Marc Faber thinks the Fed will save markets from another collapse
Posted on 24 August 2011 with 3 comments from readers
King of the bears Marc Faber believes the Fed still has the fire-power to support the US stock market, although he may be making the mistake of ignoring what is happening in Europe where the Finns are placing the Greek bailout in jeopardy.
He told Bloomberg: ‘On fundamentals one could make the case that we could go lower to around March 2009 lows at 666 on the S&P. But I think we have to be realistic that if the market dropped here another 10 or 15 per cent, there would be for sure another quantitative easing move and other measures taken to support asset prices.
‘I think what [Bernanke] will say is that they are monitoring the situation, and they will take ‘appropriate measures’ when they are required. To some extent we are in midst of QE3 already, because by announcing the Fed will keep zero interest rates until the middle of 2013, they basically encourage financial institutions to borrow short-term and to buy 10-year Treasuries.’
3 Comments posted by readers:
There’s no doubt that the FED is now extremely active again in the US stock and bond markets. The 3.5% surge in yesterday’s S&P was possible because of the FED. Ditto gold and silver’s smashdown yesterday and today, led principally by JP Morgan & their Wall St. crooks.
The FED is practically powerless to fulfill their dual mandate; so they like to brag that the economy is “recovering” and they offer as proof, the fact that the stock market is doing OK . . . the truth is that the market is “doing OK” because they, the FED, are pumping it daily, while the US economy is headed for another recession. This is the “stealth QE” that several folks, including me, have been talking about since June 2011 (the FED has over $700B in maturing US Treasuries; they can use the proceeds for their stealth QE moves).
It must be frustrating for the FED, knowing that they are impotent when it comes to their dual mandate, yet the only thing they can continue to do is to take “appropriate measures” when they see the stock market falling.
Marc Faber: “Cash is a disaster for the next 10 years”. Ouch.
@ philcu:
As much as I agree with Marc Faber, including his comment that cash is trash, we’ve got to exercise prudence in the short term. So if folks believe that there’ll be a market shake-up in September (perhaps precipitated by the European mess and Germany’s strong stand against the ECB), prudence suggests that we raise our cash positions for a period of time.
I sold off some of my stock positions (including mining firms) today.