Is Marc Faberís Stock Market Correction Finally Coming Due?
five months have passed since Marc Fabers prediction of a
10% correction in U.S stocks. It hasnt happened. Will the
month of March be the charm?
Margaret Brennan on Bloomberg Televisions Oct. 26 edition
of InBusiness, Marc Faber, dubbed Dr. Doom, said, We
are in the inflation trade again, underscoring a weak
dollar, strong precious metal prices, strong equity prices especially
in emerging markets and now in frontier markets, plus strong industrial
think a correction is overdue, he asserted.
later, the pony-tailed, eclectic, Swiss hedge fund manager
who features a medieval-style 17th century plague painting by Kaspar
Meglinger, titled Dance of Death, on his Web sites
home page reiterated his call for a 10% correction in U.S.
stocks on Jan. 25.
is coming, Faber said in an interview from Zurich on Bloomberg
Televisions Street Smart.
in the U.S. will go down less than emerging markets, he stressed.
Faber expects a much steeper correction of as much as 30% in an
overseas equities, which he has frequently said is a crowded
Six weeks since
Fabers Jan. 25 interview, U.S. equities still remain relatively
resilient in the wake of spiking oil prices, continuing housing
price declines, and lingering questions of the U.S. economys
ability to create jobs and robust consumer spending again without
help from a generous Fed.
The Wall Street
adage climbing a wall of worry has crept into analysts
repertoire of responses to media questions concerning the S&P500?s
stubbornness to relent to the threat of an oil shock to an anemic
(at best) U.S. recovery.
of a crack in the wall may have developed, supporting Faber thesis
of an overdue correction about to become due.
The watch dog
blog of everything financial, ZeroHedge.com, posted an observation
by Credit Suisse on Mar. 8, which suggests the divergence between
the gold price and the price of the economic bellwether base metal,
copper, could be signaling a tidal shift toward a risk-off trade
is around the corner.
Suisse points out, today the Gold/Copper ratio is up by over 4%
to 3.32, which happens to be the biggest one day move since June
29, and confirms that not only the copper run may be over, but that
derisking and the flight to safety trade is truly back on,
writes the sites blogger, Tyler Durden (screen name).
An hour later,
Durden added another did you know? factoid about the
normal correlation between crude and stocks moving too far away
from the mean, fueling the Faber thesis of a risk-on trading herd
maybe ready to finally flee the burning building. The last
time WTI to Stocks hit a correlation of -0.5 is just after the market
peaked in late 2007, early 2008, as the market had started its decline,
which culminated with the global sell off of everything not nailed
down, bringing the S&P to 666, Durden reminded readers
of what he wrote in a post of a week earlier.
the rest of the article
Marc Faber [send him
mail] lives in Chiangmai, Thailand and is the author of Tomorrow's
Best of Marc Faber