Marc Faber: "The Best Thing The Fed Could Do For Markets Wold Be To Collectively Resign"
In a Bloomberg TV interview following today's quixotic "QE3/non-QE3 announcement, which is Operation Twist 2, but not LSAP, and ushers in economic recession, even as it sends risk assets soaring, and somehow pushes the 2 Year a whopping 20 bps tighter so buy,buy, buy" and is really very much ado about nothing, the always outspoken Marc Faber had some very choice words about life, the universe and especially the residents of the Marriner Eccles building. While there still appears to be some confusions as to whether today's Fed decision to peg rates at zero for 2 years is QE3 or not, Faber believes that the decision to not enact more Large Scale Asset Purchases is "the right thing" although when it comes to the market, it "is more likely to move still lower. We are very oversold. We can have a rebound like we did today, maybe we'll have a rebound next week or so, but in general I think we will test the July lows of last year, the S&P at 1,010. After that, probably we'll get probably a QE3 announcement."
On why Bernanke did not announce yet another asset purchasing round: "Essentially they spent their bullets. It is very difficult to follow through with QE3 right here, because you have gold prices going ballistic, and you have the dollar being very weak, and so there are unintended consequences with implementing QE3 right here." That said, the surge in markets apparently completely ignores that QE1 and 2 did nothing for the economy, although the goosing of the RUT should suffice. What is unclear is who will end up buying the $2.4 trillion in bonds coming down the tube. Faber also had some choice words about Treasurys: "I personally think the Treasury market, the long-dated, are a bubble and it will be one of the worst investments for the longer term if you buy a 10-year, a 30-year U.S. Treasury so I'm a bit puzzled that Treasuries are now yielding, are essentially near record lows." Naturally, Faber does not think gold is in a bubble, and as to what one can do with gold, his response is that "you give your girlfriend copper rings and I give them gold rings and I keep them longer." Indeed, no bubble there.
As to how one should trade stocks, he says: "I think right now the technical picture is so horrible that I would use a rebound as a lightning up opportunity. I think [equities] will move lower... maybe after three months people will wake up and scratch their heads and say now, we know why it started to go down, because maybe there is geo political problems, maybe the Middle East blows up, maybe the economy is horrible."
Last but not least is his suggestion what the Fed should do: "The best [the Fed] could do for markets would be to collectively resign." Precisely, which is why it will never happen.
Full clip:
And full transcript:
Faber on whether he thinks the Fed did the right thing by keeping rates low:
"I think they did the right thing that they didn't allow QE3. They can watch the reaction of assets, whether they will go lower. I think the market is more likely to move still lower. We are very oversold. We can have a rebound like we did today, maybe we'll have a rebound next week or so, but in general I think we will test the July lows of last year, the S&P at 1,010. After that, probably we'll get probably a QE3 announcement."
On why he thinks the Fed is waiting on QE3:
"I think the Fed is underestimating the severity of the coming economic downturn. Essentially they spent their bullets. It is very difficult to follow through with QE3 right here, because you have gold prices going ballistic, and you have the dollar being very weak, and so there are unintended consequences with implementing QE3 right here."
On what Faber thinks the Fed should do:
"The best [the Fed] could do for markets would be to collectively resign…I think sometimes the best is to do nothing. I welcome the decision, at least today, that they aren't doing anything worse than what they have already done."
On whether it makes sense to provide any kind of stimulus:
"What has QE1 and QE2 done for the labor markets? Nothing at all. It's done nothing for the housing markets. It's lifted stocks and it created wider wealth inequality in a sense that people who own assets have done very well, and people that are the lower-income recipients groups, they are hurt by rising energy prices and food prices."
On what should be done for the U.S. economy:
"From 1981 to 2007, we have an economy that was living beyond its means. As a result of continued debt accumulation, GDP was higher than would otherwise have been the case. Now we have a period of sub-par growth that can last for quite some time now, and like in the case of Japan after 1989, people instead of being encouraged to spend, they should be encouraged to save more, and the U.S. should save more and spend less. And then capital spending will essentially pick up."
On the manic behavior in markets:
"I personally think the Treasury market, the long-dated, are a bubble and it will be one of the worst investments for the longer term if you buy a 10-year, a 30-year U.S. Treasury so I'm a bit puzzled that Treasuries are now yielding, are essentially near record lows. I would rather sell Treasuries."
