This page has been archived and commenting is disabled.

Russell Napier: The Bear Market Bottom Will Be S&P 400

Tyler Durden's picture




 

It is no secret that CLSA's Russell Napier has not been a fan of QE2. As he pointed out in his recent prominent note, "whether equities will fall further depends on how flexible and successful the Fed’s next monetary package will be. Given the risk, investors are better off watching from the sidelines." He further explained: "A risk to reflation would send equities sharply lower. The failure of QEII will undermine investor faith in a monetary solution. With equities near bubble valuations, based on cyclically adjusted PE, a failure to reflate risks major downside. The Fed will try again with a new package, but investors would do best by waiting to see how it plays out." Since as of now we still don't know when and if there even will be a package, here is Napier once again, interviewed by the FT's Long View, presenting his updated views on the economy. His outlook, which we agree with entirely, is that first we will see another major deflationary shock, following which the Fed, already boxed in a corner, will have two choices: let major financial institutions fail, or proceed to monetize outright. Regardless of which outcome is picked, Napier's target for the S&P, which just happens to coincide with that of Albert Edwards, is not pleasant for the bulls: 400 (or somewhere in that vicinity). And that will be the true generational buying bottom.

(Full clip after the jump, with the key part starting 7:30 in)

 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Tue, 05/17/2011 - 12:29 | 1283392 francis_sawyer
francis_sawyer's picture

What would be the purpose of letting the S&P slip to 400???

On one of these 'CRISISES', the 401k's will be locked up if they run out of ways to fund the debt... You know... Your act of patriotism for national security (cough cough)...

In any case, why bother locking up 401ks with the S&P at 400?... It would make more sense to do it at 1,200 (before losing the perceived market cap)... Even MORE sense to do it at 1,800...

Not that these numbers really mean anything but entries on the ledger of a dying fiat...

 

 

Tue, 05/17/2011 - 12:31 | 1283399 Rynak
Rynak's picture

I think that they will NOT lock out the 401k's in the future. They will do something more devilish. It has to do with bonds :)

Tue, 05/17/2011 - 12:32 | 1283409 francis_sawyer
francis_sawyer's picture

401k's will essentially BECOME bonds...

You'll be sold the idea that the only way to save your 401k from mass destruction will be to let the Treasury take care and manage it for you... They'll offer you a nifty 2% SAFE & SECURE (save you from losing 70% in a big stock market crash)...

Of course, once you're in, then INFLATION will start ticking along at 300 basis points above your return...

Then, in about a generation, they'll inform you that all that money has been spent and is gone...

 

 

Tue, 05/17/2011 - 12:39 | 1283422 Rynak
Rynak's picture

To be fair, i am not sad for those people who did in the last 10 years pay into their 401k. Anyone who in the last 10 years did let the government manage their retirement plan, was naive or ignorant on this topic.

What IMO instead is criminal, is what this will mean for people who have been paying for more than 10 years. It's like breaking a 40 years old contract retroactively. This is theft, plain and simple.

Tue, 05/17/2011 - 12:39 | 1283418 SMG
SMG's picture

It would let the oligarchs, who just happen to, by coincidence, right now be flush with dollars.  Rape the peasants of whatever assets they have left at next to nothing. Then destroy that worthless paper and switch to a new currency, destroying the ability of anyone to take care of themselves. Then the whole country will be like a southern plantation before the civil war.

Tue, 05/17/2011 - 14:54 | 1284076 viahj
viahj's picture

i don't see how the Treserve can seize 401(k)s without destroying all equities...forever.  seized shares are not tradable, non-tradable shares means no investment, no investment means no corporate issuance, means.....

Tue, 05/17/2011 - 12:32 | 1283401 Bastiat
Bastiat's picture

I guess it is all good if you can ignore laws & regulations, manipulate markets and where that is not adequate, subvert accounting rules and make up values for balance sheet assets and lever into the 100s of trillions off balance sheet.

Tue, 05/17/2011 - 12:29 | 1283402 RobotTrader
RobotTrader's picture

As of right now, we are in a secular bull market.

Perhaps the first "buy and hold" market in 15 years.

Too many Dow stocks are hitting lifetime highs.  Same with the Transports.

