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Soc Gen's Albert Edwards Very Bearish

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http://www.cnbc.com/id/101395618

Albert Edwards: Markets face Freddie Kruger-like nightmare

Published: Thursday, 6 Feb 2014 | 9:14 AM ET

By: Matt Clinch | Assistant Producer

The recent emerging market sell-off was the final tweet of the canary in the coal mine, according to Albert Edwards, Societe Generale's uber-bearish strategist, who now predicts a global recession with equity valuations dropping to their lowest levels in a generation.

"The ongoing EM (emerging market) debacle will be less contained than sub-prime ultimately proved to be," he said in a research note released on Thursday, warning that the markets face being trapped in "a Freddie Kruger-like nightmare."

"The market has at last awoken from the dream it hoped would last forever."

(Read More: US recession is nigh...and the Fed can't stop it: SocGen's Edwards)

http://www.cnbc.com/id/101233640

Edwards believes his "Ice Age" thesis - a series of economic cycles that deteriorate in ever decreasing circles - is drawing ever closer to its final stages. He believes that the current "tapering" of Federal Reserve stimulus is indeed a "tightening" of monetary policy - despite calls from bank officials for the contrary.

This tightening has played a key role in triggering the next financial crisis, he said, with a very weak yen also undermining current account deficits in the emerging world – as it did in the Asian currency crisis of 1997.

A weaker yen is in the process of causing a correction in emerging market currencies as they try to rebalance to achieve competitiveness again and boost their exports, he added.

This devaluation and renewed exporting will stunt corporate profit growth in developed markets as waves of deflation flow from Asia to overwhelm the fragile situation in the U.S. and Europe, Edwards said.

(Read More: Albert Edwards: Bernanke, Osborne blowing bubbles)

http://www.cnbc.com/id/101047686

Corporate profits have already been lackluster in the last two years, according to the datasets that Societe Generale include in their research.

"Most profit growth is the result of astute financial engineering rather than improving cash flow – yet another sign of a tired, long in the tooth, profit cycle," SocGen's Andrew Lapthorne said in a research note back in January.

The recent selloff in emerging markets has already also caused a "risk-off" move in equities. Japan's Nikkei has lost 8.45 percent since the start of the year, the S&P 500 has declined 5 percent and the Euro Stoxx 600 Index has slipped over 3 percent.

(Read More: Albert Edwards: Emerging market rout to trigger global recession)

http://www.cnbc.com/id/100998610

Edwards believes this is just the "pungent smell of coffee" that has now overwhelmed the "hallucinatory vapors" contained in the Fed's quantitative easing (QE) bond-buying program that it started shortly after the financial crash of 2008.

"Commodities snapped out of their trance some two years ago and could not find their way back into that same dream-like state. Now it is equities turn," he said.

"And even if the Fed resumes massive QE at some point as the world melts down, and markets desperately attempt their return to the dream trance, they will instead find themselves locked into a Freddie Kruger-like nightmare."

It's not the first time that Edwards has made bearish predictions on stocks. In September 2012, Edwards said the U.S. had already entered a recession and it wouldn't be long before the equity market reacts. He also warned about the "ultimate" death cross for the S&P 500 – where the 50-month moving average falls below the 200-month moving average. Since that call the S&P 500 has risen around 26 percent.

Some good links in the article.

Then again, Albert Edwards has been bearish for a LONG time.

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Three gigantic bubbles later....

Actually, nobody (I believe) is bullish or bearish for ever.

He has been govt bond bullish for about that long and largely he's been right

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This article on China is a REAL WORRY!! We might have thought it would be the US or even the UK that would trigger a global crash when their endless borrowing is found unsustainable - growth falters and the enormous debt can't be managed after all. But this article puts the current focus on the Chinese economy, which simply credit fuelled itself away from the 2008 crisis, but grew a new enormous balloon in the process.

These articles are a good case for something to blow up somewhere before long. As always, the timing rather than the event is the hardest part to call.

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I always turn to www.harrydent.com if I want bearish

He has some interesting research on house prices in the US. Basically he suggests that the next generation is smaller than this one and that it is smaller by enough to make supply outstrip demand in the US housing market. "Diers > Buyers"

In such situations, prices will generally go down

Worth a read

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I always turn to www.harrydent.com if I want bearish

Is he the guy who has the 30 or 40 minute audio clip telling you about how the global economy is about to go into melt-down and then, at the end, tells you how to avoid it, and prosper, by buying something from him?

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jim rogers was fawning over iceland the years before their crash, hes been just as uncritical of china the last few years.

Yep. Whatever Jim buys into will crash. He's an indicator.

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I'm expecting this to go negative again in 2014.

