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Bob Janjuah's Prompt Return: "Is It Bear O'Clock Now?"

Tyler Durden's picture





 

Define irony: literally hours after one of the world's most renowned bears says it is "not yet bear o'clock", markets have their worst daily crash in months. So what is Bob to do? Why issue a follow up opinion of course...

Bob's World: Is it bear o'clock now?

It’s funny how – after not writing for over two months – I put a note out last week (highlighting some key levels) and within hours of publishing we have gone on to test and break some of these key levels. So in the spirit of the ongoing narrative:

1 – I remain firmly and resolutely structurally BEARISH the post-2008/09 QE driven rally in risk assets. So no change there. As the year unfolds in both EM and DM we will I think see that most major and relevant data (economic) and earnings trends will be weak or deflationary. QE has so far failed to create the broad-based real economy inflation in incomes, earnings and productivity needed to get growth going again and thus has largely failed to achieve its primary objective, which was to drive the much-needed post-2008/09 debt deleveraging – heavy indebtedness, now also including the EM bloc, still dominates.

2 – Of course QE has been a friend for the paper wealth of the top 1%, at the expense of the many, through boosting speculation and financial engineering. But as we can all see, QE stopped being a friend of commodities in 2010/11, it stopped being a positive for EM around late 2012/13, has I think stopped being a positive for housing assets from around mid-2013/early 2014, and in 2014/15 the ‘last man standing’ in the QE fan club – equities – will also fall out of love with QE. Why? Because as 2014 unwinds the data will I think expose policymakers as falling far behind the curve, persisting with a policy tool, whose ‘success’ is increasingly narrowly based and which is failing to deliver broad-based inflation, growth or any other meaningful positives to the real economy, whose incomes, earnings and cashflows must ultimately validate all financial market asset valuations. I think later in 2014 the themes of deflation and recession will dominate, and in the middle of this it will I think be painful to watch Ms Janet Yellen and other policymakers flip flop and attempt to extract themselves from their policy errors.

3 – Focusing on the shorter term we think that weak Chinese data are just an excuse for last week’s price action. The reality is that the pressure behind the dam had been building for weeks – there was excessively bullish positioning and sentiment coming into 2014. Fear and greed was at work again. Investors were too hopeful coming into 2014, and last week fear dominated as, so far in 2014, the global data points to very mediocre global growth at best, mediocre earnings, and generally deflationary economic data. The important thing for me now is that after failing to see a weekly close above 1850 on the S&P500, last week there was a weekly close below 1800, which forces me to rethink my timing. My best guess from here now is:

A – Using the S&P500 as a risk proxy, 1800 and 1770 as weekly closes are now key levels. Intra-week we can bounce around, but we need to see – this week or next week latest, a weekly close above 1800 if we are going to see a quick turnaround and rally back to 1850. In such a case, and as per my note from last week, once we see a weekly close above 1850, then 1950 S&P by April remains the target.

B – If we cannot recapture 1800 this week or next, then a weekly close below 1770 points to a much more bearish picture for February. A weekly close below 1770 this week or next tells me that the risk/rewards favour a meaningful risk-off move to the low-1700s in the S&P during February, with even 1650 and 1600 possible. In this more bearish short-term scenario I’d expect Ms Yellen and her late February testimony on the Hill to be a catalyst for a bullish turnaround – if the S&P drops 100/150 points in the next 2-3 weeks I suspect that she will then send out extremely dovish signals, which the market will not be able to resist responding to! At this point in time, if this is indeed how it plays out, then from late February through to April I’d look to recapture 1800 and then aim for a weekly S&P close above 1850 into end Q1 2013 or April.

C - As per 3A above, upon a weekly close above 1850, then 1950 still attracts. But clearly 1950 is more likely under scenario 3A rather than under scenario 3B – under scenario 3B 1850 may act like a major double top. Based on last week’s closes I am now 60/40 in favour of scenario 3B.

Let’s see, but either way 2014 is already proving to be more challenging, more volatile, more illiquid and more bearish than the significantly bullish positioning and sentiment indicators warranted as we came into this year, and way more bearish than the enormously bullish consensus emanating from the sell-side. We will see painful counter-trend rallies, perhaps even to marginal new highs (3A above) – never underestimate the willingness and ability of central bankers to persist with flawed policies – but overall I think the end of the post-2009 QE-driven bull is at hand (or very soon to be at hand) and the onset of the next significant (post-QE) deflationary bear market, which I think will run deep into 2015, should now begin to guide all investment decisions.
 
Regards

Bob

 


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Mon, 01/27/2014 - 09:21 | Link to Comment Bearwagon
Bearwagon's picture

Announcement from the bearish helm: Everybody keep calm! This is not the crash we are waiting for. Just another feint attack.

Mon, 01/27/2014 - 09:29 | Link to Comment 101 years and c...
101 years and counting's picture

moral of the story?  no one thinks "this time" can be the time.  the Fed will save the "markets" at every dip. 

this is not true.  with the peasants all in (and big money all out/short), now is the perfect time for a real correction. 

