As stocks returned a whopping 30% in 2013, there have been growing concerns about a stock market bubble. Especially considering that the rally supported by only meager earnings growth.
While many have made comprehensive arguments showing why stocks are not in a bubble, Marc Faber, author of “The Gloom Boom And Doom Report,” continues to argue that we’re in a bubble that’ll pop as we head for a financial crisis.
In an interview with Bloomberg TV, he says we are in a “gigantic financial asset bubble.” He also thinks the bubble could burst at any moment.
“I think we are in a gigantic financial asset bubble. But it is interesting that that despite of all the money printing, bond yields didn’t go down. They bottomed out on July 25, 2012 at 1.43% on the 10-years. We went to over 3.0%. We’re now at 2.85% or something thereabout. But we’re up substantially. Now, this hasn’t had an impact on stocks yet. In fact, it pushed money into the stock market out of the bond market. But if the 10-years goes to say 3.5% to 4.0%, then the 30-year goes to close to 5.0%, the mortgage rates go to 6.0%. That will hit the economy very hard.”
“[The bubble] could burst before. It could burst any day. I think we are very stretched. Sentiment figures are very, very bullish. Everybody’s bullish. The reality is they’re very bullish because they think the economy will accelerate on the upside. But my view is very different. The global economy is slowing down, because the global economy’s largely emerging economies nowadays, and there’s no growth in exports in emerging economies, there’s no growth, in the local economies. So, I feel that the valuations are high, the corporate profits have been boosted largely because of the falling interest rates.”
This is not a totally new call. Faber has repeatedly said that we’re headed for a 1987-type sell-off.
Faber also said Facebook is a fad and that lower interest rates are punishing savers. Here’s the entire transcript from Bloomberg TV:
…..continue reading the topics below all on one page HERE
Faber on the Fed and how far the ‘rubber band can be stretched’:
On whether the Fed is creating a two-class system:
On how to help the people on the lower end of the economic spectrum:
On whether the government is spending too much money:
On bitcoin:
On interest rates:
On his view of overvalued stocks, including Facebook:
On overall market valuation concerns:
…..again read them all HERE
