Marc Faber on CNBC:

“Where does India fit in your preferred or not preferred list right now of markets?

A: I think the Reserve Bank of India (RBI) has one of the best monetary policies in the world because they supervise the financial sector very closely. They have maintained relatively tight monetary policies and also they pay attention not only to core inflation which is not representative of the cost of living increase and is not representative of inflation in the system but the RBI also pays attention to rising and falling asset prices. So I have to give them credit for being one of the best Central Banks in the world.

My Comment:

Faber goes on to argue for a pull-back in markets everywhere (maybe immediately, maybe after a further 10% rise), for a snap-back of the dollar in the near term (by around 10%), and for substantial further decline in the market, and over the next 2-3 years, in the dollar.

I like the point he makes in the quote that inflation isn’t just “core” inflation – the rise in prices in the stuff on the grocery shelves – but should also include asset price inflation. Because then you’d have a better judgment of what was going on in the markets.

My own take is that the media is misjudging some of the numbers coming from the emerging markets. The Chinese figures are likely to be highly over-optimistic and inflated, maybe by as much as 50% or more. The Indian market is also not that transparent….