Marc Faber: "Believing In Bernanke Is Like Believing In Santa Claus"

Tyler Durden's picture




 

"If you believe that [Bernanke] means what he says," explains Gloom, Boom, and Doom's Marc Faber to a spell-bound Trish Regan on Bloomberg TV, "then you believe in Father Christmas." Simply out, Faber adds, "we are going to see QE99," and while he notes that equities, bonds, and gold are "very oversold," he would "rather buy bonds and gold than equities." From his views on Laszlo Birinyi to inflation, the 'taper', US housing, and China, Faber calmly warns that "the S&P could drop 20-30% from the recent highs - easily."

"The only thing that I know is that I want to own some physical gold because I don't want all of my assets in financial assets."

 

Faber on whether problems will continue for the equity markets:

"Well, right now equities, bonds and gold are very oversold. They can easily rally on the S&P. We could rally 43, 50 points, but I don't expect a new high. Just in case a new high would be achieved in the next two months or so, it would not be confirmed by the majority of shares. In other words, very few stocks would lead the advance. In terms of bonds, they are also incredibly oversold. Where the sentiment about equities is actually still rather positive and all of these super bulls still predicting the market to continue to rise into 2014, 2015. In bonds and gold, sentiment is by historical standards incredibly negative. As a contrarian, I would rather buy bonds and gold than equities."

On whether yields will be higher if Bernanke meant what he said on starting to taper sooner rather than later:

"If you say that if he means what he says, then you believe in Father Christmas. He said if the economy does not meet the expectations of the fed in one years' time, they will consider additional measures. In other words, if the economy has not fully recovered by mid-2014, more QE will be forthcoming. As I said already three years ago, we are going to go with the Fed to QE99."

On whether he's investing with a backdrop of no inflation:

"Well, I think investors have a misconception about what inflation is because it is essentially an increase in the quantity of money and credit. We have wage deflation in the world in real terms, for sure. In other words, real wages are going down and the cost of living everywhere are going up. That is why you have social unrest in North Africa, in the Middle East, in Turkey, in Brazil, and it will spread because the average person on the street hasn't participated in the huge asset inflation that has been going on in high-end properties, Mayfair properties, Fifth Avenue, Madison Avenue, the Hamptons and in equities and until recently in bonds and commodities."

On Laszlo Birinyi saying that gold is his biggest short:

"To that I respond there are many people out there, they never owned an ounce of gold in their lives. They were bearish about gold at $300, bearish about gold at $700, bearish about the stock market in 2009 when the S&P was at 666. Now, they are bullish about stocks and they are still bearish about gold. The commercial hedgers - these are professional miners, mining companies and people involved in gold trading. They have the lowest short exposure, since 2001 when gold was at $300. Similarly, in the silver market, the commercial hedgers, again, the professionals have the lowest short exposure since 2001. I would rather bet on the commercial miners, the commercial hedgers than on some forecaster who knows about the future of prices as little as I know. The only thing that I know is that I want to own some physical gold because I don't want all of my assets in financial assets."

On US equity performance in light of the global economy:

"First of all, I believe that today we are talking about the global economy. The U.S. stock market has just about outperformed any other market around the world in the last 6 to 12 months. We have big trouble coming into emerging economies. The emerging economies are not performing well, There is no growth at the present time. The Chinese economy, maximum is growing at four percent per annum. We have multinationals in the S&P. Their growth and global growth came from the last four years from  the recovery in the emerging world. If the emerging world does not grow, the global economy will not perform well and corporate profits, as we just saw today from Oracle, will disappoint and stocks won't be the best investment in the world...  I think the market is on the high side, corporate profits are inflated and we could easily, from the recent high, May 22 at 1687 on the S&P, drop by 20% to 30%, easily."

On where gold is heading by year end:

"Well, I think we will be higher by year end but I am not worried where we are. I have said that I buy gold regularly. I just bought today at $1300 and I will buy more at $1200 and I will buy more at $1100."

On whether gold will go down before going back up:

"I don't know, I am not a prophet, I don't know exactly where the price will be on a month by month basis, but I want to have some wealth, some of my assets in physical gold.