Mon, 01/27/2014 - 09:36 | Link to Comment Bearwagon
Bearwagon's picture

You are right, that isn't true. And that's not what I meant to say. If this thing blows - we will all know for sure without any comment from Janjuah. It will come like a thief at night - and the morning after it will be self-evident to everyone. But then it'll be too late ...

Mon, 01/27/2014 - 10:34 | Link to Comment tradebot
tradebot's picture

Duuude, did you know the fed is pumping like 75b every thirty days to bolster the market?  No real market forces are at work here.  Just Pie in the sky!

Mon, 01/27/2014 - 11:59 | Link to Comment agNau
agNau's picture

"Somewhere in the world it is bear o'clock!"
&
"Even a broke bear o'clock is right twice a day!"

Mon, 01/27/2014 - 09:23 | Link to Comment Winston Churchill
Winston Churchill's picture

Executive Summary; I have no fucking clue whats going on.

Mon, 01/27/2014 - 09:34 | Link to Comment Bosch
Bosch's picture

"I was 100% wrong last week (Sorry guys!) but trust me, I got this shit this time around."

Mon, 01/27/2014 - 09:50 | Link to Comment new game
new game's picture

only fools make predictions. i predict most will be wrong...

Mon, 01/27/2014 - 09:23 | Link to Comment johny2
johny2's picture

the real estate prices have to up, exponentially. what is so hard to understand, about it?

Mon, 01/27/2014 - 09:23 | Link to Comment aleph0
aleph0's picture

Waste of ZH space IMO

Mon, 01/27/2014 - 09:23 | Link to Comment unrulian
unrulian's picture

I thought bears were extinct

Mon, 01/27/2014 - 09:25 | Link to Comment Bearwagon
Bearwagon's picture

I'll be blowed if we'll be!

Mon, 01/27/2014 - 11:39 | Link to Comment Hulk
Hulk's picture

They were only hybernating....

Mon, 01/27/2014 - 09:23 | Link to Comment fijisailor
fijisailor's picture

LOL.  After only $10 billion in tapering the whole shit show is about to melt down.  "Experts" everywhere see the end coming.

Mon, 01/27/2014 - 09:25 | Link to Comment TeamDepends
TeamDepends's picture

Brothers, say a guy wanted to buy some real-estate and wanted to use gold as down payment/collateral.  He is a wise old coot and saw the writing on the wall several years ago when he cashed out his 401k and went all in with gold and silver.  How can he structure the deal so as to realize the gains PMs are going to see over the next year or three?  Thanks in advance.

Mon, 01/27/2014 - 09:31 | Link to Comment Bearwagon
Bearwagon's picture

I am not a financial expert, but I wouldn't use the gold as collateral. Just take out a regular loan and pay it down with the gains from gold when they occur. Until then keep the gold as hedge. Just my 2 cents.

Mon, 01/27/2014 - 09:35 | Link to Comment kridkrid
kridkrid's picture

Does this wise old coot think real estate is going to go higher? It would seem he cold hold his PMs for a while longer and watch RE go down. Though who knows... QE Infinity is a real thing, I think, but will need to be a lot bigger than it is today for them to keep prices rising. The old coot might want to do what the elite plan to do... watch the world get wiped out and buy it for nothing.

Mon, 01/27/2014 - 09:45 | Link to Comment TeamDepends
TeamDepends's picture

This is a roof-over-head and business opportunity rolled into one.  It is a "good" distance from a major city yet smack dab in the middle of one of the wealthiest communities in the US.

Mon, 01/27/2014 - 09:53 | Link to Comment new game
new game's picture

nobody in the fake world wants your gold. they would think you are a fuking wacko..

Mon, 01/27/2014 - 09:53 | Link to Comment kridkrid
kridkrid's picture

Save me a spot. I'll need directions.

Mon, 01/27/2014 - 17:27 | Link to Comment onelight
onelight's picture

TeamD that could be a good idea, as a way of living and working long term, using gold as backing for business.

Mon, 01/27/2014 - 09:38 | Link to Comment Winston Churchill
Winston Churchill's picture

Doing this type of  deal at present.You need to find a property with serious problems.

In my case legal access is about to run out unless a deal is struck.

Nobody else will touch it, I have personal experience litigating access issues.

Rent to own lease option five years at less than current asking.

Rent comes off option price if exercised.

Gold is untouched, if property crashes in meanwhile, the seller will renegotiate.

Mon, 01/27/2014 - 09:29 | Link to Comment NoWayJose
NoWayJose's picture

The only way to have a 'post-QE deflationary bear market' is to actually have the central banks stop QE. Those central banks panic when the market drops 3%. Even if they know QE does not work, they will not stop until a black swan event forces them to. Otherwise, you are just guessing.

