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Stock Markets Face A ‘Bloodbath’, Warns SocGen Strategist Albert Edwards!

  • The Hindenburg omen is indicating a very strong possibility of a crash within 40-120 days. I suggest you take the advice and remain on the sidelines. There is a 30% chance of a full-blown financial system rattling event.
     
    Stock markets face a ‘bloodbath’, warns SocGen strategist Albert Edwards
    Investors should brace themselves for an equities “bloodbath” and a further fall in bond yields when the current excessive optimism propping up the market seeps away, Albert Edwards, a strategist at Société Générale, has warned.
      
    Mr Edwards said there was too much hope among investors, with excessive valuations in the US, but predicted it would come to an end in the coming months as economic data increasingly pointed to a double-dip recession.
     
    “Equity investors are in for a rude shock. The global economy is sliding back into recession and they are still not even aware that these events will trigger another leg down in valuations, the third major bear market since the equity valuation bubble burst,” he said
      ….. 
    The yield on UK benchmark 10-year bonds was 2.88pc yesterday, and Mr Edwards forecast a further fall to below 2pc. He predicted that “global cyclical failure” would push US 10-year yields down to 1.5pc-2pc, and German bunds to below 1.5pc.
     
    “So far the equity market has shrugged off much of the weaker data that abounds, and has not joined the bond market in a perceptive move. “The equity market will though crumble like the house of cards it is, when the nationwide [US] manufacturing ISM slides below 50 into recession territory in coming months.” The ISM index fell to 55.5 in July from 56.2 in June. Mr Edwards forecast a return to the “valuation nadir last seen in 1982”, with the S&P bottoming at around 450.

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August 31, 2010 - Posted by | Economics | , , ,

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