And markets do not top out with credit card stocks hitting 52-week highs today.

My "Formula" remains 100% correct.

S & P 500 at 1,500 = Gold at $1,650

S & P 500 at 400 = Gold at $200

Tue, 05/17/2011 - 12:41 | 1283421 economessed
economessed's picture

Robot Trader, how much time do you spend gazing in the mirror each day?  You really are in love with yourself, aren't you?

Tue, 05/17/2011 - 12:39 | 1283423 shalomprintsgreen
shalomprintsgreen's picture

you are a bufoon

Tue, 05/17/2011 - 12:40 | 1283427 dick cheneys ghost
dick cheneys ghost's picture

This chart here says we are in a secular bear, not bull, what say you?

 

http://www.ritholtz.com/blog/2011/01/spx-index-secular-markets-1900-2010/

Tue, 05/17/2011 - 14:00 | 1283732 topcallingtroll
topcallingtroll's picture

You may be right.
Bennie boy may have pulled a rabbit out of the hat.
Time will tell.

Tue, 05/17/2011 - 15:52 | 1284253 tickhound
tickhound's picture

Highly doubtful prognostication from the king of hindsight.  Check your backward vision...

S & P sub 700 in 3/09 = Gold at $930 uptrending since bottoming in 10/08, while S & P downtrended another @ 40%

The metals are the one "trade" that can have it both ways.

"Dow stocks hitting lifetime highs"... Sounds familiar.  Hope you've been short... You are a trader, right?

 

Tue, 05/17/2011 - 17:33 | 1284815 malek
malek's picture

.

Tue, 05/17/2011 - 12:31 | 1283405 RobotTrader
RobotTrader's picture

By the way, the market is not going to tank from here as long as JPM and WFC remain on the leaderboard, both up 2% today.

Tue, 05/17/2011 - 12:36 | 1283416 buzzsaw99
buzzsaw99's picture

JPM is a mutant sticking out of the belly of the fed.

Tue, 05/17/2011 - 12:57 | 1283471 Tuco Benedicto ...
Tuco Benedicto Pacifico Juan Maria Ramirez's picture

JPM is part owner of the Fed.

 

Tuco Benedicto Pacifico Juan Maria Ramirez

Wed, 05/18/2011 - 00:37 | 1286059 Lucius Corneliu...
Lucius Cornelius Sulla's picture

...also known as the "The Rat".

Tue, 05/17/2011 - 13:03 | 1283500 Tuco Benedicto ...
Tuco Benedicto Pacifico Juan Maria Ramirez's picture

JPM is part owner of the privately-held Federal Reserve.

 

Tuco Benedicto

Tue, 05/17/2011 - 14:34 | 1283934 FreeNewEnergy
FreeNewEnergy's picture

Yes, the WFC is a marvel to behold, up 2% today after an 18% loss over the past 3 months, all while the market was going vertical.

Buy, more, Robo, you tool.

Tue, 05/17/2011 - 19:31 | 1285213 slow_roast
slow_roast's picture

+1oz Au

Tue, 05/17/2011 - 15:25 | 1284210 d00daa
d00daa's picture

"Fully invested" there, Robo?  Disclose your positions, please, so I can destroy you after the 30%+ correction that's coming.

Are you a buyer of IWM here?  JPM?  Up 2% today, but completely and totally rolled over.  Short the bounces, folks.

Have you not been listening to your hero Kaltbaum lately?  Dow stocks are up because they are always up when everything else starts to roll over.  Where are all of the "fully invested" mutual funds supposed to go?  That's right, they always go to mega-cap, low-beta Dow stocks first.

 

Tue, 05/17/2011 - 12:39 | 1283424 Robslob
Robslob's picture

banks buying bank stocks.

Tue, 05/17/2011 - 12:56 | 1283447 AgShaman
AgShaman's picture

oops...dupe

Tue, 05/17/2011 - 12:52 | 1283461 AgShaman
AgShaman's picture

Can I "supersize" my Bear Market Bottom S & P order with a side dish of complete annihilation of Ratings Agencies?

....that would be the "Coup de Grok" cherry on top for the house of cards "Fraudevillian Theatre" that's been engineered by our puppetmasters.

