Legendary Gloom, Boom & Doom publisher Marc Faber has been warning of a stock market crash for some time. And just on Monday, Aug. 17, the renowned contrarian investor solidified his claim…
In a televised interview, Faber told CNBC's "Trading Nation" that U.S. markets have officially entered what he called a "stealth bear market" – which means a crash is imminent. He noted that, despite certain market indices being close to a high, "if you look at the 12-month new highs and the 12-month new lows, even in the last two days when the market rallied, there are more 12-month new lows than new highs." He then went on to explain that tracking major indices for evidence of this pattern won't necessarily render these results because:
- The indices only include a fraction of the markets' companies and stocks.
- To date, index averages have gone in opposite directions: The Dow Jones Industrial Average has fallen about 2%; in contrast, the S&P 500 has risen about 2%.
Here's what Faber said is responsible for our current "stealth bear market"…
Faber: Stock Market Crash Fueled By Two Sectors
Faber blamed the industrial and transportation sectors for a nearing crash. CNBC pointed out the transportation S&P group is indeed down more than 13% year to date.
Much of the reason for this centralized industry depression, Faber suggested, has to do with the overall impact caused by foreign currency devaluation. "Exports are going to be disappointing and because multinationals have a large portion of the earnings, the diminishing value of foreign currencies will have a negative impact."
One major currency to recently devalue was the yuan. China took the world by surprise on Aug. 11 when it intentionally devalued its currency by 1.9%. And this marked just the beginning of the yuan's plummet. On Aug. 12, the Chinese government reduced it again by 1.06%. On Aug.13, it fell another 1.11%. And on Aug. 18 – one week after China's initial devaluation move – China's stocks tumbled 6% in early morning after the yuan further devalued 3% against the U.S. dollar.
Faber told CNBC diminishing currency value, like the yuan's, will "have a negative impact" here in the United States.
That's a position we heard from former CIA insider Jim Rickards back in August 2014. The difference is, Rickards expects an impact about a hundred times worse than just "negative."
In fact, Rickards – who has been warning Americans about the danger of Chinese currency devaluation for some time now – believes the United States is on the verge of a "currency war."
You see, both the People's Bank of China (PBOC) and the International Monetary Fund (IMF) have been pushing to make the Chinese yuan a reserve world currency. And a yuan reserve currency would quickly topple the dollar, as roughly $1 trillion from U.S. Treasuries sales are accumulated and then invested in Chinese assets.
The result of all this will not just be a paltry "negative impact" on the U.S. economy. It will be an all-out economic collapse…
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