Marc Faber, editor of The Gloom, Boom & Doom Report, predicts that the current bull stock market is actually very fragile and a trio of dangerous threats loom.
He explained to CNBC that a "very complacent" market is ignoring three factors that might spark a correction: foreign currencies, the U.S. economy and the Trump administration.
Faber said the stability of the U.S. economy relative to foreign nations' economies has attracted capital to the United States, boosting the dollar and stock prices. But the trend could reverse, CNBC.com explainaed.
"I believe the time will come when the weakness of the euro becomes uncomfortable for the Europeans, specifically the Germans, and then there will be a reverse," Faber said. "And the dollar will go down, and the money that flowed into U.S. assets will flow out of U.S. assets, and so the market is more likely to go down," he said.
Faber also isn’t totally convinced that President Donald Trump has the strategy to trulky “Make America Great Again.”
"I believe also the policies of Mr. Trump will actually not reduce the government," Faber continued, suggesting that the commissions Trump sets up to restructure government agencies will actually go against traditional Republican ideals.
"Plus, fiscal spending means essentially an expansion of the government, so that is not pro-growth in my book," Faber added.
"We have roughly inflated asset markets. I also own shares, I also own bonds, and I also own precious metals. I also own real estate. So if asset prices go down, I suffer like you and everybody else," he said. "But at least I know that it can happen."
U.S. markets have seemingly been setting record highs on a daily basis amid a Trump honeymoon with investors. Reuters reported.
Trump's first address to a joint session of Congress on Tuesday evening is being closely watched by investors for clues on how he planned to carry out his agenda of boosting economic growth,
"If we have a market that is willing to accept a roadmap that says we are going to repeal and replace Affordable Care Act and then have some form of tax reform by the August recess, I think the market will continue to be supportive," said Art Hogan, chief market strategist at Wunderlich Equity Capital Markets in New York.
Trump's promise a few weeks ago of a "phenomenal" tax announcement helped rekindle a post-election rally, driving the main U.S. markets to record highs.
But with details scant on how he planned to implement his agenda, investors have turned wary and the markets have traded range-bound.
(Newsmax wire services contributed to this report).
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