RBS' Bob Janjuah: Euro Will Fall To Dollar Parity, And The S&P Is Fairly Valued At 850

Bob Janjuah, RBS’s chief market strategist, spoke with anchor Erik Schatzker of Bloomberg TV about a variety of different issues, but was keen to point out he sees the sovereign debt crises of the moment of not being over and about to get worse. On stocks he says: “I think starting point, fair value for the S&P, based on a reasonable long term earnings trend, is 850.”

Here are some key other points

  • 0:40 Buy stocks short term, euro is going to parity, treasuries are a problem long term, gold to $1500 this year
  • 1:36 The longer term trend in the eurozone is dollar parity, Greece will continue to drag it down, and the euro project will come under further pressure
  • 3:00 There is distrust of Greece in Germany, and its going to lead to public discontent over the bailout
  • 3:35 Chancellor Merkel’s ability to get more through is extremely limited
  • 4:10 Once it looked like it was heading to Spain, eurozone officials had to act
  • 4:50 The private sector failed in 2008, and now its coming to roost in 2010
  • 5:10 Europe is starting point because the politics is chaotic; only way forward is a federal Europe, which will involve a massive transfer of wealth from the North to South
  • 7:45 Balance sheets matter, corporate sectors have improved, and sovereigns have gotten worse
  • 8:50 Treasury yields could double, U.S. deficit may correct if U.S. gets split in power post 2010 elections; policy makers can’t resist blowing more bubbles
  • 9:55 We may be repeating the mistakes of the past, in terms of bubbles, and the fallout is going to be bad. The reality is this could last 10-20 years

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