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