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Nomura’s ‘Bob the Bear’ Turning Bull?

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Is “Bob the Bear” turning bull? Appearing on Bloomberg T.V. on Wednesday, Bob Janjuah, global head of tactical asset allocation at Nomura International Plc, clarified his recent estimates that a rally in equities will extend into next year and the S&P 500 will hit 1,500 in the coming months.

“It’s a short-term tactical move reflecting the current monetary anarchy,” Janjuah said. “We believe we’ll see a 10% selloff of equities in Q2 and the S&P will be somewhere in the low 1,300s or high 1,200s.”

However, he added that a rally will occur in June or July as a result of some sort of Fed “twist,” a term that refers to the policy of selling hundreds of billions billion in short-term Treasuries in exchange for the same amount of longer-term bonds. The results from such a move could be felt into the election.

As for the longer-term outlook, Janjuah sounded much like his usual self.

“Global growth, including U.S. output, is not yet self-sustaining, and we’re headed for the fiscal cliff,” he said. “A longer-term secular call still holds and we have the S&P targeted for 800 with the Dow down as well.”

Using the S&P as his benchmark, Janjuah also said Europe would underperform for “the next month or so.”

When questioned about PIMCO’s prediction, and others, that the next monetary action will be a full quantitative easing, not a “twist,” he said the Fed “understand that the outright printing of money” sends a negative signal to the markets and raises commodity prices.

“If gas in now going for an average of $4.07 a gallon and it gets raised to $4.50 a gallon, that will stop the American consumer dead in their tracks and make it very hard for the president to get re-elected.”

When challenged as to whether he felt the Fed is playing politics with quantitative easing and commodity prices, Janjuah said it was “naïve” to think a central bank in a given country is not watching and influenced by what’s happening in the political arena.

“I think that’s just common sense,” he concluded.  


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