Marc Faber is a famous Swiss investor and the publisher of the Gloom, Boom & Doom Report newsletter. In addition, he serves as the director of Marc Faber Ltd., an investment advisors and fund manager. In a recent interview on Bloomberg, Dr. Faber discussed about the European Central Bank policy, the global economy and investment strategy.
Dr. Faber considers that an easing of the ECB policy might weaken the Euro and in this way Europe could become more competitive. However, if there is no easing at all, the Euro will continue to strengthen and the European economy will continue to suffer. Moreover, Mr. Faber said that he prefers to invest in the emerging economies in the long-term.
“[…] we had with the opening of China a very strong growth, particularly after 2000 very strong growth until 2007 and then most emerging economies, including China, had significant setbacks and then recovered after 2009, but, since 2010-2011, there have been a significant slowdown in economic activity, with exports essentially no longer growing with few exceptions such as Vietnam. So after this period from 2009 till today we have slower growth going forward. Now, some countries may have accelerated growth like Vietnam and India, and some may still have less growth or a slowdown in the economic activity such as China,” Dr. Faber stated.
Marc Faber was also asked about the French ten year bond, which currently yields 1.8% and why would anyone loan money to France under such rates. He made a parallel with his holding of U.S. Treasury Bonds that he has bought when they yielded 3%, but they were a part of a diversified portfolio. In the case of French government bonds, Dr. Faber considers that they could be bought by someone who is betting on the strengthening of the Euro.
In conclusion, Dr. Faber said that if he was in place of Mario Draghi, running the ECB, he would “squezze the system like a lemon.” He would also try to reduce inflation to the a deflation level, because he considers that even deflation has some advantages for the majority of people. When the currency is strong and the commodity prices are weak, it is great for the majority of people because they can buy energy and transportation at a lower cost.
Watch the full interview below: