Below 666? SocGen Says YES!

This was just so way outside the norm that I had to republish. It seems to be implausible from where we are now, but I admit – not impossible.

Before you get all up in arms – this is not our opinion – though it is something to consider.

May 31 (Bloomberg) — Supposedly `cheap‘ equities have become cheaper and cheaper, will get cheaper still before equity valuation de-rating is over, Societe Generale strategists Albert Edwards and Dylan Grice write in client note. * Euro area crisis will be `a sideshow‘ when the main act appears on stage as U.S. expected to slide back into recession, China hard landing will crush any residual
optimism of equity bulls; global equities to drop below April 2009

  • Investors will lose all hope, most particularly in their belief that policy makers have any idea what they are doing
  • Expect savage market retribution as investors see impotence of their last two supposed saviors:
    China growth story and the Fed
  • China stimulus package will be `futile‘ amid mounting evidence of economic hard landing
  • Polls of Greek elections are erratic, result too close to call; risk remains large
  • Pop in equity markets at the start of the week was due, given bearish, oversold levels
  • Slide in 30-yr German Bund yields 2%, converging toward Japanese rates, is a taster of what is to come in U.S., U.K. in months ahead; expects 10-yr treasury yields to drop below 1% on China, U.S. hard landing

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