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Dollar Will Rise and Punish Assets: Marc Faber
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A period of weak stock markets and strong dollar is likely to come after the strong rally in developed and emerging markets alike, Marc Faber, the author of "The Gloom, Doom and Boom Report," told CNBC.
Between 2002 and 2007 we had a bull market in assets and stocks and a weak dollar [$$USDEUR
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], while in 2008 the opposite was true, Faber said Wednesday. This year, we bottomed out on the S&P 500 index but the dollar was weak.
Emerging markets have seen even stronger moves since the lows hit last year and in the spring of this year, Faber said.
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Sharon Lorimer |
China's stock market bottomed out in October last year and has recently shown signs of weakness, while Russia is down 20 percent from the peak, he added.
"I expect now for the next couple of months a period of a recovering dollar and weak assets," Faber said. "A strong dollar means global liquidity tightening."
The dollar will strengthen because the US economy is the least cyclical, but developing countries are more exposed.
"In a scenario where growth will be disappointing, I think emerging markets are vulnerable. I think we had huge increases in stock prices, a lot of markets have doubled in price," he said.
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