Uber-bear Albert Edwards, a strategist at Societe Generale, is out with a new note to clients about market tops and expensive baskets.
Edwards highlights the following comment from this weekend’s Financial Times that said the following:
Sir: The next financial apocalypse is imminent. I know this to be true because the (FT Weekend) House and Home section is now assuming the epic proportions last seen before the great crash. Twenty four pages chock full of adverts for mansions and wicker tea trays for $US1,000. You’re all mad.
Sell everything and run for your lives.
Edwards is concerned that despite falling inflation expectations in the US, deteriorating economic data out of China and Germany, and general weakness in the global economy, equities and bonds are still rallying while volatility remains low.
“So maybe it’s time to stop dancing and sit this one out,” Edwards writes. “Am I calling a top? What’s the point? As an uber-bear I am used to being called a stopped clock.”
(A common criticism of stock market bears who call for the market to sell off is that “even a stopped clock is right twice a day.)
Edwards also notes that in spite of a number of warning signals across the global economy, the US appears to be the only area where investors are still confident in a “self-sustaining recovery,” and writes that as a result, “we are entering a potentially very tricky US reporting round.”
So we have some market-based indicators to keep in mind, as well as some anecdotal evidence of a potentially overheated market.
Anyway, here’s the wicker basket in question, which seems nice enough.