Yellen will 'go down in infamy': SocGen bear

Janet Yellen
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The current tenure of Janet Yellen as Chair of the U.S. Federal Reserve will be looked upon with the same disdain as one of her predecessors, Alan Greenspan, according to a strategist at Societe Generale.

Albert Edwards, the notoriously bearish analyst at the French bank, released a note on Thursday slamming the Fed's decision to raise rates on Wednesday, calling it "too late" to avoid a major financial shock for the U.S. economy.

"I have never sought to hold back in my criticism of what I view as the serial incompetence of the Fed, both in the run-up and aftermath of the 2008 global financial crisis. In 2005 I dubbed Alan Greenspan an 'economic war criminal' and called on him to be removed from office," he said in the note. Greenspan led the central bank in the easy money era ahead of the burst of the U.S. housing bubble in the mid-2000s.

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"I think the Yellen Fed will go down in infamy as deliberately stoking up yet another massive financial bubble. But unlike the start of the last tightening cycle in 2004, this time the corporate bond market is already severely stressed and it may take just a tiny pin-prick to burst open the putrid excess," Edwards added.

The high-yield bond market has seen heightened stress in recent months with the closure of "junk" bond funds sparking a sell-off in the asset class. For Edwards, this is a warning sign that there is excess leverage in the U.S. corporate sector, which he expects will react badly to falling revenues and profits.

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"We are unfortunately sitting on yet another recession-inducing, debt time-bomb waiting to blow," Edwards said. "Outright deflation beckons in the next recession as a direct result of the fed's negligently loose money policies."

The strategist highlights U.S. household sector caution in his research note to back up his views, as well as an "explosion" in U.S. corporate net debt, that the Fed has done too little, too late to avoid another crash. He believes that record low rates and the quantitative easing programs that the Fed have undertaken since 2008 has help stoke dangerous market anomalies, but says that equity investors are still unaware "gyrating around the dance floor - just as in 1999 and 2007."

"I believe the Yellen Fed will soon be treated with the same contempt the Greenspan Fed was in the aftermath of the 2008 financial crisis. And they deserve it," he added.

While his bearish thoughts and predictions are widely read by colleagues and rivals at fellow banking organizations, they do not always come true. In September 2012, he announced the U.S. was in recession and Wall Street would soon react, and warned of an "ultimate" death cross for the S&P 500—where the 50-day moving average falls below the 200-day trend line.

Instead the S&P 500 continued to rally, and has gained around 40 percent since Edwards' pronouncement.

Others are less worried about the flare-up in high-yield bonds with BlackRock's Peter Fisher telling CNBC Monday that he does not expect to see the risky end of the corporate fixed income market sinking the overall U.S. economy.

—CNBC's Matt Belvedere contributed to this report.

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