Find The Lowest Price HERE

By Tyler Durden

The latest from Nomura’s Bob “the bear” Janjuah

Power of the Fed’s words waning?

I wanted to update my two earlier notes from this year, published on 7 January (link) and 4 March (link). The two specific drivers for this update are outlined below and are linked to each other and to the two notes referenced above:

1 – The rally off of the February lows in risk assets has been marginally stronger than I had earlier anticipated, but in particular has lasted a fortnight longer than I had expected. As per my March note my stop loss for the rally off of the February lows was set at (based on the cash S&P500 index) consecutive weekly closes above 2040. And I expected the next bear leg to begin in early or mid-March. So far my stop loss has NOT been triggered – we have come close, and if we close above 2040 this Friday then my stop loss will be activated, but 2040 has proven to be a great pivot point for the last three weeks. I also note with much interest that outside of the major large cap US indices things already look much more bearish, most notably in Japan and Europe, where in both cases risk markets have been rolling over into bearish price action since early March. Furthermore, core duration markets have traded very well, not just in Europe and Japan, but also in the US. Nonetheless, as my stop loss may soon get triggered I wanted to present this update.

2 – I set out in January that (globally) risk assets (stocks, credit, commodities and EM) would struggle through H1 2016 and that the only relief would come from the Fed admitting failure and flipping to dove mode again, thus weakening the USD and providing relief to crude, commodity, EM, credit and equity markets. In March I re-emphasised my view that the Fed ‘put’ (i.e., the point at which the Fed admits failure and flips from hawk to dove) would not be seen until mid-2016 and would require the cash S&P500 index to drop into the 1500s. Clearly, I had given the Fed too much credit – it flipped after a drop to 1810 and shifted in March, all much earlier than I had expected.

With all this in mind, how am I left?

1 – Clearly, my confidence on my negative views for global growth, on my belief in deflation over inflation and on the deeply negative outlook for earnings are now set even more in stone. The Fed has told me as much. In fact, I suspect that the Fed in private is far more concerned about these factors then it is currently willing to admit.

2 – The Fed’s change in March was all about weakening the USD, which in turn is designed to help the US economy fight off imported deflation, instead of which the Fed hopes to import inflation into its economy (all …read more

Source: Nomura’s Bob "The Bear" Janjuah: "The Question Is What Would Be Necessary For The Fed To Do QE Or NIRP"

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Find The Lowest Price HERE

By Tyler Durden

The latest from Nomura’s Bob “the bear” Janjuah

Power of the Fed’s words waning?

I wanted to update my two earlier notes from this year, published on 7 January (link) and 4 March (link). The two specific drivers for this update are outlined below and are linked to each other and to the two notes referenced above:

1 – The rally off of the February lows in risk assets has been marginally stronger than I had earlier anticipated, but in particular has lasted a fortnight longer than I had expected. As per my March note my stop loss for the rally off of the February lows was set at (based on the cash S&P500 index) consecutive weekly closes above 2040. And I expected the next bear leg to begin in early or mid-March. So far my stop loss has NOT been triggered – we have come close, and if we close above 2040 this Friday then my stop loss will be activated, but 2040 has proven to be a great pivot point for the last three weeks. I also note with much interest that outside of the major large cap US indices things already look much more bearish, most notably in Japan and Europe, where in both cases risk markets have been rolling over into bearish price action since early March. Furthermore, core duration markets have traded very well, not just in Europe and Japan, but also in the US. Nonetheless, as my stop loss may soon get triggered I wanted to present this update.

2 – I set out in January that (globally) risk assets (stocks, credit, commodities and EM) would struggle through H1 2016 and that the only relief would come from the Fed admitting failure and flipping to dove mode again, thus weakening the USD and providing relief to crude, commodity, EM, credit and equity markets. In March I re-emphasised my view that the Fed ‘put’ (i.e., the point at which the Fed admits failure and flips from hawk to dove) would not be seen until mid-2016 and would require the cash S&P500 index to drop into the 1500s. Clearly, I had given the Fed too much credit – it flipped after a drop to 1810 and shifted in March, all much earlier than I had expected.

With all this in mind, how am I left?

1 – Clearly, my confidence on my negative views for global growth, on my belief in deflation over inflation and on the deeply negative outlook for earnings are now set even more in stone. The Fed has told me as much. In fact, I suspect that the Fed in private is far more concerned about these factors then it is currently willing to admit.

2 – The Fed’s change in March was all about weakening the USD, which in turn is designed to help the US economy fight off imported deflation, instead of which the Fed hopes to import inflation into its economy (all …read more

Source: Nomura’s Bob "The Bear" Janjuah: "The Question Is What Would Be Necessary For The Fed To Do QE Or NIRP"

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