Featured on Bloomberg this morning, Marc Faber said he doesn’t see a resumption of the risk-on trade until Bernanke and the Fed resume quantitative easing once again after the Fed’s program to recapitalize the banks ends June 30.
Assets benefiting from the Fed’s extraordinary measures to prime the pump of the U.S. economy won’t get the gusty tailwind that assets such as stocks, commodities and precious metals have been enjoying since the March 2009 low of 666 for the S&P.
“I think we’ve seen the high for the year,” Faber said of the S&P.
“I think the Fed, they could print money, QE3, QE4 and so forth,” added Faber. “But they’re going to wait, because Mr. Bernanke, very clearly understands. A year ago, he talked about deflationary pressures. Now he can see that his money printing has led to unintended consequences. So is he going to wait until the S&P is down percent or more?”
Faber also suggested that his sanguine outlook for U.S. stocks includes an assumption of an impending slowdown in the Chinese economy, where the recent evidence of a “proliferation of fraud on a massive scale” by Chinese companies demonstrate to him a “very clear symptom of a bubble, a mania” in the People’s Republic of China.
Investors in America are “stupid” and don’t see this, Faber asserted. But in Hong Kong, if the local Chinese get cheated, “you have to watch your kneecaps,” he said, inferring that Mainland Chinese are more apt to try and cheat more American investors instead.
Asked if the commodities boom is still intact, Faber said, “Yes, I like gold and silver, but I think they go down for the next three months, or so. But I wouldn’t short them, and I keep accumulating gold.”
He added, “Not to own any gold is to trust central bankers, and that you don’t want to do in your life,” he chuckled to end the interview.
China Media Express (PK. CCME), Harbin Electronics (Nasdaq: HRBN), Sino-Forest (PK. SNOFF) are three of several Chinese stocks in question as regulators and independent research firms take action to crack down on alleged fraud.