**[investwise]** Obama-A Narcisstic, Destructive Force For Equities...Marc Faber

 

Marc Faber Obama's Audacity, Narcissm & serious disassociation with reality will destroy equity markets. Not to forget that the three legs that formed the global recovery of 2009-Europe, China and US have come apart at the hinges. Expect stocks to plunge 10 per cent or more in the short term. The Western financials will be the worst hit, once again...followed by Real Estate. I am very embarrassed to admit that I would have voted for Mr. Thaksin in 2001 and for Mr. Obama in 2008. (James Tisch warned me about Mr. Obama's economic policies, and my late friend Michael Schwabacher told me even before Mr. Obama was elected that he is completely ignorant and conceited, and suffers from severe narcissism.)   I would have voted for Mr. Obama because, at the time, I thought he would improve America's international relations and defuse geopolitical tensions by reducing the US military presence overseas. I also hoped that he would clean up… Ordinary people are "shocked" and p... (expletive) off that, after the government bails out the financial sector, it earns record profits (target because of the Fed's zero interest policy, which, as Rosenberg puts it enables the banks to "play a super steep yield curve"). Hence the financial sector is subsidized at the expense of decent people whose savings now provide no return. The administration approval rating collapses. At the same time, relationships with Israel sour. Some American or other pro-Israel interests may have put some pressure on Mr. Obama. This may have led Mr. Obama to think that he has to slap the pro-Israel groups at their heart (Goldman Sachs) in order to show them (and the angry US public) "who is in charge". I should mention that, according to an observer whose political views I highly respect, Mr. Obama "seems to be slipping into a slightly more delusional state these days" and is "demonstrating serious disassociation from reality". Commenting on Mr. Obama's embarrassing failure to name even one player with the Chicago White Sox after having talked about his love for this team, this commentator opined that "Obama seems to believe that he can say whatever he wants, and not reap the consequences or be forced to defend his empty assertions. Obama behaves in a manner so disconnected from reality that he is shocked when someone has the audacity to question him. Obama acts like his word is infallible." Newt Gingrich considers Obama to be "potentially the most dangerous [president), because he is so completely misunderstanding reality". (A large number of commentators have also observed that Mr. Obama displays severe narcissism.)   Now, I don't know whether Mr. Obama really wanted to take on Jewish interest groups or the financial sector.  The attack on Goldman Sachs may be just a show to appease the restless public.  (A cynic opined that Goldman Sachs was given advance notice of the filing of criminal charges by the SEC, which gave them the opportunity to short their own stock prior to the filing). My purpose in discussing politics in both Thailand and the US has not been to make a judgment about who is right and who is wrong, but to show that, in addition to economic trends, politics can have a meaningful impact on the performance of asset markets.  (Personally, I think that Goldman Sachs is one of the cleaner firms but that may not mean very much in the context of the financial sector.)   INVESTMENT IMPLICATIONS   A worsening political situation, however, provided the catalyst for the recent sell-off. I am mentioning this because, recently on CNBC, a commentator explained that a catalyst was needed to bring about a correction in the US stock market. I think the criminal charges filed against Goldman Sachs may have been the catalyst needed for a more significant correction given the overbought — yet, from a purely market technical point of view, deteriorating — condition of the stock market.   I wouldn't be surprised to see another 10% or even a larger sell-off in the stock market.   There is another potential problem for the Asian and commodity-related stock and currency markets. Jonathan Anderson, an economist at UBS, notes that after a stellar upturn in 2009, Chinese seasonally-adjusted physical levels of steel production, auto sales, property sales in floor- space terms, and the UBS property construction index "have been broadly flat since October/November of last year (the sole exception was auto sales, and even then the March numbers have weakened back toward Q4 2009 levels)". Moreover, Anderson points out that the export growth of emerging economies has recently stalled. Since exports and stock markets of emerging economies correlate closely, the performance of emerging stock markets could therefore disappoint for a while. What concerns me regarding China is that, despite superb first-quarter GDP growth of 11.9% year-on-year (though it's well understood this was from an extremely depressed first quarter 2009, it still exceeds expectations), the Shanghai Stock Exchange Index has failed to better not only its August 2009 high at 3478, but also its November high at 3361.  Similarly, Hong Kong's Hang Seng Index has failed to move above its November high of 23,100. In addition, the CRB Index has failed to exceed its January 2010 high and may be in the process of forming a head and shoulder top. Bubble or no bubble in China (I am leaning towards the bubble camp), the current economic trends are completely unsustainable. Safe Harbor Statement: Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.   Nothing in this article is, or should be construed as, investment advice.

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