....Come on "Benny and the Jetsetters"....

"give us a real variety show for the ages" -AgShaman

Tue, 05/17/2011 - 12:54 | 1283472 PulauHantu29
PulauHantu29's picture

Everyone os begging for QE3...and we need it or a serious deflationary depression will set in and take years to work out of.

Tue, 05/17/2011 - 13:20 | 1283577 A Man without Q...
A Man without Qualities's picture

"There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved."


Tue, 05/17/2011 - 15:46 | 1284336 d00daa
d00daa's picture

As opposed to DECADES of stagflationary hell, 10%+ unemployment, etc.  Sounds swell.

Feel free to screw your own progeny out of their future productivity, but leave mine the f*ck alone.

Thanks in advance.

Tue, 05/17/2011 - 13:00 | 1283479 AldoHux_IV
AldoHux_IV's picture

The problem with that bottom is that in the current market structure it doesn't exist.  The amount of inflation that needs to happen before the structure changes to reach the true bottom is the problem of that bottom not happening next.  Debt needs to be extinguished and it will take a lot more dollar destruction before there is a consensus.

Tue, 05/17/2011 - 13:00 | 1283482 Verum
Verum's picture

Nic Lenior has 380 i believe

Tue, 05/17/2011 - 13:02 | 1283490 francis_sawyer
francis_sawyer's picture

The bottom line is that whether you like it or not, the banks have everyone by the short hairs...

When history is told, the housing crisis will amount to the biggest LAND GRAB of all time...

Initiate a bunch of loans out of thin air, foreclose on the ones who don't pay, VOILA you now own land without ever have had to lift a finger... If they'd have been allowed to FAIL, then it would be a different story, but it's been easy to grease enough politicians to have made things go in favor of the bankers...

All the rest is just accounting tricks... Encourage huge amounts of "fiscal stimulus", & "nationalizing" distressed assets... then MONETIZE what's not adding up (to keep making the monthly nut while the sheeps are occupied with Dancing With the Stars)... When commodity prices spike and "sheeps" get edgy, go massively short the bogus PAPER contracts of those, and engineer some new geo-political crisis to to a big BEAT DOWN across the board (but especially in commodities)...

Essentially... Get granny to sell her tea set...

Behind the scenes, print yourself all the FIAT money you need to take PHYSICAL off the market and hide it in your basement when paper spot prices have been butchered...

During the next phase, (the part where QE3 starts) when inflation turns to HYPERINFLATION, you hold all the physical (and make it impossible for JOE BLOW to accumulate any at the high prices)... You could actually "rinse & repeat" this for as long as it takes probably all the way thry QE18 & beyond...

If it ever gets out of hand, it won't matter if the FIAT collapses because with the fresh debt money being PRINTED, the banks can just use it to take physical off the market (vis a vis JPM's silver vault these past 3 weeks)... In the end, the banks have all the land & physical commodities... So when a call is made for a "backed" currency, they're already holding all the properties on the monopoly board...

The rest of you serfs & peasants can just sit back and COPE...

 

Tue, 05/17/2011 - 17:27 | 1284792 css1971
css1971's picture

Not junk. This is the strategy used, as banal as it sounds.

You could actually "rinse & repeat" this for as long as it takes probably all the way thry QE18 & beyond...

The UK it's been going on since at least 1694 and certanly before in a less coordinated fashion for hundreds to thousands of years.

Tue, 05/17/2011 - 13:06 | 1283504 monopoly
monopoly's picture

This is just surreal. Do I feel the earth trembling yet? Buy AMZN. NOT!

Tue, 05/17/2011 - 13:15 | 1283557 Bam_Man
Bam_Man's picture

"It's tough making predictions - especially about the future."

                                                                     - Yogi Berra

Tue, 05/17/2011 - 14:38 | 1283991 Muir
Muir's picture

Yes, that's why this is such a golden opportunity to rub it in the faces (no pun to recent news items) to the many ZH readers I have called lemmings.

Tue, 05/17/2011 - 17:03 | 1284689 sellstop
sellstop's picture

I hope you mean those bouncing tits.

