Q. Will talk about sectors and markets in specific in a bit but what about the dollar? There has been almost a straight line correlation between the way emerging markets have moved and the way the dollar has been weakening. Do you sense that is going to snap back soon?
A: If I look around the world — and this is frequently missed in the inflation-deflation debate — the US current account deficit, growing from USD 150 billion to USD 800 billion between 1998 and 2007 flushed the world with liquidity and led to essential inflation in emerging economies, in particular asset inflation. We now have flats in Hong Kong, in other words condominiums selling for up to USD 9000 a square feet. In America, price levels compared to the price levels in some of the Asian cities is actually now quite low. So I think that the US dollar is no longer overvalued for the time being and the sentiment about the US dollar is so negative that we could have a rebound in the dollar for a couple of months and that would indicate some tightening of global liquidity and be bad for asset markets as was the case in 2008 when the US dollar rebounded, all asset market went down.
Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world. Dr. Doom also trades currencies and commodity futures like Gold and Oil.
