RBS’s chief strategist Bob, ‘The Bear’, Janjuah has returned from his summer travels and he is as bearish as ever.
In fact his latest missive is at times almost apocalyptic:
I do however think that we are VERY MUCH in the tail end of the correction of the Oct 07 to Mar 09 bear move, where S&P lost nearly 60% from peak to trough, and where the correction from the Mar low would, at 1120, represent the 50% retrace. Once what I assume is a bear mrkt correction finishes, over the next month or so, I expect the Bear to return with vengeance and I retain my call for NEW LOWS in equities. That’s 550 S&P!!
Wow. 550 on the S&P. Eat your heart out Albert Edwards. Bob continues:
The crossroads is only weeks away, and visibility is poor, thus it is extremely difficult to make big calls at this time, esp. when the call is against the growing weight of opinion. Something extra-ordinary MAY be happening and, joking aside, even if its not, precise timing is always difficult. But based on everything I know and see I would be using any further risk asset rallies over the next month or so as an oppose to sell risk/raise cash/get short, and to flip out of high beta risk low quality risk, into low beta high quality risk.
And here why Bob is so bearish:
I have yet to see ANY meaningful evidence of self-sustaining private sector demand, which I have said for many months is the key to a sustained/secular economic recovery and asset price recovery. All I see is growth and asset price gains driven by the willing and reckless destruction of government and central bank balance sheets. This is NOT sustainable IMHO. I continue to see a private sector that wants to pay down debt, increase savings, cut costs, take less risk. And I see the period of government and central bank driven boom times as rolling over very fast from here on in. Why? Because I think balance sheets and sustainability – govt, central bank AND private sector, MATTER. If they no longer matter, I will be WRONG, and I will have to accept that the policy of ‘Print/Borrow/Spend on Rubbish we don’t Need’ is a limitless phenomena, without consequences, which means there should never be a bear market ever again….I hope this sounds as ridiculous to you reading as it did to me when writing…..
Sadly, Bob is not very happy with his new found popularity, as these barbed comments about “unauthorised usage” by the mass media make clear:
You would all be AMAZED at the reactions I have seen from many market professionals to my piece (see below) written before I went away. Of course, some folks get their dose of Bob’s World from unauthorised ‘usage’ by the mass media – for the record, I do NOT as a rule speak to the media, I’d rather focus on clients – and as such will never see everything I write.
All of which seems rather uncharitable given that Bob is effectively working for the UK taxpayer now.
Related link:
Stopped out – FT Alphaville