Interesting sentiment picture today …
Barclays issued a “financial storm” warning …
- that the US Federal Reserve has allowed the inflation genie out of the bottle and let its credibility fall “below zero”.
- There is an inflation shock underway. This is going to be very negative for financial assets. We are going into tortoise mood and are retreating into our shell. Investors will do well if they can preserve their wealth.
- that US headline inflation would hit 5.5pc by August and the Fed will have to raise interest rates six times by the end of next year to prevent a wage-spiral.
- If it hesitates, the bond markets will take matters into their own hands.
- Inflation is out of control in Asia. Vietnam has already blown up. The policy response is to shoot the messenger, like the developed central banks in the late 1960s and 1970s.
- They will have to slam on the brakes. There is going to be a deep global recession over the next three years as policy-makers try to get inflation back in the box.
- The US yield curve is likely to “steepen” with a vengeance, causing a bloodbath for bond holders.
- the full damage from the global banking crisis would take another year to unfold.
- The creditworthiness of many US financial institutions will decline in coming months due to the Monoline problem.
Societe Generale said:
- FTSE 100 will lose almost half its value and plunge as far as 3,000.
- expects an “ice age” profit-to-earnings contraction to cause equity prices to fall 70 per cent from last October’s height before the current crisis is over.
- We have long been convinced that the global economy would slide into recession.
Remember … this team was recently voted top strategy team by research house Thomson Extel.
But if you think now, that market is not longer complacent, but AWARE of the risk and should bounce on over pessimism …
Here below … you find an article about impressions from the Morningstar conference
So … all in all, market shows no signs of strenghth, investors no signs of cleverness … RED ALERT