Faber raised doubts about the notion that markets, at least in the U.S.,
“Regarding the confidence, I’m not so sure because if you look at the performance of treasury bonds, they would indicate that there is a sense that the economy’s weakening and that there are problems in the financial system.
He then predicted central banks’ reaction to Brexit globally.
“Clearly Brexit means more money printing by central banks; They will continue to intervene. And I think before the year end we’ll have some form of QE4 in the U.S.”
Faber then responded to Federal Reserve officials attaching a low probability to the risks of a potential U.S.
“The Fed was fast asleep ahead of the 2007-2008 recession. So the fact that they assign a low probability to a recession doesn’t give me any comfort at all.”
Faber explained why a lack of additional quantitative easing globally could actually lead to a recession.
“I think the problem will be if there are no additional QEs around the world…is that asset prices will no longer go up and we’ve seen this already in London properties, in New York properties – and this will have a negative impact on the economy. The recession in my view is not going to come really from the economy per se, but from asset price deflation.”
- Source, Fox Business