“You can just hear his demonic HAHAHA reverberate through his words,” says Businessinsider.com’s Joe Weisenthal. Albert Edwards of Société Générale has been warning since the late 1990s that Japan-style deflation in the West would bring about an “Ice Age” in global equities. Bulls “have laughed” at this idea over the years, says Edwards, and have kept saying that equities are cheap.
Yet supposedly cheap and hence enticing equities have become cheaper and cheaper since 2000, and will get cheaper still as the long-term “equity valuation bear market” keeps going, says Edwards.
The West looks even worse than Japan post-credit-bubble, and Western bond yields are rapidly converging on typical Japanese levels. German and Japanese 30-year yields have converged at around 1.8%; US ten-year yields will dip below 1% as bonds become ever dearer.
The next part of the deflationary bust and bear market will soon be upon us: a global recession as China suffers a hard landing and America’s economy shrinks again. This will “crush any residual optimism among the stockmarket bulls, taking global equities below April 2009 lows”.