Marc Faber joins CNBC’s Squak Box, along with Nouriel Roubini,Â on August 12, 2009 discuss macro and micro economic trends.
I expect now, maybe for the next couple of months, a period of a recovering dollar and a correction time in asset markets. Because, the strong dollar means global liquidity is tightening.
The U.S. is the least cyclical economy. As professor Roubini pointed out, emerging economies are essentially more cycical than the US economy…And I think in a scenario, where growth will be dissapointing, I think emerging markets are kind of vulnerable. They also became the favorite investment destination by momentum players. I think we had huge increases in stock prices. A lot of markets have doubled in price between March and just now…So, a correction is possible.
Having said that, I will also argue, that the worse global economies, the more stocks can go up, because we have all these central bankers who are nothing else than money printers and they are dangerous to the health of the global economies….
They want to create another bubble to bail them out. And that is of course not a recipe for healthy, sustainable growth.
The dollar has hit quite a low recently, and it seems that the majority of investors and traders continue to be bearish on the dollar in the near term, some calling for a collapse below last year’s dollar lows. Dr. Marc Faber, on the otherhand, suggests that the bearish sentiment is so high right now, that a contrary move may occur, pushing the dollar higher and forcing a correction of US equities markets. This correction may also lead to corrections across the globe, and in my opinion, most likely in China, which is up over 80% on the Shanghai index this year.