Outspoken Australian economist Stephen Koukoulas — known as The Kouk — has challenged Royal Bank of Scotland (RBS) markets expert Andrew Roberts to a bet of A$10,000 to prove Roberts was wrong when he told clients to “sell everything except high quality bonds” and prepare for “cataclysmic” markets in 2016.
Roberts did not immediately reply to an email asking him if he would accept the A$10,000 bet.
Roberts and the RBS rates research team told clients in a note that “the game is up” and that “the world is in trouble.”
The note warned: “In a crowded hall, exit doors are small. Risks are high.”
Among many negative messages for the year ahead, the RBS team cautioned: “What counts is that the world is slowing, trade is slowing, credit is slowing, we are in a currency war, global disinflation is turning to global deflation as China finally realises what it needs to do (devalue soon, and sharp) and the US then, against ALL THIS countervailing pressure, then stokes the fire by hiking rates.”
Koukoulas, in an open letter to Roberts on his website, wrote:
“I note with interest your ‘sell mostly everything’ note from earlier this week. I think you will be wrong and in the spirit of the market and healthy competition would like to offer you a chance to personally benefit from your forecast.
“How about a bet of, say, A$10,000, that more than half of the items in list below will be stronger on 31 December 2016 than they have been in recent days?
“I am open to a different amount to wager, just let me know what you are comfortable with.
“I note with each the recent level or market price and if it is higher on 31 December, chalk that one to me, if it is lower, that is for you.
“I have 11 variables that you imply are a ‘sell’ — they cover a range of asset classes and locations and if you are correct with your forecast, most will be lower than today.
“So the winner will have six or more go in their favor …
“Please let me know if you are happy to take up the offer. I am willing to put my hard earned money where my mouth is — I hope you are too.
All the best
The Kouk lists his 11 variables as US stocks (S&P 500), Brazil stocks (Ibovespa), China stocks (Shenzhen), Japan stocks (Nikkei), US house prices (Case-Shiller 20 city), UK 20 city house prices (Hometrack measure), Sydney House prices (Corelogic index), Iron Ore, Oil (WTI), Copper, and AUD/USD.