Dr. Doom Calls Bubble, Adding to Gloomy Calls

The Federal Reserve has inflated an asset bubble and that’s going to damp market returns, perma-bear Marc Faber, publisher of The Gloom, Boom & Doom Report, told CNBC Tuesday.

Faber’s remarks follow downbeat assessments from the likes of former Pimco co-chief executive Mohamed El-Erian and Nobel economics laureate Robert Shiller, who have recently spoken on the increasing odds of a US recession and frothiness in stock markets, respectively.

“Say you’re a young person and you’re just starting to work. So take me in the 1970s. In the U.S., with 20 hours of work, I could buy the S&P 500. Now you need more than 90 hours of work to buy the S&P 500 if you’re young, with a medium income,” Faber told CNBC in an interview.

“The Fed has basically created with their colleagues in Japan and at the European Central Bank (ECB) and the Bank of England (BOE), they’ve created a colossal asset bubble. And the returns going forward will be disappointing.”

Global central banks have created easy liquidity in markets via zero interest rate policies, and sometimes negative-rate policies, as well as through asset purchases. That’s driven up prices across a range of assets.


Craig Erlam
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the BBC and The Telegraph, and he also appears regularly as a guest commentator on Bloomberg TV, CNBC, FOX Business and BNN. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.