Friday, 5 August 2011

Marc Faber Interview on Global Financial Markets


  1. Faber is suggesting there will be QE3 coming, and the term UST seems to suggest that now. 10 years UST is 2.40% a day ago, which was last at this level just before Bernanke announced QE2. But this time the currency imbalance is strained vs. when QE2 first started. My sense is to justify QE3 the Fed will first allow the economy to get worse and for the people to scream out for intervention; later rather than sooner.

  2. Thanks, QE3 will probably come, either (as you wrote) if the economy worsens (which looks pretty likely) or if asset prices (shares, property) go lower. It will lead to a difficult investment climate, some assets will rise, but not all equally, there will be fear, so some people will hold on to cash. On the other hand there is likely inflation down the road. Faber warns about long term US government bonds, the low yields and the high risk (default and weak USD in the long term) don't seem to match.