01-16-2009, 08:55 PM
<b>Depression ahead, prepare for stock rout : SocGen</b>
LONDON : <b>Societe Generale said on Thursday that the United Statesâ economy looks likely to enter a depression and Chinaâs could implode.</b>
In a highly bearish note, veteran cross asset strategist Albert Edwards said investors should now cut equity exposure after a turn-of-the-year rally and prepare for a rout.
He predicted that the S&P 500 index of US stocks could be set for a fall of around 40 per cent from recent levels. Edwards also raised the danger of a global trade war with China.
âWhile economic data in developed economies increasingly reflects depression rather than a deep recession, the real surprise in 2009 may lie elsewhere,â Edwards wrote.
<b>âIt is becoming clear that the Chinese economy is imploding and this raises the possibility of regime change. To prevent this, the authorities would likely devalue the yuan. A subsequent trade war could see a re-run of the Great Depression.â</b>
Edwards has long been one of the most bearish analysts in London, first with Dresdner Kleinwort and then with SocGen
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