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Bob Janjuah: Global Asset Bubble Is Building, Fed Is Fattening Market Tail Risk, In One Year Bonds Will Be At Either 1% Or 8%

Tyler Durden's picture





 

Bob the bear emerges from hybernation and gives Bloomberg his first interview since joining Nomura. As always, it's a must watch. His most concise outlook: "In 6 months time, if we’re right, I think treasury yields are lower. Sub 2. 10-yr notes. I think the S&P could be sub 1000. Gold, look I think we may see the highs for gold in the next 3 months in this little cycle, 1500 maybe but beyond that, I think absent of a policy response, I think gold could fall." Specifically for bonds, "I think from my side, Kevin and I have talked about this a lot, we could make a story where by 12 months time 10-yr notes are at 1% or at 8%. What we’re pretty sure of is that aren’t going to be at 2 ½ -3." Surely PIMCO, and its $1 trillion+ of assets, despite recent bearish clarity from the boss, would prefer the former. And to demonstrate just how insane the world has become, now Bob is even more optimistic than Bill Gross: "Within the next 3 or 4 months, 1220 is the sort of level that I’m looking for and at that point, depending on the sort of news around it and the trends we see in growth, that’s probably where I want to reverse my portfolio." Well, at least briefly.

HIGHLIGHTS:

On whether quantitative easing will work:
“Some the issues that we talked about last time, they are still the issues. As you remember we talked about QE coming, I think a lot of the street was talking about exit policies back then, which to myself sounded ridiculous. The QE event is happening. We can talk about whether it’ll be disappointing or not but ultimately I’m not sure whether this fixes anything.”

“Clients that we’ve spoken to and the general sense we get from the market is that people are getting sucked into the buy risk trade, which is clearly part of what the Fed is trying to achieve. I think the big problem that people have is that they cannot equate QE with growth success. And also, I think importantly, the asset that really matters, housing, that’s the least impacted by QE.”

On whether we’re in a bubble:
“I think clearly, what we think they (the Fed) is trying to do is take away the tail risk of deflation. What we think they are actually achieving is increasing or fattening the tail risk in the market generally. What we have here, we think, is a situation where investors are being forced into piling its risk assets. If the growth story globally in the U.S. and the emerging markets doesn’t follow through, that in the old days used to be called a bubble and that I think is the big risk building up for 2011.”

On the outlook for S&P 500:
“Within the next 3 or 4 months, 1220 is the sort of level that I’m looking for and at that point, depending on the sort of news around it and the trends we see in growth, that’s probably where I want to reverse my portfolio.”

On emerging market valuations:
“I think they are going to get over valued going forward, more so than I think in the western markets on the basis that global growth and EM (emerging market) growth are driven primarily through their exports and through commodity price inflation. I think the reverse in percentage terms could be salvaged. I mean fundamentally, the long term story of emerging markets; I’m a big fan of that. But this market has a tendency to get ahead of itself and then correct.”

On the outlook for treasury yields, S&P and gold:
“I think from my side, Kevin and I have talked about this a lot, we could make a story where by 12 months time 10-yr notes are at 1% or at 8%. What we’re pretty sure of is that aren’t going to be at 2 ½ -3.”

“In 6 months time, if we’re right, I think treasury yields are lower. Sub 2. 10-yr notes. I think the S&P could be sub 1000. Gold, look I think we may see the highs for gold in the next 3 months in this little cycle, 1500 maybe but beyond that, I think absent of a policy response, I think gold could fall.”

 


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Wed, 10/27/2010 - 10:46 | Link to Comment jus_lite_reading
jus_lite_reading's picture

All should take note: Everyone, bears, bulls and pigs are saying the markets go higher first. That is the exit sign. They want out now.

Wed, 10/27/2010 - 11:06 | Link to Comment Gromit
Gromit's picture

+1

Wed, 10/27/2010 - 12:25 | Link to Comment Comrade de Chaos
Comrade de Chaos's picture

+ 10000 !

It may or may not be the exit sign yet, but everyone in their right mind should be rather very nervous by now... and ready to use that fat finger...hoping it is fat enough to click on time.

