Marc Faber : Oct Market Commentary

Marc Faber is out with his monthly report in which he discusses quantitative easing, equity markets, the dollar, gold, and other commodities. Here are a few highlights:
1. 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.

2. 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.

3. 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.


4. 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 QE would be on the way.



5. Bonds--If the market declines and the dollar surges, this would be good for treasuries. However, upside is limited to 2.08% on the ten year. Faber does not expect yields to fall to new lows.


6. QE--Almost a slam dunk, according to Faber. The decline in asset markets will provide cover for the Fed to print more money.

Oct Market Commentary : Asset Bubble..

The surge in global liquidity now underway is likely to provide further fuel to the next major asset bubble, which is likely to already be in the process of forming. Potential candidates are gold and commodity prices, emerging markets and resources shares. But the absence of obvious overvaluation suggests we are still in the foothills of the next bubble, which likely has years to run, providing plenty of opportunities for investors in these assets in the interim.