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A review of September 2009 wouldn’t be complete without mentioning this. In his September 10th Global Strategy Weekly, Albert Edwards, the strategist for Societe Generale mentioned this blog:
The chart is from this commentary: Baltic Dry Index as Leading Indicator - which was mentioned by Pfaendler on his blog. Pfaendler, by the way, was correct to dismiss a link between the Baltic Dry Index and the stock market.
I have to admit, after referring to his work so much on this blog, it was thrilling to have Edwards turn the tables. By the way, he continues to be an uber-bear and most recently suggested that based on the lessons provided by Japan’s post-bubble experience, it is exactly when things are starting to seem better that the stock market tops out:
For Japanese investors, it took some time to learn the new metrics of investing. Today, investors have no such excuse. After all, Ben Bernanke tells us we should learn the lessons of Japan and so we must. Though many commentators want to complicate the investment business, we try and keep our advice as simple as possible. The leading indicators have begun to turn down in the US (see charts below) and so risk assets are therefore dangerous. Almost no-one will be willing to predict renewed global recession and no-one will predict new lows in equities. And with the market so bullish (cover chart) a cyclical failure will come as a crushing blow to sentiment. It is time for caution. It is time to sell.
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