Marc Fabers Investment Predictions for 2017

In general volatility will increase though volatility has been quite high in 2016 . At the beginning of last year, we dropped to 1810 on the S&P and then we closed over 2200. So we had a big move in the market and then we had currency moves that were also very strong. Some currencies went down but others appreciated against the US dollar – bitcoins, the Brazilian Real and the Russian Rouble. It was a year where you could make a lot of money and also lose a lot of money depending on how you were positioned.

For the year, I do not know but for the near future, I have essentially three views. First off all, the US economy is like a supertanker or a sailboat. It is not easy to turn it around and come back to where you have been in terms of prosperity. In general, Mr Trump’s policies will fail to lift economic growth rates significantly.

US stocks, compared to emerging markets or European companies or Japanese stocks, are significantly ahead of themselves. In 2017, emerging markets will outperform the US either by going down less than the US or by going up substantially more than the US. So I would essentially avoid the US and rather invest in emerging economies including India. 

The second view I have is that recently investors have been obsessed with growth in the United States and with interest rates going up because the Fed has said that they would essentially increase the Fed fund rates three times this year but in the US, the treasury bond market is grossly oversold and for the next three months, we can have a rebound in US treasuries. Short-term and long term interest rates in the US are going to ease again in the next three months. You could get the 5% to 10% upside move in US treasuries.

- Source, ET