This is why I hate strategists, all the lipservice, none of the reality check that comes with actually managing money.
Meet Albert Edwards, SocGen Strategist:
August 2011: Global hyperinflation trigger market crash back to the ice age.
“After that, says Edwards, a period of hyper inflation will push bond yields into double digits and send the S&P stock index tumbling to 400”
April 2013: Global hyperinflation triggering market crash
" Rapid inflation surely beckons. But that will not occur without firstly a Japanese-style loss of confidence in policymakers as we dive back into recession and produce dislocative market moves."
January 2016: Global deflation triggering market collapse with S&P falling 75%
“A falling Chinese yuan will unleash a wave of global deflation that will send the U.S. into its next recession and pull the S&P 500 back down to 550 points , according to a strategist at Societe Generale.”
2008 was a 100 year flood, the chances of that happening again in the near future are near zero. People are unwinding the QE price momentum trade, not selling because we’re near imminent collapse in the financial markets (not in the US anyway). Exhibit A: The biotech fraud market is now experiencing its “1999 to the downside” moment. Most of these stocks have another 50-75% downside. Wave good bye. Buh bye!
SeekingAlpha bullets from SocGen:
The SocGen strategist says the West is about to be hit by a wave of deflation from emerging market economies and that central banks were unaware of the disaster about to hit them.
“I realize most people think I am talking utter garbage but I’m used to that. And maybe I am! But the truth will come out in the next recession which may be pretty close now,” Edwards says.
“The previous bear market low was in March 2009 when the S&P reached 666. I think we’ll go below that within this bear market.
“Developments in the global economy will push the U.S. back into recession. The financial crisis will reawaken. It will be every bit as bad as in 2008-09 and it will turn very ugly indeed.
“Emerging market currencies are still in freefall. The U.S. corporate sector is being crushed by the appreciation of the dollar.
He says the U.S. economy is in far worse shape than the Fed realizes: “We have seen massive credit expansion in the U.S. This is not for real economic activity; it is borrowing to finance share buybacks.”
Edwards attacked the “incredible conceit” of central bankers, who had failed to learn the lessons of the housing bubble that led to the financial crisis and slump of 2008-09. “They didn’t understand the system then and they don’t understand how they are screwing up again. Deflation is upon us and the central banks can’t see it.”
Note: Edwards’s “Ice Age” thesis goes back to Aug. 2008, and was reiterated in Dec. 2009, Sept. 2011, and May 2012.
The worst part is that when, after 6-10 years of being wrong he is eventually right he’ll spend the next 10 years saying he called X crisis.
I’ve been very outright in saying the EM situation is going to deepn significantly and that US valuations are very stretched but this guy’s just all over the map between hyper inflation, deflation, ice ages, etc.
He probably gets paid to have very contrarian calls. If it’s not SocGen’s money, they probably don’t care whether he’s right or wrong. There are always funds looking for very out of consensus calls and will pay to read his stuff.
Reminds me of this tool: http://www.mauldineconomics.com/
Apparently one of the most subscribed investment websites out there. Even though the guy is wrong year after year. And completely full of himslf.
In 2007 he foresaw merely a “goldilocks correction” and in 2009 and 2010 he was sure the markets would not recover. For the last couple of years he was predicting the next big crash. It’s just around the corner. Any day now…
societe general has been bearish for the longest time. his predecessor was bearish as well, dylan grice. good reasoning, but wrong calls. mauldin is able to bring sum really smart ppl at his conference. but i remember seeing an interview where he was excited/fascinated on how bonds are priced. and i just thought, how clueless is that?
Meanwhile… back in CNBC La-la land…
Some “expert” a couple weeks ago put a target of 2300 on the S&P for 2016. I will see if I can find the link.
Ed Yardeni predicted a global recession in 2000 due to the Y2K computer glitch:
That being said, apparently he has been pretty good otherwise.
This is the way I think about it, since it seems how the world works: http://awealthofcommonsense.com/buy-side-vs-sell-side/
Even a stopped clock is right twice a day.