Stock market historian Russell Napier may be the closet thing to a permabear, but at least he admits when he’s wrong. About bearish predictions for treasuries over the past several years, Napiers tells the FT’s John Authers: “Like any strategist I made the big mistake of putting a time frame on it.”
But Napier still believes in his doomsday scenario.
Direct intervention by the Fed will cause rampant inflation in emerging markets, leading to explicit currency revaluations “which will be terrible for treasuries.” Commodities will suffer too from a “massive deflationary shock.” Finally the S&P500 will fall to 400 when Bernanke stops “bribing people to play the game.”
In this scenario your safest bet is emerging market currency.