Bob Janjuah of Nomura has released his latest note attacking the bullishness in markets right now saying it’s based on “hopeful assumptions” and not reality (via Zero Hedge).
For 2011, Janjuah is firmly focused on risk off, rather than the risk on.
Beyond 2010 and focusing on 2011, we remain negative on the reflation trade and favour a “risk off” stance to markets. We are concerned about global growth. We are concerned that policymakers are running out of credibility, ammunition and the support of their electorates. And we are concerned that policymaker interests around the world are now diverging.
So those are Janjuah’s worries, but how does he think bull’s are living on hopes?
…financial markets are very fragile right now, and any bullish risk-on phase seems to be based on very hopeful assumptions (“don’t fight the Fed”; “beware animal spirits in the US”; “don’t position against the US consumer”; “Germany owes us”; and lastly, “China will always grow at 10%”). We prefer to rely less on hope and more on hard reality and sensible and credible policies – even if they may mean more pain in the short term.
So while this short-term rally may persist, Janjuah doesn’t care. He sees the coming troubles in the weakness of government policy to combat current problems, and isn’t particularly optimistic they have many bullets left.
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