Bob Janjuah Sees "Final Parabolic Spike Up" To 1575 Followed By Up To 50% Market Crash

Tyler Durden's picture

Bob Janjuah may nt have rvrted to his RBS wrtng style of yore, yet, but the New Nrml appears to also fnly b getting to 1 of our fvrte strategists, who has finally gone bold, ALL CAPS.

From Bob's World: Are We There Yet?

I last wrote in November (Risk not on?) and since then markets have broadly continued to track the medium-term bigger picture outlook set out in that note, as well as the shorter-term tactical "S&P500 1450/1475 rule? that I also discussed in that piece and in my earlier September note (Stop Loss Update). I wanted to publish now to provide some extra clarity:

1 – The medium-term and the ‘1450/1475 rule’: I wanted to recap the views set out in the above notes. Over the medium term – the first half or so of 2013 – I expected risk assets to rally with the S&P500 trading in the 1500s. Drivers were largely centred on more kicking of the can by policymakers. In terms of the "1450/1475 rule? for the S&P500, in place since September, the call has been and remains that on any weekly close above 1475, the outlook for risk assets is bullish and remains bullish until and unless we see a weekly close below 1450 for the S&P500, at which point the outlook flips to bearish. And the 1450/1475 zone for the S&P remains the neutral/zero position/no-go zone.

2 – Fundamentals vs. Policy – also known as "the gap between the real economy and financial markets high on the synthetic intoxicants coming out of central bank laboratories?: I have written before about the grotesque – in my view – and persistent misallocation of capital (in financial markets) being caused by the mispricing of capital/money by central banks; by their ongoing "promises? to misbehave – seemingly forever – such that anyone with good common sense will eventually be battered and beaten into submission and be forced into the misallocation game; and by the – again, in my view – irresponsible behaviour of fiscal policymakers too. Collectively, we have a huge global game of kicking the can down the road driven by excessive and wasteful government largesse, funded by explosive growth in central bank balance sheets. Future generations will and indeed already are beginning to pay (chronic youth unemployment in the Western world is the current channel) for what I see as deeply depressing policy settings and failed policymaker thinking, which persists with the idea that some form of debt-fuelled asset price elevation will lead to real wealth creation, which in turn will fix all our ills. The "movie? has been run before – too many times – and failed. Mispricing capital and forcing indebtedness into the system is an artificial booster of asset prices – in other words, such policy settings create asset price bubbles that always burst badly. NASDAQ 5000 was one recent example. And of course the huge bubbles that burst in 2007/2008 are another. Real wealth can only be created by innovation and hard work in the private sector, with policymakers, the financial sector and financial markets there to aid and encourage/incentivise. Real wealth is not created by the printing press and by excessive government spending. We simply cannot turn wine into water – after all, if it were that easy, why have we not done this before (with any lasting success, as opposed to abject failure, for which there is plenty of evidence)! Sure, central bankers through QE can create a chemical/synthetic concoction that may well get us even more intoxicated than real wine, but like most chemical processes that are focused on by-passing the rules and focused on immediate quick fixes, the "wine? they are synthetically creating will I fear ultimately lead to either a large market hangover (at best) or – at worst – to the "market equivalent? of serious liver poisoning or something even worse. The scale of the fallout will I feel be determined largely by how far markets and policymakers are willing and/or able to stretch the elastic band between real world reality and liquidity fed asset markets. Past experience shows us that this band can be stretched a long way, and we know that central bankers have a bad track record at both spotting and managing asset bubbles.

