Skip to main content

Market Overview

Ice Age Thesis: Here's Why The S&P Might Fall Below 666

Share:
Ice Age Thesis: Here's Why The S&P Might Fall Below 666

In a new report, Societe Generale analyst Albert Edwards explains why the bumpy start to 2016 for global equity markets could be the beginning of a catastrophic collapse in equity valuations to levels below the ones seen during the worst of the Financial Crisis.

According to Edwards, the devaluation of the renminbi will lead to a prolonged period of global deflation and recession. In addition, the global asset bubble that the U.S. Federal Reserve inflated with its aggressive QE programs is now bursting.

Related Link: George Soros Says We're In A Crisis Like 2008

"A key part of my Ice Age thesis is that the US equity market remains in a valuation bear market that did not fully play itself out in March 2009, when the S&P touched the 666 level, and we will see new lows," Edwards predicts.

He expects the S&P to bottom at a Shiller PE of around 7x, implying a 75 percent decline for the index from its 2100 peak down to 550.

Less than two weeks into 2016, the SPDR S&P 500 ETF Trust (NYSE: SPY) is down nearly 6 percent year-to-date.

Disclosure: the author holds no position in the stocks mentioned.

Image Credit: L.C. Nottaasen, Flickr

 

Related Articles (SPY + SPX)

View Comments and Join the Discussion!

Posted-In: Albert Edwards Societe GeneraleAnalyst Color Commodities Top Stories Markets Analyst Ratings ETFs Best of Benzinga

Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
SPAC
Everything you need to know about the latest SPAC news.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com