Monday, August 20, 2007

Marc Faber on markets, Fed intervention

Having "correctly forecast the downturn in global financial markets", Marc Faber speaks with Bloomberg to update his investment outlook and share his views on the recent central bank interventions in the market.

Marc feels that recent interventions into the market and liquidity injections by the Fed are unjustified, and will only lead to greater problems in the economy at a later time.

He also points out that many of the problems we are currently witnessing arose out of the easy monetary policies of 2001-2007; therefore "solving" these problems with yet another dose of liquidity amounts to pure folly.

Faber also elaborates on his earlier calls for a deleveraging in the markets and resulting lower asset prices in the short-intermediate term.

He notes that a capital outflow from emerging markets into the U.S. and the Yen will probably keep the dollar aloft for the time being, and allow U.S. markets to outperform most emerging markets for the next few months. Of course, we're talking relative outperformance here, as most asset classes will head down in this "deleveraging" environment, rather than make new highs.

Check it out.