Most Europe, US ratings should be lower: Marc Faber

Most of the European countries should be rated triple-C and the US "should not be a "triple-A-minus but a triple-B or junk bond when you really analyze the unfunded liabilities that will come due in future," investor Marc Faber told CNBC Friday.

The editor of the Gloom, Boom and Doom Report said France is not a very good credit risk, and Standard and Poor`s one-notch downgrade announced by the French finance minister Friday was "insufficient." France had been rated at triple-A and now, like the US, is double-A-plus. Germany, the strongest of the euro-zone members, "is ok," Faber said, "but Germany also has large, unfunded liabilities." He said he is "not interested in sovereign bonds except as a trade but longer term you`ll lose money in sovereign bonds." He said he wouldn`t buy French government bonds "and I wouldn`t buy any US bonds either." He predicts the SandP downgrades in Europe will have little effect on the world`s stock markets, just as SandP`s one-notch downgrade of the US credit rating had little effect. "Much of any downgrades has [already] been priced in," he said of Europe. Where they will have an effect will be on the value of the euro. "I think the euro is in a downtrend," said the man nicknamed Dr. Doom. The European corporate sector has a lot of US dollar-denominated debt and a lower euro "makes it more expensive to service these debts." What could move the stock markets "is if some country would say, `We`ve had enough, we`ll exit the euro,`" he said. "If Greece does that it`s not going to be a disaster. But if Greece, Portugal, Spain, Italy do it, then it would have a huge impact" on the derivatives market. He said European stock markets underperformed the US market, but at some point that will change. When that happens, he said, companies like Novartis, Nestle and Total are "reasonably good value" although "not compelling values." Sectors in which he would invest include commodities, real estate and precious metals. Copyright 2011 cnbc.com