burn your statist asses (and they do).

This is now developping into a sterile war of "religions" :  On the one hand : Statist, populist "neo fascist" (soon to become "militarist"?) leaders  now eyeballing the free marketeers of libertarian values in the name of "world stability" and talk of inevitably nationalising the banks and chilling the markets, via opacity and price fixing, the Krugman/BEN/Draghi brigade,  to create a centrally planned economic ice age; where they will eke out of the system the past folly of the financialised world; all the while building a new world reich of politically controlled continents, a vast top down engineered model of Keynesian FDR mantra world order.

On the other : the free market Oligarchy that wants markets to dominate all statist plays and unashamedly says 1% pyramid is good for world as it allows permanent and recurrent creative destruction, the essence of captial growth and innovative primacy. 

Both logics are wrong if pushed to their  extremist culminating Everests of hubris and intransgent mind sets; the sin of man in essence. Short term selfish reasoning and long term statist planning from the same elitist viewpoint: Stalin and Rockafella eyeballing each other at the world poker table. 

That is the lesson of history. Popes and Kings, Guelphs and Ghibellines, Crusaders and Jihadists, Romans and Barbarians, have proven time and time again that war and intransigence leave us always with the ruins of Troy and both civilizations destroyed. We need to find holistic solutions to complex recurrent problems. This world belongs neither to the Czars-- even when they capture religious dogma and universal deity-- nor to the financial/industrial Oligarchs. We the people have to avoid both Charybdis whirlpool of statism and Oligarchy hard rock of elitist greed and "me first" mayhem. But alas we are a blind species in the current context; the people...

Especially as our ability to destroy ourselves and our planet have grown exponentially since the industrial age. 

The bottom line is that this sterile debate at the top of Pax Americana, new Roman construct  now harbouring both trends in its own folds (the irony of past actions), does not address the issues from the viewpoint of 99% of the world population. Which only spells one thing : the demise of the construct like that of old Rome.

New beginnings, new empires...Sisyphus plays on. 

We are in a destructive spiral for current world order. And we don't have the weapons of popular power to neutralise either camp. Ulysses was a legend that lives on. 

 

Sat, 01/26/2013 - 10:53 | 3187597 j0nx
j0nx's picture

YAYA. How long everyone been saying that for? 5, 6 years now? And here we are all these years later with a manipulated market still in full swing. These guys can keep the fraud going wayyy longer than anyone can bet against them.

Sat, 01/26/2013 - 15:11 | 3187945 edifice
edifice's picture

If Japan can do it for a generation, who knows how long the FED can go...

Sat, 01/26/2013 - 11:12 | 3187619 GMadScientist
GMadScientist's picture

Fabertardz!!

Sat, 01/26/2013 - 11:25 | 3187637 SmoothCoolSmoke
SmoothCoolSmoke's picture

MSM is certainly onboard with the 'improving economy' theme.  Friday night Brain Williams' lead story was the the improving economy.  The "proof"?

The housing pick-up and, THE STOCK MARKETS ARE NEAR ALL TIME HIGHS.

Bernankie must have popped a boner over that report.

 

Sat, 01/26/2013 - 11:36 | 3187648 bugs_
bugs_'s picture

End the interventionisting!

Sat, 01/26/2013 - 12:28 | 3187719 Pseudolus
Pseudolus's picture

I cant watch MF with a straight face since Christmas

Hmmm....toy? Just as i supsected....

Sat, 01/26/2013 - 15:10 | 3187944 edifice
edifice's picture

Hah! That's great!

Sat, 01/26/2013 - 12:51 | 3187753 Venerability
Venerability's picture

I don't know if "markets will punish interventionists," but I sure as heck think China will figure out ways to punish Japan.

Sat, 01/26/2013 - 21:00 | 3188442 Nassim
Nassim's picture

Funny how when he starts talking about fraud, the interview comes to an end.

Sat, 01/26/2013 - 22:41 | 3188617 deebee
deebee's picture

markets don't have morals

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