Marc Faber Doesn’t Think Consumer Spending is Sustainable


Investment analyst and entrepreneur Marc Faber spoke with FOX Business Network’s (FBN) Connell McShane about today’s market rally and United States consumer spending. Faber addressed today’s market surge and said, “We have seasonal strength and oversold conditions and we can rally, but I don’t think you should expect too much.” Faber also talked about the rise in consumer spending and if it will continue this holiday season, saying, “I don’t think that is very sustainable.”

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Excerpts from the interview are below: On today’s market rally:

“The rally came from a very oversold level. We have a very strong support on the S&P between 1100-1150. And usually the December month is a strong month as well as January so we have seasonal strength and oversold conditions and we can rally, but I don’t think you should expect too much. I think we’ll get into overhead resistance when the S&P rallies another 5% or so between 1250-1300.”

On if the optimism shown in the markets today is sustainable:

“The optimism arises from some sort of a bailout and monetization. But if you look at the market, OK it’s up, but gold is also up and oil is up. Like in the US, we monetized time and again and it’s just postponing the problem. In the end, crisis will eventually happen. The problem of the Western world is that there is too much debt and too many unfunded liabilities.”

On consumer spending this holiday season:

“The American consumer went shopping but it’s not supported by income growth. If you look at the share of labor income or salary as a percent of GDP going down, what is happening is that people are again borrowing and diminishing their savings rate and I don’t think that is very sustainable.”

On what he predicts will happen in Europe:

“The big picture endgame in Europe is that they will also monetize like in the US and that will postpone the problem, but it will not solve it.”

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