One of the many lessons from equity investing during Japan’s Lost Decade is that in a secular bear market hope is a killer. In a secular bear market hope should only be flirted with briefly during cyclical upturns, but it must be ruthlessly rejected as the cycle turns. In a secular bear market being wedded to hope destroys portfolios as the bear slashes to ribbons the hard-fought gains of the previous bull market. Gains that have taken years to accumulate are gone in months. One key measure we monitor informs us conclusively: we are now in a bear market.
The ‘key measure’ SocGen strategist Albert Edwards is referring to here is one of six models developed by his quant-ist colleague, Andrew Lapthorne. And, in chart form, it looks like this: Read more
On China’s innovative approach to mangling its markets — and whether it’s a dead-cat bounce — here’s SocGen’s Albert Edwards (our emphasis):
Regular readers will know I feel a close affinity with Karachi, my father having grown up there in the 1920s. I have subsequently been to the city many times, visiting a former fund manager colleague and good friend. I also sent my son there when he was 16 to help teach English at an excellent local charitable school foundation (TCF) in a Karachi slum so he could appreciate the value of education – link. Hence in 2008 while the global financial markets were in chaos my attention was drawn to the bizarre events in Karachi more than most commentators.
A couple of years back, the highly regarded Pakistani Dawn newspaper reviewed events in 2008: “In that fateful year, the Karachi stock market index of 100 shares had galloped to touch its all-time high level of 15,760 points on April 20, 2008. And then the stock prices collapsed with index plunging by some 6,600 points or 40% in four months. As panic was thick in the air, an entirely insane act was performed. On August 20, 2008, a “floor” was fixed at the level of 9144 points below which the index was not allowed to fall. All investors, including foreigners who wanted to seek an exit were trapped.
Ice Age theologian, Albert Edwards of SocGen, is back from holiday with a new missive warning of imminent equity collapse.
(As a reminder the Edwards’ Ice Age thesis, which has been running since the days of the Asia crisis, predicts a world of very low inflation and near deflation, where equities de-rate both absolutely and relative to government bonds, which also re-rate in absolute terms. This long-term valuation bear market doesn’t end until the S&P 500 hits 400 and bond yields are below 2 per cent and there’s been a deep recession and blow-up in China.)
As Edwards notes, sub 1-per cent 10-year bund yields are testament to at least one part of his theory playing out as anticipated. Read more
Albert Edwards, the SocGen strategist who first began advocating a big holding of long government bonds seventeen years ago, would like to bring to your attention news overlooked during the Easter break by giddy investors.
China’s Q1 GDP was highly significant, not for the headline slowdown in GDP growth to 7.4%, but because economy-wide inflation slumped further towards outright deflation. The continuing deterioration in Chinese economic data significantly increases the odds of global deflation being unleashed via an unavoidable Chinese devaluation. No wonder the markets prefer to look elsewhere!
LIVE from the Marriot on Grosvenor Square…
Albert Edwards, the SocGen strategist, is pretty much beside himself. His latest Global Strategy Weekly recycles his usual spit, sweat and fury, thrown again at “bozo” policymakers.
But it also includes this fab J Paul Getty quotation, via John Hussman… Read more
SocGen’s bathed-bear Albert Edward has been forced by overwhelming rage to look past the rich vein of Abenomics to the UK’s George Osborne. It’s the Chancellor’s latest meddling with the housing market that has got Edwards so inflamed:
George Osborne in his March budget proposed an unusually misguided piece of government interference in the housing market.
With the S&P 500 making a fresh run higher at pixel time, it would be rude not to share the latest thoughts of Albert Edwards, Socgen’s Ice Age bear. Rather than gawping stocks, he reckons we should be mindful of the red metal…
From Albert Edwards’ latest:
I was on gardening leave when the Dow reached its previous peak in October 2007. One echo from those days is that I was beginning to feel lonely. Pessimism (realism) is very rare on the sell-side so I took a coffee with my fellow bear, Bob Janjuah and cheered up tremendously, reinforced in my belief that this is all going to end very, very badly indeed. Read more
Sadly, FT Alphaville’s New York wing couldn’t make it to this year’s Societe Generale-run bear sighting in London — the bank’s Global Strategy conference starring Albert Edwards and Dylan Grice (who’s off to the buyside).
But we did hear that Albert had called European stocks “unambiguously cheap”. It’s a “once in a generation” buying opportunity, and so on. Is Albert, no longer a equities bear!? Read more
As the festive season draws nearer, Albert Edwards brings us good cheer:
Expect the New Year to bring nothing but disappointment.
Yes, our favourite bear argues that even though we’re getting relatively decent US economic data, it’s falling corporate profits to come we should be concerned about. In short, he argues the US is already entering another recession. Read more
There may be a new China to consider but its signs are not very easy to discern. The yuan is on a roll against the dollar, hitting multiple new highs since July but somewhat confusingly, estimates suggest that in the 12 months through September, some $225bn flowed out of China — that kind of outflow doesn’t square with the yuan’s recent strength. Read more
“The Fed will destroy the world”
As top lines go it’s pretty decent… and when you follow up with a pic of a strategist in a bath you leave us no choice but to post (we tried to resist, we really did): Read more
We were NFI on the occasion of the 39th annual Thomson Reuters Extel survey awards ceremony, held at London’s Guildhall on Tuesday. But we shouldn’t allow that to stop us sharing the results.
