Marc Faber Sees Equities in Trading Range, No Break of March 2009 Low
Marc Faber the Swiss fund manager and Gloom Boom & Doom editor believes equities are in a trading range. He sees markets first dropping somewhat into October-November and then rallying again towards the end of the year.
Speaking in an exclusive interview with India’s CNBC-TV18‘s Udayan , Faber said: "I think the difficulty is what to do with money when interest rates are essentially at zero on US dollar…obviously people look at their portfolios and they see stocks that have dividend yields".
Asked whether the S&P 500 could break its recent low, Faber said: "We have touched 1,010 at the low point and we traded it several times around 1,040," adding that hough there is some support there, he "wouldn’t bet that it’s not going to be broken on the downside".
Explaining himself, Faber said: "The fact is simply the economy is not doing well and it is very likely that they will have more monetary easing and further stimulus packages".
"Maybe the stock market won’t be very happy about additional stimulus, more interventions into the free market," he said, adding "though anything could happen, but let’s put it this way that I do not think that we will go and breakdown below the March 2009 level.
"I think that we have seen a major low [in March 2009] and that we will be in a kind of a trading range around this level we are at now," Faber said suggesting that the Fed’s economic policy measures would likely fail to boost economic activity in the US but could support asset markets.
Reiterating his foundness for gold, Faber told CNBC-TV18: I think we may have geopolitical events that could play a role in valuation of asset. That’s why I tell people they should have some money in physical gold.
In November, Faber, known as Dr. Doom, had warned about future geopolitical tensions brought about by the economoc crisis and the high levels of debt. "At some stage, somewhere in future, we will have a war – that you have to be prepared for. And during war times, commodities go up strongly,” said Faber.
"If you want to hedge against war, you don’t want to own derivatives in UBS and AIG, but you have to own them physically, like farmland and agricultural commodities. That is something to consider for you as a personal safety and hedge. You have to own some commodities," he said.