'Gloom, Boom & Doom' Report Publisher Marc Faber weighed in on the impact of Brexit on the global markets and economy as well as central bank policies.
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Faber raised doubts about the notion that markets, at least in the U.S., are gaining their confidence back since the U.K. vote to leave the European Union.
“Regarding the confidence, I’m not so sure because if you look at the performance of treasury bonds, they would indicate that there is a sense that the economy’s weakening and that there are problems in the financial system. Also if you look at the performance of European bank stocks, they are horrible performers,” Faber told the FOX Business Network’s Dagen McDowell.
He then predicted central banks’ reaction to Brexit globally.
“Clearly Brexit means more money printing by central banks; They will continue to intervene. And I think before the year end we’ll have some form of QE4 in the U.S.”
Faber then responded to Federal Reserve officials attaching a low probability to the risks of a potential U.S. recession in 2016.
“The Fed was fast asleep ahead of the 2007-2008 recession. So the fact that they assign a low probability to a recession doesn’t give me any comfort at all.”
Faber explained why a lack of additional quantitative easing globally could actually lead to a recession.
“I think the problem will be if there are no additional QEs around the world…is that asset prices will no longer go up and we’ve seen this already in London properties, in New York properties – and this will have a negative impact on the economy. The recession in my view is not going to come really from the economy per se, but from asset price deflation.”