Marc Faber : The Market will push Interest Rates Higher

Marc Faber is a great contrarian investor and publisher of the Gloom Boom & Doom Report. He is well known for his accurace predictions of stock market crashes and other correct calls on different investment assets.

Marc Faber warns colossal credit bubble in China

The main risk for investors lies in the "colossal credit bubble in China," said Marc Faber, publisher of The Gloom, Boom & Doom Report, said on CNBC.

In 2012, investors were generally bearish towards the second largest economy in the world after China published the most anemic macroeconomic data for the last decade. In the last quarter of last year, investor confidence returned amid economic recovery and the news of the election of a new administration in Beijing.
This mood can be illustrated by the strong performance of the Shanghai Composite Index, which won 15 percent in December.

Faber warned that the growing credit bubble in China remains a key risk for investors in the country.

"If the Chinese government can ensure growth depends on reform and how to solve the problem of colossal credit bubble in the country. There are incredibly large amount of loans to black, bad debts and doubtful investments, "he said.

Western rating agencies warn of rapid expansion of the underground lending market, which is poised to become a real threat to financial stability.

Fears of Faber coincide with the request in December warning from the World Bank (WB), according to which the Chinese economy risks overheating because loose monetary policies of Western central banks leads to hot capital inflows to the region. They are the reason for the excessive growth of credit and investment bubbles swelling, according to a study of the bank.

Recent data on Chinese exports, which exceeded market expectations are also cause for concern, according to Faber.

Data on Chinese exports in January revealed a growth of 21.8% yoy, while analysts expect it to reach 10.1%. However, the reliability of this statistic is questionable because of discrepancies with the customs declarations in neighboring countries, including South Korea and Taiwan.

Faber said he believed the growth of the Chinese economy will actually be much lower and that some sectors will even fall into recession.

"I think the economy has slowed considerably, but they will announce that they have achieved the planned 7.5 percent. Real growth will be much lower. If you look at the data that can be relied on to a greater extent as those in Korea, Japan and Taiwan, statistics from China fits into the equation, "he said.

"China's economy will slow, and some sectors will even fall into recession ... The question is what will happen next. I think China will grow, but the road will be difficult, "said Faber.

In 2012, China's economy grew by 7.8 percent. The government in Beijing has set a growth of 7.5% in 2013, although most analysts predict that the expansion will reach 8%.

Marc Faber is a great contrarian investor and publisher of the Gloom Boom & Doom Report. He is well known for his accurace predictions of stock market crashes and other correct calls on different investment assets.

Marc Faber Warns: ‘Market Has Peaked Out’

If the stock market continues to climb into July or August, a crash is possible, says Marc Faber, publisher of the Gloom, Boom & Doom Report.

The stock market has "peaked out" and bonds may be on their way to a rebound, Marc Faber, publisher of the Gloom, Boom & Doom Report, said Thursday on CNBC.

"I think we have made an intermediate top, and it could be a longer-term top," he said on "Fast Money."

"I don't think the market is as overbought as it was in '87, so I don't expect a crash. But I think for the time being, the market has peaked out, and I think in the meantime, bonds, which are extremely oversold, could rebound," he said.

The S&P 500 closed at 1,502.52 Thursday. A level of 1,530 could prove to be a longer-term high, Faber said.

"What I maintained in earlier interviews is that either we have a correction now, and then we go up further or we go straight up high in July-August, from where we could crash, so I welcome a correction here," he said. "The question will be, after this correction, we have to watch the market's rebound, whether it can make a new high or not."

Faber's holdings are 25 percent gold, 25 percent equities, 25 percent corporate bonds and cash, and 25 percent in real estate.

Why should investors believe his bearish prognostications?

"There was a correction between March, April 2012 and actually June 2012, so we had a correction, and then from September onward, when the S&P reached 1,474, we also had a correction into November, at which stage I said that the market would now rally. So I don't think I've been so totally wrong about the moves of the market, especially since 2009, and I can document those with the performance of my portfolio.

"But I think that the market has now become quite overbought and that is very significant or overextended, bullish sentiment. Everybody says, 'Sell bonds, buy equities.' And when everybody thinks alike, one has to be careful."

Marc Faber is a great contrarian investor and publisher of the Gloom Boom & Doom Report. He is well known for his accurace predictions of stock market crashes and other correct calls on different investment assets.