At the end of April Todd Schoenberger of BlackBay Group came on Breakout and boldly reiterated his predictions that stocks would be down 20% for the first half of 2012 and 35% for the full year. Now that the S&P 500 officially finished up over 8% for the first 6 months of the year we invited Schoenberger back to give him a chance to concede defeat or tell us why he's still right. As expected, he chose the latter.
The bad news, he says, will start Friday with non-farm payrolls and the unemployment rate data. The official estimates are 100,000 and 8.2% respectively. Schoenberger is looking for a repeat of the results in May when payrolls came in at 69k vs. 150k expectations and the unemployment rate moved higher. According to Schoenberger's crystal ball, Friday's disappointment will set the tone for the back half of the year.
"Going forward it's best to be bearish," he says affably. The negative catalysts are, in the order given in the attached video: Europe depression, China weakness, America's fiscal cliff, slowing earnings, high debt to income, and inflation. The familiarity of these factors, and the market's ability to largely shrug them off thus far, doesn't mean they won't spook investors when the worst fears are confirmed.
"I'm still sticking with my prediction that we will be down 35%," Schoenberger says, his words betraying not a whisper of doubt. "For your viewers right now; if they're not getting out of the market they are going to pay the price."
For those keeping score, the price in question is a drop to about 815 on the S&P500, a full 544pts or 40% below where we finished June. Whether he proves right or wrong, you can't say Todd Schoenberger didn't warn you.