Always notorious for predicting any impending doom on the horizon, economic expert Marc Faber says we may experience a market crash mimicking that of 1987 in the second half of 2012.
In fact, Faber believes we need “massive QE3” in order for markets to continue moving upwards with strong momentum without crashing after hitting 1422. In the meantime, Faber says corporations are likely to report “good” earnings, but they will certainly not exceed any expectations.
Faber elaborates:
“A crash, like in 1987…because the market would become technically very weak. I would expect the market making a new high. If it happens, it would be a new high with very few stocks pushing up and the majority of stocks have already rolled over. The earnings outlook is not particularly good because most economies in the world are slowing down. People focus on Greece but Greece is completely irrelevant. What is relevant are two countries — China and India — 2.5 billion people combined. They are a huge market for goods and these economies are slowing down massively at the present time.”
In regards to the S&P 500, Faber thinks we have already seen the high this year – unless, of course, a huge dose of QE3 is injected into society. Faber does expect that the Fed will issue further stimulus, but says it depends on asset markets. According to Dr. Faber, QE3 will become a more probable scenario if the S&P drops another 100-150 points.
Additionally, Faber was not bashful at all in expressing his disdain with many government officials in the U.S. and especially the bureaucrats in Brussels. Faber asserts that the lack of fiscal discipline and frivolous spending is destroying Europe. Although Faber is not particularly fond of America's bureaucrats, he thinks the look like “geniuses” when compared to Europe's.
Commenting on the euro crisis, Faber suggests that Europe not only kick-out not only Greece from the euro-zone, but also Spain, Italy, and even France. Repeated bailouts provide a band-aid patch to mask the wound, but they don't cure the infection. Avoiding the real culprit of the problem could lead to an all out economic catastrophe for Europe and the United States of America.
Faber says the public has been “brainwashed” into thinking that the real catastrophe will ensue if the above listed countries are kicked out of the euro-zone. Quite simply put, Faber says that couldn't be further from reality.
Bloomberg recently interivewed Mr. Faber concerning his thoughts on impending market crashes, QE3, Europe, and what can be done to avoid economic calamity. Check out the interview below:
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