How many holidays does one pessimistic researcher need? If you're Albert Edwards of SocGen, try two - one in January, one in August. But don't expect either of them to leave you filled with hope for the future.
Alphaville reports that Edwards has marked his return from his August sojourn with a note declaring that the, "equity market is now running on fumes." Yes, the S&P closed above 2,000 for the first time ever on August 26th, but Edwards thinks this was an aberration. He says that equity prices are being propped up by corporate buybacks and quantitative easing, and that buybacks are themselves being encouraged by quantitative easing as companies issue cheap debt to buy back their expensive equity. With quantitative easing due to end in October, Edwards thinks the whole horrible edifice could come crashing down.
This sounds like bad news, particularly given that solid equity markets are doing a good job of sustaining banks' dwindling revenues elsewhere. However, Edwards has been predicting doom for more than a decade and was equally negative when he returned from his holiday in January, at which time he proposed that a global deflationary shock wave would emanate from Asia with disastrous effects. That didn't come to pass. Hopefully Edwards' latest post-holiday postulates won't either.
Separately, how much is a good coder worth? Deutsche Bank has discovered to its detriment that a bad coder can cost up to £5m in fines. The German bank has been penalized this amount by the UK's Financial Conduct Authority after a software coding error led to it misreporting sales of contracts for difference as purchases and purchases of contracts for difference as sales. Due to the coding mistake, this happened 29 million times between 2007 and 2013. Strangely, no one seemed to notice.
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