Tue, 05/17/2011 - 13:29 | 1283617 Hacksaw
Hacksaw's picture

From his mouth to God's ear.

Tue, 05/17/2011 - 13:30 | 1283621 packman
packman's picture

Mr. Napier needs to familiarize himself with the parable of the scorpion and the frog. 

The S&P will not hit 400.  It will not come close.  This is because the PTB will print, and print, and print until the economy is complete gone, to prevent that from happening.  They will kill the economy to "save" it, the way Mugabe has killed his economy to "save" it.  It's just what they do.

 

Tue, 05/17/2011 - 13:35 | 1283628 aerial view
aerial view's picture

Remember people-this game is about money and control and the winner will be the last man standing which means that the U.S. with it's reserve currency, military might and skill at media manipulation is still the frontrunner. This is a war to end all wars-the survival of the U.S. at the expense of everyone else which means they will pull out all stops and not spare any expense to win. We'll see high volatility in all markets with both  deflation and inflation effects until our weaker adversaries fall (China and Eurozone) and are forced to accept our way of doing things. We are in uncharted territory moving at warp speed so hold on to your seats.

Tue, 05/17/2011 - 13:52 | 1283711 topcallingtroll
topcallingtroll's picture

Uh......we already won.

The other side is checkmated already. They are just unwilling to admit it yet.

Tue, 05/17/2011 - 14:32 | 1283776 Rynak
Rynak's picture

No, "we" have not won yet. The final decision is made on the material plane, and i do not mean PMs. In the case of the US, the gov will have no hesistation turning into an all-out fascist dictatorship. The question is: Will the masses start a civil-war, or will they go into submission? A lot of people here say, that the masses will stand up and not allow this to happen. The same people simultaneusly are now bashing the masses for how dumb and docile they are. I personally am not sure about what would happen in this case.

However, if i would be living in the US, and would have seen over and over how the masses totally failed - not even putting up any fight at all, but actually encouraging the shit going on.... would i want to bet my life on them doing the right thing when the time comes? Or would i rather fight this battle on another more promising battlefield? In my case, the answer clearly is the later: I would leave the US before the showdown.

Tue, 05/17/2011 - 14:51 | 1284045 earlthepearl
earlthepearl's picture

I don't see a forceful dictatorship forming, what armed force will physically do the suppression?

 

Tue, 05/17/2011 - 15:26 | 1284216 topcallingtroll
topcallingtroll's picture

I was just discussing the dollar hegemony war and the subsidy the rest of the world gives us. We have won.....for now and hopefully the next ten years.

Tue, 05/17/2011 - 14:10 | 1283790 zaknick
zaknick's picture

There's a German newspaper report out claiming Iran is building a missile base in Venezuela with DC within range. They're calling it obamao's Cuban missile crisis.

Your conclusions about the KKK empire being in the lead are facile. When you put people's back against the wall their liable to do something crazy. There very well could a "terrorist" strike inthe "homeland" (what did you expect would happen if you go murdering milions for their countries' wealth) or, since these fascist banksters never let a crisis go to waste, a nukular false flag. Hey, after 911 anything goes, bitchez!

Best thing for the world would be AmeriKKKa's collapse and rebirth under Dr Paul and no bank!

Tue, 05/17/2011 - 15:24 | 1284207 topcallingtroll
topcallingtroll's picture

You gotta love america for the opportunity.

Where else, zacknick, would they give an oppirtunity to a third worlder like you to come here to work? At the same time you have a forum available where you can exercise your right to free speech and criticise the country that gave you such opportunity!

Tue, 05/17/2011 - 13:50 | 1283696 topcallingtroll
topcallingtroll's picture

I hate to sound like robotrader but retail and restaurants are going gangbusters in my area. It is booming.

Tue, 05/17/2011 - 14:29 | 1283915 sabra1
sabra1's picture

i think you got confused, those were soup kitchens!

Tue, 05/17/2011 - 14:43 | 1284006 Muir
Muir's picture

"I hate to sound like robotrader but retail and restaurants are going gangbusters in my area. It is booming."

same here, but as ZH has pointed out, many are not paying their mortgage.

