Marc Faber warns U.S. dollar, stock market are ‘overvalued’

This week, after the Federal Reserve raised interest rates for just the second time in a decade, the United States dollar rose to a 13-year high. The greenback is certainly flying high. But the question is: is the U.S. dollar overvalued? Marc Faber, contrarian investor and financial publisher, thinks so.

Faber, speaking in an interview with CNBC TV 18 in India, explained that investors are “too bullish” on the U.S. and too bearish about the emerging markets. He added that Japan and Europe, two markets investors that he thinks are bearish, are attractive.

Ultimately, according to Faber, the U.S. dollar is “overvalued” and “too strong.”

“It may overshoot further which may then cause a problem for the Federal Reserve because as they said they basically plan to have three interest rate increase in 2017. But if the dollar is too strong maybe they can’t do it,” he said.

“[The Federal Reserve] can have other central banks print money for them for a while and then in 2017 possibly the dollar becomes too strong and the U.S. economy rather weakens than strengthens then they can print again themselves. They have an excuse. I still maintain that central banks will keep on feeding the world with excess liquidity.”

Across the U.S., he notes, valuations are at record highs, while valuations in other markets are inexpensive. Therefore, he suggests, investors need to start concentrating on foreign markets, and perhaps even put their money on markets that have been ignored for a long time, citing oil, mining and agricultural.

“People will tell you that emerging markets performed poorly in 2016 and that the U.S. was the only game in town. But let me just say that in U.S. dollars in 2016 the Russian index was up 51 percent, Brazil 63 percent, Kazakhstan 66 percent, Thailand 19 percent, Indonesia, 19 percent, Karachi 40 percent, Vietnam 30 percent,” he explained.

“Some markets have actually performed very well. We turn to individual stocks some stocks have done very well in 2016 in particular the sectors that were very depressed like oil and gas and mining companies that is until recently have weakened but on the year they are still up strongly.”

Many have been warning about the massive rally that has occurred on the stock market since Donald Trump’s upset victory last month.

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