3 – Positioning and Sentiment: The most significant new developments have been in the realm of positioning and herding. Market sentiment had already been turned primarily by Draghi in the early summer of 2012, and the Fed's QEI leant heavily into this – as has the subsequent actions and/or words of other notable policymakers. But – and with the benefit of some hindsight – the missing link in calling the big top in the secular equity bull run out of the 2008/09 lows has been positioning. Market participants had – on a broad-based basis – simply been too cautious in terms of positioning structurally in risky assets. Without extreme positioning (long or short) markets tend to only see medium-sized corrections at best/worst, rather than big collapses. A key part of the positioning extreme is LEVERED positioning. Well, based on everything I have seen and heard from the flows and from talking to clients across geographies, across asset classes and across investor types, positioning is now getting structurally long risk. Folks are fearful of missing a raging bull market (no matter how poor the foundations of such a bull run maybe in their eyes), they are fearful that everyone else will enjoy a risk-on bonanza while they suffer from being too cautious, and they are looking to buy all and any dips. Herding is a natural animal phenomena and the markets are now beginning to herd in the "it?s all gonna be OK, get short bonds and get structurally long risk? camp. At peaks we see levered positioning in risk, and this is now clearly on the increase too. The number of times I have heard from clients that "with central banks in full QE mode, financial market risk asset prices can ONLY rally? can now almost be described as a cacophony. The key word here is "almost?. I don't think investors are yet "fully? positioned. We are "not there yet?. There is not yet sufficient leverage in risk-on positioning in my view. I think we need at least another round or two of "buying the dip? before we can consider positioning to be at extreme enough levels to set up the conditions necessary for a major sell-off (25% to 50%) as opposed to a minor correction (5% to 10%).

4 – Market Outlook: As can be inferred from the above, in the medium term (2 quarters +/- 1 quarter), and as per the route map in my previous notes, I think risk can rally further. I continue to believe that the S&P500 can trade up towards the 1575/1550 area, where we have, so far, a grand double top. I would not be surprised to see the S&P trade marginally through the 2007 all-time nominal high (the real high was of course seen over a decade ago – so much for equities as a long-term vehicle for wealth creation!). A weekly close at a new all-time high would I think lead to the final parabolic spike up which creates the kind of positioning extreme and leverage extreme needed to create the conditions for a 25% to 50% collapse in equities over the rest of 2013 and 2014, driven by real economy reality hitting home, and by policymaker failure/loss of faith in "their system?. I always like to remind clients that, in the run up to the 2000 and 2007 highs, before the significant collapses that followed in the subsequent 18/24 months, markets seemed infatuated in Greenspan and his famous "Put? the same way today?s teenagers seem infatuated with Justin Bieber, investor complacency was off the charts, volatility was at record lows, belief in "the system? was sky high, and positioning was at extremes. The flashing common sense warning signs were being ignored, if not mocked. Time – the next 18/24 months – will we think provide the answer as to whether we are witnessing a repeat disaster in the making. IF I AM WRONG AND WE TRULY HAVE FOUND ECONOMIC AND MARKET NIRVANA SIMPLY THROUGH THE CENTRAL BANK PRINTING PRESS AND ENORMOUS INDEBTEDNESS, THEN I WILL HAVE NO HESITATION IN ENJOYING THE FUTURE, THINKING ABOUT THE FUNNY MONEY MIRACLE, NEVER NEEDING TO WORRY ABOUT ECONOMIES OR GROWTH EVER AGAIN (all hints of sarcasm entirely intentional). Tactically, over the next quarter or two, I expect to see one or two (at least) 5% to 10% dips or corrections ((there are after all many banana skins ahead in terms of politics, policy, and economic fundamentals), but which I think will be short lived and heavily bought into largely by latecomers (retail?) to the party, encouraged by more central bank promises. One such correction is due now and should take the S&P500 down by 5% or so (from 1515 to 1440ish) over the first few weeks of February. Over the end of February and the first half of March (at least) we should see risk assets rally back into the 1500s (S&P500) – and most likely above 1515. Two asset classes that may lag any such a rebound rally are credit (IG and HY) and EM. Credit markets in particular are I think great early indicators of a secular change in the direction of (equity) markets and it may well be the case that we have already seen, or will over the very near future (the next quarter) see the grand cycle tights for credit spreads.

Enjoy the dips. And focus on being very tactical and liquid, whichever way you feel markets are going to trend. Now is not the time to be getting overly levered, overly "structured?, or overly illiquid with respect to portfolio positioning. And good luck for 2013 and beyond.