Tue, 05/17/2011 - 15:03 | 1284132 francis_sawyer
francis_sawyer's picture

"retail and restaurants are going gangbusters in my area. It is booming"

---

Really??... So tell us... What part of Manhattan/District of Columbia do you live in???

 

Tue, 05/17/2011 - 15:19 | 1284190 topcallingtroll
topcallingtroll's picture

Fort smith russellville I40 corridor.

Arkansas is a low wage right to work state. We are doing well in traditional manufacturing areas and tiny micro businesses serving the manufacturing base.

Anti union low wage states will show relative prosperity compared to the blue states.

Tue, 05/17/2011 - 15:27 | 1284217 Muir
Muir's picture

Coral Gables, Fl

However, as ZH pointed out, many spending money freely have not payed their mortgage in years.

Tue, 05/17/2011 - 15:39 | 1284290 d00daa
d00daa's picture

People said the same thing in 2007.

"What problems with the economy?  Have you seen the restaurants and the malls?  Packed!"

But, this time is different.  Right?

Tue, 05/17/2011 - 13:59 | 1283739 Johnny Lawrence
Johnny Lawrence's picture

If you look at 1990s Japan and The Great Depression, they both established new lows after rallying after the initial crash.  Predicting a new low is not a radical thought, but something which has already been proven by history.

Tue, 05/17/2011 - 15:43 | 1284313 d00daa
d00daa's picture

It is certainly the rule rather than the exception.

But that doesn't matter to bulltards.  The market can never go down again.  The Fed is in control.

This time is different.

Tue, 05/17/2011 - 13:59 | 1283746 SkewYou
SkewYou's picture

This is quite simple..the government will have to "borrow" from 401k's. What better way to replace the funds then crashing the market buying the pensions enough SPY @40 to make up the difference through distributions and capital gains by inflating the markets again via monetary policy?

Tue, 05/17/2011 - 14:40 | 1283984 FreeNewEnergy
FreeNewEnergy's picture

You like predictions, how about Obama running unopposed in 2012. Shaping up that way, though Ron Paul will probably get a Libertarian and/or Conservative endorsement somewhere.

Tue, 05/17/2011 - 14:56 | 1284072 anony
anony's picture

Other than megalomaniacs looking for a sweet ride on Air Force One, Marine One and the limo, with lotsa secret service hunks to give him an air of Gravitas (with biscuits, yum) what sane person would want that job?

It has no real power, you spend 8 years kissing the dicks of those who put you there for their own benefit, and when you're done you get a fucking library, (like, INTERNET, you ninny) named after you to hold all those papers that you never read.

The job of POTUS is a money maker no doubt in the aftermath, but you're still a joke of a human being as much as your party would like to make you out as some kind of 2nd Comer, like Christ.

The smart men and women forego the limelight that this do-nothing job is about, which is to distract the folk with feel good, feel bad stories fo4 8 yrs while the Senate Appropriations Committee members steal away quietly into the night, like Arabs, with all the money.

You want a really good gig, get appointed as Chairman of one of the really powerful committees in Defense, Offense, Approp, or other and have some real clout, make even more money, and get more girl (or boys) than even the movie star makers do.

This is an Actor's job, no more, no less. 

And I guarantee you that Senate Appropriations committee Chairman and Vice,  Inouye and Cochran, aren't acting. 

 

Tue, 05/17/2011 - 17:14 | 1284746 css1971
css1971's picture

This is an Actor's job, no more, no less.

Kinda wondered about that. Wasn't it obvious the President is a puppet when they put Reagan in?

Tue, 05/17/2011 - 14:47 | 1284030 earlthepearl
earlthepearl's picture

why do they never give a time frame?

400 ok sweet, when do you think......

