Marc Faber, known as “Dr. Doom” by the media, appeared on Bloomberg Television this morning from Bangkok and shared his short-term outlook for stocks and commodities. The editor of The Gloom Boom & Doom Report told Bloomberg viewers:

Global Economy:

For everyone, business is down. And in the U.S., if the statistics were compiled properly, the economy would be in recession also. The same in Europe. I travel extensively around the world. Compared to a year ago, all businesses are down.

Stocks:

I can see that stocks can rally because of psychological reasons. They’ve been oversold.

Crude Oil:

The oil price coming down is precisely a symptom of economic weakness. Not a symptom of strength.

Airlines:

Maybe there is a recovery going. I think one, in investing money, you should not look only at your personal experience. You can buy stocks of companies that are of poor quality. If they’re low enough, they can rebound. It’s like now the financial stocks. They have been hit very hard. Maybe they stabilize around this level and maybe they even rebound by 30 to 40 percent. I don’t think that they’re attractive from a longer-term perspective. I don’t think that stocks are attractive in real terms from a longer-term perspective. But I think that they can rebound somewhat.

U.S. Economy:

We have a tightening of global liquidity, and that tightening comes essentially from a diminishing U.S. trade and current account deficit. And I think that if the oil price continues to go down, as I think it’s very likely in the near-term for the next three to six months, as well as other commodities, then the trade and current account deficit of the U.S. could decline more than is perceived. And that would strengthen the dollar further, and in my opinion, if there is a contraction in consumption in the U.S., it is not a disaster for the U.S. because they don’t produce much anymore, but it would be very bad for the producing countries, the manufacturing centers of the world, that are mostly emerging economies.

Commodities:

The second half of 2008 of this year would not be favorable for commodity prices… As far as I’m concerned, we peaked out in commodity prices, and later on we will have to see whether it’s a longer-term peak or a short-term peak. But we don’t know yet.

You can view 9 minute 14 second Faber segment here.

Source:

Marc Faber Interview
Bloomberg, September 2, 2008

Earlier today, legendary investors Marc Faber and Mark Mobius talked about Thailand as the Southeast Asian country wrestles with political instability. Thailand’s SET Index dropped to a 19-month low Tuesday after Prime Minister Samak Sundaravej declared a state of emergency following clashes between pro and anti-government demonstrators.

Marc Faber, the famous Swiss-born investor who resides in Thailand, appeared on Bloomberg Television this morning from Bangkok and talked about the political crisis, the economy, and the investment outlook for Thailand. The editor of The Gloom Boom & Doom Report said:

Thailand is essentially a political mess. The economy is not very dynamic, and it will continue to kind of move ahead slowly…

But at the same time, these people look for a strong stock market. I think that will be misplaced. At the same time, Thai shares are inexpensive. You can buy lots of Thai companies at a dividend yield of between 5 and 8 percent. So, that will give some support to the market.

Templeton Asset Management’s Mark Mobius also addressed the Thailand situation when he appeared on CNBC this morning. The emerging markets veteran said:

We are bullish on Thailand long-term. And we have been for quite some time because we think that these political disturbances sort of refresh the political climate and pushes for reform. So, we think after this is over, things will be good…

Based on our experience, from many, many years in Thailand, things will get better. There’s no question about that. You may have to wait for a while. But the interesting thing about the market is it hasn’t come down very much in the face of these demonstrations. So, I would like to see some further correction in the market before going back in.

(CNBC: How much of a correction?)

20, 30 percent like that.

You can view 9 minute 14 second Faber segment here.

You can view the 3 minute 31 second Mobius segment here.

Sources:

Marc Faber Interview
Bloomberg, September 2, 2008

Mark Mobius Interview
CNBC, September 2, 2008

Bloomberg spoke to legendary investor Marc Faber by telephone earlier today. Dr. Faber, who publishes the monthly investment newsletter The Gloom Boom & Doom Report, weighed in on the recent commodities slump. Bloomberg’s Chanyaporn Chanjaroen and Feiwen Rong wrote today:

Commodities, measured by the Standard & Poor’s GSCI index, have tumbled 22 percent from their record July 3, descending into a bear market…

“Prices have made a peak,” said investor Marc Faber, 62, who told investors to bail out of U.S. stocks before 1987’s so- called Black Monday crash. “Whether that is a final peak or an intermediate peak followed by higher prices, we don’t know yet. It could go lower,” he said by phone today from Chiang Mai, Thailand.