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Tsar Pointless's picture

Totally plausible. The "sequestration crisis" and its *fix* will lead us to nearly-new or new highs on the S&P.

Then, we turn the calendar past October 2007.

GetZeeGold's picture



Back to the future......what does Ned have to say about it?

TruthInSunshine's picture

Former cnBSC anchor Ron Insana and Bob Janjuah should open a 5 & 50 hedge fund together, to be named 'Isjuah Insana?'

GetZeeGold's picture



Word is they're going to sell insurance against credit defaults.....not that it will ever happen.


Has Goldman come out with the flash crash paper yet? I'll be first in line when they do.

MillionDollarBonus_'s picture

Bob Janjuah's apoclyptic market predictions have been apaullingly inaccurate in the past and I suspect that this one will fall flat on it's face just like the rest. Asside from his shockingly innacurate market forecasts, Mr. Janjuah's educational background is also highly suspect. There appear to be no accessible public records on Mr Janjuah's formal qualifications, and whilst it is not known for sure, I highly suspect that he did not even attend an Ivy League school. I would strongly advise the less experienced investors on this site to treat the eccentric analyst’s views with caution and skepticism.

kliguy38's picture

I'm only feeding you to make a point here and I don't mind you collecting your reply pittance from your masters.......after all...even trolls need to eat....but here is the live in this same world and its your masters that are pulling the triggers and waterboarding day it will be your peeps or even yourself......just remember that.......

resurger's picture

i just wanna know what he has to say when the S&P crashes in the future...

The Juggernaut's picture

If the Fed Reserve is going to tickle the market and give it all the reach arounds it needs... then why the fuck does it need to stop there?  Have the Federal Reserve pay the People's taxes!!!  Why does anyone need to pay taxes anymore?!?

CIABS's picture

"Bob Janjuah's apoclyptic market predictions have been apaullingly inaccurate in the past and I suspect that this one will fall flat on it's face just like the rest. Asside from his shockingly innacurate market forecasts,..."

- MillionDollarBonus_




inaccurate [good]

flat on it's face


innacurate [not so good]


azzhatter's picture

Yes the lack of an Ivy League degree is a non starter for me. Those Ivy Leaguers have done a wonderful job of managing the economy the past couple of decades

unplugged's picture

Blame it on "Sex Week" at Ivy League leaders Yale & Harvard - apparently too big of a distraction.   Its not their fault. 

lunaticfringe's picture

All you need to know is that Obama, the wise Latina, and the rest of the Supreme Court- all come from Harvard. These are the people who wipe their ass with the Constitution. University of Phoenix has more credibility- and a better football team.

kaa1016's picture

Is it only me that reads MillionDollarBonus' sarcastic posts and hears an Abby Joseph Cohen's voice over? I read it and get those flashbacks to late 1999 to early 2000. Fucking weird...

new game's picture

One morning in the not to distant future you will look at your screne and the futures market and realize

the bigs are unloading and you are locked out until 9:30 and the damage is done.

you then will realize you are fucked...

TruthInSunshine's picture

These are what I refer to as "we thought we had a stop loss" days, where investors get their first real world education that "stop losses" mean that their shares of "equity" can and will be sold at surprisingly far lower levels than where they have placed their "stop loss."

Gimp's picture

"Did not attend an Ivy League School"  thank god for that. We have enough "special people" who attended such institutions fuckinng-up the country currently with their smoke and mirrors and extend and pretend campaigns.

Will take a barrow boys street savvy anyday over the "entitled".


Dr. Engali's picture

Thanks for the advise. On a side note I need to order some more Herbalife product..I'd like to try some Hawaiian Gold this time if I could.

hapless's picture

Nice closeted reference to the Kenyan's transcripts, MDB!

Randall Cabot's picture

Bob Janjuah Goes "Risk Off Effective Immediately" In Advance Of "Major Risk Off Phase"


Submitted by Tyler Durden on 08/21/2012 07:42 -0400     



NeedleDickTheBugFucker's picture

The word is appalling.  It seems that your educational background is also highly suspect.

jomama's picture

attending an ivy league school is a stamp, not necessarily an education.

