Marc Faber, who advised his clients to get out of U.S. stocks one week prior to the October 1987 crash, told CNBC in an interview yesterday that he believes equities, oversold as they are, will bounce and then eventually head lower. From the CNBC website yesterday:

The $700 billion US financial rescue plan might give the market a temporary boost, but eventually stocks will fall again, Marc Faber, the analyst know as “Dr. Doom,” told CNBC.

Faber, editor & publisher of “The Gloom, Boom & Doom Report”, said he doesn’t believe that the recent efforts to ease the global credit crisis will help.

“It will work temporarily in the sense that some confidence is coming back into the market,” Faber said about the bailout plan. “First we’ll get the bounce from an oversold level and I suppose afterwards it will drift because the global economy is decelerating at an unprecedented pace, and the governments in the Western world they try to reignite credit growth, and I think it will fail.”

The Thailand-based investor, who has an office in Hong Kong, believes that the slowing U.S. economy will have a significant impact on the rest of the world. From CNBC:

He sees the same slowdown in Asia.

“The U.S. produces very little,” he said. “Asia is the producer for the United States and it is also the region that has very large capital spending. So when there is a slowdown in the U.S., it’s not good for the U.S., but it’s basically a disaster for Asia. Because of reduced demand in Asia it’s an even greater disaster for the resource producers of the world: the Middle East, Russia, Brazil. The whole world goes into a vicious down cycle economically, and the U.S. is relatively better off.”

Source:

“Dr. Doom: Bailout Won’t Help Markets Much”
CNBC, October 21, 2008

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