Source:

“Gold, Oil Slump, Leading Commodities Drop on Dollar, Growth”
Chanyaporn Chanjaroen, Feiwen Rong
Bloomberg, August 15, 2008

Last Friday, well-known bear Marc Faber spoke to Bloomberg’s Kathleen Hays about the euro’s performance against the U.S. dollar, commodities, and the global economy. Some notable excerpts from the interview included:

The global economy is in recession already…

The U.S. would now outperform for 3 to 6 months…

I think the dollar can continue to rally somewhat to say 1.47 against the euro, then there’s some support there. The Europeans will have to cut interest rates as well, because their economies are most likely much weaker than it’s perceived. The emerging economies are also much weaker than it’s perceived. And so, on a relative basis, if you put a gun on my head and said you had to buy stocks somewhere, I would by U.S…

I think commodities individually, could easily drop 50 percent, as some have already done, like nickel, lead, and zinc, and others will follow. But after that, I think that the bull market in commodities will reassert itself. But, my view was, that, for the second half of 2008 commodities would go down…

Well, let me put it this way, I personally am not buying U.S. stocks, but am long the dollar right now…

Where I’m also long and optimistic is essentially about Japan. And I would be very wary of the favorite trades of the last say, two years, long commodities, long steel stocks, long iron-ore companies, that kind of sector I would avoid…

You can listen to the 5 minute 18 second interview here.

Source:

Marc Faber Interview
Bloomberg, August 8, 2008

Money managers from around the world gathered in Chicago last week for the CFA Institute’s annual investment seminar. Yesterday, the Chicago Tribune’s Gail MarksJarvis talked about two of the speakers- Jeremy Grantham and Marc Faber. The personal finance columnist wrote:

“I am officially scared,” GMO investment manager Jeremy Grantham told professionals from as far away as Abu Dhabi and Malaysia. “In 2000, we had a technology bubble. But this is massive, a massive credit crisis and a bubble in global housing, global equity and global land.”

Grantham, whose clients have included Vice President Dick Cheney and 2004 presidential candidate John Kerry, warned that the world is working its way through the “first truly global bubble.”

The British money manager shared his investment outlook with seminar participants. MarksJarvis wrote:

When asked by a money manager what he would buy now, Grantham said, “long mattresses” — jesting about the stereotypical nervous behavior of hoarding cash. He seriously suggested: “Put money into something incredibly safe, like a high-quality hedge fund.”

Grantham said rather than buying stocks for the long run now, he would only “short” them, or bet that they will decline in price. He sees “nothing interesting in quality corporate bonds,” and he has been shorting oil. “Commodities had a good run, but that’s over,” he said.

Although downtrodden mortgage-related bonds might be a good deal now because some are selling for 59 cents on the dollar, he said he wonders if the price will seem compelling if home prices fall another 20 percent or 25 percent.

He confessed to the group that “I bought my first gold last week, and I hate gold. It doesn’t pay a dividend. I would only do it if I was desperate.”

MarksJarvis noted:

Generally, when bubbles burst, the asset prices stay down for lengthy periods. Grantham isn’t expecting the stock market to hit its low until 2010.

The Tribune columnist also talked about Marc Faber, who publishes the monthly investment newsletter The Gloom Boom & Doom Report. She quoted the Swiss-born investor as saying:

The Fed has created a bubble in everything — stocks in emerging market, real estate everywhere in the world, commodities, art. The only asset class that is down is the U.S. dollar…

It is quite likely that the current synchronized global economic boom and the universal, all-encompassing asset bubble will lead to a colossal bust.

MarksJarvis also noted:

And with commodity prices so inflated, he expects an “increase in international tensions” over resources.

Source:

“Even the pros may be stuffing the mattresses”
Gail MarksJarvis
Chicago Tribune, July 29, 2008

Well-known investor Marc Faber appeared in an interview with Bloomberg Television this morning, where he shared his grim outlook for the global economy. Bloomberg’s Carol Massar and Alexis Xydias wrote:

Faber said the “world may already be in recession,” and reiterated a prediction for a “bust” in global markets.

Markets may enter “a vicious cycle on the downside” whose worst scenario is a “colossal bust with inflation,” as central banks are unable to manage the economic slowdown and faster growth in prices.