"The stock market peaked out on the 2nd of May on the S&P at 1370. So we're now around 1010. For many stocks we're down 20% or so. We're very oversold. I think a rebound is coming but you can forget about a new high. That is out of the question. Because the technical picture is horrible, horrible. "
On why investors are continuing to move to Treasuries:
"I've been in this business for 40 years and on many occasions, nothing made sense to me….I think the Treasury market is another example of a gigantic bubble. The problem with the Federal Reserve policy of essentially zero interest rates is that they are essentially throwing money at the system, but they don't control where the money will flow to. It can flow at some point into commodity-related stocks. It can flow into gold, oil, treasuries, but it doesn't flow evenly into these assets. In my opinion, the Treasury, the long-dated Treasuries are essentially the short of the century thing here."
On whether gold is a bubble:
"I don't think it is a bubble, but I think the gold market has exploded to the upside recently and the correction is overdue. But as I have always maintained for the last 12 years, every responsible adult should gradually accumulate gold, because not owning any gold is the trouble with government. I don't understand. People of Bloomberg, I hardly know anyone who owns any gold physically. All of the Bloomberg employees are intelligent people. They listen to the news every day. They make the news every day. Hardly anyone owns any gold.”
On what you can do with gold:
"I disagree [that you can't do anything with gold.] You give your girlfriend copper rings and I give them gold rings and I keep them longer."
On how Faber would play the markets right now:
"I think right now the technical picture is so horrible that I would use a rebound as a lightning up opportunity. I think [equities] will move lower. I mean, some say you should move back into emerging economies because the fundamentals of emerging economies are far better than the fundamentals of European countries and the fundamentals of the United States. This is something I will consider."
"The only thing I have to say, basically the market has sold off in such a rapid way and with so much momentum that I am smelling as if something really wrong happens in the next two or three months, because the market is a discounting mechanism. Like March 2009 the market started to go up and people were baffled why it started to go up. Now it starts to go down, and maybe after three months people will wake up and scratch their heads and say now, we know why it started to go down, because maybe there is geo political problems, maybe the Middle East blows up, maybe the economy is horrible."
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The best thing the Fed could do for the markets (and mankind in general) is a circular firing squad.
No NO NO! We need to throw a Guillotine Party for them. Have you not checked on the costs of guns and ammo lately?
Guillotines are quiet, fast, efficient, 100% human powered, and provide outstanding entertainment value.
Shovel ready.
I'll volunteer for basket duty!
When we walked through Place de la Concorde I just kept thinking, "what a wonderful place". Storm the Bastille, bitchez.
snark: When we decide to do it. I am going in to get Wesley Snipes out first, and timmy too if he is in there at the time. (junk if you must)
My similar moment of granduer was getting my PhD from the esteemed institution of CNBC were the janitor has a PhD and I heard this:
non snark paraphrase:"It is kinda weird how you don't tax consumption in any meaningful way"
-- British dude from Fitch to Bartriromo last week regarding the US credit rating.
tax code bitchez. S&P > D&R (political parties)
Better yet.....
I am going to sit back. Blood splattered popcorn makes me sick.
Tuco
WAIT! WAIT! WAIT!
Think of what we could raise on Pay-Per-Veiw. From ZHers alone!!!!
I am ready to pay for the public gallows for everyone I ever met on my JPMorgan Chase Credit Card right now!!
Seriously. Nothing would make me happier.
Except maxing out then pulling the lever at the gallows, that is.
Naaa.... They can do pretty good FX in Hollywood these days. I want it live and in person to make sure I'm not being bamboozled yet again by the goobermint.
Hara-Kiri:
http://www.youtube.com/watch?v=N6RB62gHO6U
The Fed governors should enroll at the Ludwig von Mises Institute.
Maybe they can learn something about economics.
I know everyone in New York is totally absorbed in "parsing phrases" and "divining meaning from the statement" but FYI in Washington DC what made all the news was how The Bernank "made his arrival" and what he did when he got there:
http://www.youtube.com/watch?v=_NwllttiP0k&feature=player_detailpage
who knew? he really is Mr. Amazing!
The best thing Zerohedge could do is spellcheck the titles of its articles before posting them. Why? Because if you're going to yell fire in a crowded theatre, you'd better have your shit together.
My take is that you [collectively] don't.
You [collectively] see only disaster and apocalypse because this tactic makes it easy to avoid responsibility. Why spend time educating people and building things when you can simply claim that the whole paradigm is going to collapse at any time?
