LIVE MARKETS-SocGen Bear Edwards still foresees downturn, but catalyst not clear

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SOCGEN BEAR EDWARDS STILL FORESEES DOWNTURN, BUT CATALYST NOT CLEAR

Societe Generale’s permabear Albert Edwards continues to see a damaging downturn in stocks, but says that unlike the 2000 dotcom bubble, a catalyst for the market collapse is not yet clear.

“One thing that concerns me most is that unlike in 1999/2000, I struggle to see an imminent macro trigger for a major bear market. Back then the Fed was raising interest rates, but after shovelling liquidity into the market in late 1999, it withdrew it and popped the bubble,” Edwards said in a report on Wednesday.

Edwards says that investors are tired of hearing the views of naysayers like him, as the relentless AI/tech-led rise in the market forces them to participate whether they like it or not.

That said, “I remain as convinced as ever that the S&P is in a valuation bubble built on a bubble of earnings funded by easy money and vendor financing and it will end in inevitable collapse.”

While the 2001 downturn in stocks produced only a mild recession, Edwards sees a deep downturn as likely if the AI-fueled market rise is a bubble and pops, as he expects.

“That is because the economy is now far more exposed to shifts in the equity market via AI investment directly,” he said. In addition, “large equity gains have disproportionately boosted richer consumers’ spending.”

(Karen Brettell)

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