There is a risk that U.S. stocks could drop in the second half of the year “like in 1987” without further quantitative easing, according to the investment guru Marc Faber, who spoke to Bloomberg TV on Thursday.
“I think the market will have difficulties to move up strongly unless we have a massive QE3,” said Faber, who manages $300 million at Marc Faber Ltd. “If it moves and makes a high above 1,422, the second half of the year could witness a crash, like in 1987.”
He says that the overall technical condition of the U.S. markets “is deteriorating rapidly.” The European markets have already turned bearish, he notes.
The S&P 500 moved up about 0.25% to trade at 1,361 midday on Friday. The Dow Jones was up 0.20% at 12,880.
Despite JP Morgan’s (JPM) report of a $2 billion loss, investors reacted to the news that consumer sentiment edged higher in May to its best reading since January 2008.