RBS Predicts Stock, Credit Market Crash
Wanted to bring up the following story earlier, but unfortunately I was out of town for a few days. Better late than never, I always say. From CNBC on June 18:
The Royal Bank of Scotland issued a stark warning to investors Wednesday, stating global stock and credit markets could be on the verge of a fully-fledged crash as central banks have their hands tied by soaring inflation, the Telegraph reported.
“A very nasty period is soon to be upon us - be prepared,” Bob Janjuah, credit strategist at RBS, told the UK daily paper.
The S&P 500 index is likely to slump by more than 300 points by September, according to a report from the bank’s research team, as “all the chickens come home to roost” from over-easy lending practices and other excesses of the global boom period, the report quoted by the Telegraph said.
“I do not think I can be much blunter. If you have to be in credit, focus on quality, short durations, non-cyclical defensive names. Cash is the key safe haven. This is about not losing your money, and not losing your job,” Mr Janjuah told the paper.
RBS expects US stocks to continue to gain until early July before the effects of the oil spike start to drag on momentum, the Telegraph said.
“A very nasty period is soon to be upon us”
Source:
“RBS Warns of Stock, Credit Market Crash: Report”
CNBC, June 18, 2008
June 26th, 2008 at 9:12 am
Could you clarify “…Cash is the key safe haven. This is about not losing your money, and not losing your job,” - by cash I’m guessing he doesn’t mean stuff your money in your mattress or under your bed… I guess what I’m confused about is where exactly or what medium is a safe with all these banking irregularities and weird FDIC ads - makes me wounder what is legit and who you can trust. WHERE IS GEORGE BAILEY WHEN YOU NEED HIM?!!! We’re stuck with all these modern-day Mr. Potters aka Angelo Mozilos…
June 26th, 2008 at 10:52 pm
Thanks for the question Erkel. I can’t say for sure what RBS credit strategist Bob Janjuah meant when he said, “Cash is the key safe haven.” However, consider what Jeremy Grantham, founder of GMO with Richard Mayo and Eyk van Otterloo and overseer $152 billion, and whose clients have included U.S. Vice President Dick Cheney and 2004 presidential candidate John Kerry, had to say back on March 24:
June 30th, 2008 at 9:55 am
I don’t think anybody who recommends sitting on cash these days meant sitting on Dollars.
Euros, Pesos, or Rubles - take your pick!
And good luck.
July 1st, 2008 at 5:04 pm
Thanks for the comment Mammoth. I know of one well-known investor who is not a big fan of U.S. dollars these days- Jim Rogers. Rogers said at the opening of an investment club in Shanghai yesterday: