It seems that it was only 4 months ago that Albert Edwards was channeling Dante when he advised clients that "All Hope Must Be Crushed For A True Bull Market To Emerge. [8]" It would appear that the SocGen strategist still has some bullish friends he wants to lose because he just released the follow up.
"As 30y German Bund yields slide below 2% and rapidly converge towards Japanese rates, we have a taster of what is to come in the US and UK in the months ahead. We still see US 10y yields – even now making new all-time lows – falling below 1% as hard landings occur in China and the US. The secular equity valuation bear market began in 2000 and renewed global recession will be the trigger to catalyse the third and hopefully final, gut-wrenching phase of valuation de-rating. Expect the S&P500 to decline decisively below its March 2009, 666 intraday low. All hope will be crushed."
We have long said that excess "hope" remained a major impediment to the end of this equity bear market and we believe there is still too much of it about. There won’t be by the time this is over. Investors will lose all hope, most particularly in their belief that policy makers have any idea what they are doing. We saw the same in Japan. As the investors now see the full-frontal naked impotence of their last two supposed saviours 1) the China growth story and 2) the Fed, there will be savage market retribution. In the words of George W Bush, "This sucker’s going down".
And just in case someone missed the message:
A word on the China stimulus package: amid the mounting evidence of a hard landing – that word is FUTILE.
What can one say, but a true, modern day Dante.
