Economic strategist Bob Janjuah of the Nomura Group has provided a new assessment to the current markets and global economy. His findings on Febraury 20th have led him to push for a strong recommendation to investors that they should sit in gold and any non-financial equities due to the underlying conclusion that the market system is rigged, and is no longer capable of honest valuations.
So, in terms of markets, be warned. My personal recommendation is to sit in Gold and non-financial high quality corporate credit and blue-chip big cap non-financial global equities. Bond and Currency markets are now so rigged by policy makers that I have no meaningful insights to offer, other than my bubble fears. Real assets are relatively attractive. But I am going to wait for this current central bank bubble to burst before going all in. I may be waiting 5 days, 5 weeks, 5 months, perhaps 5 quarters. It all depends on when and how our central bank leaders are exposed as lacking credibility and/or lacking the mandates to keep pumping liquidity into the system. The end of the bubble will be sign posted by either monetary anarchy creating major real economy inflation or by a deflationary credit collapse (if they run out of pumping "mandates"). The end game is incredibly binary in my view, but in between it is pretty much a random walk. Either way, "bonds are toast" in any secular timeframe (due either to huge inflationary pressures, or due to a deflationary credit collapse), which in turn means that asset bubbles in risky assets will get crushed on a secular basis. – Bob Janjuah via Zerohedge
Janjuah's assessment is very concise as money is being torn between two assets at this time in the global markets. Bonds represent the negative aspect of money as they increase the debt, devalue currencies, and inflate prices of real assets. Gold on the other hand, represents the positive aspects of wealth protection, inflation protection, and its price reveals the true value of currencies.
Bob Janjuah is not the only economic strategist or financial expert to be moving into gold as a primary hedge for an inevitable collapse of the monetary system, and bond markets. Hedge fund manager of Lone Pine recently purchased a large position in gold, and made a similar assessment to Janjuah during his companies 13Fs disclosure on February 14th.
Besides market strategists prognosticating the collapse of the Bond Bubble, price inflation is beginning to reveal the truth of the state of global currencies, especially in regards to oil and gasoline. The months of January and February in 2012 have produced the highest gas prices ever in the United States for these two months, and at a time when demand for oil is at 13 year lows by American consumers. In a free market economy, this disconnect should not occur, but it validates the growing currency devaluation, and monetary inflation that is now running contrary to economic growth.
Economic strategists such as Bob Janjuah are paid to determine the best markets for their clients to invest in, and when their recommendations are to hold assets such as gold, or low-risk equities, then that determination usually reflects a coming recession, or in this case, a coming collapse. When such recommendations are validated by actual market prices, then economic direction is assured, and it is only a matter of time before an economic bubble collapses once again.
Comments