Plenty of gems in the latest missive from Bob Janjuah.
Aside from the above, the RBS strategist believes the market is starting to realise just how daft the consensus views for global growth and corporate earnings are:
WE have now had Ben B talk up the recovery and the outlook for rate hikes, following on from a few Fed hawks last week (even President Obama was talking up the eco recovery post the payroll release last week!!). I assume they are all rehearsing in public for some tragi-comedy skit they are abt to perform, maybe at some July 4th party. I can ONLY assume this because I cannot believe that they are being serious in any way when talking up the recovery and the prospect of rate hikes. And price action in markets is making it pretty clear that the market is fully prepared to call the Fed’s bluff here.
Policy makers need to realise that YES, you can fool some of the people some of the time. But NO, you can’t fool all the people all of the time. It seems pretty clear that the market is beginning to figure out how ridiculous the consensus view is for global growth and earnings, and instead is BEGINNING to price in the kind of multi-yr global growth outcome that Kevin and I have been talking abt – closer to 2.5% pa global, rather than 4.5% global.
So, Ben, keep up the rah rah if you have to, but I think you need to accept that folks are beginning to see the post-Lehman global recovery for what it was – a 1 yr wonder driven by the most extraordinary policy response ever seen in history at the global economy level. And folks are now beginning to accept that a slow down is on its way, with policy makers pretty much all-in.
All that’s now left, as I have said before, is for the Fed to shift to a USD5trn or so new QE programme, likely in co-ordination with a bunch of other central banks, which in total may give us USD10trn or more of new QE. But this isn’t happening until much much later this yr or, more likely, next yr.
And here is the conclusion:
At the outset I said that there was no chge in view. This applies Strategically where, on a 3/6mths I remain v bearish risk (equities, credit, EM etc) and bullish USTs & the USD. And Tactically, I still think the real fireworks and nastiness will be a July/Aug/Sept phenomena. HOWEVER, shrt term the key zone is, in S&P cash speak, 1040/1020. A clear break below this zone would indicate that a MAJOR sell-off is coming sooner rather than later, down to the mid-800s. It also seems to me that as part of this move, we are building up the pressure for a huge one/two day move where global stocks drop well over 5%, maybe up to 10%. This last ‘call’ is based on nothing more than my (ample!) gut-feel. But I know I am not alone in this regard. Let’s see, but I am preparing for Flash Crash 2…sadly the excuses used to play down Flash Crash 1 have been exposed as bogus, so I wonder what the next set of excuses are – its been a while since we used the old ‘rogue trader’ excuse so my money is on that horse.
I’ll get my tin hat.
(Oh, and the usual warning about snarky comments on Bob’s style, grammar, spelling and/or syntax applies — Zapwatch™ with a negative outlook.)
Related links:
Get liquid – FT Alphaville
‘Some horrendous Keynesian/monetarist nightmare’ – FT Alphaville
Bob the Bull – FT Alphaville
The Great Depression II – FT Alphaville