원문 보기
Mark Farber welcome back to the business well thank you very much for having me on your show last time we spoke in May last year it was just before Central Bank started tightening monetary policy around the world you said to me at the time that central banks had been too slow to act on rates they've since acted and they've acted aggressively but have they done enough to avoid a hard Landing or recession well I think they haven't done enough in the sense that say in the U.S the FED fund rate is at four one quarter percent and whatever figures you believe in inflation is somewhere in the range of six to twelve percent depending on the household depending on how many children you have and so forth and so on in Europe uh the ECB rate is at two one quarter percent and the inflation is around nine percent so in both cases interest rates in real terms inflation adjusted are negative and this usually is a symptom that not enough has been done and what about here in Australia well in Australia the case is similar in my view well you're more familiar with your rate of inflation whereby I have to say here that what the government is publishing is always understating the true cost of living increases for everybody the sister study came out in the U.S by Universe by a university that highlights how much the government actually understates the rate of cost of living increased Australia used to be an inexpensive country and now most people ordinary people not people who are in the financial sector But Ordinary People they suffer because they cannot afford to buy a house and even can't afford to pay the rents well sticking with rights for now we know and you touched on this the ECB is likely to hike another 50 points this week the FED likely to go another 25 as is the Reserve Bank next week would you at all commend central banks for their actions have they got the settings right at all well it's an improvement but as I said it's not enough and in my view although it's gonna substantially actually more than ever before in terms of the speed of rate increases they also had kept interest rates at an artificially low level for far too long after 2009 in the U.S interest rates were essentially at zero that's why you have this huge wave of speculation I mean you should really not Pat anything on the shoulders of central banks they've messed up whatever they could mess up well if it's not enough and if central banks haven't done enough what more can they do because last time we spoke you told me that central banks would break the system if they hiked rates too far well this is a huge problem the potential Banks especially in the current Vogue environment where people shouldn't have any pain at all they should go through life painlessly and the central banks in my opinion will be very timid to inflict any pain on the economic system but the economic system and Society needs pain okay so what would that pain look like well the pain would look like people losing a substantial amount of weight in other words they would have to tighten their belts and live more modestly onto Global monetary policy do you think it's still tightening or are central banks starting to pull back given the latest raft of numbers well it's good that you're asking this question because there has been unquestionably relative tightening but equally I can give you symptoms of uh economic developments that would point out that monetary policies are relatively easy still usually when you tighten in the U.S the dollar should be strong it was strong last year but this year for the last three months the dollar has been weakening and substantially substantially so this is a symptom actually of a loser oratory horses and not tighter or stock markets that goes through the roof Tesla is up in three weeks by 78 this is not occurring usually in an environment of tightening monetary policies it's interesting isn't it because only a month ago many analysts were calling for a deep recession in Europe as well as forecasting one in the U.S but the mood now seems far less pessimistic what do you think's changed the analysts they watched the stock market the stock market goes up no recession the stock market goes down recession the analysts are largely I'm saying largely they're very good and is they're sorrow but largely is a bunch of incompetent people who look at what the other analysts forecasts and then they forecast about the same not to be falling out of range okay so then can you tell me why share markets are rallying around the world some markets became I have to distinguish the Marcus they became oversold because they went down a lot from a hugely overvalued level of the U.S the NASDAQ the Fung stocks Facebook Amazon meta Tesla and Civil Wars and then you have Marcus they've been in Bear markets for against the U.S relative to the US for the last 12 years since 2009 these are Emerging Markets largely and the markets they have been in absolute bear markets like Hong Kong China for the last five years so this there are different types of stocks and assets that are depressed at the moment he oversold stocks from the U.S and suppose they have rebound potential they have big short positions so the shorts have to cover and that the stocks move up by 100 in three days and you have value markets like Hong Kong since Singapore China especially and Emerging Market in general that are depressed and are entering my view long-term bull markets because the sentiments say about China Hong Kong I lived in Asia for the last 50 years and in Hong Kong since essentially 73 and I have still an office there but I've never seen sentiments about Hong Kong China as negative as it was three months ago I think we've made a major low not everything is good in Hong Kong and not everything is good in China