Why Marc Faber Is Choosing Europe over the US
Marc Faber on investment decisions
Marc Faber said in a recent interview that he is basing investment decisions on overseas opportunities. He is more optimistic about investment opportunities in Europe (VGK) (IEV) than the US (SPY) (IWM). The Eurozone’s (EZU) economic indicators have shown improvement, which is signaling that the economy is improving gradually.
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The manufacturing PMI of the Eurozone stood at 57 in May 2017 as compared to 56.7 in April. The May manufacturing PMI was the largest expansion in manufacturing activity since April 2011. In the last one year, the region’s PMI has been improving gradually. The Eurozone’s services PMI is also increasing gradually. It was at 56.3 in May 2017. The Eurozone’s consumer spending and its business climate index have also shown strength in the past few months.
Marc Faber expects that European stocks could perform quite well in 2017. He believes the valuations of the European stocks look quite cheap compared to US stocks. The corporate earnings of the European equities are expected to perform better than the corporate earnings of US equities.
The current price-to-earnings multiple of the Euro Stoxx 600 is at 18.84x, and the S&P 500 (SPY) Index’s multiple is at 21.62x. The dividend yield of the Euro Stoxx 600 is at 3.2%, and the S&P 500 Index’s is at 2.4%.
In the next part of this series, we’ll analyze Marc Faber’s view on emerging markets.