INTERNATIONAL. Dr. Marc Faber the Swiss fund manager and Gloom Boom & Doom editor is still expecting a global recession in 2013 when the economies of the world could take a hit from negative developments.
Speaking to CNBC's Closing Bell on Thursday, Faber still sees a 100% chance the world heads into recession, echoing a call he made in May, as he simply can't see where growth will come from.
"If you look at the world, essentially Europe, the US, China and emerging economies that depend heavily on China, Europe is already in recession, the German economy is still growing slightly but likely to go into recession, the other economies are already in recession. The US has decelerated and I don't see much growth in the next 6-12 months," he said.
Faber was about to elaborate on China's slowdown when he was interrupted by the CNBC anchor.
China's manufacturing activity fell to a nine-month low in August as firms struggled with global woes. Preliminary figures from HSBC's closely watched purchasing managers' index (PMI), which gauges nationwide manufacturing activity, hit 47.8 this month, the lowest since November. New export business declined at its sharpest rate since March 2009, HSBC said, without giving a figure
In May, Faber warned that a global recession was on its way. "As an observer of markets whenever everyone focuses on one thing like Greece and Europe maybe they miss issues that are far more important such as a meaningful slowdown in India and China," he cautioned.
"There are more and more stocks that are breaking down, economic sensitive stocks and companies that cater to the high-end," he said, adding "that suggests to me the economy is likely to weaken and the huge asset run is likely to come to an end with significant asset deflation."
When taken in concert, all the economies of the world could take a hit from these negative developments, he reckons. “I think we could have a global recession either in Q4 or early 2013." When asked what were the odds, Faber replied, "100%."
Is there anything the Fed or the Treasury can do, i.e. more quantitative easing?
"If you look at the injections of liquidity and the interventions by the Fed and also by the Treasury with fiscal measures over the last 15 years, [the measures] have actually already impoverished the U.S. economy," he said.
"So yes they can print money and maybe the S&P goes up somewhat but my sense is that the asset markets have already discounted further easing... so you would need massive easing to boost the S&P meaningfully, “he stressed.
Asked about the fiscal cliff in the U.S. and if Congress could fix it by the end of the year, Faber said the fiscal deficit will remain high regardless of who wins the U.S elections in November.
"It doesn’t matter whether the republicans win the election or Mr. Obama [wins]. The fiscal deficit will stay around US$1.3 trillion for a long time and in my view it will go up, he cautioned before reminding the CNBC anchors that the true fiscal deficit would need to include accumulated unfunded liabilities and then the deficit would be over US$4 trillion.
Adding gloom to the one area that seemed to be doing fine, Faber pointed out that "corporate profits will disappoint over the next 12 to 18 months."
About Dr. Marc Faber
Dr. Marc Faber was born in Zurich, Switzerland. He went to school in Geneva and Zurich and finished high school with the Matura. He studied Economics at the University of Zurich and, at the age of 24, obtained a PhD in Economics. Between 1970 and 1978, Dr Faber worked for White Weld & Co in New York, Zurich and Hong Kong.
Since 1973, he has lived in Asia. From 1978 to February 1990, he was the Managing Director of Drexel Burnham Lambert (HK). In June 1990, he set up his own business which acts as an investment advisor and fund manager.
In 2000 Faber decided to spend more time writing his newsletters as well as growing his advisory business. He moved back to his home in Chiang Mai, Thailand, maintaining only a small administrative office in Hong Kong.
Dr. Faber publishes a widely read monthly investment newsletter 'The Gloom Boom & Doom Report' which highlights unusual investment opportunities, and is the author of several books.
Note: See the video of the CNBC phone interview with Dr. Marc Faber.