Mon, 01/27/2014 - 09:52 | Link to Comment kridkrid
kridkrid's picture

I think this is right. Only, the nature of the exponential function will require that QE grows. The problem there... they can't come out and say what needs to be said which is, "listen folks, our monetary system is a Ponzi scheme. I'm not sure you'll follow all of this, but in our system money is debt which is loaned into existence with interest attached... which, in a nutshell, means that debt must be in a state of constant expansion or the Ponzi scheme collapses. We were kind of joshing about the taper. I mean we can do it, but you'll see cascading defaults. And we're sorry to say, but there's really no way out here. Our bad".

Mon, 01/27/2014 - 09:54 | Link to Comment new game
new game's picture

plus barrowed one

Mon, 01/27/2014 - 15:01 | Link to Comment OldBoy
OldBoy's picture

That’s hilarious.

Mon, 01/27/2014 - 09:30 | Link to Comment q99x2
q99x2's picture

Hey Bob, Everything is going great now. Everything is fixed. Govs across the nation are increasing spending and lowering taxes. Yellen' goin up my FAFSA. The Washington D.C. Totus is signing executive orders not to abduct us and kill us but to have us build infrastructure. He is even going to tell the nation exactly what he is going to do. The decisions have been made. Davos is over.

Time to chill sit back and BTFD

Mon, 01/27/2014 - 09:32 | Link to Comment papaswamp
papaswamp's picture

I see corporate QE is the new move. Now we know why companies stashed all the cash.... To buy back their own stock in order to prop up stock prices. CAT sees a 16% Y/Y decline in revenue... But due to cost cutting and stock buy back, the return is higher... As opposed to good economic situation boosting stocks. So the Fed must have told big corps more taper to come...

Mon, 01/27/2014 - 10:05 | Link to Comment Dr. Engali
Dr. Engali's picture

Well that was fast. If people are turning bearish after a 4% dip that tells me that some shorts will be getting reamed pretty soon. I hope everybody got a chance to buy that dip.

Mon, 01/27/2014 - 10:28 | Link to Comment negative rates
negative rates's picture

No, they are all waiting for the 31st to buy the dip.

Mon, 01/27/2014 - 09:44 | Link to Comment The Wisp
The Wisp's picture

Went to bed expecting a bigger crash in the morning, Wake up to see Green Party Lights..

 i really have to Limit my Time on Zero Hedge....

Mon, 01/27/2014 - 09:52 | Link to Comment papaswamp
papaswamp's picture

Not sure volume will be heavy as this is a big week for economic news... Though the algos will certainly run with impunity. The hilarity is that CAT is the big driver due to declined sales BUT huge cost cutting and stock buy back. Corporate QE is kicking in as the Fed continues to taper.

Mon, 01/27/2014 - 09:53 | Link to Comment Bearwagon
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Wait at least until US opens ...

Mon, 01/27/2014 - 10:10 | Link to Comment papaswamp
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I'm half expecting a spike into the green and then sell off as the suckers pile in only to get proper fucked.

Mon, 01/27/2014 - 09:58 | Link to Comment new game
new game's picture

if confidence is broken you will see strong selling into ANY rally.

only to turn red...lower highs, lowere lows til????

then get your shorts, time to rise and shine...

Mon, 01/27/2014 - 10:06 | Link to Comment ghostzapper
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Bobby Boy needs to spruce up his TA skills.  1772-1773 and 1812ish.  

Mon, 01/27/2014 - 13:51 | Link to Comment ghostzapper
ghostzapper's picture

Today's low so far:  1772.88.

 

Don't be shocked with a green close.

Mon, 01/27/2014 - 17:49 | Link to Comment ghostzapper
ghostzapper's picture

Well they got it green for a little bit.  1773 to 1793 not too shabby for a day.

Same key levels for tomorrow.  Might need an injection of hopium to test the 1812ish but all we can do is be ready and take the signals.  

Mon, 01/27/2014 - 10:16 | Link to Comment Its Only Rock N Roll
Its Only Rock N Roll's picture

As I stated last week, this either

1) Never happens

2) Happens really quick

 a)like this week

 b)or next week

 c)fuck you Ben Bernanke & Janet Yellen

 d)fuck you Bob for turning bullish right when TSHTF

Most likely 2a or 2b or most likely 2e (all of the above)

 

Mon, 01/27/2014 - 10:17 | Link to Comment papaswamp
papaswamp's picture

CBOT slowly melting off highs... Might be a flat open..

Mon, 01/27/2014 - 10:28 | Link to Comment bobbydelgreco
bobbydelgreco's picture

1 day upping qe won't help equities but that's not today so ms piggy will examine the data & raise qe so don't drop your stocks yet remember though 1 day bob's going to be right then uh oh 

Mon, 01/27/2014 - 13:17 | Link to Comment Professorlocknload
Professorlocknload's picture

We're either going to 1750 or 1850, on our way up or down.

OK, got it.

Mon, 01/27/2014 - 13:33 | Link to Comment wingmann
wingmann's picture

To answer the age old question:yes,bears do short in the woods.

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