The markets seemed relieved last week when the Fed announced that it will not raise interest rates this month. Nevertheless, super bear Marc Faber states that the markets should not be worried about a rate hike at all.

He doubts whether the Fed will raise interest rates at all this year and feels they will keep them at zero ultimately, which is what he mentioned in an interview last week. He explained that Janet Yellen clearly stated that rate hikes will be dependent on data and the data has only shown a worsening trend.

Recession in the US?

Dr. Doom continued by saying that the picture does not look good for the US economy. The author of the Gloom, Boom & Doom Report underlined that one of the problems is affordability and cost of living. For most households this cost has gone up substantially, which limits their buying power. If you look at tax revenue in the US and look at the percentage from US companies versus the GDP, you will notice no changes. What did go up is individual taxes versus GDP, which has a negative impact on the economy.

Faber even predicts that we could be in another recession in 6 months. Officially a country is in a recession when the GDP drops in two consecutive financial quarters.

Pessimistic Outlook

This interview was not the first opportunity of Faber to express his pessimistic view on the economy. Faber mentioned in an interview with the Indian Cnbc that we are in a very ‘overbought’ situation and that the economy is not doing well. The biggest move is behind us, said Dr. Doom, referring to both US as Indian stocks.

You know when this last interview took place? On the 1st of October, 2009, when the S&P 500 was trading around a little over 1,000 points. Since then the index has doubled.