After appearing to be on a downward spiral, the world economy grew at its fastest rate in 18 months in the third quarter of 2013. According to calculations by The Economist which cover 90% of world GDP, output increased by 2.76% compared with the same period a year ago.

The world remains dangerously dependent on China, however; it was responsible for nearly half of GDP growth (measured at purchasing-power parity). Since the recession ended, the emerging world has led the recovery, contributing four-fifths of global growth. But there are signs of change in the rich world: after five years of being weighed down by debt and deleveraging, it quickened its output in the third quarter.

Dec 21st 2013

20131221_INC080.png

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Is he the guy who has the 30 or 40 minute audio clip telling you about how the global economy is about to go into melt-down and then, at the end, tells you how to avoid it, and prosper, by buying something from him?

No.

Harry has much more than just a 40 minute audio clip!

He also has videos, ebooks, email lists, guest slots on TV / radio etc. encouraging people to buy stuff from him :-)

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No.

Harry has much more than just a 40 minute audio clip!

He also has videos, ebooks, email lists, guest slots on TV / radio etc. encouraging people to buy stuff from him :-)

you have to love how bitter socialists begrudge people to earn a living from their work. Either the guy's advice is right or wrong and that is the only judgement to be made. If he is right and he charges you for the advice then your calculation is, will i save or make money following the advice? I see the same socialist moaners every time the Money Week doom article is linked. If they are correct in their work the advice may literally save your life and that is worth some payment.

http://moneyweek.com/endofbritain/

In socialist Britain people need their nappies changed, preferably by the govt, and preferably if they pay far more in the end via taxes.

Edited by evetsm

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It is true. Partly the internet is to blame. There is so much information available now. The cost of useful information has largely moved from being a cash cost to a time cost - finding the useful stuff in amongst all the crap.

Dent's analysis is pretty robust. He does sensationalise it in his attempts to sell it to consumers, but that's OK. No one is forced to buy it. And there is plenty of stuff from him for free that you can think about with your own brain too.

If you want something that is less sensationalist, but largely conveying the same message, stay away from cnbc, moneyweek, the daily mail et al. and head somewhere like

http://www.hoisingtonmgt.com/hoisington_economic_overview.html

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Please, please don't take any advice from Dent, his track record is terrible and he's made some outrageous calls which will have no doubt cost people a lot of money. He's a salesman, nothing more.

The same goes for pretty much all the pundits, just 5 mins of googling is usually enough to highlight a raft of bad predictions. Most can't even get trend right. These guys say outrageous things to get on TV or draw hits to websites, and make a living off the proceeds that can generate in fees, clicks, book sales and subscriptions.

It's a valid business model for them, but a terrible investment decision for those who follow them.

There's a website set up to track their prediction hit rate:

http://www.pundittracker.com/categories/view/finance

Note the derisory levels of return even on those rated A+, considering the risks involved. A FTSE/DOW tracker bought after any 10%+ sell off would outperform them all.

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Please, please don't take any advice from Dent, his track record is terrible and he's made some outrageous calls which will have no doubt cost people a lot of money. He's a salesman, nothing more.

The same goes for pretty much all the pundits, just 5 mins of googling is usually enough to highlight a raft of bad predictions. Most can't even get trend right. These guys say outrageous things to get on TV or draw hits to websites, and make a living off the proceeds that can generate in fees, clicks, book sales and subscriptions.

It's a valid business model for them, but a terrible investment decision for those who follow them.

And Moneyweek, Schiff, Zero Hedge etc

All right yet all disastrously wrong.

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And Moneyweek, Schiff, Zero Hedge etc

All right yet all disastrously wrong.

One is best to make her own decisions of course. But she should seek input to her decision making from a wide range of sources.

Sound analysis is one thing, a good conclusion and recommendation as a result of that analysis is very much another

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Please, please don't take any advice from Dent, his track record is terrible and he's made some outrageous calls which will have no doubt cost people a lot of money. He's a salesman, nothing more.

The same goes for pretty much all the pundits, just 5 mins of googling is usually enough to highlight a raft of bad predictions. Most can't even get trend right. These guys say outrageous things to get on TV or draw hits to websites, and make a living off the proceeds that can generate in fees, clicks, book sales and subscriptions.

It's a valid business model for them, but a terrible investment decision for those who follow them.

There's a website set up to track their prediction hit rate:

http://www.pundittra...es/view/finance

Note the derisory levels of return even on those rated A+, considering the risks involved. A FTSE/DOW tracker bought after any 10%+ sell off would outperform them all.

New to me. Nice to see Nouriel Roubini with an F against his name. Always had that guy down as a bankster shill. :D

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New to me. Nice to see Nouriel Roubini with an F against his name. Always had that guy down as a bankster shill. :D

Well he did buy a $5M triplex looking over Central Park in 2009 or 10...

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