INTERNATIONAL. Marc Faber the Swiss fund manager and Gloom Boom & Doom editor suggested that in a very negative environment where everything collapses, the US would outperform many emerging markets as it is still a relatively self contained economy that produces enough food and has the resources to produce enough energy, if it wants to.
Speaking with Tom Keene on Bloomberg Television's "Surveillance Midday" on Thursday, Faber said a correction period has begun where all markets will go lower, the dollar would rally and bonds would rally.
"In general, if you are very bearish about emerging economies, you shouldn't be bullish about the US. What I am saying is that the US would go down less than emerging markets".
"I am suggesting that America will outperform it doesn't mean it will go up, Faber stressed.
Clarifying his outlook for global stocks, the Gloom Boom & Doom editor says he doesn't think that emerging markets have bottomed out and predicts US stocks could be set for a difficult year.
"The correction in emerging markets begun in November and will go lower," Faber told Keene, adding "the US will go lower".
On the US economy and particularly on the reasons he remains gloomy despite some recent good news on growth and employment, Faber said: “Maybe statistically the US is growing, but relative to the rest of the world.....today America is nothing."
Faber added: "For the first time in the history of Capitalism, the Emerging World is now more powerful than the Western world, and that is a huge change...which brings huge tensions".
“If I had to make a bet for the next ten years in terms of equity markets, I would seriously consider a very strong weighting here in Japan,” Faber said yesterday at the CLSA Asia-Pacific Markets’ annual conference in Tokyo. “Once the debt market starts to go down, the yen will begin to weaken and that will lift equity prices. I would buy equities at the present time.”
“If I look at the next five to ten years, the interest payments on the government debt in Japan and the fiscal deficits will become very burdensome and that will necessitate monetization,” Faber said. “That will bring about a huge shift of money out of cash and bonds into equities.”
In a recent interview with Udayan Mukherjee and Mitali Mukherjee on CNBC-TV18, Faber predicted that oil prices could make further gains, but warned many things can happen in the world suggesting investors have been very complacent about the events in the Middle East.
"I am not suggesting that it will necessarily spread to the Emirates to Qatar and to Saudi Arabia but there is always a possibility of some further bad news coming out of the Middle East, which would then, in my opinion, drive up oil prices. Obviously, rising energy prices would be a negative for the global economy," he said.
"On the upside, if you look at some other commodities like copper, then obviously oil prices could go up substantially even from these levels," Faber told CNBC’s TV-18. "I don't think that oil is expensive compared to other commodities or compared to other goods prices in the world".
"Further gains would obviously depend on some political problems — some interruptions in oil supplies or a possibility of the global economy experiencing some kind of a crack-up boom," Faber added.
A crack-up boom is a boom that is driven by artificially low interest rates, easy monetary policies and debt growth in an attempt to postpone a recession. "These crack-up booms don’t last. They are not sustainable but they can last six months to one year to 18 months and then a renewed setback occurs in the global economy," he said.
Speaking to Alex Jones in an interview on February 21, Faber also referred to crack-up booms in his concluding remarks.
"We are in the end game but we are currently in a crack-up boom that will end very badly," Faber told his host.
Before it ends badly, we'll have more money printing and high inflation and when everything else fails the US will go to war, Faber predicted.