Charlie Aitken goes bearish

Advertisement
bear_market3

by Chris Becker

One of the biggest permabulls out there, Bell Potters Charlie Aitken, has clanged the warning bell, from Livewire:

I am increasingly concerned that cracks are appearing in US equities and Wall St itself will become the next trading victim of the resurgent US Dollar and an increase in volatility. On that basis I am going to issue a correction warning on US equities this morning.

What will be the catalyst for this correction? My answer is consensus US earnings downgrades driven by the strong US dollar. When EPS downgrades come through in multi-nationals, large cap tech, and US oil majors in particular, which have heavy equity benchmark index weights, I think it will be the trigger for a multi-year profit taking correction.

I am again backing my market instincts on this and positioning for the now long-overdue Wall St correction as the Fed ends QE and starts the process of cash rate normalisation. In terms of value I reiterate the only clear value I can see is the US Dollar, Volatility and Chinese equities.

I note that his last warning, a downgrade of Aussie banks back in August, led to an instant short term rally but he has since been justified with those gains and more wiped out.

Advertisement

And although his rationale for the correction is mainstream in thinking, beware the buy the dippers if you intend to be aggressively short.