Tue, 05/17/2011 - 17:12 | 1284733 css1971
css1971's picture

Couple of things:

  • He says Ben hasn't printed... So, what are the 2.+ trillion on the balance sheet then?
  • He also seems to believe that QE3 is not on the cards either. It isn't just banks this time which are on the hook. If Ben doesn't print, I suspect that the ECB will, forcing the issue.
  • Buy equities on the way down? Um don't you mean sovereign bonds? Something guaranteed to return you paper currency when businesses and banks are falling over like skittles. Ironically this means not Euro bonds, because the ECB, not the national governments authorise printing... i.e. the ECB owns the nations.
Tue, 05/17/2011 - 21:12 | 1285519 MallaKite
MallaKite's picture

when the dow hits 12888   cash in 12%

dow hits 13888 ..clip off 13 percent. There's nothing hard about giving Wallstreet an old  fashioned slipper on the backside

And thats what's scaring them shitless at the moment.....retail playing em at their own game

Tue, 05/17/2011 - 22:48 | 1285828 Lucius Corneliu...
Lucius Cornelius Sulla's picture

I agree that the dollar is eventually toast.  However, IMHO, the USG can and will run these huge deficits with willing buyers of their debt a lot longer than most ZH readers think.  There is zero pricing power in the economy because there is too much global capacity.  Furthermore, there is too much debt in the USA, Europe and Japan.  You take these two factors and what you find is little or no demand for debt.  Furthermore, banks are tightening so there are fewer suppliers of debt.  Bottom line is the economy must deleverage.  Sure, the FED is going to attempt to ameliorate it because that is, ostensibly, what Congress put them there to do...but it is going to happen.

I have a small consulting business.  I have not been able to raise rates in over 10 years.  Most people I know in the private sector are making less or have had stagnant salaries.  So where's the inflation?  The only place I see it is in objects of speculation such as oil and commodity futures or precious metals.

Tue, 05/17/2011 - 23:48 | 1285983 Muir
Muir's picture

So Long, and Thanks for All the Fish

Wed, 05/18/2011 - 00:33 | 1286038 longorshort
longorshort's picture

Good riddens.  All talk no content bimbo.  Go bother Hugh Hef..... Maybee hell let you polish his walker before going to the scooter store shopping.

Wed, 05/18/2011 - 01:12 | 1286107 Don Keot
Don Keot's picture

Wash, rinse, repeat.

Wed, 05/18/2011 - 03:18 | 1286272 robertocarlos
robertocarlos's picture

Mako was probably right .

Wed, 05/18/2011 - 17:56 | 1289054 GoinFawr
GoinFawr's picture

All the deflationists are right. They just generally mistake which currencies are deflating (hint: it isn't the USD,the JPY, CAD, AUD, or EUR).

Tue, 05/22/2012 - 02:07 | 2449945 tianbian
tianbian's picture

 Additionally, the internet can be used to help you get deals on the costumes that you want This is due to the fact you may have altered your viewpoint, and now possess the ability to empathize with the Michael Kors Totes other person; furthermore, it implies that hypnotherapy has assisted you in turning out to be far more calm This neurosis could be a huge handicap towards someones good Michael Kors Shoulder Bags results The best way to Michael Kors Handbags Examine Minimal Price Auto Insurance In South CarolinaIn case you push Michael Kors7426954 Michael Kors Outlet an automobile in South Carolina you would far better have vehicle insurance The trainer will supervise during the training to educate the dog all of your desires and also the location so he can guide you by means of a large town street even It Michael Kors Handbags in many cases undoubtedly are a little little bit many different for mothers Try to look in to the subsequent suggestions and ideas on the best way to finest pick the affiliate program that?s right for you

 How many sales will you've got to report to become entitled for a commission check? What is the minimum amount necessary for the commission check to be issued? In any event, you might have to select the option that you really feel will be the most suitable for you The inventor Francis Michael Kors Wallets Wolle should be thanked for his innovative thought as an appropriate thing which could Michael Kors Clutches solve the difficulty of people carrying their items back home The red reflects the sense of enthusiasm as well as romantic breath All of us know Ivey is extensively regarded as the very best participant inside the globe, but even he will must be focused and running nicely to win WSOP 2006 Michael Kors Bags As I have mentioned a lot of instances before, we only have a limited amount of power to remain Michael Kors Satchels wholesome, age gracefully Michael Kors Spring Catalog 2012 and reside happily An authentic designer Michael Kors Small Accessories label Michael Kors New Arrivals handbag is a true status symbol In addition to helping balance the encounter, eyeliner is also meant to offer lashes more depth, and make them seem thicker than they seriously are

Michael Kors Ipad Iphone Cases

 

Do NOT follow this link or you will be banned from the site!