Highlights: Read more
The famous (
implied) last words of Crocodile Edwards — a.k.a SocGen uber bear, Albert Edwards — this Thursday.
Following in the foot steps of colleague Dylan Grice’s episode of Australia bashing the other week, Edwards calls the situation plain: Read more
We retain our heavy overweight in 10y+ government bonds
…the stronger US economic data have shifted the market further away from our vision of sub-1% US bond yields. This does not concern us. We have been here many, many times before Read more
Albert Edwards is with Terry Smith on this one. If Shredded Fred must lose his knighthood, then certain other players in this game of bubble and crunch need to forego an honour or two.
But while Smith has focused on Sir Alan Greenspan, Edwards has it in for Sir Mervyn King. From the SocGen man’s latest Global Strategy Weekly… Read more
That is US and UK central bankers pursued by über bear Albert Edwards of Société Générale.
Edwards is rather peeved that researchers at the Federal Reserve seem to have concluded that the Fed wasn’t responsible for the housing boom that has turned into the biggest bust since the 1930s. He would like to know if these are the same researchers who in 2005 that there was no housing bubble at all. But what he wants to know above all else is: Read more
As we watch the snaps from the Greek PM cross the tape on Thursday afternoon…
RTRS-GREEK PM SAYS WE ARE BEARING A CROSS AND WE ARE BEING STONED Read more
What’s come over über bear Albert Edwards? The day after Europe’s leaders reached a deal (of sorts) to tackle the region’s sovereign debt crisis the SG strategist is relatively chipper:
I have minimal confidence that governments can turn this around within the confines of the eurozone project. You might be surprised though that I feel more bullish! Why? Both Dylan [Grice] and I have come to the view that the ECB will be forced, by events, to monetise debt in the GIIPS and beyond. And if investors believe the governments in Spain and Italy are bust, then Germany, France, and not forgetting the UK and US, are far, far worse. Read more
What are chances of a soft landing for the Chinese economy? Pretty slim if you ask über bear Albert Edwards.
The Société Générale strategist reckons “blind faith” in the competence of the Chinese authorities to guide the economy to a soft landing is misguided. He says: Read more
For someone who hasn’t got much to add about the current state of the market, Bob Janjuah still manages to crank out 1,500 words in his latest piece for Nomura.
Bob firmly believes we are in a third stage of a secular bear market, which is about to get nasty. Read more
After his brief experiment with technical analysis (well, Killer Waves) uber bear Albert Edwards returns to more familiar ground in his latest Global Strategy Weekly.
Jeremy Grantham of GMO says this is “no market for young men”. Maybe now I am over 50 it is my time! Yet my forecast of the S&P bottoming at 400 is still met with utter derision. I have been underweight global equities since the end of 1996 and overweight government bonds. Meanwhile US 10y bond yields have fallen from 7% to 1¾%, a hair’s breadth from our longstanding 1½% target. Similarly, in my very humble opinion, S&P at 400 is almost inevitable. Read more
Not sure what to make of this.
Über bear Albert Edwards has abandoned his empirical approach for (shock horror) the mystical world of technical analysis. Read more
“At a certain stage of development, the material productive forces of society come into conflict with the existing relations of production or – this merely expresses the same thing in legal terms – with the property relations within this framework of which they have operated hitherto”.
So said Karl Marx in introducing ‘A Contribution to the Critique of Political Economy’, (1859) and so quotes UBS’ George Magnus, in introducing his latest missive. Read more
Albert Edwards has a soul mate — GMO’s Jeremy Grantham.
Like the SocGen strategist, he too is worried about the massive transfer of income to the very rich that has occurred and has been tolerated only because Central Bankers have created housing booms. So worried is Grantham that he thinks debt forgiveness and changes to the tax system may be needed if America is ever to prosper again. Read more
Thought the current turmoil was down to the downgrade of US debt? Wrong!
According to Societe Generale’s uber bear, Albert Edwards, this has absolutely nothing to do with S&P, the White House, Tea Party etc. It’s the economy stupid: Read more
Bears are endangered and misunderstood. Here in the French Pyrenees, with only some 20 left in the wild, the authorities have been trying to introduce some Slovakian bears to the mountains to beef up the population. Their arrival has to be in secret and they are outnumbered one hundredfold by a gendarme escort. For bears, as I well know, are not too popular. Large demonstrations have been held in various towns against their re-introduction and some get ‘accidently’ shot – link. Needless to say, I’m not venturing out too much.
That’s from Société Générale’s uber-bear, Albert Edwards, who might want to stay indoors if he visits Paris on his way back from the mountains. Read more
He might have been knocked off his Extel perch by sidekick Dylan Grice, but SocGen’s dancing bear Albert Edwards is still our favourite ‘strategiste global’.
And is he loving the recent batch of weak economic data. Read more