Tuesday, December 15, 2015

Bob Janjuah says oil could go to $30 at some point

Monday, November 23, 2015

Markets could drop 25 PERCENT from these levels

We have disinflation or deflation almost everywhere in the world.
Europe is the biggest beneficiary of falling energy prices. US is not a beneficiary anymore due to being a net-exporter.

US Federal Reserve
This fed hiking cycle will be the shortest and shallowest on record. I think the Fed will be on hold and perhaps even cut rates this time next year.

Stock Market 
Ultimately I do expect to see a 25 percent correction in the equity markets from around here, maybe a little higher... marginally higher. 

Tuesday, October 20, 2015

Stopped out of position and waiting for right opportunity

This is an update to my last note released on 29 September (Bob's World - Priced for recession?). As one of my (two) market stop losses has been triggered it is now necessary for me to reconsider the themes and recommendations set out in my last note.

Since I last wrote the market is now seems to agree with my long-standing concerns on global growth weakness, on the ongoing victory of disinflation/deflation over inflation, and on my long-held view that - globally - central bank policy will stay looser, and get looser, for longer. The last shoe to drop was around the FOMC, whereby after the recent payrolls data the market is now in line with my long-held view that the FOMC has no data-driven justification to hike rates anytime soon.

In fact the markets are so in line with my views that the expected Pavlovian reaction - that weaker data will lead to central bank action (balance sheet expansion), thus driving risk-on positioning - has led to my equity stop-loss trigger being activated. Even though I had expected Q4 to contain lots of two-way volatility my expectation was generally for another risk-off quarter, and I felt that my S&P stop loss (weekly close above 2020 on the cash index) would afford me a prudent degree of cushion and comfort to absorb this expected two-way volatility. I did not expect such a strong risk-on move in response to such bad data!

Where does that leave me?

First, I would point out that my other core market view - to be long core rates duration - has performed extremely well with my sub-2% yield target on UST 10s being hit. I have also highlighted how markets are seemingly in line with my fundamental views on weak global growth and strong disinflation/deflation.

Going forward from here I see no reason whatsoever to change my fundamental outlook. In terms of my core rates long duration call, I am persisting with this position, but am now going to move my stop loss, from a weekly closing cash yield on UST 10s of 2.4%, down to 2.2%. This move gives me protection while also crystallising some 20bp to 30bp of gains in terms of the yield move on UST 10s since my May recommendation.

In terms of equities, for as long as the S&P 500 cash index sustains a weekly close above 2020 then being positioned for risk-off no longer seems appropriate. Rather, I would not be surprised to see attempts to recapture the highs of the year over the next few months if the 2020 level holds. Weekly closes between 2020 and 1970 are in the neutral zone for me now where I'd recommend being flat/extremely close to home. Weekly closes in the S&P 500 cash index BELOW 1970 would get my bearishness reawakened, and put 1820 and the low-1700s back on the radar.

To wrap up my view here is that markets now think they are ahead of the curve with respect to fundamentals, and markets now also think that central bankers have caught up again with the curve and thus that they stand ready to act. I still fear that over Q4 2015 and into Q1 2016 both these twin pillars of consensus thinking will likely come unstuck, as the fundamental outlook deteriorates far more quickly and more deeply than the consensus can currently envisage, and as markets realise that the Fed put is far far away from here (in terms of the data, in terms of time, and in terms of asset (equity) prices). But until that happens, and for as long as the 2020 level holds on the S&P 500 (weekly close on the cash index) then it makes sense to further participate in this latest bout of Pavlovian antics. 

via http://www.zerohedge.com/news/2015-10-20/bob-bear-stopped-out-i-did-not-expect-such-strong-risk-move-response-such-bad-data

Monday, October 5, 2015

Bob Janjuah on China and the US Federal Reserve


China’s devaluations are not over yet. There is more weakness ahead — both fundamentally and within markets — over the fourth quarter and perhaps into first-quarter 2016.

Fed and Rate decisions

Clearly QE4 has to be in the Fed’s toolkit. However, considering the failure of global QE to generate sustainable global growth and inflation, and considering the Fed’s starting point, 2016 could be the year when we see negative Fed Funds as a way of getting money velocity moving up rather than down.

Such a move may work, in that risk assets could react very positively for a period of time, but in the longer run any such moves would only serve to highlight the extraordinary ongoing failure by global central banks to manage economies (both into and) since the 2008-09 crash.

Monday, September 21, 2015

Bob Janjuah on China and its need for exports | VIDEO

Thursday, September 10, 2015

India to be the next growth story says Bob Janjuah [VIDEO]

Tuesday, September 1, 2015

Deflation in the world economies | Markets have more downside

I thought we would see 1,700 (on the S&P500) at some point in late (Q3), early (Q4). We made some progress towards that target, I think there's a bit more to go [on the downside].

What I think the global investor needs to understand is that globally there's not enough growth, there's way too much capacity and we've hidden that gap with this thing called liquidity - actually liquidity is debt.

The workers of the world have no pricing power, without pricing power you cannot get a sustained cycle of inflation. And a world where we have got excess capacity and not enough demand, that's deflation.

Monday, August 31, 2015

Fed caught between rock and a hard place

A quick word on the Fed: my view is unchanged. The Fed does not need to hike for some time yet. I think a hike in Q3 would be a major policy error and would occur because the Fed has made some pre-determined decision to reload its monetary policy ammo before it’s too late. 

