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In the US there is a renewed love affair with high tech stocks, notes Marc Faber (aka Dr Doom), in the final part of his latest monthly Gloomboomdoom market commentary for subscribers.

Driven by the superior performance of Google, Apple and Research in Motion, the Nasdaq 100 has recently exceeded its July high. But there are two points to consider:

• Google, Apple and RIM are already extremely over-extended and have become overly popular among investors at a time at which these companies’ growth rates are likely to slow down.
• The high tech industry’s best customers are consumers and the financial sector.

Since demand from both these sources is likely to slow and possibly even decline, the
fundamentals would not seem to support the recent rise in prices.Faber is similarly gloomy on emerging stock markets: yes, they may have fully recovered from their July/August declines, but “market breadth has deteriorated and declining volumes are arguing for some caution”.

There is no doubt that we are dealing with bubbles in China and in India, Faber warns. Can these bubbles be inflated by another 100 per cent? “Possibly, if Taiwan and Japan in the 1980s serve as a model.”

However, he concludes, the risks are high (as they are for the Nasdaq 100) and once these markets tumble (and they will) “the shaky global financial system will be tested one more time”.