‘Unloved’ Rally Over by August: Market Bear

The current slight market rally will be over by the end of July or early August, notedly bearish strategist Bob Janjuah told CNBC Thursday.

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Janjuah, contributing strategist at Nomura, predicted a 10 percent dip in equities in the second quarter of 2012. While this had happened around the middle of May, the S&P 500 has since regained some of its losses.

The strategist now predicts that the S&P 500 will hit 1400-1440 around the end of July, before the “realities of economics” hit home.

“It’s an unloved rally, which is why I think it will carry on rallying in the short term,” he told CNBC’s “Squawk Box.” “We haven’t had a whole heap of client buy-in.”

Markets were boosted slightly on Thursday by the Federal Reserve’s announcement it would continue with Operation Twist — which was “not what the market was looking for,” according to Janjuah.

“If Bernanke has one big bullet left, he’ll save it until he really needs it — probably until December after the (U.S. presidential) election,” he said.

Janjuah is also bearish about the prospects forEurope, and forecasts flat growth for the continent at best in the next three years as his best case scenario.

“Fundamentally, we’re not addressing the problem that the euro zone project doesn’t make sense as it stands,” he said. “It’s not very convincing, growth measures backed by debt doesn’t really make an awful lot of sense.”

Bunds will lose ground to U.S. Treasurys as the reality of Germany’s euro zone burden sinks in, Janjuah argued.

“As we move towards fiscal union, Germany will become a bigger and bigger credit risk. Ultimately that will be factored into the pricing of bunds,” he said.