 

I can see a lot of problems coming into the world including expropriation through taxation or through regulation or even through revolution and social strife."

On where 10 year yield is going:

"I am tempted to buy a 10 year treasury at a yield of 2.5%. I think we will rebound in the treasury market. Yields will go down first, and if they go up further, it will kill the economy including the housing market."

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Fri, 06/21/2013 - 20:53 | 3681137 The Shootist
The Shootist's picture

Love it when Faber does his evil laugh at the schmucks.

Fri, 06/21/2013 - 21:04 | 3681168 DaddyO
DaddyO's picture

Bernanke is Santa Claus, right?

DaddyO

Fri, 06/21/2013 - 21:15 | 3681184 WayBehind
WayBehind's picture

Wh cares about the future price of gold or the stock market. Soon enough you will be lucky to find a piece of bread to feed your family.

Fri, 06/21/2013 - 21:28 | 3681209 King_of_simpletons
King_of_simpletons's picture

Believe in Santa Claus or not, but he does bring a lot of gifts year after year. So it is not all bad, if one doesn't lose sight of the whole fiat concept.

Fri, 06/21/2013 - 21:39 | 3681235 AlaricBalth
AlaricBalth's picture

Bernanke is the high priest of an archaic, dying religion.

Fri, 06/21/2013 - 22:11 | 3681276 ZerOhead
ZerOhead's picture

It's almost time to change the Fed motto on it's notes from:

"In God We Trust" to "To The Gods We Pray"... personally however I think I'll stick to "In Gold I trust"...

Sat, 06/22/2013 - 16:01 | 3682305 SafelyGraze
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at 5:30, 'blah blah buy *play in america blah blah  *blue chip or *good quality stocks and hold them blah blah *dividends blah blah *consensus play  .. what's wrong with that"

faber treats it as a serious questions

didn't even question the premise

faber = thoughtful and considerate interviewee

* emotive/affective/propaganda words for audience consumption

Sat, 06/22/2013 - 17:48 | 3682465 AldousHuxley
AldousHuxley's picture

That' why joos are good with money. They don't believe in Santa Claus and skip the Christmas thing altogether and go to work on wall st. on Christmas.

 

But American joos are getting sucked into consumerism too.

Hanukkah cards and candles half off after hanukkah at walmart.

 

 

Fri, 06/21/2013 - 22:13 | 3681295 chubbyjjfong
chubbyjjfong's picture

Funny how the hosts just laughed Faber off at the end of the piece.. "go have some fun, you crazy whacky funsta Marc, hadehaha chuckle chuckle" 

It was Marc though who had the last laugh.

Sat, 06/22/2013 - 06:48 | 3681618 RideTheWalrus
RideTheWalrus's picture

The presstitutes will keep that nervous chuckle going until the pitch on the deck of the titanic gets too step and they end up hitting a smoke stack as they plummet towards the icey ocean of collapse.

In some regards you have to respect them for continuing to do their job in the face of certain destruction, even thou it's crazy to keep up illusions at this point.

 

 

Sat, 06/22/2013 - 12:59 | 3682034 TheMerryPrankster
TheMerryPrankster's picture

teleprompter said "laugh knowingly and cut to commercial" so they did. they are talking heads. the puppets dancing, someone else fills them with words and tells them where to look and when to stop.

They are pets of the rich who own the broadcasters

They are noise in the signal, reject them.

Sat, 06/22/2013 - 17:42 | 3682457 AldousHuxley
AldousHuxley's picture

Michael Bloomberg wants to offload bonds and stock up on equities so he brings Faber on air to do his thing.

 

Equities Up & Bonds down = INFLATION people

 

DEFLATION would be Bonds down & Equities WAY down

 

don't judge bonds by prices alone so take yields into account. Econ 101....bond price is inverse of yield which is what we have.

 

 

Sat, 06/22/2013 - 08:16 | 3681676 kito
kito's picture

Which is why he is preaching bonds??? And oversold equties?? Really???

Sat, 06/22/2013 - 08:10 | 3681670 spentCartridge
spentCartridge's picture

Santa clause ...