Still, Faber forecast the Standard & Poor’s 500 Index may climb about 5.7 percent from current levels, to 1,350. Oil may drop $30 a barrel to “about” $100 in the near term, he said, although the “long-term” prospect for oil prices is to remain “tight.”

The 16 minute 27 second Bloomberg interview can be viewed here.

Graphic By Barun Patro, stock.xchng

Source:

“Freddie, Fannie Should Split, Not Get Aid, Faber Says (Update2)”
Carol Massar, Alexis Xydias
Bloomberg, July 23, 2008

It’s not all too often that I come across a piece mentioning three of Investorazzi’s legendary investors. This morning, Bloomberg’s Chen Shiyin and Catherine Yang compared emerging markets veteran Mark Mobius’ outlook for China and India stocks to those of Marc Faber and Jim Rogers. Shiyin and Yang wrote:

Stocks in China and India offer “good bargains” after benchmark indexes in the nations declined more than any other major market this year, Templeton Asset Management Ltd.’s Mark Mobius said.

“We’ve been rearranging the portfolio based on valuations, which have come down pretty dramatically in places like India and China,” Mobius, who oversees about $47 billion of emerging market equities as executive chairman of Templeton, said in an interview from Toronto. “There’ve been big declines.”

The Bloomberg reporters noted that Mobius’ view is shared by legendary investor Jim Rogers:

Mobius joins investor Jim Rogers in favoring Chinese stocks after they plunged 46 percent this year. China and India, the two most populous nations, are the worst performers among the world’s 20 largest stock markets as soaring raw material prices and slowing economic growth weigh on profits. Last year, China’s main index surged 162 percent and India’s advanced 47 percent.

China’s CSI 300 Index is valued at 21 times reported earnings, near the lowest in more than two years, and down from a peak of 53 times in October 2007. In India, the Sensitive Index is trading at 14 times reported earnings, down from a high of 31 earlier this year. That compares to a multiple of about 22 times for the Standard & Poor’s 500 Index in the U.S.

However, Marc Faber of The Gloom Boom & Doom Report disagrees with their outlook for Chinese and Indian equities. From the Bloomberg piece:

The investor who advocated bailing out of U.S. stocks before 1987’s so-called Black Monday crash and correctly predicted last August the U.S. would enter a bear market, said on July 4 that investors betting on a rebound in China’s tumbling stocks are setting themselves up for more losses.

Who will win this clash of the titans?

Source:

“Mobius Sees ‘Good Bargains’ in China, India Stocks (Update2)”
Chen Shiyin, Catherine Yang
Bloomberg, July 22, 2008

Bloomberg caught up with Marc Faber, aka “Dr. Doom,” at an investment forum in Sydney earlier today. Reporter Shani Raja wrote:

Marc Faber, who told investors to bail out of U.S. stocks before 1987’s so-called Black Monday crash, said oil prices may fall to $100 a barrel as demand slows in a global economy at the “tail end” of its expansion.

Accelerating inflation and rising interest rates worldwide are likely to dent the value of commodities including oil, said Faber, who publishes the Gloom, Boom & Doom Report, at an investment forum in Sydney today.

“Global liquidity is under some relative tightening, and that is unfavorable for all asset classes,” said Faber, 62. There will be “sharp corrections’” in commodities prices.

According to the Swiss-born investor, the global economy has experienced a synchronized boom since 2001. Dr. Faber noted:

In the history of capitalism this is most unusual. When it comes to an end it should affect all countries.

Bloomberg’s Raja pointed out global stock markets losses have amounted to nearly $12 trillion so far this year, while financial institutions have been hit with $447.6 billion in credit-related losses.

Dr. Faber told the forum that he prefers holding physical commodities rather than shares or futures, and that real estate in India and Cambodia were among his favored Asian investments, according to Raja.

Cambodian Beach

Such pessimism extends to the financial sector as well. According to India’s Moneycontrol.com (home of CNBC-TV18):

Marc Faber, Editor & Publisher, The Gloom, Boom & Doom Report said, “We had expanding credit growth in the period 2001-2007. We had this credit bubble built up after 1982.” So in other words, for 25 years now credit growth is slowing down and the fundamentals of the financial sector have worsened and they will stay unfavourable for a very long time, he added.

