Tags: Edwards | bubble | Long | US

SocGen's Edwards: Yes, Sell Everything and Run for Your Lives

By    |   Thursday, 09 Oct 2014 11:39 AM

Stock-market bear Albert Edwards, global strategist for Societe Generale, sees more signs than ever that equities are headed for a meltdown.

In his weekly commentary, provided to Moneynews, Edwards cites a letter to the editor in the Financial Times from one Matt Long of Seilh, France.

"The next financial apocalypse is imminent," Long states.

"I know this to be true because the [FT Weekend] House and Home section is now assuming the epic proportions last seen before the great crash. Twenty-four pages chock full of adverts for mansions and wicker tea trays for $1,000."

So what does that mean? "You're all mad," Long maintains. "Sell everything and run for your lives."

And what does Edwards think of this missive?

"I have to commend" it, he writes. "He clearly identifies current conditions as entirely consistent with the top of the bubble. This is the sort of incisive analysis that is often so lacking in our industry.

"We are entering a potentially very tricky U.S. reporting round. U.S. companies have been playing their usual games in the run up to the reporting season by ramping down EPS [earnings-per-share] expectations so they can beat the numbers on the day," Edwards notes.

"Certainly you can feel the increasing nervousness in the market. Volatilities are definitely on the rise."

Meanwhile, Anthony Perrotta, head of fixed income research at the TABB Group, a financial advisory firm, argues that the Federal Reserve's determination to keep interest rates low may spell doom for the bond market.

"The fear is that the committed posture of the U.S. government [to low interest rates] may provide the impetus for a doomsday scenario in credit markets," he writes on Tabbforum.com.

"While the market focuses so intently on the reasons to keep rates low, it may be blinded to the problem brewing just underneath the surface — the structural imbalance that is developing as the size of price takers (bond fund managers) grossly dwarfs traditional price makers (dealers)."

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Stock-market bear Albert Edwards, global strategist for Societe Generale, sees more signs than ever that equities are headed for a meltdown.
Edwards, bubble, Long, US
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2014-39-09
Thursday, 09 Oct 2014 11:39 AM
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