JPM Hater001's picture

"There appear to be no accessible public records on Mr Janjuah's formal qualifications"

You're one to talk

Rick Blaine's picture

"There appear to be no accessible public records on Mr. Janjuah's formal qualifications..."

Wait...are we talking about Janjuah or Obama?????


sickboy's picture

Colourful character with an even more colourful history. At least once on a FSA banned list and controversy never too far away from which ever business he has conned into paying for his services, or lack of.

cliffynator's picture

I always thought Ron Insana was an excellent wrestling stage name.

mayhem_korner's picture



Of course it's totally plausible.  So is $150 Brent and $80 Brent, $2200 Au and $1350 Au.  Unaccountable speculation about where the "markets" ought to go is mostly an exercise in rationalizing the plausible.

(except maybe if you're Dick Bove...)

TheCanadianAustrian's picture

Borrowing sugar from the neighor to sell on the street in order to buy treasuries. This is what Paul Krugman fears panicked citizens will be doing in the future.

dracos_ghost's picture

I'm shorting dwarves. I win.

fonzannoon's picture

Bob please take a seat here next to Biderman. 

Whiteshadowmovement's picture

Lol, at least Janjuah understands that if youre threading your own noose its best to leave a little slack. Every one of his bearish calls is preceded by a "but a new blowout top first". As soon as we get to a new top and no drop is in sight, simply lather rinse repeat

TotalCarp's picture

Bob is always good fun even tho his tactical calls been so-so for years. 

This read was entertaining though, is like watching a bear being attacked by a swarm of bees.

Mister Ponzi's picture

Liver poisoning, bitchez!

That 50% or so market drop is similar to what Marc Faber recently was musing about.

eclectic syncretist's picture

He who gets out first gets out best.

mayhem_korner's picture



Advising on timing this "market" is a fool's errand.  Think I'll just sit this one out and rearrange my phyzz stacks...again.

EscapeKey's picture


Otherwise, lots of people would have made money on the "widowmaker".

tango's picture

Exactly.  Just because something is inevitable does not make it predictable.  Don't these folks realize they lose all kinds of credibility with all these wrong forecasts?  For foreasting withe real R&D behind it, Boom Bust is hard to beat.  He may not be exciting (within 3-4 years, etc) but Reggie is a onsumate analyst who excels in research.  Like your mom said, "Do your homework."

new game's picture

one millionth agree. sit and relax

very entertaining as i am a finance junkie.

i am taking the ten step program to make sure i sit and watch.

remember i can make stupid comments and act stupid even though i am out of the markets entirely.

just some phizz bitcheez

all a lotta fun.

francis_sawyer's picture

I remember back in 2007... February 27th was a weirdo day that made everyone go "WTFF"?... S&P then recovered & eventually reached it's height in October... But I wouldn't be suprised to see a 2/27/07 repeat...

Archimedes's picture

Whatever! I have seen this knucklehead predict a parabolic spike followed by a 50% market crash for the past 3 years....

mayhem_korner's picture



He must be pushing the 'stopped watch' theory...

buzzsaw99's picture

Pulling words and numbers out of your butt is hard.

mayhem_korner's picture



A little psyllium and 8 glasses of water daily should do the trick...

SheepDog-One's picture

'I think the markets could maybe go up or down from here'

Gee, thanks Bob!

reader2010's picture

BTFD for the next thosand quarters. 

unplugged's picture

market  =  f($,t)

The top and duration of the "market" is completely a function of how much money the Fed prints per unit time. 



jjsilver's picture

This market will only go down when the Satanic Sabbatean Frankists  want it to go down. They own it!

doggis's picture

bob your analysis is good - your timing is ungood.....if you are calling for a rally in feb/march of 2013, be prepared for the crash of the markets. your timing calls are a contrarian indicator......



Tango in the Blight's picture

Who'd want to turn wine into water? Did Jezus suddenly become a teetotaller?