MARC FABER EN BLOOMBERG

Adjunto una entrevista que le realizó Bloomberg a Marc Faber.

Faber Says Oil, Stocks, Real Estate Are Overvalued (Transcript)

June 10 (Bloomberg) -- Marc Faber, managing director of Marc Faber Ltd., talked with Bloomberg's Carol Massar and Erik Schatzker yesterday about the outlook for stocks, oil and commodity prices, and his investment strategy. (Source: Bloomberg)

(This is not a legal transcript. Bloomberg LP cannot guarantee its accuracy.)

CAROL MASSAR, BLOOMBERG NEWS: For a closer look at the market, we have an exclusive interview with Marc Faber, managing director and founder of Marc Faber Ltd., and publisher of the Gloom Boom and Doom Report. He comes to us on the phone from Zurich this morning. Marc, good morning.

MARC FABER, MANAGING DIRECTOR, MARC FABER LTD. Yes, hi, hello.

MASSAR: Hi, Friday's sell-off, you got oil, that unexpected jump in the unemployment rate, the most in more than two decades, big sell-off in stocks. Do you think it was overdone or did investors get it just right in your view?

FABER: Well, I don't think it was overdone at all. I think it's a delayed reaction, as to the view that obviously as the economy is already in recession, corporate profits will disappoint, in particular the consensus earnings for 2009 are still far too high and assets adjusted downwards. Obviously, the valuations become less compelling.

MASSAR: Alright, so, what's your outlook from here, that I mean this morning, of course, Asia sold off, no surprise, but Europe's holding up fairly well.

FABER: Well, I would say what we are in is kind of a water torture bear market. A lot of stocks peaked out already in 2005 like the homebuilders; then in 2006, the subprime lenders; then in 2007, all financial stocks. The stocks that have performed well over the last 18 months are material stocks and energy stocks and cyclicals.

And I think, the cyclicals and the energy and the material stocks, like steel and iron ore companies, they will now all become under pressure. Probably, the big downside in banks is kind of running out.

In other words, we have had a huge decline in financial stocks. I think they will go lower and I think they are unattractive. But I think other sectors of the market that have held up well are now vulnerable.

MASSAR: Alright. So, where would you be buying or suggesting investors buy? As you are saying, don't maybe don't go into energy, don't go into materials, and so on.

FABER: I think the question should be what sectors should be sold. I don't believe that investors should be buying all the time and that each time, the market drops a little bit, that gives a long-term buying opportunity. I don't see any compelling value in equities. I also don't see any compelling value in say, real estate or in the commodity markets, I think asset markets are still inflated.

And we are in an environment contrary to the last 25 years during which leverage increased. We are in a period of deleveraging, just consider that the brokerage industry on $1 of capital has liabilities of $20. In other words, the leverage is 20 to 1, and I think that has to come down and it will affect corporate profits across the board.

MASSAR: All right. So, are you saying that investors should park most of their money in cash at this point or what?

FABER: Well, cash is not desirable in the sense that it loses its purchasing power because we have a money printer at the Fed, Mr. Bernanke. And the problem of Mr. Bernanke's policy is that it hurts the average of the median household in America since he cut the Fed fund rate from 5.25 percent on September 18 to 2 percent, the price of oil has gone from $75 to $140.

I am not saying that he is only responsible but he is partially responsible for the soaring food prices and for soaring energy prices, because his monetary policies inevitably is inflationary and as a result, leads to a lower dollar.

MASSAR: In terms of oil, Marc, the Oil Minister is saying that the surge in prices was unjustified. Do you agree?

FABER: No, not entirely. First of all, obviously, the increased demands from countries like China and India have shifted the demand curve for oil to the right and resulted in a higher equilibrium price. Now, is the price of $140 justified or not? I am not sure.

I think it should correct, partly because international liquidity is now still growing but at a decelerating rate, and that usually leads to poor performance of asset markets including commodities. And so, my view would be that commodities will rather ease, as some have already done. Nickel is down 50 percent, wheat has been down 50 percent as well as lead, and lead and zinc.

So, we are going to have corrections. But in general, I think if you have a money printer at the Fed, it's very clear that you can increase the quantity of money, but you cannot increase the quantity of gold and commodities at the same rate. So, money loses its purchasing power against commodities where the supply cannot be increased indefinitely.

ERIK SCHATZKER: Marc, I just want to confirm. Are you suggesting that investors should get out of oil and should get out of all the other commodities such as agricultural commodities, whether it be rice, wheat, or corn et cetera?

FABER: I think that investors have to be aware that the price of oil has gone from $12 in '98 to now roughly $140. And so, the increase is a 12 times. I don't think that oil will go up another 12 times. Can it go up another $20? Of course, it can. But the big upside is now gone.

And so, I would be a little bit careful about blindly buying commodities, I think they are on the high side, the way the real estate was on the high side, and the way the stocks were on the high side. I am not saying this is?I would certainly be careful about buying them here.

SCHATZKER: So, you don't buy commodities, but at the same time, you don't hold cash. What investment do you go into right now?

FABER: Well, I mean I think in this environment, I was referring to a relative tightening of global liquidity because of the declining U.S. trade and current accounts that at the present time. Because of that, the dollar has essentially some upside potential here, it has, but of course, if Mr. Bernanke continues to play in commodity and push down the Fed fund rate to zero, then the dollar won't go anywhere. But as of today, I think the dollar is relatively undervalued with the euro. I feel like gold could (inaudible) gone up that much.

MASSAR: Alright, so, if you had to pick one investment if you will, so kind of bet the bank, Marc, I don't know, for the next 6 to 12 months, what it would be, the dollar, the gold, what is it?

FABER: Well, I would take a holiday and forget about the speeches of the Fed governors because their economic knowledge is, in my opinion, extremely limited and each time they speak, they actually confuse the issue. And so, there is very little transparency at the present time, although in the financial sector. I have no idea whether Citigroup is a good sign here.

MASSAR: So, what let me break it, I mean Ben Bernanke inherited certain things when he came to the Fed. He did ..

FABER: No, no, no. He was a Fed Governor, he was the Fed governor underneath the Greenspan that has a lot of influence and he actually influenced Mr. Greenspan to cut the Fed fund rates after January 3, 2001 down to 1 percent and keep it at 1 percent until June 2004.

MASSAR: Alright, but who is responsible for the financial fall out of the subprime mess? I mean that certainly wasn't his fault and yet?

FABER: They are collectively responsible. They are collectively, the Fed governors, all of them and especially, Mr. Greenspan and Mr. Bernanke. And Mr. Bernanke has written about essentially printing money and dropping money from helicopters and supporting asset markets with monetary tools. You can't deny that.

MASSAR: Okay. Hey, Marc, we've got to run. Always good to get some time with you. I know you're headed for a plane. Have a safe trip and we will talk to you soon. Thank you.

SCHATZKER: Yes, thank you very much.

FABER: Thank you.

MASSAR: Marc Faber, managing director and founder of Marc Faber Ltd., also, publisher of the Gloom Boom & Doom Report, joining us on the phone.

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Last Updated: June 10, 2008 11:47 EDT