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Bob Janjuah's Latest Big Picture Outlook

Tyler Durden's picture




 

The latest big picture observations from one of the original skeptics: Bob Janjuah.

Bob's World - Vigilantes bite back

The themes I have been highlighting all year certainly seem to have played a major role in driving markets over the past two weeks:

A. The bond vigilantes did their job with respect to Italy. While Greece, Portugal and Ireland are, in my opinion, insolvent nations that need debt relief or restructuring, it seems clear to me that the market does not want to attack Italy out of any speculative spite. As long as the sensible fiscal policies of the last decade are further built upon, I am confident Italy can exit the eurozone debt crisis in acceptable health.
 
B. The 8 July jobs report told investors all they need to know about the weakness in DM growth. I am very confident that both DM and EM growth will only get weaker as H2 unfolds. But in the near term I think a combination of a "fudged" US debt ceiling agreement, more talk of stimuli in the form of QE3, a genuine push by most Italian policymakers to back Mr Tremonti and implement the required fiscal adjustment, and a little more of the Q2/Q3 Japan bounce, will together be viewed, at the margin, positively by markets. But I would expect this to be only a short-lived reprieve.

Therefore, in terms of markets:

A. Although I think the current risk-off phase could last a little longer in the very short term, for the latter half of July and heading into August I am bullish and favour another risk-on phase. In this coming risk-on phase I expect to see over late July and August my S&P targets are 1350/1370, with a possibility of a bigger move to 1440. And 1250/1220 S&P remain my bear alert levels.

B. Over a Multi-Week/Multi-Quarter horizon, I remain bearish and risk-off, as outlined in my previous note. I have high conviction on this call.

C. Any surprise will likely come from the US rather than the euro zone and centres on the risk of no deal being reached on the debt ceiling. If that becomes the market consensus over the next few weeks, then my 1250 and maybe also 1220 S&P bear alert levels should come into play. I think USD and USTs would rally if the debt ceiling deal were not to materialise. The knee-jerk reaction may be to sell USTs and USD, but no deal on the debt ceiling would I feel ultimately send a very positive message to the bond vigilantes that the US is serious about getting its fiscal house in order. Risk markets on the other hand would likely see such an outcome as ultimately very negative, as uber loose policies have been and are the main support and driver of risky asset valuations. At this juncture, however, I see a short-term fudge as the more likely outcome.

Bob Janjuah

 

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Thu, 07/14/2011 - 09:16 | 1455610 rdenner
rdenner's picture

FIRST..Muhahaha....

 

Robert

Thu, 07/14/2011 - 09:19 | 1455634 slaughterer
slaughterer's picture

Short-term fudge, bitchez...

Thu, 07/14/2011 - 09:21 | 1455638 slaughterer
slaughterer's picture

= Fudge on Obama's face.

Thu, 07/14/2011 - 09:16 | 1455617 Mae Kadoodie
Mae Kadoodie's picture

O'blama proposing to move debt talks to Camp David.  Great, when the going gets tough, the tough go golfing.

Thu, 07/14/2011 - 09:20 | 1455640 caerus
caerus's picture

What?!  No beer summit?!

Thu, 07/14/2011 - 10:09 | 1455810 snowball777
snowball777's picture

They should move onto whiskey and coke (not cola) to get that "Jersey Shore" ambiance these negotiations really deserve.

Thu, 07/14/2011 - 09:29 | 1455679 Sudden Debt
Sudden Debt's picture

:)

 

Thu, 07/14/2011 - 09:48 | 1455752 Ying-Yang
Ying-Yang's picture

FYI - There is no golf course at Camp David.  There is a driving range near the helicopter landing zone and there is a single golf hole with multiple tees just outside the President's Aspen Lodge.

Thu, 07/14/2011 - 10:09 | 1455812 bigdumbnugly
bigdumbnugly's picture

that'll do in a pinch.

Thu, 07/14/2011 - 09:19 | 1455632 unky
unky's picture

so would that mean a good buying opportunity for gold in the end of july/ beginning of august ?

Thu, 07/14/2011 - 10:45 | 1455967 Crisismode
Crisismode's picture

Every single day is a great buying opportunity for gold.

When the price passes $3000./oz. you won't spend a lot of time thinking about whether you got a "great deal" at $1500. or "overpaid" at $1580.

Thu, 07/14/2011 - 09:19 | 1455636 jm
jm's picture

Spain not mentioned, which is interesting.

Thu, 07/14/2011 - 09:53 | 1455761 Ying-Yang
Ying-Yang's picture

Nice avatar JM.... although my Yang is larger due to the blue aura of repeated Viagra in-gestation.

Thu, 07/14/2011 - 09:22 | 1455643 equity_momo
equity_momo's picture

Bobs turned into a fence-sitter - throw enough levels out there and either/ors and you cover yourself.  And if he thinks Italy comes out ok hes delusional , i thought he understood where we were in the system. Clearly just another industry hack.

Thu, 07/14/2011 - 09:23 | 1455648 MiningJunkie
MiningJunkie's picture

Mumbo-jumbo blah blah blah....justy buy the metals and sit back and ring the register. The O/I at $1600 August calls is going to propel this baby to $1,635 by next week. Epic short squeeze will slaughter the fuzzy-cheeked geek quants as they puke up their bonuses with the failed trade of the year...

Thu, 07/14/2011 - 09:24 | 1455653 unky
unky's picture

.

