U.S. stocks may plunge in the second half of the year “like
in 1987” if the Standard & Poor’s 500 Index climbs without further stimulus
from the Federal Reserve, said Marc Faber, the publisher of the Gloom, Boom
& Doom report told Bloomberg.
“I think the market will have difficulties to move up
strongly unless we have a massive QE3,” Faber told Betty Liu on Bloomberg
Television’s “In the Loop” from Zurich today, referring to a third round of
large-scale asset purchases by the Federal Reserve. “If it moves and makes a
high above 1,422, the second half of the year could witness a crash, like in
1987.”
The Dow Jones Industrial Average plunged 23 percent on Oct.
19, 1987 in the biggest crash since 1914, triggering sharp losses in
stock-market values around the world. The Standard & Poor’s 500 Index (SPX)
plummeted 20 percent.
“If the market makes a new high, it will be a new high with
very few stocks pushing up and the majority of stocks having already rolled
over,” Faber said. “The earnings outlook is not particularly good because most
economies in the world are slowing down.”
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