Though infamous for his doom and gloom more than boom, Marc Faber explains in this brief CNBC clip how the herd-like behavior in stocks and real estate is actually not totally irrational as it is merely a reaction to the central banks forcing people not to hold cash and instead but “gold watches and Ferraris.” His point is that if (and when) interest rates are ever normalized, everything changes (and not in a good way) as valuations become severely stretched on all these inflated assets. While the world tells us that bonds are unattractive and stocks are attractive, Faber rhetorically asks, “who knows, maybe the bonds are telling us something about the future return on equities.” He warns of paying too much attention to government headline statistics, “what is published does not necessarily reflect the reality,” But, just as we have warned, China is his biggest fear for knocking the world’ exuberance: “Whether they [Chinese government] can ensure continuous growth will depend on reforms and how to deflate the colossal credit bubble we have in China. This is going to be a huge problem because we have so much underground credit, questionable loans outstanding and questionable investments.”
Rational Irrationality; Interest Rate Normalization; and Don’t Trust The Data
China’s Credit Bubble… questioning Chinese growth relative to real GDP numbers…
China won’t miss it [GDP growth target 7.5%] They will announce it. But the reality will be much lower. If you look at the statistics that are more reliable like Korean, Japanese or Taiwanese exports … then export figures from China don’t add up entirely.
Nov 22, 2014A Conundrum For Treasury Yields by James Picerno, Capital Spectator New York Fed President William Dudley is inclined to ignore the recent drop in inflation forecasts via the Treasury market. In a speech last week, he explained that “in assessing inflation expectations, I currently put more...
Nov 21, 2014There is no excerpt because this is a protected post.
Nov 21, 2014Here are this week’s reading diversions for your personal enligtenment. Have an excellent weekend! by Helen Lamanna, AdvisorAnalyst.com How successful people stay productive | SBS News...
Nov 07, 2014
Oct 31, 2014
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Oct 17, 2014