 

Is a big red dude that instills in the minds of our children the notions of material greed, and, his name just happens to be an anagram of Satan ...

 

'Go figure' is, I believe, the turn of phrase that you Yanks like to prefer?

Fri, 06/21/2013 - 20:53 | 3681140 Cabreado
Cabreado's picture

Thank you Mr. Faber, but at this point, not even Bernanke believes in Bernanke.

Sat, 06/22/2013 - 17:53 | 3682475 AldousHuxley
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that's why he is on his way out.

the elites know it is not about what bernanke does but how much you can front run him. That's all there is to making money. Place the right bets before the game. Everyone else is just another pawn for the game to be played out.

Fri, 06/21/2013 - 20:55 | 3681141 buzzsaw99
buzzsaw99's picture

Don't believe that 2.5% on the 10y can last either. Not saying it is a screaming buy, only that the us gubbermint (and housing) cannot sustain anything like that over the long haul. My call for 1% on the 10y still stands.

Fri, 06/21/2013 - 21:53 | 3681263 ZerOhead
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Things would have to be absolutely suicidally abysmal (yet curiously still intact) for that to happen... but hey... you seem to be pretty much always right...

Sat, 06/22/2013 - 08:12 | 3681674 Beam Me Up Scotty
Beam Me Up Scotty's picture

I agree with you Buzzsaw.  The pendulum will swing.  If the stawk market tanks 30, 40, 50% because rates are headed higher, people will "try" and rotate out of stawks into bonds.  Personally, I'd rather rotate to cash then give my money to .gov for 10 years, but lots of sheeps would be happy to get 1% on their money rather than lose 30,40,50% or more.

Fri, 06/21/2013 - 21:53 | 3681265 mofreedom
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hello, fundamental transformation and cloward and piven calling obama...hello...oh, there you are, yes, you really are lazy...now, get to work and finish off destroying the u.s. of a....get those rates raised and bring it all down.

Fri, 06/21/2013 - 21:04 | 3681166 kchrisc
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Mr. Farber should drive very carefully and check his motor-mounts.

Fri, 06/21/2013 - 21:06 | 3681170 lolmao500
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Is it me or he speaks slowly??

Yeah the 10 years will reverse. The FED will reverse... they will double down on their QE, just like Japan. If I'm right, I make money, if I'm wrong... it won't matter...

Fri, 06/21/2013 - 21:06 | 3681174 stock trout
stock trout's picture

Thanks for the recap ZH. I was watching the interview live but all I could focus on was Trish Regan.

Fri, 06/21/2013 - 21:24 | 3681202 WmMcK
WmMcK's picture

I still miss Lauren Lyster.

Sat, 06/22/2013 - 04:34 | 3681570 e-recep
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you miss her legs.

Sat, 06/22/2013 - 09:19 | 3681731 WmMcK
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And the Capital Account camera angles.

Fri, 06/21/2013 - 21:33 | 3681220 Moe Howard
Moe Howard's picture

Does the chasis match the grille?

Sun, 06/23/2013 - 04:19 | 3683182 papaclop
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She is pretty hot.

Sun, 06/23/2013 - 04:18 | 3683183 papaclop
papaclop's picture

She is pretty hot.

Sun, 06/23/2013 - 04:19 | 3683184 papaclop
papaclop's picture

She is pretty hot.

Sun, 06/23/2013 - 04:18 | 3683185 papaclop
papaclop's picture

She is pretty hot.

Fri, 06/21/2013 - 21:09 | 3681178 Hedgetard55
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Faber: "Go long Thai hookers, bitchez!"

Fri, 06/21/2013 - 21:23 | 3681199 Unprepared
Unprepared's picture

At least you will die happy.

Fri, 06/21/2013 - 21:35 | 3681226 lolmao500
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If you're into shemales, yeah.

Fri, 06/21/2013 - 21:26 | 3681207 DollarMenu
DollarMenu's picture

Thanks for the Mark Faber, always a treat to hear him speak.

BTW,

Who was that pink-shirt bow-tie asshole?