Wed, 10/27/2010 - 15:23 | Link to Comment FEDbuster
FEDbuster's picture

Double double toil and trouble, fire burning cauldron BUBBLES, something wicked this way comes.....

http://www.youtube.com/watch?v=M_yi1OjhShs&feature=related

or my favorite "I will try again to blow a bubble that will last all day!"

http://www.youtube.com/watch?v=vdED3rVgIu4

 

Wed, 10/27/2010 - 10:52 | Link to Comment denarii
denarii's picture

OMG he is wearing a suit

Wed, 10/27/2010 - 10:59 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

Hardly.

Nice jacket, open collar shirt, casual slacks.

Were those sandals on his feet? Or top-siders? At least he wore solid colored socks. :>) 

Wed, 10/27/2010 - 12:14 | Link to Comment Spitzer
Spitzer's picture

hahaha

Those are Crocs man ! those are brown Crocs. He wore Crocs to Bloomberg. This guy is awesome.

Wed, 10/27/2010 - 16:44 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

OMG

They are Crocs. I wonder if Bob has a "no suit clause" in his contract.

And the other guy is wearing pink socks to match his pink tie. Nothing wrong with pink. It's the decision to match tie and sock that's interesting.

Wed, 10/27/2010 - 19:15 | Link to Comment PuppetRepubl1c
PuppetRepubl1c's picture

I am amazed but yes indeed he is wearing crocs! 

 

To me this is extremely bearish on the American economy, yet bullish on cheap Chinese imports!  :)  (the seemingly obvious trade these days)

 

 

Wed, 10/27/2010 - 13:37 | Link to Comment ZeroPower
ZeroPower's picture

Nice, top-siders FTW!

Wed, 10/27/2010 - 10:58 | Link to Comment Dismal Scientist
Dismal Scientist's picture

He's wearing a jacket.

Wed, 10/27/2010 - 10:55 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

Funny, but when I read "Bob the Bear" I don't hear an accent.

Wed, 10/27/2010 - 10:59 | Link to Comment Dismal Scientist
Dismal Scientist's picture

CD, I replied to your reply on the Grantham post from yesterday. My question still stands, I think ?

Wed, 10/27/2010 - 11:39 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture
by Dismal Scientist
on Wed, 10/27/2010 - 06:23
#679934

 

'Regarding your specific question about the 5th level of control, what benefit would be derived from trying to explain the 5th level when so many people don't believe there's a 3rd or 4th'

 

Thanks, I'm with you on the 3rd and 4th levels. Hence my interest in the 5th. It would benefit me to hear your thoughts, as you can see I read your previous comments and took them seriously?

 

I appreciate the interest. But as I said a week or so ago when I mentioned the 5 levels, I have no interest in publicly discussing my views on the 5th level. One's credibility among his/her peers is slowly built up, but can quickly crumble into dust simply because the group isn't as tolerant as they say they are.

More to the point, this site is infested with psyops operatives who dearly wish to demoralize and discredit those who have some standing here on ZH, of which I count myself. I would be handing them the seeds to my own destruction by openly discussing my deepest thoughts and conclusions. There is no benefit gained for me or those around me that wouldn't be completely offset by the damage that could be done.

This is a fact of life, not a defeatists position. There are places where I do speak openly. But not here. Not in an open forum. One doesn't speak openly among those who either don't wish to see/hear open speech or are frightened of views that are very contrary to their own. You've read my articles, you know how people say one thing but believe another. I don't care how "open" this blog appears to be, there are places this community simply doesn't wish to go as a community. Including the owners.

And the comments and replies left when delicate subjects are broached reflect this perfectly. There are areas that are verboten here on ZH as they are in society. I will not waste my time transgressing those areas publicly when I can do so much good while still staying within the lines drawn by the community. I've been here for well over a year and the community is slowly moving forward. Things that can be openly discussed today would have been shouted down a year ago. Maybe some day I will feel the time is right.