The peak earnings of finance companies ain’t going to come back. “I don’t think that Citigroup, or UBS or any other finance stock will go back to their peak level they had reached in 2007.”

Sources:

“Faber Says Oil May Decline as Global Growth Weakens (Update3)”
Shani Raja
Bloomberg, July 21, 2008

“See long-term negative cues for fin sector: Marc Faber”
Moneycontrol.com (India), July 21, 2008

NewsMax.com recently talked to well-known money manager Marc Faber, who shared his views on the U.S. central bank, bank failures, and bailouts with the Internet news site. Dr. Faber is famous for advising clients to get out of the U.S. stock market one week before the October 1987 crash. On the Fed:

The Federal Reserve has misled the public, and its fiscal policy has greatly damaged the U.S. economy. But the big Wall Street banks and brokerage firms will be bailed out by the Fed if they get in trouble because they’re members of the same “club.”

Those are the opinions of Marc Faber, economist, author, former Managing Director of Drexel Burnham Lambert, and editor of The Gloom Boom & Doom Report, a monthly investment newsletter.

“Let’s say if I’m a manufacturer and I’m a bad businessman and I go out of business, who’s going to help me? But Bear Stearns and the Wall Street elite because they’re tied into the Treasury and the Federal Reserve and they lunch together, it’s a club… and they’re bailed out. I mean it’s a joke.”

“The first thing that people should do is stop listening to the Federal Reserve in America, and specifically to Mr. Ben Bernanke,” Faber said in a recent CNBC interview.

“They are misleading the public and investors by claiming they want to have a strong dollar and that they’re concerned about inflation. But when it comes to actions, they show no concern about inflation and [about] the ordinary Americans and middle class at all.”

Getting The Shaft?

Dr. Faber is also forecasting an explosion of bank failures over the coming year. According to NewsMax.com:

In Faber’s recent note to investors he writes with extreme pessimism that he expects 150 bank failures in the next 12 months.

“I think a lot of banks are already bankrupt,” Faber says.

“And a lot of insurance companies and financial institutions, but they hide their rotten assets in level three asset categories, where you don’t need to value them.”

“I think the financial sector by and large has much larger problems than is perceived by the investment community. The stock market to some extent is telling you that, is giving you the price signals.”

The Swiss-born investor also feels that the Fed acted irresponsibly when it bailed out Bear Stearns. The news site explained:

Yet after the Bear Stearns bailout, the Fed has essentially promised bailouts for the largest firms if they go belly up, says Faber.

“It’s a very questionable practice in life to have a financial sector that made so much money in the good days, and when something goes bad the government just bails them out. It sets a very bad precedent.”

Source:

“Marc Faber: Bernanke, Fed a ‘Joke’”
NewsMax.com, July 10, 2008

Not everyone is sold on a rebound in Chinese stocks. According to Bloomberg this morning, Dr. Marc Faber, aka “Dr. Doom,” won’t be first in line to buy up these battered equities. Bloomberg’s Chua Kong Ho wrote:

Investors betting on a rebound in China’s tumbling stocks are setting themselves up for more losses, according to Marc Faber, who told investors to bail out of U.S. stocks before 1987’s so-called Black Monday crash and correctly predicted last August the U.S. would enter a bear market.

Faber’s forecast contrasts with local stock analysts, who are as bullish as ever even after a 51 percent plunge in the CSI 300 Index since its October record. “Buy” calls still make up two-thirds of all recommendations for Chinese stocks, virtually unchanged from the market’s peak, according to Bloomberg data.

Faber, who publishes the monthly investment newsletter The Gloom Boom & Doom Report, told Ho in an interview from Bangkok on July 4:

I just wouldn’t buy. When a bubble bursts, you only hit bottom when people totally give up and vow they’ll never buy stocks again. People are still more worried they’ll miss the next rally.

Ho noted:

The last time Chinese stocks fell by half — from a June 2001 high — the Shanghai Composite Index took four years to reach its low.

Even so, the Swiss-born investor admitted there could be a short-term bounce after such a huge decline:

We could have rebounds of 20 to 30 percent, but I wouldn’t bet on it. I would rather use rebounds as a selling opportunity.

Source:

“China Bulls Wrong; Stock Rout to Worsen, Says Faber” (Update2)
Chua Kong Ho
Bloomberg, July 7, 2008