Can it be that he has no idea what a cartoon he is?

 

 

 

Fri, 06/21/2013 - 21:54 | 3681267 The Shootist
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He and Neil Cavuto, both on radio, have voices for newspaper op-eds. Can't stand them.

Fri, 06/21/2013 - 21:59 | 3681277 mofreedom
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he's in singapore with our friend mr snowden, hopefully sharing a picture of  singapore sling.

Sat, 06/22/2013 - 02:46 | 3681524 Lore
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Re: "Who was that pink-shirt bow-tie asshole?  Can it be that he has no idea what a cartoon he is?"

My thought as well. Some aging dorks seem to be under the impression that it connotes scholarliness or something similarly absurd. It actually screams lack of sophistication and social exclusion: "If you wear a bow-tie, you will never be taken seriously and no-one will trust you with important business.” - John T. Molloy, Dress For Success

Sat, 06/22/2013 - 11:00 | 3681869 Bendromeda Strain
Bendromeda Strain's picture

Jim Grant pulls it off just fine imo. I think he would make an awesome Treasury Secretary (no Fed in existence) bow tie and all.

Sat, 06/22/2013 - 13:14 | 3682051 Lore
Lore's picture

You're right. Grant is a rare exception -- a dork of sufficient brilliance and personal power that the message becomes one of willful nonconformity. Jim Rogers, on the other hand, is merely quaint, but it complements his grandfatherly style. Choice of tie can also indicate membership in certain groups.

Fri, 06/21/2013 - 21:29 | 3681211 GOSPLAN HERO
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Would Trish be a fun date?

Sat, 06/22/2013 - 00:15 | 3681452 r3phl0x
r3phl0x's picture

Probably, but not as fun as Faber.

Fri, 06/21/2013 - 21:32 | 3681218 game theory
game theory's picture

QE99 would mean you should own *any* asset other than dollars. Come to think of it, you should likely also own a large parcel of arable land with easily defended borders and a large group of trustworthy allies to help you defend those borders. And lots of ammo.

 

Fri, 06/21/2013 - 21:33 | 3681222 Bansters-in-my-...
Bansters-in-my- feces's picture

Hi Mom.

 

Ps ...

Fuck YOU bernanke.

Fri, 06/21/2013 - 21:35 | 3681229 GOSPLAN HERO
GOSPLAN HERO's picture

Would Trish be a fun date?

Fri, 06/21/2013 - 21:42 | 3681242 Sun and Moon
Sun and Moon's picture

I always like listening to Faber.

Bernanke's unoffical press secretary, Hilsenrath, has already made it clear that any talk of tapering was just talk. So Faber is spot on there.

There will be no tapering and QE will probably be expanded if things go badly in China, Europe, or Japan and threaten to take down the US "recovery".

Fri, 06/21/2013 - 22:19 | 3681302 surf0766
surf0766's picture

"If" things go badly. The world is on fire. QE can never end. There are to many takes in the U.S from the corrupt politicians to the greedy bankers and baby boomers to the lifetime welfare peeps.

 

Fri, 06/21/2013 - 21:51 | 3681247 Lore
Lore's picture

The most important statement in the entire interview -- just BEGGING for elaboration ("I can see a lot of problems coming into the world including expropriation through taxation or through regulation or even through revolution and social strife") -- AND THE TALKING HEAD CUTS HIM OFF.

They go to the trouble of contacting Faber all the way over in Zurich in order to request his opinion, and then they proceed to drown him out and interrupt with their own pablum. This is why I despise financial television. The talking heads never know when to SHUT THE HELL UP AND LET A CREDIBLE GUEST FINISH WHAT S/HE IS TRYING TO SAY.

It's even worse during political discussion -- like a children's day care, everybody shouting past each other. Thank goodness for alternative resources online!

Fri, 06/21/2013 - 22:08 | 3681285 ZerOhead
ZerOhead's picture

To top it off they laughed him out at the very end for being a "brave man" to be buying gold as it was falling....

THAT is going to come back and bite them hard in the ass if they still have jobs or even a network to work for in the not-to-distant future.

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