Investment guru Marc Faber, publisher of The Gloom, Boom & Doom Report newsletter, sees better times ahead for the stock market.
That may surprise many, given that stocks dropped to fresh lows this week as the government wrestled with bank bailouts and rumors of nationalization in the financial sector.
But Faber tells Bloomberg that the economy and markets have slumped so badly that they should soon rebound — at least a little bit.
“I wouldn’t give up entirely on the theory that you can have some kind of rally develop soon, for one simple reason: The news on the economy has been horrific,” he says.
Faber doesn’t expect the economy to recover instantly. Indeed, “economic news will stay bad for quite some time, and the global economy will continue to deteriorate,” he says.
But many financial markets already have discounted the bad news, Faber notes.
“And the news over the next three months might not be quite as bad,” he says. “There can be a rebound in housing starts or exports.”
That would bring bulls out of the woodwork, saying the economy has bottomed out, and we could get quite a rally, according to Faber. Global easing by central banks also will help.
“We are now more or less in an area where the market, after a final selloff, can have a reasonably good rally,” he says.
Others don’t expect a fast rebound.
“Sell the recent rally,” Morgan Stanley strategist Jason Todd wrote to clients.
“A turnaround in profitability will not come quickly.”
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