Faber also cited weakness in the high-end as another key catalyst that’s very negative.“There are more and more stocks that are breaking down – economic sensitive stocks and companies that cater to the high-end,” he said. "That suggests to me the economy is likely to weaken and the huge asset run is likely to come to an end with significant asset deflation.”
Earlier in the week Tiffany lowered forecasts citing slower sales. At that time, Fast Money trader Dan Nathan warned that results such as these were foreboding and suggested the high-end was starting to crack .When taken in concert, Faber says all the economies of the world could take a hit from these negative developments.
“I think we could have a global recession either in Q4 or early 2013." When asked what were the odds, Faber replied, "100%."
However, in the near term Faber also sees potential for a market rally. Faber said the bullish catalyst would be Greece exiting the EU.“I think the market would be relieved if finally Greece exited the euro. There would be some clarity. Although it wouldn’t be good for banks and insurance (stocks) in general I think markets are oversold and with an exit – markets would rally.”Page 2 of 4 | Prev Page | Next Page