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Mark Mobius, executive chairman of Templeton Asset Management Ltd., believes that the global stock market will fall by up to 30%. The strong rebound following last year's calamity is likely to be impeded by profit-taking on the upswing. Basically, an increase of 70%, he says, will lead to a decrease of 20 to 30%.

The greatest risk in a recovering stock market comes from the increase in new stock and bond issuances, Mobius says. To participate in these new deals, investors would have to liquidate existing positions, which can put downward pressure on the market as a whole. Money doesn't come from nowhere, and new capital will come on the backs of the previous investments.

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Mobius says stocks will drop by a third originally appeared on BloggingStocks on Mon, 10 Aug 2009 09:20:00 EST. Please see our terms for use of feeds.

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Talk about a call for a return to a more-accommodative monetary policy.

Investor Mark Mobius said the U.S. Federal Reserve should eventually cut its benchmark, short-term interest rate to 1% to boost the U.S. economy, Bloomberg News reported Tuesday.

"With oil prices beginning to soften, there may be a chance for them to give a boost to the economy by lowering rates again," Mobius told Bloomberg News Tuesday. "It think it's still in the cards, but no one really knows." Mobius oversees about $40 billion in emerging market equities as executive chairman of Templeton Asset Management Ltd.

The doubling of oil prices over the past year and the more than $480 billion in housing-related, credit market write-offs are viewed by many economists as the primary culprits in the U.S. economic slowdown, a slowdown now beginning to dampen global growth, also. Oil prices have retreated about 20% from record-highs, falling to $118 per barrel early Tuesday morning, but unlike Mobius, economist David H. Wang isn't convinced the Fed should hit the 'accommodative button' just yet.

Too soon to lower interest rates?

"I think it would be premature for the Fed to ease rates further. The Fed has used new mechanisms, including the Term Auction Facility and the Term Securities Lending Facility, to help maintain financial system liquidity and the orderly function of markets, and so as long as no further stress events occur in the credit markets, I think they should stand pat on rates," Wang said.

Continue reading Mobius: Fed should eventually cut rates to 1% to boost U.S. economy

Mobius: Fed should eventually cut rates to 1% to boost U.S. economy originally appeared on BloggingStocks on Tue, 05 Aug 2008 12:00:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>consumer pricescredit crunchFedgdpinflationinterest ratesinthenewsMark MobiusMobiusmonetary policyoil pricesTempleton Asset ManagementTerm Auction FacilityTerm Securities Lending FacilityU.S. economyU.S. Federal ReserveTue, 05 Aug 2008 12:00:00 EST