Tags: Faber | Treasury | stocks | bonds

Marc Faber Bearish on US Stocks, Bullish on Bonds

By    |   Monday, 29 December 2014 02:48 PM

For months Marc Faber, publisher of the Gloom, Boom & Doom Report, has forecast a 20 percent drop for U.S. stocks. And while the S&P 500 index again hit a record high Monday, Faber's not changing his tune.

"I still think sentiment about stocks in the U.S. is much too bullish, and sentiment about U.S. bonds" is too bearish, he tells Bloomberg TV.

"What would you rather own, given that forecasts are so optimistic about the dollar, U.S. 10-year Treasurys yielding 2.2 percent, 10-year French bonds yielding 0.88 percent, 10-year German bonds at 0.56 percent or 10-year Swiss bonds at 0.22 percent?"

In light of the global economic slowdown and low bond yields in the Japan and Europe, "I think Treasurys aren't such a bad alternative," Faber said.

He sees "a lot of volatility and surprises" in store for 2015. "That's why I keep recommending diversification," he said. "I'm a believer in trading as little as possible."

Thomas Kee, CEO of Stock Traders Daily, also is skeptical about stocks for next year. "Without stimulus our economy is likely to look much different than it has in years past," he writes in an article for MarketWatch. GDP growth has averaged 4.8 percent over the last two quarters.

"Corporate earnings growth will likely look different, and economic activity will likely look different," Kee says. "That raises a few eyebrows, because 2000 and 2007 were seven years apart, just like 2014 is seven years after 2007. That, we can only call coincidence."

The stock market crashed soon after its peaks of 2000 and 2007.

Kee's statistical analysis shows that "if this market does pull back in the final few days of this year and mimics Decembers in 2000 and 2007, it will set the stage for 2015," he says. "And if history repeats itself we could see material market weakness for the first time in years."

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For months Marc Faber, publisher of the Gloom, Boom & Doom Report, has forecast a 20 percent drop for U.S. stocks. And while the S&P 500 index again hit a record high Monday, Faber's not changing his tune.
Faber, Treasury, stocks, bonds
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2014-48-29
Monday, 29 December 2014 02:48 PM
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