Albert Edwards of SocGen (Societe Generale SA (ADR) SCGLY 5.88% has held a bearish view for quite some time and on Friday released a new note to clients, which is merely a follow-up from previous bearish reports.
Edwards said in early January that the S&P 500 index could collapse by 75 percent to the 550 level. He followed up in April by saying that a “tidal wave” of corporate default is looming and this will propel the US into a recession.
Related Link: SocGen: Recession Is “Virtually Inevitable”
As far back as 2013, Edwards predicted that the price of gold will surge to $10,000 an ounce, the S&P 500 index will bottom at around the 450 level and 10-year U.S. Treasury yields will trade at sub-1 percent.
Why Is This Time Different?
“In the aftermath of the latest, weaker than expected, nonfarm payroll data, economists are certainly more worried,” Business Insider quoted Edwards as saying in his latest research note. “The excellent folks at Advisor Perspectives highlight the Feds Labour Market Conditions Index as suggesting a recession is imminent (the cumulative peak is an average of nine months ahead of the start of recession and we are now four months beyond a peak.”
Edwards has been expecting an “Ice Age” for stocks since 2013, which would consist of a multi-decade downturn for stocks and financial assets. The “Ice Age” is also characterized by “lower lows and lower highs for nominal economic quantities,” driving a “re-rating of government bonds and the de-rating of equities.”
“The secular bear market only ends when cyclically adjusted valuation measures reach rock bottom (such as the Shiller PE on the bottom line),” he added in his note. “Each successive recession sees huge downturns, usually to new lower lows of both prices and valuations. That is why we reiterated our view early this year that in the coming recession the S&P will bottom at 550, a 75 percent decline from current levels.”
Bottom line, the equity market is heading into a “cold, dark, and damp” space, and only time will tell how accurate his forecast is.
There are a number of indicators which give no sign of recession at all, such as Calculated Risk’s hotel occupancy rate charts.
Yes esp obvious looking at the chart of Income Tax and State Sales Taxes headed down.
We have been in one since 2007. Its all smoke and mirrors. Anyone really see a booming economy that would support the numbers at the stock market? The steady rise of debt by our government has kept the illusion that things are ok,Or at least not that bad. Prepare for an economic collapse.
We will hear and see how gloriously the economy is performing on the MSM until the final stake is driven through Trump’s heart in November. The Fed and Treasury have sufficient flexibility to project high tidings for a limited period and they will do so to guarantee a Hitlery victory. There needed to be an October surprise in 2008 when Mc Cain, as inept as he was, showed some strength in the polls. Now the Queen makers will stave off any such surprise. We are well into June and no sign of a long-hot Summer from BLM or various Muslim actors. They know when to show up and when to hold the cards tight to the chest. With Mrs Clinton on the way for two terms sure, there is no need for Bernie people to protest in Philly and the Media is taking Trump out even without the back stabbing of Ryan, Romney, Kirk or Kristol. Nothing to see here, just move along.