During an interview on Wednesday, July 22th with CNBC, the publisher of The Gloom, Boom & Doom Report discussed the stock market crash. (Source: CNBC. July 22, 2015.)
“There were [also] more declining than advancing stocks and the list of 12-month new lows was very high on Friday.” Faber told the panel, “In the U.S., the market could easily drop 20% to 40%.”
Over the past few weeks, U.S. equity markets suffered substantially from the Greek debt crisis and turmoil in Chinese stock markets. Despite these facts, investors’ expectations from the U.S. stock markets are still very high. This can easily lead to disappointment.
The latest slump in the Chinese stock market and concern over the slowdown in the Chinese economy sent commodities towards multiyear lows. China is the buyer of everything from iron ore and coal to copper and gold. China is expected to grow slower than previously expected, putting pressure on the demand side.
“Supplies haven’t gone up that much and do not reflect the price weakness,” he said. “Price weakness is because of weak demand.”
In respect to growth in emerging markets, Faber sees “no growth” coming from those regions as well, with some countries in recession.
He concluded his interview by pointing out the impact of long-term low interest rates posed by central banks. “Maybe this signals that there are strong deflationary forces despite all the money printing by central banks.”