"The Fed will never end QE for good..." blasts Marc Faber, "they may do some cosmetic adjustments, but within a few years, [Fed] asset purchases will be substantially higher than they are today." There will be another weakening in the US economy, Faber warns, and "the Fed will argue it hasn't done enough and will do more... they have been irresponsible for 20 years."
Noting that investors should "not buy stocks but be in cash", the stunned CNBC anchor exclaims "How could you sit in cash when th emarket is on fire and interest rates are so low?" to which Faber blasts, "The market is not on fire, look at IBM, Cisco, and Intel - all lower than 2011; it's on fire if you are in Facebook or Twitter and not everyone owns them."
Use rallies to reduce exposure, he warns, "we will go up until it is over; and when it is over the drop will be larger than 20%"
On The Fed
"They will never end QE for good... they may do some cosmetic adjustments, but within a few years, [Fed] asset purchases will be substantially higher than they are today"
"Do not forget, the stock market and the so-called economic recovery will be in its 5th year... and at some point the economy will weaken again. The Fed will argue it hasn't done enough and will do more"
On Money Printing
If money printing can truly enrich the world, we should all be on the beach! Money printing does not create wealth but that's what the Fed thinks.
On the Fed's ability to spot bubbles,
Faber analogizes the members sat on top of a barrel of dynamite covered in gasoline and lighting a cigar..."and still not notice any danger."
"The members of the Fed have never worked a single day of their lives in business" and are blind to the real world impact of the policies.
"They have been irresponsible for at least 20 years," by creating one bubble after another and "bailing out institutions that should have failed."
On Stocks,
The S&P will not go up forever, and the happy times will not last forever; use any rally in the US markets from here to lighten up on long positions...
We have had a huge run off the lows in the US stock market, "we will go up until it is over; and when it is over the drop will be larger than 20%"
I don't think people should buy stocks - they should be in cash.
On Going To Cash,
The most-hated asset at the present time is cash
The stunned anchor exclaims "How could you sit in cash when th emarket is on fire and interest rates are so low?" to which Faber blasts,
"The market is not on fire, look at IBM, Cisco, and Intel - all lower than 2011; it's on fire if you are in Facebook or Twitter and not everyone owns them."
On the US economy,
In the US, the numbers may look better - but look at who publishes the numbers... globally the numbers have actually deteriorated.
On the Global Economy,
The global economy will not be strengthening next year, it will be weakening as all the Asian economies are slowing
On Gold and Gold Stocks,
Of all the asset claases that I look at, the most depressed is precious metals (and precious metals equities).
If money printing continues, which he sees as likely around the world as they "continue their insane policies", these will benefit the most.