As equity markets get ready to close out the first month of 2017, Dr. Marc Faber recently gave an interview articulating his predictions for 2017. Dr. Faber was uniquely prescient in his market sector predictions for 2016, having called for the rally in oil, industrial commodities, precious metals, and many emerging markets in 2016, before they happened.
A consummate contrarian, Dr. Faber is calling for rally in US Treasuries noting that “Interestingly for the last say six ot nine months treasuries have correlated with precious metals very closely. In other words bond prices went down in the last six 7 months and gold prices have gone down in the last six to seven months and now I think that also precious metals can rebound and my favorite precious metal is actually platinum.”
Dr. Faber goes on to make more calls but when asked what he sees as the biggest danger in the financial system today he remarks “I don’t see any deleveraging at all in the world. I just see larger debt as a percentage of the economy than in 2007 and worst of all I see government debt having exploded on the upside whereby if we distinguish, as the classical economists did, between productive debt and unproductive debt than government debt that is used for transfer payments, in other words for food stamps and for all kinds of benefits, has to be the most unproductive debt that you can imagine. So I would say actually the big danger, and this is also applied to other financial assets… is that we have headwinds like expensive debt then when people talk about Trump making America great again and they think in the back of their mind about Reagan… first he had a two year bear market until August 82 and… when he got elected he only had tail winds, record high interest rates and depressed asset prices. Mr. Trump faces a huge headwind in terms of inflated asset prices. That is the key that people should consider. He is becoming president with very elevated equities in the US.”
Listen to the interview below for all the details