One of the last market bears left standing, Albert Edwards of Societe Generale SA (EPA:GLE) (OTCMKTS:SCGLY)’s Cross Asset Research, has not changed his tune. In a research report dated December 13, Edwards continues to make the case for an impending recession and a resulting significant pullback in global equities markets.

Albert Edwards: Macroeconomic cycles

Albert Edwards points to the work of Andrew Lapthorne to support his arguments. Lapthorne recently published an analysis showing that equities have outperformed government bonds 90% of the time since the stock market crash of 2000. In tooting his own horn a bit, Edwards continues to say that since his 1996 call to underweight equities, 10-year government bonds have actually outperformed global equities. He leaves it up the reader to draw their own conclusions, but maintains his call to underweight equities.

Albert Edwards: Negative guidance

The fact that corporate guidance is extremely negative right now is also a worry for Albert Edwards. He points out that the negative-to-positive guidance ratio stands at an all-time high of 11.4 this week, with 103 companies offering negative guidance to date and a mere nine offering positive guidance.

Albert Edwards sums up his point of view. “If, as we suggested here last week, the margin cycle is turning down, profit forecasts over the next few weeks will be eviscerated. To me, this is consistent with recession.”

Albert Edwards, US ratio EPS guidance

Albert Edwards: Misleading employment statistics

Another issue Albert Edwards brings up is that we are starting to see a significant divergence between the non-farm payroll employment data and the Household Survey data. Edwards also points out that the Household Survey data typically offers a lead over the non-farm payroll data, and that quite frequently the payroll data is revised to match the household data.

Albert Edwards: Hints of deflation

Albert Edwards argues the recent major recent devaluation of the yen is having a major deflationary impact on the U.S. economy. He says the proof is the pudding, and points to the fact that import prices of capital and consumer goods are retreating into deflationary territory.

Albert Edwards concludes his report on a decidedly somber note. “I agree with Russell’s view that a deflation scare is set to crush U.S.equities. I also expect that as the deflationary cock crows in a darker dawn, U.S. bond yields will witness the sub-1% lows in yields that my Ice Age thesis has long forecast. Welcome to Japan.”