In other words, I think the Fed is caught between a rock and a hard place. Let’s see but based on what is in front of us right now, any hikes by the Fed would add significant risk to markets, risk assets in particular. 

For US Treasuries, if the Fed does hike, I think its hiking cycle would likely be 2 x 25bp and done, which to me would make 2s20 and/or 5s30s curve flatteners very attractive.

Wednesday, July 22, 2015

Fed rate hike this year would be a mistake [VIDEO]

Bob Janjuah on the possibilities of Fed rate hike and possibly even Rate cuts. 

Monday, July 13, 2015

Worries for Unskilled workers in the future [VIDEO]

Watch the video interview - Bob Janjuah speaks on employment, debt, education costs, Emerging markets huge Dollar debts. 

Monday, July 6, 2015

Deflation overpowering China

I do not expect the global fundamental themes to change. With the current very worrying situation in Greece and China, it would be foolish to focus too much on what may or may not happen in the very short term, but I am confident in my view that by the end of Q3/early Q4 we will still be worried about weakness in global growth and about the lack of sustainable core global inflation – if anything, the deflationary wave that is currently engulfing China, and which has been given a major boost by both the collapse in equity markets and by China’s unwillingness (for now) to weaken its currency, will soon wash up all over the world, particularly in the US. 

In this regard, note that the price of crude has fallen by over 15% from its Q2 high to current levels. In terms of the sustainability of the eurozone/Greece, it looks like the next three months will be crucial, but NEVER underestimate the willingness of eurozone leaders, the EU and the Eurogroup to “fudge” a way through – we are well over five years into this “fudge” era, despite being told many times that things were “fixed”, and I think the sustainability of the eurozone/Greece may well be a core global theme for at least another five years. 

Overall, all things globally point to looser monetary policy for longer as the only lever that is perceived to work is the FX devaluation route. And, of course, for now, the USD and the RMB are on everyone’s “other side”. 

Tuesday, June 30, 2015

Equities at risk due to Greece

European stocks are more risky than US stocks. We've priced in way too much. People were talking about ECB exit a few weeks ago and frankly that's laughable. 

Monday, June 29, 2015

Too many bankers and not enough demand

Watch Bob Janjuah explain the challenges Financial/Banking sectors facing nowdays.

Tuesday, May 12, 2015

Bob Janjuah on monetary policy of central banks around the world

Looser monetary policy will continue pretty much everywhere else in the world [except the US]. In particular, once it becomes clear that the Federal Reserve is not going to hike, the U.S. dollar is likely to weaken. 

This would force the rest of the world to step up efforts to loosen policy to weaken their currencies vs the U.S. dollar. I see this as the ultimate race to zero.

Monday, May 11, 2015

Central Banks not right on money

Growth remains pretty anemic. Central banks beyond doubt are mis-pricing money and risk. 

Wednesday, April 1, 2015

US Consumers will decide if economic conditions improve

As of December [2014] for me the major concern this year was the fact that we have Four big structural deflationary factors in the world: Debt, Demographics, Globalization, Technology. They are long wave things, they're not shifting anytime soon. On top of that is oil price which is cyclical, has been dis-inflationary, inflationary. 

To me this tells me we got another year of weak growth, weak final demand, so I think a lot of bullish expectations which were built into the market particularly the US Equity market and Global markets I think we are looking for final demand. And for me really the only source of final demand that matters is the US consumer. 

And if that doesn't pick up then why the hell would the Fed raise rates. We talked about the Fed hiking. If Q2 is as weak as Q1 and so far we're blaming Q1 on the weather again, its like the US is the only place which has weather in Q1. If Q2 is as weak as Q1, or doesn't show a significant improvement, we're going to price the Fed into late next year.

Monday, March 30, 2015

US economy risks if oil stays low

Oil can go up in the short-term but I think actually that there's some political motivations at play here and Saudi Arabia is at risk of losing its position as the marginal price-setter and I don't think they want to lose that position.

I think the Saudis will potentially carry on [with their policy of not cutting back on oil production] and production will remain high. 
Time Magazine cover article on oil prices

If you look at the US economy, the bulk of capital expenditure and jobs growth has been in and around the shale and energy-related sectors so if crude is down around the $30-$35 mark for a significant period of time I think you're going to see a default cycle in the US energy sector.

Monday, January 12, 2015

Bob Janjuah on Fed Rate hike possibility

What has surprised me, however, is how many people are now openly talking about QE4 and no Fed hikes until 2016/2017. My key point here is that I do not believe the Fed is going to do anything substantive on the easing front anytime soon, but over the next 12 months 50/50 seems a fair assessment to me.

Monday, January 5, 2015

US Consumers will have to continue spending in 2015 to keep economy rolling

If I boil 2015 down to one thing, it will be the US consumer – on the basis that the US is the relative bright spot in the global economy. For 2015 to end up being a bullish year for risk assets with attractive Sharpe Ratios I think the US consumer will have to deliver as I see no other obvious driver of global economic growth and inflation. 

There will need to be US consumption growth of 4% to 5% if this bullish outcome is going to play out. 

This will require the US consumer loading up on debt again. As of now, I rate this as only a slim possibility rather than a probability, hence my views in the paragraph above. 

As mentioned I will revert on all of this with more thoughts and detail early in 2015, and of course the outlook for crude oil and the geopolitics behind the crude price will be something I will focus on.

Suffice it to say that the idea that lower crude oil prices are necessarily a net positive for the US consumer is, in my view, overly simplistic and not even necessarily correct.