Marc Faber, publisher of the Gloom Boom & Doom Report, says that everything is pointing to a downward correction. While we generally prefer to ignore ‘expert’ opinions, Marc Faber has proven time and again that he has an almost sixth sense about what global stock markets and money flows will do next. In March of 2009, he called the bottom in stocks to the day.
If you have any stock/paper holdings, it may be time to sell and go away, it is, after all, May.
Via The Daily Crux:
The markets are due for a correction and the technicals point to a weak market, Faber tells Wall Street Pit. In particular, he points to the decline in new 52-week highs as evidence of an unhealthy internal market.
Right now, Faber advises investors determined to buy stocks to stay away from cyclicals, tech stocks, and banks, sticking with safer plays such as consumer staples.
Faber, publisher of The Gloom, Boom and Doom report, likes gold as a long-term investment.
He’s more cautious when it comes to silver because of its recent runup in the price, and expects a 20-percent-plus correction in the metals complex because the inflation trade has become too crowded.
Faber says copper and the S&P 500 are highly correlated, and finds he fact that the stock index reached a new high while the metal didn’t is another signal that stocks could follow commodities lower in the short-term.
Faber says the U.S. housing market has another 10 percent to fall, but valuations are now attractive and housing hasn’t been this cheap since the early 1980s. In a serious inflation environment, Faber would rather own housing than paper dollars.
Source: News Max
Even if you don’t hold any equities or paper assets, it’s important to pay attention to stock markets, as they signal global investor sentiment and, in recent years, what the government will do next.
A collapsing stock market will have policy implications at the Federal Reserve and government levels, and as Marc Faber has previously pointed out, this means that even though Ben Bernanke says Quantitative Easing will end in June of this year, another round of money printing is sure to come.
A weakening stock market means that the US dollar should be strengthening as investors flee equity markets and move money into “safety” assets, in this case the US dollar. Since the majority of Americans equate a rising stock market with a healthy economy, a falling stock market means things are getting really bad.
Thus, to quell disconent among the unsuspecting populace we have no doubt the Federal Reserve will resume monetary easing within days or weeks of the previous program ending.
While we may see a near repeat of the 2008 crash in stocks, gold, silver and commodities, be assured that Mr. Bernanke will fire everything in his arsenal at the problem.
This means that any near-term or intermediate-term correction will be short lived.
The trend of rising prices, especially for essential goods, will continue unabated.
How long this strategy of extend and pretend can continue is anyone’s guess, but every time the Fed has engaged in adding liquidity to the system and the purchasing of billions of dollars in US Treasuries, it has lead to a declining trend in the US dollar.
We may see dollar strength in coming weeks or months. We may see collapsing prices in stocks and commodities. Eventually, however, the US dollar will break its historical support line and dive even further into oblivion.
Our long-term recommendations, which include acquiring gold, silver, food, equipment and skills, have not changed. In fact, we would suggest to our readers that any meaningful correction in prices should be used to acquire even more quality assets.