, Marc Faber Blog

Friday, November 9, 2018

Real Returns Are a Myth, the Markets Are Rigged

Many international investors consider “real returns” a key gauge for emerging market investments. 

Although there are multiple metrics to determine real returns, one popular mode is the difference between one-year government Treasury Bills and one-year projected retail inflation.

“With no further rate increase, the lure of India's real return may have diminished, especially when US Treasury is rising,” said Anindya Banerjee at Kotak Securities. “It would impact investor sentiment when the world is in a risk-off mode.”

The central bank did not raise the benchmark rate in its October bi-monthly monetary policy.

According to Marc Faber, a global market guru, tight monetary policies are good for the rupee, but not so good for the stock market.

- Source, Economic Times, Read More Here

Tuesday, November 6, 2018

Overseas Investment Exits Hit a Record High

This month, foreign portfolio investors have sold Indian stocks and bonds the most in two years after a declining rupee made US assets more attractive, and rising global interest rates rendered the carry trade unviable.

Total bond and stock net sales by overseas funds touched a high of Rs 31,984 crore so far this month, show data from National Securities Depository.

“There is a flight to safety amid the improving US economy and rising global rates,” said Ashutosh Khajuria, CFO, Federal Bank. “Pressure has been mounting on the emerging markets. If India demonstrates better performance on macroeconomic indicators like inflation, current account and fiscal deficit, those investors would come back again.”

This year, overseas investors have net sold Rs 93,481 crore of financial assets in India, the highest ever sale at least since 2002, data showed.

US unemployment, a key economic metric for the world’s biggest economy, fell to levels last seen about five decades ago, signaling a strong labour market and rising wages. That would mean the US policymakers would continue to raise headline lending rates.

“Rising US yields along with improving global economies have triggered investment exits from emerging markets,” said Sanjiv Bhasin, Executive VP-Markets, IIFL Securities. Softer oil prices and a stable rupee should reverse the market trend, he said.

“The debt market is going through uncertainties in the non-banking sector. Once it is settled, investors should regain confidence,” Bhasin said.

Two weeks ago, the US benchmark yield climbed to 3.23%, its highest level since May 2011. High US yields are prompting dollar funds to return to US assets that carry no currency risks...

- Source, Economic Times, Read More Here

Friday, November 2, 2018

Diversify Your Assets And Jurisdictions To Survive The Next Financial Crisis

Dr. Marc Faber, editor of the Gloom, Boom & Doom Report, spoke on SBTV about the state of the global financial system. Despite the trade wars initiated by the Trump Administration, the U.S will be unable to compete with Asia to reverse its trade deficit. Dr. Faber believes that the US cannot be competitive even if there is free trade.

Compared to the 70s, the stock market now is a significant part of the US economy. A stock market crash will have a huge impact on the economy today, probably enough to trigger a depression. In general, many assets are expensive today due to monetary inflation.

The Bank of Japan is now a major shareholder in nearly 40% of listed companies in Japan as the central bank keeps buying stocks under its ultra-loose monetary policy. If such central bank interventions become pervasive, Dr. Faber thinks it is possible for a central bank to own most of the assets in a country. This would be tantamount to achieving silent socialism.

- Source, SBTV

Sunday, October 28, 2018

India rupee CRISIS: Could rupee PLUNGE to 100 against US dollar? Dr Doom in BLEAK analysis

THE India rupee could plunge to depths of 100 against the US dollar if the crisis-hit currency continues to fall in value against the US dollar, according to a prominent investor and economic analyst known as ‘Dr Doom’. The languishing rupee has shed around 15 percent of its worth versus the American currency this year and is currently the worst-performing tender in Asia.

This month saw the rupee breach the 74-mark for the first time ever against the US dollar as it falters under pressure from soaring oil prices and higher interest rates.

Financial analysts are now wondering how low the rupee will continue to sink, with Marc Faber, veteran investor and publisher of the Gloom Boom & Doom Report newsletter, admitting that “India’s fiscal position is not particularly good”.

As of just before 12:30 BST, the Indian rupee is trading at 73.61, according to data from Bloomberg.

When asked if the rupee could plummet to levels of 100 against the US dollar, Mr Faber said this would require a depreciation of 5 to 10 percent per year.

But he stressed that this process would need to rumble on for “the next few years” in order to reach triple figures against the greenback.

Mr Faber told The Economic Times: “Well the timeframe is I would look for is a depreciation of 5 to 10 percent per year for the next few years.”

Mr Faber also called on India to raise interest rates “meaningfully” to give the rupee some breathing space.

