Friday, September 5, 2008

Societe Generale: ***Alert****Economic and equity market meltdown imminent****Alert***

This is not a joke, this is an actual release from a Societe Generale analyst called Albert Edwards. It included the *** and all, if it had been all capped it could have come from me.

I love a good alarmist headline, I don't know what it is but it is just the way it is. I got to say that this one gave me a chuckle though. I mean the picture isn't pretty but come on! how can one time it like that. Even though the analyst isn't french, it is very french to believe your gloomy theoretical outlook is reality.

I read with interest a piece yesterday (I couldn't find the link, I read about 50 pieces a day :) that was entitled "what investment was safe during the great depression". The short answer is "none". When M4 goes down, the monetary deflation kicks in and ALL ASSETS ARE UNSAFE. Hold No Assets (HNA) could be the new mantra. The article went on to trace the bond market swings. Cash, overnight, is the only place to be. With the EURIBOR at 4 and change and Trichet opening his mouth, I am tempted to go long EU monetary.

On the positive side, I can feel capitulation in the air, it is that electricity in the comments, the analysts, the blogs, that confusion everywhere...."It" is coming, I am waiting for "it".

Dow 9000? you ready?

Or not. The one thing that the article made clear was that any theoretical framework doesn't hold up in desperate times, things breakdown, logic doesn't necessarily explain daily or weekly movement.

We know where we are, we know (somewhat) where we got to be, lower M4, (maybe) but the actual path there is an incognita.

What is sure is that in a lowering of M4 environment no assets float (deflation is always and everywhere a monetary phenomenon). Bill Gross the head of PIMCO has publicly called for the government to prop up a safety bubble for investors... knowing that Gross is the king of bond investments, it says something.



Daniel Brum said...

UK analysts take on the situation:

Marcf said...

Well, in restrospect (Tuesday) this call was right on the money.