If you are blaming China's stock-market volatility for the plunge in U.S. shares, you're wrong, says Marc Faber, investor and author of "The Gloom, Boom & Doom Report."
"The U.S. economy is weakening and weakening much more than is perceived," he told
CNBC.
China is not the reason U.S. stocks "are unlikely to make new highs this year," Faber says. "It has nothing to do at all with China," he said.
But
Bloomberg notes that Faber’s predictions haven’t always hit their mark. Since he called long-term U.S. bonds “a suicidal investment” four years ago, the 30-year Treasury has returned 8.7 percent per year, according to Bank of America Merrill Lynch data. Last year, he touted gold and predicted U.S. stocks would plunge; since then gold has plummeted and stocks have gained.
However, Faber, known for his dire predictions, isn’t alone this time in warning about dark economic clouds on the U.S. horizon.
American financier George Soros warned that weaker world markets, triggered by a slowdown in China, were showing signs of a financial crisis reminiscent of the 2008 crash,
AFP reported.
Speaking at an investment forum in Sri Lanka, the magnate and philanthropist said China's flagging economy and subsequent devaluation of its currency were undermining global financial stability.
His speech came as world markets tumbled and oil prices reached new lows after China suspended its stock market when shares fell more than seven per cent for the second time this week.
"Unfortunately China has a major adjustment problem and it has a lot of choices and it can actually transfer to the rest of the world its own problems by devaluing its currency - and that is what China is doing," Soros said of the number-two economy.
A weaker Chinese yuan was "inflicting deflationary pressures" on the rest of the world, he told the Sri Lanka Economic Forum, attended by President Maithripala Sirisena and Prime Minister Ranil Wickremesinghe.
"We are facing a very serious transitional problem which is quite recent and it is, I would say, (something) that amounts to a crisis and we are at the beginning of that," Soros said. "When I look at the financial markets, there I see a serious challenge, which reminds me of actually the crisis we had in 2008."
The Hungarian-born multi-billionaire said he had warned his investment staff to play it safe. "In my guidance to my investment people, I have been telling them to be very, very cautious and very, very, very careful."