Markets were decimated yesterday but things looked rosier for most of the trading day Tuesday. But what now appears to be a dead cat bounce turned into another day of losses by the time today’s closing bell rang. Marc Faber, creator of the Gloom, Boom & Doom Report doesn’t think this is the end. He expects U.S. markets to decline between 20% and 40%-- that brings us beyond a correction and into a full on bear market.
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It’s not only Chinese markets that have been over hyped, says Farber. “U.S. markets have been massively hyped up over the past few years through the media and corporations that bought back their own shares instead of investing in people and capital.” But the biggest perpetrator of all, according to Farber, is the Federal Reserve.
Farber believes the Fed should have raised rates a long time ago but he doesn’t think it will happen anytime soon. “The Fed is happy to see the stock market down,” he says. He thinks there will be more intervention, more money printing and more government debt. According to Farber ,the Chinese economy isn’t just decelerating, it’s in recession and the Fed will also use that as an excuse. “There’s a decline in car sales, a decline in smart phone sales and a decline in exports,” he says. “I don’t know where any growth could come from at this time.”
Still, Dr. Doom isn’t as gloomy as he could be. He doesn’t believe that the world will experience a global recession like it did in 1997-1998. Economies are not growing, he says, but airports are still full and people are still spending.
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