Marc Faber, publisher of the Gloom, Boom and Doom Report,
stopped by Bloomberg Television’s “Street Smart” today and told Trish
Regan, Adam Johnson and Matt Miller that Janet Yellen would “make Mr.
Bernanke look like a hawk.”
Faber also said, “When I look at the market action today, I would
like to see the next few days, because it may be a one-day event. The
markets are overbought. The Feds have already lost control of the bond
market. The question is when will it lose control of the stock market.”
**BLOOMBERG TELEVISION**
Faber on the reaction that there’s going to be no taper for now:
“My view was that they would taper by about $10 billion to $15
billion, but I’m not surprised that they don’t do it for the simple
reason that I think we are in QE unlimited. The people at the Fed are
professors, academics. They never worked a single life in the business
of ordinary people. And they don’t understand that if you print money,
it benefits basically a handful of people maybe–not even 5% of the
population, 3% of the population. And when you look today at the market
action, ok, stocks are up 1%. Silver is up more than 6%, gold up more
than 4%, copper 2.9%, crude oil 2.68%, and so forth. Crude oil, gasoline
are things people need, ordinary people buy everyday. Thank you very
much, the Fed boosts these items that people need to go to their work,
to heat their homes, and so forth and at the same time, asset prices go
up, but the majority of people do not own stocks. Only 11% of Americans
own directly shares.”
On whether interest rates are held down when the Fed continues this type of policy:
“On September 14, 2012, when the Fed announced QE3, that was then
extended into QE4, and now basically QE unlimited, the bond markets had
peaked out. Interest rates had bottomed out on July 25, 2012–a year
ago–at 1.43% on the 10-year Treasury note. Mr. Bernanke said at that
time at a press conference, the objective of the Fed is to lower
interest rates. Since then, they have doubled. Thank you very much.
Great success.”
On what the endgame is:
“Well, the endgame is a total collapse, but from a higher diving
board. The Fed will continue to print and if the stock market goes down
10%, they will print even more. And they don’t know anything else to do.
And quite frankly, they have boxed themselves into a corner where they
are now kind of desperate.”
On Janet Yellen:
“She will make Mr. Bernanke look like a hawk. She, in 2010, said if
could vote for negative interest rates, in other words, you would have a
deposit with the bank of $100,000 at the beginning of the year and at
the end, you would only get $95,000 back, that she would be voting for
that. And that basically her view will be to keep interest rates in real
terms, in other words, inflation-adjusted. And don’t believe a minute
the inflation figures published by the bureau of labor statistics. You
live in New York. You should know very well how much costs of living are
increasing every day. Now, the consequences of these monetary policies
and artificially low interest rates is of course that the government
becomes bigger and bigger and you have less and less freedom and you
have people like Mr. De Blasio, who comes in and says let’s tax people
who have high incomes more. And, of course, immediately, because in a
democracy, there are more poor people than rich people, they all applaud
and vote for him. That is the consequence.”
On where he sees gold heading:
“When I look at the market action today, I would like to see the next
few days, because it may be a one-day event. The markets are
overbought. The Feds have already lost control of the bond market. The
question is when will it lose control of the stock market. So, I’m a
little bit apprehensive. I would like to wait a few days to see how the
markets react after the initial reaction.”
On whether the 10-year yield will float back up to where it was before 2pm today:
“I will confess to you, longer-term, I am of course, negative about
government bonds and i think that yields will go up and that eventually
there will be sovereign default. But in the last few days, when yields
went to 2.9% and 3% on the 10-year for the first time in years i bought
some treasuries because I have the view that they overshot and that they
could ease down to around 2.2% to 2.5% because the economy is much
weaker than people think…I think in the next three months or so.”
On gold prices:
“I always buy gold and I own gold. I don’t even value it. I regard it
as an insurance policy. I think responsible citizens should own gold,
period.”
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