S&P to hit 450 with U.S. worse than 'lost' Japan: strategist

[marmar]

By Steve Goldstein, MarketWatch


WASHINGTON (MarketWatch) -- A noted bearish strategist said Thursday that the S&P 500 will tumble to 450 because conditions in the U.S. are "much, much worse" than during the lost decade in Japan.

As the market debates whether bond prices are in bubble territory, Societe Generale's London-based strategist Albert Edwards said bond markets are at least moving to discount deflation but that sell-side strategists still say the current situation in the U.S. is unlike Japan a decade ago, when the now-third-largest economy suffered through a prolonged no-growth period.

"There is still too much hope about. Until the mantra changes from 'Equities for the long term' to 'Bonds at any price,' we will not have completed our Ice Age journey," he said in predicting the S&P 500 would tumble to 450 -- from 1,055 at the close on Wednesday.

Edwards noted that the total return of U.S. long bonds over the S&P is over 20 percentage points this year. (The chart at right shows yields, which move inversely to prices.)

"The structural bear market has not reached the end. We have long said that the de-bubbling process would end only when equities became very cheap and revulsion in equities as an asset class hangs in the air like a fog," he said. ...........(more)

The complete piece is at: http://www.marketwatch.com/story/sp-500-to-hit-450-socgen-strategist-warns-2010-08-26

[xchrom]

1. So at 450 - what does that mean for the average American?

Jobs?

Grads looking for jobs?

[pjahn]

3. S and P 450

A 60% drop in the value of the 500 largest companies would mean increased unemployment and layoffs. The car companies and governments such as NY state would take a large hit in the value of their pension funds. 401 k and IRA investors who put their money in index funds would see a 60% loss in value. The banking crisis would be revisited and things would basically suck

[xchrom]

8. Thank you - and welcome! Nt

[ThomWV]

7. I wouldn't get too worried about it if I were you

The prediction is just bullshit.

[closeupready]

2. I don't understand what all this jargon means. But I do think

the markets are going to continue to tank.

[pscot]

4. $450 on the S&P

would mean 4000 on the Dow. It would wipe out 15 years worth of economic activity. Very bad.

[aquart]

5. But we bailed out the banks and all is well!

This won't affect executive bonuses, will it?

[aquart]

6. But we bailed out the banks and all is well!

This won't affect executive bonuses, will it?

[ixion]

9. "the de-bubbling process would end only when equities became very cheap"

Exactly.

[ixion]

10. kick

because this is important.