All I see is a lot of semi-affluent folks whining about taxes and the exploits of more powerful versions of themselves [ie. the selfish banksters that only care about getting rich, privatizing everything and avoiding anything resembling responsibility to society - sound familiar?]. You always have someone else to blame, don't you?
Better luck next time. Spellcheck, people - if you want to be taken seriously outside your own echochamber.
A voluntarist and culturalist leftist... go back to the HuffPo or the 1960s, please. Or go masturbate on your J.P. Sartre books.
Right. Labeling people based on what they criticize you for is surely the best way to understand those phantom images also known as other human beings.
I'll bet you've read more Sartre then you care to admit.
Anyway, your wannabe anti-intellectual tough guy act is unconvincing. Maybe you should get off the internet and spend more time shitting yourself to get into character.
First you label:
Then you complain:
---
What a f'ing idiot...
The Government Sock Puppets are out in full force lately.
How many are there? 5,000? 10,000?
I know that the Sock Puppet operation gives them each 20 unique IP Addresses and characters with which to spread misinformation and run interference, so that's a big force multiplier.
Keep making excuses.
You've got nothing but your pettiness. You offer no solutions.
Crying out for collapse when there's plenty of work to do only makes your impotence all the more obvious - which is why my minor critiques strike a nerve here. You could simply ignore me, but instead you fall all over yourselves to defend your little hate jerk-off.
You don't even have original ideas; I criticize spelling, so you do. I expose hypocrisy, and so you try to follow suit.
It's painfully clear that you've got nothing constructive to offer. It makes it easy to poke holes in your flimsily constructed realities. A simple misspelling is just that; but in the context of blatant hypocrisy, it is a worthy subject of discussion - uncomfortable as it may be.
Your internet tough guy tactics make work on others, but I am unimpressed. Strip away that veneer and you [collectively] have little to offer beyond bitterness. Grab a shovel and do something useful and quit your whining. Outside this echochamber [I'll keep utilizing this term as one word, thanks] original ideas do exist - despite your apparent desire that these pesky realities would just go away. Holding on to hypocritical frameworks will keep you closed off to alternatives and prolong your discomfort. Cheers.
can i label you as "hot" and if so "is it true?"
its the economy, bitchez
Yo, Maniac!
nar·cis·sism
noun
1. inordinate fascination with oneself; excessive self-love; vanity.
2. Psychoanalysis . erotic gratification derived from admiration of one's own physical or mental attributes, being a normal condition at the infantile level of personality development.
and Fuck Off!
I'm glad you've learned how to use a dictionary. Type in "straw man" next. Your final "Fuck Off!" also sounds a little desperate -- what, my minor criticism has caused you that much annoyance? Grow some backbone.
Haven't you seen the new phonetic spell check? Wold is exactly correct.
That's how Faber pronounces "would".
The letter "R" does not exist in Maine.
States Rights, Bitchez!
We welcome you even though you are obviously a very sllllllooooooow learner.
T. D. please forgive him for he knows not what he does.
Tuco
If it wasn't the typo you'd complain about Faber having a funny accent...
Echo chamber is two words.
DAMN! ARE two words.
How good is that? Thank you.
'Echo' AND 'chamber' are two words.
We kollektively grasp the math and the math spells |]00|\/|..
Please feel free to fight all the bureaucrats standing in your way when you go to start your own business -- consider all the fees and red-tape a challenge -- you sound like you're up to it!
Also, show me all the responsible people that have been placed in cells for the Gulf oil disaster, imploding the financial system, allowing guns to wind up in the hands of the Mexican drug cartels, etc. In short, the US Govt DESERVES TO COLLAPSE!
Pity is though, that a lot of innocent people will wind up dead or dismembered in the melee! Check your premises, because your conclusions are 180° out of focus!
Since when are you the final arbiter on when and what should collapse?
Perhaps one day you'll learn to put yourself in the shoes of those who are "acceptable losses" and realize that when you imagine *yourself* as the innocent person who gets killed off - cheap words don't sound quite so lofty.
Do you dynamite your car when the check engine light comes on, too? Different people have different ideas about when it's time to give up. No matter what you say, it's never a good option - and certainly not one worth promoting. Again - this is simply a sign of laziness. Frustrated laziness, yes - but still an impotence and unwillingness to act. This is why my comments raised your ire - because they expose this reality.
"Better luck next time. Spellcheck, people - if you want to be taken seriously outside your own echochamber."
Well fucknut, since we're on spell check... "echochamber" is a phrase that is actually 2 words. Ergo "echochamber" would, properly spelled, read "echo chamber". But hey, it's just your left wing edumakashun showing. No harm, no foul.