He said: “Either India has to increase interest rates meaningfully, which would mean that the economy would be hurt, or they obviously will have a weaker currency over time – and nobody can deny the fact that over the last 10, 20, 30 years, the rupee has been a weak currency.”

The Reserve Bank of India went against predictions from financial analysts as it held interest rates at the start of October.

The RBI's monetary policy committee (MPC) left the repo rate unchanged at 6.50 percent, with five out of six panel members voting to hold the rate

In its policy statement, the bank said: “Global headwinds in the form of escalating trade tensions, volatile and rising oil prices, and tightening of global financial conditions pose substantial risks to the growth and inflation outlook.”

Defending the decision, the bank said it was acting "to further strengthen domestic macroeconomic fundamentals”.

- Source, Express UK

Thursday, October 25, 2018

Marc Faber: The Long Term Trend for India is Down

What is happening with the EM currencies? The fall also reflects the gain in the trade weighted dollar index pegged towards EM currency basket. Is the dollar buying seen as risk aversion or just better yield?

It is the question more of this tightening global liquidity and the way emerging economies borrowed. They borrowed in dollars and so there is a lot of demand for dollars to pay the interest on the dollar debts.

Number two, when you look at international investors, they have some cash and they have some bonds. If you look at what they do in terms of money in cash and in bonds, they can buy US treasuries. The 10-years now are available at an yield of 3% but they could also buy in Europe treasuries but the yield would be much lower.

For example, in Germany they would get a yield of 0.5% on German governments. In Portugal, they would get 2.2%, in Spain 1.66%. The dollar compared to this European currencies and bonds is relatively attractive in terms of a yield. It is not particularly attractive as a currency because some emerging economies have a much better financial condition today than they had in the last crisis or in ‘97-98.

If you ask me what I think about India, last time I said the currency has become a bit oversold and may rally a little bit, maybe to 71-72 against the US dollar. But I think the long-term trend of the Indian rupee is down...

- Source, Economic Times

Monday, October 22, 2018

Marc Faber: India's Interest Rates Have to Rise Sharply or Rupee will Crash

What are rising yields across US as well as Europe indicating about the risk that the world is running on?

The financial markets were already very fragile at the beginning of this year and this fragility has actually increased because there is a tendency among central banks to step back from asset purchases, letting interest rates gradually adjust on the upside. And so this liquidity that we have in the world has been diminishing. It is not shrinking, but it is growing at the diminishing rate.

Then came the announcement of the Trump administration. It is a really bad idea to pick on China and to launch not only a trade war but a confrontation with the US’ largest trading partner who also happens to be a large buyer of US assets, bonds, stocks and of course, properties. 

This idea has disturbed the financial markets around the world and so they are adjusting on the downside. Now, I would not call that the crash. A crash happened in 1987 when the Dow Jones dropped 21% in just one day.

In the US, we have gone from a peak to the current level, down by 7%. This is nothing. This is after an increase of the S&P from 666 in 2009 to the current level of over 2900. This correction is really not very meaningful but yet it may become meaningful.

- Source, Economic Times

Friday, October 12, 2018

Marc Faber: You MUST Have Your Seat In The Lifeboat BEFORE The Titanic Hits The Iceberg

SBTV’s latest guest is Dr Marc Faber, editor of the Gloom, Boom & Doom Report. We discuss the signs showing that the US is an empire in decline and how the next financial crisis will impact asset owners. Despite the video difficulties in this episode, Dr. Faber doesn’t disappoint and delivers a great interview on various topics.

We also asked Dr Faber what he would do to reverse the US trade deficit if he was the President of the US.

Tuesday, October 2, 2018

Central Banks Could End Up Owning Every Asset In a Country

SBTV's latest guest is Dr Marc Faber, editor of the Gloom, Boom & Doom Report. 

We discuss the signs showing that the US is an empire in decline and how the next financial crisis will impact asset owners. 

Despite the video difficulties in this episode, Dr. Faber doesn't disappoint and delivers a great interview on various topics. 

We also asked Dr Faber what he would do to reverse the US trade deficit if he was the President of the US.

- Source, SBTV

Friday, September 28, 2018

Dr Marc Faber: Economic Boom or Doom?

I was recently in Chiang Mai and connected with world-renowed economist, Dr. Marc Faber. 

Dr. Faber is a Swiss-born Phd in economics, and is the editor and publisher of the 'Gloom, Boom and Doom Report'. 

He is regularly invited on mainstream financial news media to provide his views on various aspects of the global economy and financial system. 

In this conversation we talk about economic history, social and political issues, and the emerging opportunities and threats in the global economy.

- Source, John Vallis