That next recession is shaping up to be a painful one, given high levels of corporate debt among US companies. China is still struggling, and in Europe, Italy – led by populists including Matteo Salvini – is the big danger, says Edwards.Unusually, the European Union (EU) is less popular among the young than among the old in Italy, and so Italian hostility towards the EU is only set to grow.With unfailing regularity he is ranked number one in his category in surveys of global investors. But his talent for imagining the worst is valuable.
In this he resembles an old-school Marxist or a modern-day Eurosceptic.
They all believe that in the end they will be proved right; the twists and turns in the meantime are of minor importance.
Albert Edwards, the ultra-bearish global strategist at French bank Société Générale, has argued for many years now that the world is facing a financial “ice age”, with the developed world following Japan into an era of collapsing bond yields and flattening equity prices.
He hasn’t changed his mind yet, telling a conference in London this month that yields on US government debt will slide below zero percent during the next recession.
Italy’s steep unit-wage costs militate against the jobs the young crave. ” The pressure on policymakers to do something will be hard to resist.
To protect themselves, investors should favour cash and gold.When Mr Edwards first developed his “Ice Age” thesis in the 1990s, he stood out from the general cheerleading of stockbroker strategists. Debt and disinflation would lead to rising bond prices (and falling yields).At the same time, there would be a “derating” of equities, so that prices would fall relative to earnings (and the earnings yield would rise). The trend in bond yields has been down (see chart). This was because of “massive, massive is being withdrawn, it is no surprise that markets are jumpy.Recessions of recent vintage began when a fairly modest tightening in monetary policy led to a blow-up in finance, he argues.High levels of corporate debt in America mean the next one will be deep. and Europe, now confronted with a Japanese-style bust (even if we won't except it yet), has caused voter anger to boil over. This goes beyond steel and aluminum tariffs, Edwards says. "Expect President Trump to soon turn his protectionist fire on both Germany and the EU," Edwards writes. "A trade war and competitive currency devaluation was always going to be the end game in our Ice Age thesis as a global deflationary bust destroyed wealth, profits and jobs," Edwards writes. president, Donald Trump, who is willing to take an "America first" attitude, one that has the potential to upend the traditional economic order. is investigating whether China is stealing its intellectual property, but Edwards contends that Trump's wrath will turn to Germany as well due to its enormous trade surplus.He has scarcely had a good word since for the established church of central banking.In the early noughties, when a callow Buttonwood was a colleague, he charged Alan Greenspan, the Federal Reserve chairman, with near-criminal negligence for his easy-money policy.He's been predicting an Ice Age for a while now, basically what he describes as a "global deflationary bust" which upends the financial world as we know it, destroys wealth, jobs, and just about everything else. today, while the Dow Jones Industrial Average has gained 73.43 points, or 0.3%, to 24,831.55. But sometimes it pays to pay attention to the worst-case scenario.And he thinks it's finally arrived, even sooner than he thought. It all starts with the trade war that could be brewing between the U.