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Faber Pessimistic On China, Favors European Stocks
Chinese growth is slowing and disappointing and the growth of the last ten years is slowing down. He says the Chinese market has done terribly, but the good companies are not yet inexpensive (and he doesn't say it, but I'd guess they are not cheap putting into consideration if the country's growth rate of the last ten years is not seen again for a while.) He believes there will be stimulus measures eventually (although they will fail as anything but a short-term bounce) and will see how things appear then. Some other areas of Asia are doing well (Indonesia, Thailand), but there are not values there at this point. Also talks about the high saving rates in Asia due to people having to rely on themselves due to lack of government entitlement programs and how the high savings rates continue to be a positive.
European equities have discounted a lot of bad news and sentiment is terrible, and he is looking in European markets - believes we have seen a major low in European markets. Believes that the break-up of the Euro is actually the best possible solution (although most do not) and equities rather than debt.
He is rambling as usual. Personally I don't see Euro will break up, but the road to right itself will likely be long and painful with the possibility of some countries exiting euro not by their choice. So far less than credible plans have been put forward.
I was surprised how many European funds have double digit gains in 2012, primarily thanks to the past month. I think I better get aboard. Reminds me of muni bonds in early 2011 when the smart money was scooping them up while the dumb money was selling because of the headline news ala Meredith Whitney. The dumb money is scared to death of anything with the name Europe in it because of all the negative headline news. Even the European junk bond market is enjoying a bang up year with double digit gains. Technically, I saw in another forum how the advance/decline line in both Great Britain and Germany are at or near all time highs.
Comments
European equities have discounted a lot of bad news and sentiment is terrible, and he is looking in European markets - believes we have seen a major low in European markets. Believes that the break-up of the Euro is actually the best possible solution (although most do not) and equities rather than debt.