Wednesday's sharp sell-off in U.S. stocks should be a wake-up call for investors, Societe Generale's notoriously bearish strategist Albert Edwards said, adding that weak manufacturing data merely illustrated the continuation of a clear downtrend.
"I might be wrong, but I just don't see this economy as healthy. If I am right, then any sharp rise in bond yields should quickly derail this apology of a recovery," Edwards wrote in a note, published on Thursday.
The Dow Jones Industrial Average closed below 15,000 points on Wednesday, for the first time in a month. This followed the publication of the Institute for Supply Management's (ISM) index, which showed that U.S. factory activity fell to 49.0 in May, below the 50-point level signaling growth. However, many investors are convinced the bull market remains intact, with bargain hunters still keen to step in.
Alberts argued that ISM data is a poor gauge of whether a recession has started,and said he preferred to look at company earnings.