U.S. markets are off their lows, but they don’t appear headed back to where they started, the nearly 300 point downward excursion for the Dow reminiscent of late-2008 when moves of this magnitude were almost commonplace. According to this report at CNBC, Dr. Marc Faber thinks Fed Chief Ben Bernanke’s money printing finger might already be getting twitchy.
If Market Keeps Falling, Fed Will Keep Printing: ‘Dr. Doom’
Falling stock prices will be met only with more money injections from the Federal Reserve, Marc Faber, the so-called “Dr. Doom,” told CNBC.
Speaking as global markets fell violently lower in the wake of the Japan earthquake and fears of a nuclear meltdown, Faber said a stock correction actually is healthy in view of how far equities have come from the March 2009 lows.
He also expects weakness to persist and the Standard & Poor’s 500 to drop as much as 15 percent. Further, Fed Chairman Ben Bernanke will likely give the green light to another round of Treasurys purchases, which have come to be known as quantitative easing, he said.
“We may drop 10 to 15 percent. Then QE 3 will come, (then) QE 4, QE 5, QE 6, QE 7—whatever you want. The money printer will continue to print, that I’m sure,” said the author of the Gloom, Boom and Doom Report. Later in the interview, he added, “Actually I made a mistake. I meant to say QE 18.”
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“I think Mr. Bernanke doesn’t know much about the global economy but he probably watches the S&P every day,” he said.“Until very recently the Feds have had very few critiques, very few people criticized the Fed’s policies under Mr. Greenspan and Mr. Bernanke,” Faber added. “Over the last few months, a lot of critical comments have come up about the Fed and its money-printing habit. The S&P drops 20 percent (and) all the critics will be silent and they will all applaud new money-printing.”
That much is absolutely certain. Any threat of the current bull market turning into a bear market – remember, a 20 percent decline for the Dow would mean a drop of almost 2,500 points – would see many Fed alarmists quickly turn into Fed cheerleaders, what has sadly become “business as usual” in 21st century financial markets.
