Faber Seeing Recession Clashes With Yellen, Likes Treasuries
2015-12-29 08:50:35.878 GMT
By Wes Goodman
(Bloomberg) -- Marc Faber recommends Treasuries and says
the U.S. is at the start of an economic recession, clashing with
Federal Reserve Chair Janet Yellen's view that things are
improving.
"Ten-year U.S. Treasuries are quite attractive because of
my outlook for a weakening economy," Faber, the publisher of the
Gloom, Boom, Doom Report, said in an interview with Bloomberg
on Monday. "I believe that we're already entering a recession in
the United States" and U.S. stocks will fall in 2016, he said.
Yellen raised interest rates this month for the first time
in almost a decade and said Americans should take the decision
as a sign of confidence in the U.S. economy. Analysts differ
over whether the Fed's decision to increase its benchmark came
at the right time because the inflation rate is stuck near zero
even as gross domestic product expands.
The benchmark U.S. 10-year note yield was little changed at
2.23 percent as of 8:44 a.m. in London, according to Bloomberg
Bond Trader prices. The price of the 2.25 percent security due
in November 2025 was 100 5/32. Treasuries have returned 1.1
percent in 2015, down from 6.2 percent last year, based on
Bloomberg World Bond Indexes.
U.S. economic growth slowed to an annualized 2 percent rate
last quarter from 3.9 percent in the previous three months, the
Commerce Department said Dec. 22. The last time the economy was
in a recession was December 2007 until June 2009, according to
the National Bureau of Economic Research.
"While things may be uneven across regions of the country
and different industrial sectors, we see an economy that is on a
path of sustainable improvement," Yellen said Dec. 16 after the
Fed increased its benchmark rate by a quarter percentage point.
Former U.S. Treasury Secretary Lawrence Summers and
economist Nouriel Roubini had both warned the Fed should be
cautious because inflation has yet to pick up as the economy
expands.
The central bank's preferred inflation index was at 0.4
percent in November, a government report showed this month. It
has been below the Fed's 2 percent target for more than three
years.
Faber is also at odds with the consensus view on
Treasuries. U.S. 10-year yields will climb to 2.80 percent by
the end of 2016, based on Bloomberg surveys of economists with
the most recent forecasts given the heaviest weightings.
To contact the reporter on this story:
Wes Goodman in Singapore at wgoodman@bloomberg.net
To contact the editors responsible for this story:
Tomoko Yamazaki at tyamazaki@bloomberg.net
Nicholas Reynolds, Naoto Hosoda
2015-12-29 08:50:35.878 GMT
By Wes Goodman
(Bloomberg) -- Marc Faber recommends Treasuries and says
the U.S. is at the start of an economic recession, clashing with
Federal Reserve Chair Janet Yellen's view that things are
improving.
"Ten-year U.S. Treasuries are quite attractive because of
my outlook for a weakening economy," Faber, the publisher of the
Gloom, Boom, Doom Report, said in an interview with Bloomberg
on Monday. "I believe that we're already entering a recession in
the United States" and U.S. stocks will fall in 2016, he said.
Yellen raised interest rates this month for the first time
in almost a decade and said Americans should take the decision
as a sign of confidence in the U.S. economy. Analysts differ
over whether the Fed's decision to increase its benchmark came
at the right time because the inflation rate is stuck near zero
even as gross domestic product expands.
The benchmark U.S. 10-year note yield was little changed at
2.23 percent as of 8:44 a.m. in London, according to Bloomberg
Bond Trader prices. The price of the 2.25 percent security due
in November 2025 was 100 5/32. Treasuries have returned 1.1
percent in 2015, down from 6.2 percent last year, based on
Bloomberg World Bond Indexes.
U.S. economic growth slowed to an annualized 2 percent rate
last quarter from 3.9 percent in the previous three months, the
Commerce Department said Dec. 22. The last time the economy was
in a recession was December 2007 until June 2009, according to
the National Bureau of Economic Research.
"While things may be uneven across regions of the country
and different industrial sectors, we see an economy that is on a
path of sustainable improvement," Yellen said Dec. 16 after the
Fed increased its benchmark rate by a quarter percentage point.
Former U.S. Treasury Secretary Lawrence Summers and
economist Nouriel Roubini had both warned the Fed should be
cautious because inflation has yet to pick up as the economy
expands.
The central bank's preferred inflation index was at 0.4
percent in November, a government report showed this month. It
has been below the Fed's 2 percent target for more than three
years.
Faber is also at odds with the consensus view on
Treasuries. U.S. 10-year yields will climb to 2.80 percent by
the end of 2016, based on Bloomberg surveys of economists with
the most recent forecasts given the heaviest weightings.
To contact the reporter on this story:
Wes Goodman in Singapore at wgoodman@bloomberg.net
To contact the editors responsible for this story:
Tomoko Yamazaki at tyamazaki@bloomberg.net
Nicholas Reynolds, Naoto Hosoda
