This guy has been spot on. Wonder what he is saying now.
RBS’s Janjuah Expects “Crash” in Stock and Credit Markets
by StockJockey
Wednesday, June 18, 2008 - 2:58 am
Royal Bank of Scotland is expecting a market rout to commence shortly that will take the S&P 500 to the 1050 level, wiping out anything that is still left standing:
The Royal Bank of Scotland has advised clients to brace for a full-fledged crash in global stock and credit markets over the next three months as inflation paralyses the major central banks.
"A very nasty period is soon to be upon us - be prepared," said Bob Janjuah, the bank's credit strategist.
A report by the bank's research team warns that the S&P 500 index of Wall Street equities is likely to fall by more than 300 points to around 1050 by September as "all the chickens come home to roost" from the excesses of the global boom, with contagion spreading across Europe and emerging markets. Telegraph
While Americans have an addiction to oil, Bob Janjuah is addicted to making high profile market predictions that draw attention.
His call on FAS 157 was only 6 weeks behind my warning, which received little or no attention at the time, despite coming directly from a hedge fund legend who specializes in short selling:
September 27, 2007
FAS 157: This is No Rumor
A year ago the FASB issued Statement number 157, which provides guidance for using fair value to measure assets and liabilities, and should result in a consistent approach to valuing complicated instruments. You might not have a degree or interest in accounting, but you might have an interest in Bear Stearns’ stock and want to briefly peruse Level 3 exposure on Wall Street
Somebody on the BuySide likely turned Janjuah onto the FAS 157 theme, given it usually takes about 8 weeks for a profitable trade idea to migrate from Hedgistan to the unwashed masses.
But I will have to give him credit for the call, which took a stab at estimating the ultimate damage:
November 7, 2007
U.S. banks and brokers face as much as $100 billion of writedowns because of Level 3 accounting rules, in addition to the losses caused by the subprime credit slump, according to Royal Bank of Scotland Group Plc.
The Financial Accounting Standards Board’s rule 157 will make it harder for companies to avoid putting market prices on securities considered hardest to value, known as Level 3 assets, Royal Bank’s chief credit strategist Bob Janjuah in London wrote in a note today. The new rule is effective Nov. 15.
``This credit crisis, when all is out, will see $250 billion to $500 billion of losses,’’ Janjuah said. ``The heat is on and it is inevitable that more players will have to revalue at least a decent portion’’ of assets they currently value using ``mark- to-make believe.’’ Bloomberg
Janjuah created a mini-panic with his call in November, and his street cred has since risen, which means this might actually get some traction, adding to the markets woes, and perhaps even becoming a self fulfilling prophecy as investors get drawn and quartered in a fashion reminiscent of William Wallace’s final moments.
“Cash is the key safe haven. This is about not losing your money, and not losing your job,” said Mr Janjuah, who became a City star after his grim warnings last year about the credit crisis proved all too accurate.
RBS expects Wall Street to rally a little further into early July before short-lived momentum from America’s fiscal boost begins to fizzle out, and the delayed effects of the oil spike inflict their damage.
I appreciate Bob’s color, and hope he does not take a mulligan if this call fails to pan out on schedule. And, to be honest, Elaine Garzarelli handles all crash predictions on this side of the pond, and she has not called it.
At least yet. |
