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

Tyler Durden's picture

A month ago, RBS' Nomura's permarealist Bob Janjuah wrnd tht mrtks r set 4 a squeeze breakout. He was right. Today, he has sent out an update, saying the party is over, the ramp is finished, and the time to sohrt ahead of a "major risk off phase" is here: "my stop loss on the risk off call effective immediately is a consecutive weekly close on the S&P500 at or above 1450. As the Global Macro Strategy team is looking for Mr Bernanke to disappoint markets at Jackson Hole next week, and also because we are confident that markets will soon discover that neither the ECB nor Eurozone politicians will actually be able to deliver on their ‘promises’, we are hopeful that our stop losses will not be triggered. For now we are happy to risk 30 S&P points against us, in order to potentially pick up 300 S&P points in our favour."

Full note

Bob's World: Warning over, time for action

This is a very brief update of my most recent note published on July 25th. Referencing back to this July note the key takeaways were:

Firstly: ‘In terms of markets, the route map I set out in early April and which I affirmed in early June continues to play out extremely well. After correctly calling the late March/early April 1420 high in the S&P500, and also the early June (1270) low, we have also now fully captured the risk-on rally in stocks and credit that began in early June…’

Secondly: ‘Tactically, we have not yet hit my targets for the risk-on phase I called in early June – my S&P500 target was set at 1400/1450 by late July/early August, and my iTraxx Crossover target was set at 600bp. And as I also said in June, this risk-on phase was likely to be a struggle due to headline risk and volatility, market illiquidity, and the general lack of strong investor views/willingness to take big risks. Nevertheless, stock and credit markets have indeed climbed the wall of worry. Over the extreme short term, over the next two to four weeks, I would not be surprised to see my targets ultimately hit.’

And lastly: ‘However… I now think the correct thing to do – as I also said in April and June – is to prepare for a serious risk-off phase between August and November…over the August to November period I am looking for the S&P500 to trade off down from around 1400…by 20% to trade at or below the lows of 2011... For iTraxx crossover, this equates to a spread wide for 2012 of – in my view – 800/1000bp (from 550/600bps)… investment grade cash corporate (non-financial) bonds remain a core (relative!) safe-haven. This coming major risk-off phase will, in my view, also be very USD bullish (my expectation of Fed USD1trn QE in December should eventually alter the bullish USD trend of course) and bullish core government bonds (USTs, Gilts, Bunds) – perhaps we could see 10yr Bunds at 50bp all-in yields, with USTs and Gilts at/close to 1%. By late 2012, based on my Fed December QE view, my tactical call will likely turn bullish/risk-on – let us see about that closer to the time.’

My July note thus held out the prospect of further Risk On over late July and August, where 1400/1450 has been my long-standing target ‘high’ for Q3 2012, but it also warned that in August we were likely to see the beginning of the next risk off phase, which would likely be the ‘biggest’ move of 2012. Whilst in the extreme short term – days – more risk on is possible, we now feel comfortable in flipping from risk on to risk off and positioning for this major risk off phase.

Just in case something genuinely new and unusual is happening – we note that the risk on phase has, time wise, extended for a few more days than we had originally forecast - and in the interests of prudence, my stop loss on the risk off call effective immediately is a consecutive weekly close on the S&P500 at or above 1450. As the Global Macro Strategy team is looking for Mr Bernanke to disappoint markets at Jackson Hole next week, and also because we are confident that markets will soon discover that neither the ECB nor Eurozone politicians will actually be able to deliver on their ‘promises’, we are hopeful that our stop losses will not be triggered. For now we are happy to risk 30 S&P points against us, in order to potentially pick up 300 S&P points in our favour.


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GetZeeGold's picture



Seems a tad risky right now.......I'm just gonna watch for now.


Maybe buy AAPL....everyone else is doing it. What could go wrong?


Withdrawn Sanction's picture

Seems a tad risky right now

Indeed, but you dont get 10-to-1 risk/reward ratios by sitting in cash, do you.

GetZeeGold's picture pretty much want to keep it in gold.


Maybe a little silver if you're feeling freaky.

DeadFred's picture

Nasty resistance just a couple dozen points above... should we wait for it??? Might as well. I doubt there will be a single point on the top. It will take a bit of consolidation before they get the tanking party going

vast-dom's picture

i have bob's SP chart and it's been a bit off to say the least at 800 for this month. but i'm in agreement with him in general.

dexter bland's picture

Nothing - there's no risk. Investors will keep doing it safely for years to come. Buy gold, oil, pineapples, iPad manufacturers, anything really. This stuff is all really cheap unless you're paying with hard-earned wages and actually want to consume it in some way. Consumption is for proles, if you can't afford to invest, you don't deserve to be rich -or vice versa.




Need More Cowbell's picture

His stop loss of S&P 1450 is at the same level that was his target that he thinks may still be hit in the next 2 weeks.  Absolute garbage.

Randall Cabot's picture

"my stop loss on the risk off call effective immediately is a consecutive weekly close on the S&P500 at or above 1450."


Haager's picture

Risk off risk of markets imminent. We already knew that and we would agree if there IS a market. Unfortunately, I don't expect something drastic to show up before the elections.

francis_sawyer's picture

 "I don't expect something drastic to show up before the elections."


Imagine saying that on August 21, 2008

Quinvarius's picture

Or, you could just stop pretending the stock market is capable of going down when bankers get 0% money and the Fed is doing everything it can to rig it to maintain the status quo.

The economy stinks.  Yes it does.  But what does that have to do with it?

