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Dr. Doom Warns of Stock Market Selloff ‘Avalanche’ (Video)

Monday, February 27, 2017 9:28
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Marc Faber, known as ‘Dr. Doom’ for his pessimistic views of equity markets, has warned investors that US stocks are vulnerable to a seismic selloff, which could start any moment.

The Swiss investor doesn’t expect the rally’s disruption to be evoked by any catalyst, as the markets are overbought and sentiment is way too bullish for the so-called Trump rally to continue.  

“Very simply, the market starts to go down. As it goes down, it will start triggering selling, and then it will be like an avalanche. I would underweight US stocks,” Faber said in an interview with CNBC.

This bearish forecast is not tied to President Donald Trump, according to Faber.

“One man alone, he cannot make ‘America great again.’ That you have to realize. Trump, unlike Mr. Reagan, is facing huge, huge headwinds — including a debt to GDP that is gigantic, as it is in other countries,” he said.

Faber lists rising interest rates and record earnings and margins as additional risks to the historic rally.

The Dow Jones Industrial Average closed at a record level for an eleventh consecutive session on Friday with the S&P 500 to see the fewest declines in February than in any month since May 1990.

The investor said that markets in Mexico, Brazil, and Asia also have been picking up significant gains so far this year. However, Faber doesn’t expect the worst-case scenario for all countries that have been benefiting from a strong run.

“China looks quite attractive. For the next three months, money can flow into China. The economy, surprisingly, has begun to do quite well. We see that in retail in Hong Kong. We see that in the hotel industry, and we see that in demand for commodities,” he said.

Faber says that resource commodities such as copper and gold would probably bring the traders solid profits this year.

“When you look at Trump and his administration, and the way the budget is, I think further money printing down the line is inevitable,” he said, stressing that such a policy could push commodities even higher.

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Total 5 comments
  • Arcturus

    “One man alone, he cannot make ‘America great again.” Perhaps not, but he can give people something to believe in again, and make the words “hope and change” mean something.

  • oh brother

    The only reason our economy is still here is because of printing fake money. Trump talked about our big bubble and a currency reset during his campaign. This may have to happen with the debt ceiling coming due May 15th. I highly doubt he’s going to take a bailout. If he messes with the Fed and our currency system, he may end up like JFK. :shock:

    • oh brother

      My mistake. The debt ceiling is March 15th not May 15th.

    • Andy

      Trump could end the fed & simply disown all debt owed to the fed – that would save the US fer sure

  • Jdelec

    Another Bull ****er. Every year he says the same thing and every year he is wrong. The Dow is going to 27,000. Precious metals are not so precious unless your a Gollum.

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