but in my view it's better than in the U.S so is your view that the markets are valid because they were oversold and short sellers were caught out but how does China's reopening play into that the main responsibility is as I mentioned to you that interest rates are still negative in real terms in other they've gone up like in the 70s they increased the interest rate but they never increased interest rates enough as to curtail inflation so if you're a pension fund then you have money for management or you're a large investor you're billionaire and you have an asset allocation you say to yourself bonds yeah okay uh bonds for now they can really because they've also become oversold they were very weak over the last two years they can rebound but long term you want to be in Bonds in an environment where central banks give interest rate negative in real terms no so then what do you see as the current dilemma for policy makers I tell you something in my view it's practically impossible for central banks to put interest rates in a positive real interest rate environment in other words the Taylor rule in America according to a professor called Don Taylor yeah the according to the Taylor rule the FED fund rate should be over nine percent can you imagine what nine percent fed fund rate would do to the U.S financial system well the last time we spoke you said that if the FED funds rate got to over eight percent that the whole world would be broke it it it is already broke at four percent but they can postpone the problem in Turkey I just want to bring up because a year ago everyone was a bearish about turkey and I wrote twice the report about turkey everything was bad but the stock market was cheap because the currency had collapsed what happened the stock market in U.S dollars has doubled in value over the last 12 months okay but that is because it was terrible terribly depressed and because the Turkish economy even with 80 percent inflation per annum still functions if you go to Istanbul everything functions but of course the poor people suffer it's always the poor people that will suffer and I for sure well just a couple of projections briefly now take stocks the Fang index as we know was down around 40 percent last year when we spoke what's the future for tech stocks I think they'll still go down more but as you said they became oversold after the decline meme stocks about 90 or 80 stocks eighty ninety percent down and so forth and uh unicorns the same and so they become very oversolded then they rebounds if you look at long-term charts of say popular stocks that were traded heavily on Robin Hood you take for instance the cannabis stocks from the peak in 2019 2020 they may have doubled three times and still making new lows you understand the bear Market takes time in my view minimum ideal is about three years on to another asset now property what's your forecast for house prices in Australia where is it in Australia for too happy as in Canada this is a disaster waiting to happen because young people don't have the money to buy the houses this is the central banks never considered they applaud it and the fund managers uploaded when central banks printed money because every fund manager everybody involved in the financial sector makes money according to the quantity of assets that they manage so money printing is the golden calf of the financial sector I'm in it I'm in the financial sector for the last 50 years I should know it so Mark do you think Australia will avoid a recession nobody can avoid the recession in the long term you think the climate activists can avoid Ice Age as we had many times over the last four and a half billion years during which Earth developed well when we respects come and go can you avoid deaths no maybe your spirit will live on but physically you will be gone one day and Mark fiber as well and all your viewers as well and so recessions come and go and the recessions are healthy this is the point it's like a sickness is necessary in children because it gives them some immunity and the recessions is very good to build characters of a society and it's very good to clean up the system and any government who thinks that they can clean up the system the worst type of decisions ever taken in the world are by government officials that I want to say when we spoke last Mark you said that the main aim of investors should be the preservation of capital or losing the least do you still hold that view yes but uh I'm glad to say people don't take decisions usually according to how do I lose the least I mean people should have precious metals as an example but if precious metals don't move for six months then they despair but better not move for six months then go half by 40 or 80 percent in the growth stocks so where are you holding your Investments well as I said to you I think Emerging Markets by and large are inexpensive certainly relative to the US I think European stocks are relatively inexpensive compared to the US I think some real estate last year the best performing real estate market was Portugal I always said in Europe you have this secondary cities and real estate in the countryside of Spain Portugal Italy Sicily uh the whole Balkan uh Coast the Adriatic Coast Yugoslavia Grace and macedonians all these countries yes and all these countries they have real estate that is relatively attractive also in Asia in the main cities real estate is expensive but in the countryside it's inexpensive so that is an asset class number two uh I would hold at all times and not just now but at all times some precious metals because you cannot trust central banks you cannot trust Central Bank you have to be believing in Father Christmas to trust Central Bank Mark Farber thank you thank you bye-bye have a nice day
Comments 0