Thursday, February 5, 2015

Société Générale's Albert Edwards Is Bearish (and possibly suffering from a mental disorder)

Albert appears to have begun speaking in clichés which is one of the hallmarks of the mental disorder jargonaphasia, more below.
Here's Mr. Edwards at CNBC, see how many clichés you can find:

Stocks will be 'ripped to smithereens': SocGen bear
Societe Generale's notoriously bearish strategist, Albert Edwards, has warned that the deflation threat currently dogging the euro zone is greater in the U.S. and that equity markets will soon be "ripped to smithereens."

"The deflationary fault line on which the U.S. sits is every bit as precarious as that of the euro zone, but is being disguised," he said in a new research note on Thursday.

"The scales will soon lift from the market's eyes."

Despite years of central bank easing, consumer price growth across the world has begun to stagnate with the euro zone recently falling into deflationary territory - when consumer price growth turns negative. An official flash figure for the 19-country region last week showed prices fell by 0.6 percent year-on-year in January.
Across the Atlantic, consumer prices increased 0.8 percent in the 12 months through December, the weakest reading since October 2009. The U.S. might be posting better figures than the euro zone, but Edwards argues that it's not a like-for-like comparison.

"My former esteemed colleagues Marchel Alexandrovich and David Owen pointed out to me that if U.S. core CPI (consumer price index) is measured in a similar way to the euro zone, then U.S. core CPI inflation is already 'pari passu' (on an equal footing) with the euro zone despite the former having enjoyed a much stronger economy," he said.

He adds that U.S. numbers differ because they are measured with "shelter inflation" which is derived from housing costs based on rent, not the price of homes. This has been preventing U.S. core CPI from falling away sharply, to the extent that it has in the euro zone, according to Edwards.

With this warning, Edwards now believes that there is "ample room" for global yields to fall further over the next two years. He believes that market participants will see sub-1 percent yields on the U.S. 10-year sovereign, down from its current level of 1.8015 percent.

Edwards is known for his markedly pessimistic predictions, and regularly touts the idea of an economic "Ice Age" in which equities will collapse because of global deflationary pressures. On Thursday he maintained his view that equities are likely to fall below 2009 lows....MORE
We have listened to Albert since 2007 and were impressed with the timing of his September 4, 2008 comment:
A good call.

On September 7, 2008 Fannie Mae and Freddie Mac were placed into conservatorship.
On September 14, 2008 Merrill Lynch agreed to be acquired by Bank of America.
On September 15 Lehman filed their bankruptcy petition.
On September 16 AIG became a 79.9% subsidiary of the U.S. Treasury.

Within 10 more days the Nation's largest thrift, WaMu was seized and five days later Wachovia gobbled up.

Good times, good times.
Albert has also been one of the very few analysts to call the direction of interest rates over the past half-decade.
So it is more in sadness than anything else that we post:

From the Journal of Neurological Science:
Neologistic jargon aphasia and agraphia in primary progressive aphasia
1. Introduction
The production of incomprehensible language containing frequent phonemic distortions, semantic errors or neologisms secondary to neurological disease has been termed jargon aphasia (or if writing is affected, jargon agraphia). The production of inappropriate language can be considered in the context of either normal propositional speech or writing, or in the production of single words in the context of naming tasks performed during neuropsychological assessment. Three types of jargon aphasia have been described [1,2]: the production of language which is devoid of content and consists of real words that are inappropriate given the context of the situation (semantic jargon); the production of language containing inappropriate words that are nonetheless phonemically-related to what the patient is attempting to convey, and may therefore be either real or non-existent words (phonemic or phonological jargon); and the production of language containing non-existent words or true neologisms, which are not phonemically-related to the target (neologistic jargon). Patients may have one or more of these types of jargon as part of the same disorder. The occurrence of true ‘abstruse’ neologisms is most common in acute neurological disorders and in particular Wernicke's aphasia.
In plain English: 
1. Jargonaphasia Patients Are Makeshift Gertrude Steins
This is a disorder that, in at least one of its forms, could have been lifted from an absurdist satire. No one entirely agrees on what jargonaphasia (or jargon aphasia) is. For some psychologists, it's when a patient has lost the ability to form words entirely, and only utters a string of sounds that don't resemble words at all. For some it's when patients speak words, but without any sentence structure or grammar to give them meaning. The last understanding of the term is the most interesting. Patients can be said to be suffering from jargonaphasia when they incessantly use platitudes, cliches, and pleasantries to cover the fact that they're saying nothing. This isn't necessarily a contradiction; how many times in the last decade has the phrase, "Have a nice day," conveyed any real meaning whatsoever? Stock polite terms and phrases are often the last thing that slips away from us, since we don't put any thought into them and they become something like a reflex response. Théophile Alajouanine, a famous French neurologist, was a leading proponent of this view of jargonaphasia. He said that 'incomprehensibility and lack of meaning, not articulatory loss or lack of proper grammatical sequencing,' are the hallmarks of this disorder....
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