ALBERT EDWARDS: I Had Coffee With Bob Janjuah, And He Cheered Me Up With His Bearishness

Albert Edwards

Albert Edwards, the bearish strategist at Societe General, is out with a new research note to address the all-time high in the Dow.

He first shares a funny story:

I was on gardening leave when the Dow reached its previous peak in October 2007. One echo from those days is that I was beginning to feel lonely. Pessimism (realism) is very rare on the sell-side so I took a coffee with my fellow bear, Bob Janjuah and cheered up tremendously, reinforced in my belief that this is all going to end very, very badly indeed.

Janjuah is the strategist at Nomura who is just as bearish, if not more bearish, than Edwards.

Anyway, Edwards is not letting up on his bearishness. He points to recent history.

"As the Dow surges to all time highs it feels eerily similar to the prior mid-2007 peak," he writes. "Exactly the same jitters abound of a bond bear market and true to form Ben Bernanke is making the same complacent comments."

He expands on the Bernanke complacency:

The great thing about Ben Bernanke appearing before Congress is that it gives us loads more ludicrously complacent quotes to store away until after this pyramid of jelly melts – a bit like his famous July 2005 quote rejecting any impact on the economy of a bursting of the US housing bubble by saying ‚Well, I guess I don’t buy your premise. It’s a pretty unlikely possibility. We’ve never had a decline in house prices on a nationwide basis?. Classic!

...I enjoy reading the insights of long-time Bloomberg contributor Caroline Baum and she picked up on a lovely moment.

"One of the more interesting exchanges at Ben Bernanke's testimony to the Financial Services Committee today was the one between the Federal Reserve Chair and Representative Scott Garrett, a Republican from New Jersey. Citing Bernanke's assertion that one of the benefits of QE had been the rise in home prices, Garrett said the following: ‘Previously you have said that the Fed's monetary policy actions earlier this decade, 2003 to 2005, did not contribute to the housing bubble in the U.S. So which is it? Is monetary policy by the Fed not a cause of inflationary prices of housing, as you said in the past? Or is it a cause of inflating prices of housing? Can you have it both ways?’. ‘Yes,’ Bernanke said, much to Garrett's surprise."

Bears find comfort in knowing that they spend much of their time being wrong before being right. For now, he'll have to keep waiting.