Thu, 07/14/2011 - 09:24 | 1455656 milanitaly
milanitaly's picture

Please buy our Bunga Bunga Bonds

Thu, 07/14/2011 - 09:25 | 1455660 unky
unky's picture

there is actually a porn perody called "bunga bunga presidente"

Thu, 07/14/2011 - 09:29 | 1455677 milanitaly
milanitaly's picture

But if you buy 100 Bunga Bunga Bonds you can win a fantastic dinner with Silvio and his staff. Much better, believe me.

Thu, 07/14/2011 - 09:31 | 1455690 milanitaly
milanitaly's picture

But if you buy 1000 BBB you can win a dinner with silvio and his stuff. Much better, believe me

Thu, 07/14/2011 - 09:28 | 1455672 kito
kito's picture

i get the sense from bob that he doesnt see the world imploding. 

Thu, 07/14/2011 - 09:42 | 1455730 ssp2s
ssp2s's picture

Not before mid-August, you mean.

Thu, 07/14/2011 - 09:30 | 1455689 trentusa
trentusa's picture

Varney came out 1st thing on FBN a few mins ago @ 830 (ding ding ding) & damned if it didnt sound to me like Varney nearly quoted last nite's ZH story word-for-word about Obama walking out of debt meeting  

Thu, 07/14/2011 - 09:35 | 1455706 earnulf
earnulf's picture

appears very wishy-washing to me.    lack of committment?

 

Thu, 07/14/2011 - 09:38 | 1455721 trentusa
trentusa's picture

FBN was complaining but not real loud last week/10 days ago the gov't was telling the channel to chill the hell out, if nobody here noticed FFBN has toned it down in last week and a half. You could tell the broadcasters were chafing @ the bit & didnt appreciate it. Been some superb political theatre last couple three weeks.

Thu, 07/14/2011 - 09:43 | 1455734 nscholten
nscholten's picture

I'm going to take a stab at a market prediction. 

I look for the market to go either up or down or sideways.

Do they really get paid to print this shit?

Thu, 07/14/2011 - 09:51 | 1455757 Boston
Boston's picture

I think USD and USTs would rally if the debt ceiling deal were not to materialise. The knee-jerk reaction may be to sell USTs and USD, but no deal on the debt ceiling would I feel ultimately send a very positive message to the bond vigilantes that the US is serious about getting its fiscal house in order.

Exactly. So here's the plan:

1. On any knee-jerk sale of UST, go long.....in preparation for the upcoming risk-off later in the fall.

2. If no debt deal happens, and risk off strikes sooner.  Sell into a panic-driven UST rally as equities take a nosedive.  Soon after, buy back the UST's when they come off their panic highs.

 


Thu, 07/14/2011 - 10:00 | 1455787 New American Re...
New American Revolution's picture

Explain C again.   Is it me, or are you saying it could go up or down?

Thu, 07/14/2011 - 10:10 | 1455804 Caviar Emptor
Caviar Emptor's picture

no deal on the debt ceiling would I feel ultimately send a very positive message to the bond vigilantes that the US is serious about getting its fiscal house in order

lol. 

There's no intention, no desire, no effort, no interest, no reason. 

First there's politics: we gotta keep handing money over to the Wall Street and the oil-industrail complex, along with the corporate welfare lobby so they can keep exporting jobs. And we gotta keep the millions of unemployed off the streets

Second there's economics: a Ponzi placed on a diet implodes with a huge sucking vortex, pulling everything in like a black hole. The entire financial complex depends on a huge expansion (not contraction) of debt to keep alive by paying off the previous giant bad debt. Every S&P 500 living off the fat of large amounts of nearly free credit would have to cut itself in half. 

Thu, 07/14/2011 - 10:10 | 1455820 snowball777
snowball777's picture

Party pooper. ;)

Thu, 07/14/2011 - 10:14 | 1455829 TooBearish
TooBearish's picture

Clearly Bob has lost his mojo

Thu, 07/14/2011 - 10:22 | 1455875 SoNH80
SoNH80's picture

RISK-ON!  RISK-OFF!  THE TRADER!

http://www.youtube.com/watch?v=3rMW-btXzwo

Thu, 07/14/2011 - 11:02 | 1456037 ElvisDog
ElvisDog's picture

The problem with not increasing the debt ceiling is that living within our tax revenues ($2.4T or so?) means a 33% cut in federal spending. Read that story about CA. If they don't get their sugar from the Federal daddy they implode. Same with most other states. Living within our means would certainly be healthy in the medium to long term, but over the short term there would be a reckoning. There is no way the markets would view that favorably.

Thu, 07/14/2011 - 11:09 | 1456076 newstreet
newstreet's picture

Isn't this the guy who had us selling the SPU's at 1000 last fall?

Carthago delenda est.

Thu, 07/14/2011 - 12:00 | 1456322 rdenner
rdenner's picture

FIRST..Muhahaha....

 

Robert

Thu, 07/14/2011 - 13:19 | 1456645 milanitaly
milanitaly's picture

Looking at today that we have approved new taxes and the interest rate is higher than yesterday, I foresee not good days for our bonds ( 10years 6%before the end of july).

Thu, 07/14/2011 - 13:30 | 1456684 Ying-Yang
Ying-Yang's picture

Hey Tyler... I don't know if you caught the the following interview but it was pretty good!

A U.S. default isn't a matter of "if" but "when," David Murrin, chief investment officer at Emergent Asset Management, told CNBC.

http://www.cnbc.com/id/43721270 

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