Albert Edwards: Market still deluding itself that it can escape the inevitable dénouement

Perhaps the greatest bear on Earth, Albert Edwards has forecast the S&P 500 to ultimately fall to 450 by the time the current secular bear market is over. In his most recent report (Global Strategy Weekly), Edwards looks at the state of denial the market is currently in. Furthermore, he argues that any risk-rally post QE2 will be fleeting, and as monetary stimulus proves fruitless the markets will react violently.

The current situation reminds me of mid 2007. Investors then were content to stick their heads into very deep sand and ignore the fact that August and September 2007, even though the wheels were clearly falling off the global economy, the S&P still managed to rally 15%! The recent reaction to data suggests the market is in a similar deluded state of mind. Yet again, equity investors refuse to accept they are now locked in a Vulcan death grip and are about to fall unconscious.

Source: Global Strategy Weekly