In early October, when the stock market had dropped 20 percent from its April highs, Bob Janjuah, co-head of cross-asset allocation strategy at Nomura Securities, correctly forecast that the market had put in its low for the year.

He also predicted that the Standard & Poor’s 500 Index could hit 700 in 2012, which then represented a 35 percent drop. In the wake of the market’s sharp rally over the past four weeks, that now constitutes a 45 percent plunge.

But Janjuah isn’t backing off his prediction.
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He says Europe’s latest financial rescue package will help seal the stock market’s fate, because there is less to it than meets the eye.

“Policymakers will be exposed as 'emperors with no clothes on,'” Janjuah writes in a research note obtained by CNBC.

“Their policy choices over the last few years will be seen as the central problem, rather than as some mystical bazooka solution which can somehow reconcile the chasm between a lack of growth and productivity on the one hand, and the enormous debt and debt servicing costs and unsustainable entitlement culture costs that we face in the developed market world on the other.”

On cue with Janjuah’s report, stocks fell Monday partly on concern about Europe.

“Europe did get a rescue that buys them more time, but they are not anywhere near a resolution to their crisis,” Jeffrey Saut, chief investment strategist at Raymond James, tells Bloomberg.