Wed, 10/27/2010 - 12:20 | Link to Comment Dismal Scientist
Dismal Scientist's picture

Thanks CD, that was a much clearer answer (for me) than yesterday. I get your point, and of course respect your views. My curiosity will have to remain for a while longer, it seems.

As for the infestation of psyops operatives, it was inevitable from day one. As the owners of this blog do not wish to exercise restraint on commenting, then we have to live with the good and the bad outcomes of that decision.

Appreciate the response, my original question was meant in good faith.

Wed, 10/27/2010 - 12:23 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

I can appreciate you desire to explore, particularly when you find someone whom you feel might have something real or substantial to offer or share. I come across people such as this from time to time myself. But they, as well as myself, have been burned so many times that we have set up walls and a vetting process that would put the mating rituals of the Dodo bird to shame.

As I said, it's a fact of life. I will say that as I continue to explore my consciousness and "reality" I'm learning that I don't need to trust (or not trust) my 5 senses when trying to discern honesty or sincerity in another. My 6th sense is becoming stronger, primarily because I'm allowing it to come through rather than stifling it in favor of the manipulated and distorted 5 physical senses.

Meaning that I can better tell when someone is being sincere. I sensed that in you. It's often how something is phrased rather than what is said. Those on the path not only use different terms, but their written thoughts are constructed in subtle ways most wouldn't really see as different even if it's pointed out to them.

Wed, 10/27/2010 - 14:02 | Link to Comment E.Z. Mark
E.Z. Mark's picture

Belief perseverance is another powerful cognitive bias, that's one of the reasons this place is sometimes like an echo chamber.

 

I don't think learning should end until you die.  It's a shame intellectual humility is not seen as a virtue even by young people like me.

Wed, 10/27/2010 - 14:34 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

It's a shame intellectual humility is not seen as a virtue even by young people like me.

Good point.

In a Ponzi world that ultimately affects everyone and everything, intellectual arrogance must be promoted in order to encourage herd or lemming behaviour. The Ponzi doesn't work when people recognize their own fallibility and weaknesses, thus assuring that people will stop and think about potential consequences and possible/likely outcomes of their actions. It only works when people are certain they're correct and that they know what they're doing, thus only the fool dawdles when considering the dangled bait.

When faith and belief is the only supporting characteristic of a Ponzi economy, contemplation is a mortal danger to continuation of the Ponzi.

Wed, 10/27/2010 - 10:56 | Link to Comment pangalliondotcom
pangalliondotcom's picture

I wish he would stop saying, "Now look...". It's so condescending and it makes him sound like that war criminal Blair.

Wed, 10/27/2010 - 12:00 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

"Now look...." is simply a "See here...." that's been toned down.

It's also the "proper English" way.

Wed, 10/27/2010 - 10:57 | Link to Comment Quinvarius
Quinvarius's picture

Good to see everyone is still a gold bear.

Wed, 10/27/2010 - 10:58 | Link to Comment rubearish10
rubearish10's picture

Disappointing discussion. He's a burned bear. Talk about ambivalence. "if we're right,,,,," Fuck him!

Wed, 10/27/2010 - 11:49 | Link to Comment spartan117
spartan117's picture

Agreed.  I recall one of his last interviews on Bloomberg claiming we would turn bye end of summer, topping out below 1125 on the SPX.  The fall from there would be massive.  Now he's only a short term bear?  What the hell?

Wed, 10/27/2010 - 11:06 | Link to Comment KevinH
KevinH's picture

funny that the tagline is "Janjuah sees new highs for stocks." Casual observer who didn't really listen to the program would think he's bullish long term. 

Wed, 10/27/2010 - 11:14 | Link to Comment unum mountaineer
unum mountaineer's picture

Gold, look I think we may see the highs for gold in the next 3 months in this little cycle, 1500 maybe but beyond that, I think absent of a policy response, I think gold could fall.”

 

...and silver?

Wed, 10/27/2010 - 12:14 | Link to Comment spartan117
spartan117's picture

Yes, gold will fall from $1500 to $1450, then go to $1650, $1800, $2400, then $3500.  All the while, Bob will be shorting stocks with his new, new company.

