This morning, Marc Faber, managing director of Marc Faber Ltd. and publisher of the monthly investment newsletter The Gloom Boom & Doom Report talked with Bloomberg’s Carol Massar, Erik Schatzker, and Ellen Braitman about the outlook for industrial commodities and gold prices, as well as government intervention in the economy, his outlook for the financial markets, and his investment strategy for technology stocks. Notable excerpts from the exchange included:
2009 Outlook
Well, economically it will be very bad. We have a contracting economy, globally, everywhere. And, I mean, not mildly contracting, but falling off a cliff. However, after this fall off of a cliff, the news in the next 3 months could look somewhat better than expected. In other words, there could be some rebound from the lows in economic activity.
U.S. Economic “Stimulus” Proposals
Well, it may help a little bit, temporarily. But in the long run, it’s a disaster. Any government intervention into the economy is basically bad, in particular, an intervention that is designed to support prices. The Federal Reserve, and the Treasury, both actually want to support asset prices. Most cartels that have been designed to support prices eventually broke down and prices collapsed.
Industrial Commodities
Gold is now very expensive compared to industrial commodities. Actually, it’s at the highest level in 30 years or more. And so right now, as of today, I would rather buy a basket of oversold industrial commodities.
Crude Oil
I would say, the long-term demand for oil is there. The supply won’t be there. So, long-term, I think the price will be much higher than it is today.
World War III
Everybody talks about monetary and fiscal policies, but nobody talks about the worsening geopolitical situation in the world. I think World War III has already begun.
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Blue Chip Companies
I think in every industry, the leading companies emerging from the crisis, whenever the economy recovers, will be very strong.
Asian Stocks
If someone has no money in Asia, now you can buy top-quality companies at reasonable PE’s.
BRIC (Brazil, Russia, India, China) Stocks
Prices are now down to attractive levels as an entry-point, as a trading opportunity, like the metal stocks I mentioned. So, I think I would buy these BRIC countries for a rebound, looking for a rebound of around 30% from the present level.
Long-Term Outlook
Well, I’m very bearish long-term because I think that Treasury bond yields will go up a lot, and the trade of 2009 is to short U.S. government bonds- big time… I think it will take 5 years until the world recovers.
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