WORLD MARKET UPDATE

Bob Janjuah: "InOne Year I Expect Global Equities To Be 25%/30% Lower; The S&P Will ReachLow 1000s In October"

Nomura Bob is back withanother hotly anticipated if, unfortunately, grammatically flawless, marketstrategy piece. Short and sweet, Bob as usual cuts right to the point.

Bob's World - Stilloverreacting?

Summary

Most commentators nowseem to accept that what is happening is not an overreaction, rather themarkets are at last on the way to fully pricing in the sad state of the globaleconomy and global markets. I remain firmly convinced that we are in a secularbear market where stage 1 was the late 2007 to early 2009 sell-off, stage 2 wasthe countertrend rally from early 2009 to April 2011, and stage 3 is thecurrent phase, where I expect the sell-off to last at least until late 2012.

The key basic problemsremain weak trend growth in the DM world, which we think will continue foranother three to five years, the policy errors (in our view) of the current setof policymakers, and the existing set of inadequate 'old world' policyinstitutions.

My secular view remainsbearish. In or within a year from now I expect global equities to be 25% to 30%lower. My S&P500 target for the low in 2012 remains 800/900, and I think an'undershoot' into the 700s is entirely possible. In this bearish outcome I wouldexpect 10-year bund yields at 1% to 1.25%, 10 year UST yields at 1.25% to 1.5%,and 10-year gilts below 2%. The USD should do well, credit and commoditiesshould not.

My view over the nextmonth also remains unchanged. I expect stocks to reach their lows for 2011 inthis time frame. I still expect the S&P 500 to bottom in the low 1000s inOctober. And I expect to see 10-year bund yields below 1.5%, 10-year UST yieldsbelow 1.75%, and 10-year gilts close to 2%. Beyond October 2011, on a two- to three-monthbasis into year-end/early 2012, I still see a possibility of a decentcounter-trend risk rally. Should this materialise, the S&P500 could movefrom a low in October of around 1000, up to/towards 1200 by end-December2011/January 2012.

On a secular basis,investors should remain cautious, and focus on strong balance sheets andstrong/robust business models. I expect the next year to be about capital andjob preservation. Any counter-trend rally should be tradable but short lived -it should be viewed opportunistically.

And the Full report -SOURCE: http://www.zerohedge.com/news/bob-janjuah-one-year-i-expect-global-equities-be-2530-lower-sp-will-reach-low-1000s-october)