Wed, 10/27/2010 - 12:40 | Link to Comment UGrev
UGrev's picture

Silver has kept pretty good pace with gold by looks of the charts. Don't know about you, but it seems like the better bet for those of us without a lot of disposable income. I know it's not really "disposing" of cash so much as transfering it to a more stable form of monetary value... but it's less acceptable cash on hand until you "cash it in" for whatever denomination you choose.

I bought a tiny bit of gold.. the rest is silver.

This is my opinion... make your own decision.

Wed, 10/27/2010 - 11:45 | Link to Comment 99er
99er's picture

(Reuters) - Dollar issuance by the United States is "out of control," leading to an inflation assault on China, the Chinese commerce minister said in comments reported on Tuesday.

http://www.reuters.com/article/idUSTRE69P3QW20101026

Wed, 10/27/2010 - 12:43 | Link to Comment trav7777
trav7777's picture

solution: DE-PEG

Wed, 10/27/2010 - 13:29 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

DE-PIGGS?

Wed, 10/27/2010 - 11:55 | Link to Comment unum mountaineer
unum mountaineer's picture

alot of so called experts have blinders and tunnel vision. they focus on one area. which is not necessarily a bad thing...also alot make predictions based on how things "usually" worked...relationships charts, etc. i've proposed this before....what might have worked 30-40 years ago would be all well and fine..if it were 30-40 years ago..internet is a beautiful thing...all the shit that would have taken years to come out into the open...heck, barely scratch the surface and be otherwise entertained by basement tin hat crowd  is being talked and discussed (albeit at the level of 3rd grader) by MSM..hence the citizenry gets restless when faced with information...what they do with said information is a matter of choice...and an ephiphany I've had at or around the same time; what happens when more honest, good people realize the game is rigged and start behaving badly? these experts don't touch on that..maybe it gives them itchy bum..gawd forbid there be a fundamental shift in thought and behavior coming / here and abroad..food for f-ing thought..these so called experts should take some tums after digesting that....you too contribute to the disinformation..sighted?

Wed, 10/27/2010 - 13:22 | Link to Comment michigan independant
michigan independant's picture

China IMO is sending some reality as they honor licensing but planning longer term than our talking Heads can adapt on the Hill. Decoupling is tough love in a Lean manufactoring supply chain reality models. I feel many aspects he conveyed we understand but when does reality meet math. This will be a social event affecting math. The question we have to deal with is whether it is possible to grasp human action intellectually if one refuses to comprehend it as meaningful and purposeful behavior aiming at the attainment of definite ends. It is a fact that people in the pursuit of their selfish interests try to use doctrines more or less universally accepted by public opinion. Moreover, they are eager to invent and to propagate doctrines, which they could possibly use for furthering their own interests. But this does not explain why such doctrines, favoring the interests of a minority and contrary to the interests of the rest of the people, are endorsed by public opinion. No matter whether such "ideological" doctrines are the product of a "false consciousness," forcing a man to think unwittingly in a manner that serves the interests of his class, or whether they are the product of a purposeful distortion of truth, they must encounter the ideologies of other classes and try to supplant them. Then a rivalry between antagonistic ideologies emerges. Skynet will now decide since the sphere of private property and the market lies the sphere of compulsion and coercion; here are the dams which organized society has built for the protection of private property and the market against violence, malice, and fraud. This is the realm of constraint as distinguished from the realm of freedom. Here are rules discriminating between what is legal and what is illegal, what is permitted and what is prohibitcd. And here is a grim machine of arms, prisons, and gallows and the men operating it, ready to crush those who dare to disobey and not needed since it has taken three generations to dilute any meaningfull thougt of the wandering moral compass instilled. It is easier to pick them off one class at time to continue the leveling process as the Voter serves no interest as avarice decimates capital stock.  

Fri, 10/29/2010 - 22:22 | Link to Comment obobcatu
obobcatu's picture

The real highlight was seeing Bob rock his Crocs on Bloomberg TV at about 2:50 in the video.

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