Monday, July 8, 2013

MARC FABER CNBC TV Jul 08, 2013 : Sell Equity & Bond, hold Cash as more Gloom ahead




Q: What did you make of the jobs report and the takeaways from there which is that the taper program may begin sooner than most expected?

A: I don’t know because the Federal Reserve (Fed) does not know either when they will slow down their bond purchases. First of all on a closer analysis the jobs report was not particularly good. A lot of full time jobs were lost and part time jobs were added.

So, I would not call now the jobs report as a supportive of say tighter monetary policies. I have to say that the Fed basically believes in money printing and they will continue to print money in my view. The question is at what pace they will continue to print money.

Q: What did you make of the very sharp spike in the US bond yield on Friday to about 2.74, that got the emerging markets worried this morning? Would you expect to see further rise in the US bond yield from here?

A: Well basically its interesting that since they initiated Quantitative Easing (QE) unlimited a year ago, bond yields have been rising regardless. It will be interesting to see in the months ahead what the impact of the increase in interest rates is on say the housing market, and on asset prices.

So, I would say looking actually at the past predictions by the Federal Reserve they have no clue themselves. I think the view at the Fed is it will cause less damage. That would be my assessment of their thinking. It is not that I would agree with it, but that is the way they think.

Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.

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