Here are a few highlights of Faber`s Monthly Report:
I. Equity Markets -Faber was correct last month in predicting a rally based upon extremely negative investor sentiment. He is more cautious about October because stocks are very overbought according to the % of stock above their 50 day moving average. Another reason for concern, is that after a strong September, markets often fall sharply in October and November. He is underweight equities right now.
II. Emerging Markets - Countries like Indonesia, Malaysia, etc are likely entering a price bubble thanks to worldwide money printing. Faber would not be buying these high-flying markets right now even though they could enter a final parabolic phase. He would be selling positions.
III. Dollar and Currencies - The dollar is extremely oversold and investor sentiment is very bearish. Conversely, investors are very bullish on the Euro (96% bullish according to DSI). Faber believes that a inflection point could be at hand leading to a nice move upward move in the dollar. He would not be short the dollar right now.
IV. Gold and Commodities - Because he is bullish on the dollar right now, Faber believes there could be a significant correction in gold and other commodities. This could be a rather large decline, but would represent a buying opportunity. Why? More Quantitative Easing would be on the way.
V. Bonds - If the market declines and the dollar surges, this would be a positive for treasuries. However, upside is limited to 2.08% on the ten year (Dec 2008 low). Faber does not expect yields to fall to new lows.
VI. Quantitative Easing - The decline in asset markets will provide cover for the Fed to print more money.
Source: BlackSwanInsights
Related ETFs: iShares MSCI Malaysia Index Fund (ETF) (NYSE:EWM), ProShares UltraShort S&P500 (ETF) (NYSE:SDS), PowerShares DB US Dollar Index Bullish (NYSE:UUP), ProShares UltraShort 20+ Year Trea (ETF) (NYSE:TBT), SPDR Gold Trust (ETF) (NYSE:GLD)
Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.
