US might fall into recession according to author Marc Faber


US might fall into recession according to author Marc Faber

Bengaluru, India | Red Newswire | Dec 31, 3:21 PM IST

The author of Gloom, Boom  & Doom, Marc Faber has said that US is on the verge of recession and has recommended Treasuries. His view is in direct conflict with that of the Federal reserve Chair Janet Yellen’s according to which the economic condition of the country is improving.

Faber said, “Ten-year US Treasuries are quite attractive because of my outlook for a weakening economy.
I believe that we’re already entering a recession in the United States.” He also added that the US stocks might fall in the coming year.

For the first time in this decade, Yellen has raised the interest rates and said that this should be considered as a sign of confidence in the country’s economy. On the other side, analysts don’t think that this is the right time for the Fed to increase the benchmark as the inflation rate is almost zero.

As per the Bloomberg Bond Trader Prices, the increase in the benchmark US 10-year note has been 2.25%. the Commerce Department of December 22nd said that the economic growth of the nation has slowed to 2% from 3.9%. According to the National Bureau of Economic Research the last recession occurred from December 2007 to June 2009.

Yellen said, “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.”

The Fed had also been warned by the economist Nouriel Roubini and former US Treasury Secretary Lawrence Summers about the inflation that will result because of the economic expansion.

The inflation index preferred by the central bank is 0.4% according to a government report and the Fed’s target has been 2% for over 3 years.

However, Faber’s predictions haven’t always came true. Last time he said that the long term US bonds were “a suicidal investment”, the Treasury returned 8.7% per year.

Source: Bloomberg