I find this comment ironic since it is precisely critics like you who arguing for a *less* intellectual conversation here. Again - more hypocrisy on display.
Has my point been received loud and clear yet? Hypocritical attitudes are very unlikely to produce constructive results. All the things you complain about here [many of which are valid, by the way] are not going to get any better until a little self awareness and criticism occurs. No matter how much bile you sling my way - this will not change. Any relief you get from tearing me down is going to be limited because the problem remains the same: Your motives and ideas will be bankrupt without some form of critical analysis. This cannot occur in a system where ideas cannot be freely exchanged. Willful ignorance will continue to prevent that from occurring - and thus hypocrisy will continue to reign here. Thus, you create a situation where it is easy for individuals like me to point that out - adding to your continued annoyance. Can't say I feel bad for you, as you are helping to create the problem you are reacting against.
But I guess that's a pretty good definition of reactionary, is it not?
The irony is that you made a pointed (much like the top of your head) reference to "spell check" and hurled an insult referenced to same and when called out on it you (like most delusional hypocrits) simply ignored it to hurl more insults. Who's the hypocrite here? Who will never produce constructive results? "Continued annoyance"? Only at the fact that you breathe precious oxygen that a productive being might need to produce invigorating thought and stimulating conversation. And finally....
...yes, I agree quite wholeheartedly, your ignorance is quite willful. I apologize in advance for conducting a verbal battle of wits with you. I was alway told to never do battle with an unarmed man, and you fit that definition given your witless condition quite nicely. Troll on.
Lets not get particular on how we should kill them or how they should kill themselves just yet. Next thing you know everyone will be arguing about it and we won't get anything done.
faber eees da sheet
Hellz ya,
Funny he seems puzzled by the treasury market even though he predicted the rally all the way back in December 2010.
he's not puzzled
he's high. i know because i packed the bowl and handed it to him.
The man knows what he is talking about.
His response to Matt Miller on what you can do with gold is pretty awesome.
I watched the vid before I read the article and I almost spit out my drink when Faber laughed at Miller and used the ring analogy. Damn, that was funny. Freakin' Miller had nothing to say after that. Too funny. I'm playing it back in my head - didn't the bimbo agree with that statement in the background? I think I'll listen to it again. Edit - yeah, she says, "I'll take the gold" at the same time Miller shakes his head and mutters "priceless". At least he copped to being had.
"But you can't do anything with it" says Miller.
How do these bobbleheads get those jobs having no education on basic financial matters (sound money)?
Seriously...and they should get out more and read about how central banks are buying the gold.
And they should read the US Constitution that defines gold and silver as legal tender.
BoP - I have Many Arrows. Good to 'see' you here. Soon the bobbleheads will be rummaging thru garbage cans for lack of earning power.
I'm convinced they are paid to give the same opinions on every issue. One of the opinions is that gold is 'obsolete.' I have never heard one host of these shows say gold is valuable.
Yeah, I have watched Matt Miller many times on Bloomberg. He plays the "smart ass, snot nosed kid" role very well. A little too well if you ask me.
holding interest rates at nada is not QE3, additionally purchasing assets would be QE3, keeping interest rates where they are is not QE3
"So, what I'm hearing you say is that holding interest rates where they are is QE3. Thanks. Got it."
Gold is jumping all over the place. I see it at $1,762.37 right now. The spot premiums are still high, much higher than last week. It must be the announcement of QE3 that is causing this.
We just raised the debt ceiling 2T+, we will spend it through treasury auctions, fed printing and POMOs and whatever it takes. QE 3 started with the new debt ceiling. We are in phase 2 , justification.
Scumbag Krugman: London Riots? Jobs Created!
http://i.imgur.com/wAoMv.jpg
They just love communicating over Blackberry in order to loot the Apple stores...
Speaking of Apple I just heard their market value surpassed that of Exxon. Tough question: Which companies assets would you like to hold choosing between two over the next decade!?
Tuco
I'd take Exxon. Why? Because through good times and bad people can live without i-whatever but we can't live without oil. That said, however, I'm itching to get a new Macbook Air since my laptop is 4 years old but I just can't open up my wallet for it knowing that with that money I can get a new shiny ounce of Pamp or a Maple.
I just had a vision of you huffing gasoline while trying to pedal a bike fast enough to keep an old Vaio at full charge.