If they can print enough money to stop complete global financial collapse dead in its tracks in 2009, I am pretty sure they can hold the stock market up.  You cannot have a financial collapse without a banking panic.  You cannot have a banking panic when the banks get 0% money.  What you get is massive money creation on every downtick.  You should be more scared that Bernanke feels he has done enough in private to announce anything in public.  Because, he is doing stuff in private.

Short Memories's picture

Reminds me of the markets:

Unshuffled casino cards cost big bucks



dingoj's picture

commodities will give the first indication

Gold & Silver will for no reason dip hard, followed by Oil

then the EUR,

then the rest will follow down

BTFT, then watch it all sink down into oblivion

GetZeeGold's picture



Yeah....but we've got a couple smokem if ya got em.


samcontrol's picture

i agree, but one week or one year? i say one month.

Ponzi_Scheme's picture

Don't fight the fed. This low volume melt up in the face of declining trends is paid for. No one will shout fire in this theater..

GetZeeGold's picture



Don't fight the fed.


Dude.....this is Fight Club. You gotta fight.


doubledutch's picture

Main GS and carry is the the NZDJPY,right now QUOTE STUFFED ''trading''on a year high..Can be the final blowout..Also with with an eye on the Baltic Dry Index (BDI)    -3   711 direction all time low..

and the ssec.

Clint Liquor's picture

The crash will come before the election. Then President Romney can spend the next four years saying 'it's Obama's fault'.

GetZeeGold's picture



Yeah....but this time we can just blame it on racism.


Christoph830's picture


Hahahahaha perfect

Robslob's picture

Call me crazy but it almost seems like Wall Street is mad at itself for "front running" QE?

On the other hand a big up / big down / big up / big down market may be the only way they can profit...and of course destroying their Golden Goose in the process.

I actually liked my government better when it was run by big oil rather than big banks.

LawsofPhysics's picture

"big oil rather than big banks"

I agree.  At least big oil knows how to produce something fucking real (made up largely of real engineers doing real work).  Big banks simply steal (push fucking paper, steal your savings, buy politicians in order to change laws and keep stealing).

grid-b-gone's picture

It does seem like many "buy and holds" have left the party and new retail investors are scarce due to the squeezing of the middle class, leaving only volatility as a way for Wall Street to make big, easy money.

Even many of those still participating have changed or eliminated their stop loss strategies so as not to become HFT victims.

HFT gets them price, but not transaction fees.

If they want Obama, who gives them placid federal, state, local, and union workers, digital 0% money can surely levitate S&P in the 1,400s for another 54 sessions.

If they want Romney, and some nice volatility-driven transaction fees, they'll let this rising wedge play out soon to the downside - like today or tomorrow.

Big oil in control was a more honest form of greed, but it put a lot more young people in prosthetics.

I'd vote for a simple, free market with just enough regulation to control food contaminants, dangerous chemicals, and drugs, but that would let too much money leak back to people who work hard.


LouisDega's picture

Mr miyagi bitchezz. Risk on, Risk off

GetZeeGold's picture



Up....down. Up....down.


No side side!!!


youngman's picture

But Hey...Spain sold bonds today.....and they sold...all of them a lower rate too...and some idiot bought them....when does it stop...

GetZeeGold's picture



when does it stop


When the ECB dies.....any other questions?


buzzsaw99's picture

a few names for the shorts:


dog meat

road kill


1450? why not 1550 or 1650? i intend to mock janjuah at a later date.

fonzannoon's picture

a 25% correction with gold dropping and the usd benefitting is not any sort of crash. It's a shart at best. Give me a 30% correction with gold over 2k and the ten year at 4% and climbing and you have my undivided attention.

Centurion9.41's picture


"wrnd tht mrtks r set 4" 

"sohrt ahead"

Did this piece come in via Twitter?

DIEKeynesianEconomics's picture

How could anyone think about shorting SP when it rallied even during a large USD rally? Can you imagine how nuts it's going to go once the dollar goes bearish again??

The only case I see for bears is that SP needs to come down a few hundred points for QE3 to be justified. 

What reason is there for Ben destroying USD more, other than to bailout the EZ??

Gotta be long Aussie in this scenario. It has also gone very bullish while USD has been bullish. Almost all USD bullishness is due to the Euro, as most other currencies have scraped back May's losses.

I can see AUDUSD at 1.20 one day no sweat. I don't know know about the Euro since the charts really don't matter on a long term perspective, since usually there is intervention. However, that monthly chart is screaming 1.16 on the Euro. But like I said, intervention could make it so we don't make a lower low. (below 1.1875)

Anyway the point is, the dollar is going to be so very weak soon, and I will feel sorry for bulls. That doesn't mean E/U is going to 1.40/1.50, but it may have a little pop. However, more of the USD bears will park their cash in anything other than E/U more than ever before. The large dollar down wave will have little effect from the E/U, even though its the currency with the most weight on the USD, no one will be messing with E/U longs. This is why I expect another insane Aussie rally soon.




taraxias's picture




"I can see AUDUSD at 1.20 one day no sweat"


Not before it hits parity FIRST. Australia is a bug in search of a windshield and the China slowdown unfolding now is one hell of a huge windshield to miss.

Jake88's picture

In three years now of listening to all the smartest people attempt to predict which way the market will go tomorrow. I think I can conclude that nobody really knows. The surest way to go broke is to hold a bet on which way it will go. Been there done that. Even Ben Bernanke who now seems to have the power to levetate the market at will can't say for sure where it will go tomorrow.