Wednesday, November 20, 2013
Marc Faber sees bubbles, says Yellen could make it worse,...By Barbara Kollmeyer
November 20, 2013, 4:49 AM
Bubbles? Uber bear Marc Faber sees them just about everywhere these days.
And that bubble is being pumped by central banks, which may worsen with the nomination of Janet Yellen as Fed chairwoman, he says. She adds to a “collection of dovish professors at the Fed”, who could push for more bond buying rather than a taper. Read the latest from Fed’s Bernanke on asset-buying and rates.
Faber also sees a “colossal bubble” in the high-end sector, like diamonds, art and luxury goods, where costs have been going up and competition has increased. “The outlook is relatively favorable but tastes may change,” Faber says. (HSBC strategists recently tapped luxury goods as a theme to watch for 2014, saying they see a wave of consolidation coming for the sector.)
As for what Faber likes, he’s holding onto 10-year Treasury bonds and adding to his gold position. On that note he also likes mining stocks, notably in the precious metals space.
Faber sees no great value within equities, warning that rising markets don’t indicate good value. An exception here is Europe, a market he sees poised to outperform U.S. stocks and emerging markets. But even here he cautions against buying “indiscriminately” because everything has moved up so much and sentiment is so bullish. The Stoxx Europe 600 index is up over 15% year-to-date, though that still trails a 25% surge for the S&P 500 .
He likes European companies because much of their business is international, saying he owns stocks in telecoms, utilities and blue-chips in Switzerland.
– Barbara Kollmeyer
Follow this reporter @bkollmeyer
Follow The Tell Blog @thetellblog