Agreed T. M. Oil for me. I am not much on tech though. I just learned how to text with my T-Mobile.
Tuco
.
Krugman is a piece of shit. It grates on my nerves every time I hear "Nobel peace prize winning economist".
It grates on my nerves every time I hear, "Krugman".
An award given by a bunch of blowhard statist academics to another blowhard statist academic means shat on a stick.
"for his extraordinary efforts to strengthen international diplomacy and cooperation between peoples"
Bingo on that. Irony abounds. Kind of like Odumbo getting one. Bet they didn't see the extracurricular military events coming when they voted on that one.
Faber is 100% correct. The Fed have pretty much exhausted all options. When they do a QE3 it will have to be huge, biggest yet. The markets are totally fractured and busted, so to get them completely supported, the Fed will have to go trillions large. Major bulltraps on the s&P and Dow have been set, the volatility last session was just nutso, even the melt-up has no legs.
Every trader in the world listnes to Faber, funny and smart guy
Hey Tyler, there are some error in the transcript.
e.g. Faber doesnt say: "because not owning any gold is the trouble with government"
but "because not owning any gold is to trust the government"
That makes more sense. Thanks.
I can't get the people around me to understand that owning gold is the same as saying, "I hate the system". All they can say is "but it is so expensive". That is the price of peace of mind.
Error in the title too.
Wold=Would.
Now wouldddd you stop bitching.
Kidding.
Now orthographical errors I can live with,
but semantical errors (those that turn the meaning around) I like to report!
It won't be long and the fed will self destruct. They won't need to resign.
I don't think so. They can always take another form. Don't assume they are just going to go away.
Hopefully we don't let something like the IMF take it's place.
They are one in the same. Demons all.
Tuco
There is a book I read a long time ago called "Psycho-cybernetics". One of the tenants of the book is that when one fears something irrationally their actions ruled by the subconscious actually lead them to that which they fear the most. So, what does Bernanke and the fed fear the most. "Deflation", of course. Hence deflation is what we will get. Remember we have 1500 trilliion in worldwide derivatives that must be unwound before true inflation, perhaps hyperinflation sets in. Initially, believe it or not, they will not be able to print money fast enough to overcome the deflationary spiral that ensues.
Tuco Benedicto Pacifico Juan Maria Ramirez
Is that book you once read kinda like "hooked on phonics?" And is their an Espanol version? This is important because i'm trying to become expert at talking points which just as you say mean the exact opposite of what is intended...but don't give that appearance for some reason.
Hell, I am still trying to figure out why "phonics" is not spelled fonetically:)
Tuco
How ironik iz that?
It matters not what they should do, it only matters what they will do, and as Faber said, they will do QE3.
This is a financial site, not Government Ethics 101 class. Use what you know about them and how they will act to
position yourself to profit from it.
Spot on, spot on. Who is going to buy that 2.4 trillion in debt, oh yea us. When this game implodes, it will destroy this nation.
Anybody else think we would have all been better off if the South had won?
Or better yet, if the North just allowed them to secede. I think there are many states that would like to secede now, including Texas.
i wouldnt mind if my state of california secedes from the union.
i absolutely could see one or (many?)more states seceding as this clusterfuck evolves
China buys U.S. debt to keep the Yuan low.
I welcome the decision, at least today, that they aren't doing anything worse than what they have already done...
classic
This announcement does the same as QE3, only without printing money.
The Fed wants trillions of parked in treasuries dollars to go into risky assets (stocks and commodities).
Also, they left the door open to QE3 if the economy deteriorates (as it most likely will, so QE3 is coming).
Don't fight the Fed dude (at least not at these ridiculously depressed stock prices).
In Europe, Trichet is retiring within a month or so. The Italian dude replacing him will cut rates and start European QE as soon as Trichet out the door.
Which stocks have ridiculously depressed prices? Seriously. Even with a 10% budget deficit we are still back in a recession (not that we ever left). Why would you think stocks are cheap?
Hell, just look at how many companies get revenues solely from advertising. How muchy advertising money is out there?
Just buy any stock you like and frontrun the investing community -- a lot of funds have capitulated (or were forced to liquidate) and a lot of shorts are trapped.
Either the economy is going to get better by itself in the next few months... What assets are going to do well? Stocks are going to do well; bonds won't do so well, gold won't do as well. Or the economy is not going to pick up in the next few months and the Fed is going to come in with QE3. Then what's going to do well? Everything. Everything will go up.
luv Dr. Faber, he's the best. the video clip made my day .