We have some experience tracking Mr. R., more after the jump.
From 's The Market.ch, January 12:
David Rosenberg, head of Rosenberg Research, thinks the so-called soft landing is just the calm before the storm. The renowned contrarian explains why he expects a recession in 2024 and how to protect the portfolio from the looming turmoil.
Swimming against the tide is not easy. Herd mentality and the career risk of being wrong create a lot of pressure when it comes to navigating the financial markets. One of the rare exceptions who’s not afraid to go against the consensus is David Rosenberg.
The Toronto based top economist and investment strategist has been one of the most prominent contrarian thinkers in the investment industry for decades. «Breakfast with Dave», his daily market commentary, is a must-read for professional investors.
So what does he think about the current outlook? «We are probably still in a soft landing», he says of the surprisingly robust economy in the US. «But I would not forecast that this is somehow magically a perpetual state of affairs for the business cycle. It’s a prelude to a classic recession which no one should be too surprised about.»
In this in-depth interview with The Market/NZZ, which has been lightly edited for clarity, Mr. Rosenberg explains why he expects an economic downturn in 2024, why the current behavior of the stock markets reminds him strongly of the last stage of the bull markets in 2000 and 2007, and how to best protect your portfolio against the upcoming storm.
«This year’s primary theme is going to be capital preservation»: David Rosenberg.
The new year is off to a muted start. What awaits us in the coming weeks and months?
For 2024, the debate ultimately will be not whether interest rates come down. I think we can all agree on that. The question is going to be the magnitude. So you have to ask why interest rates are coming down: Is it only because inflation is in the rearview mirror, ratifying the recent decline in bond yields? Or will it be coupled with a deterioration in the economy that isn’t fully priced in? That’s going to be the main debate: Whether or not – from an economic standpoint – 2024 will be a repeat of 2023 where the economy surprised on the upside and yet inflation still came down.Where do you stand in this debate about a soft landing for the economy?
That’s an easy one! In some sense, it’s a debate that is completely unnecessary because soft landings are a part of the economic cycle. Every cycle has a soft landing and the soft landings usually do come in the immediate aftermath of the Fed tightening cycle. Think of 1969, 1979, 1989, 2000 or 2007: These were all soft-landing years, but people can’t seem to see past the tip of their nose because the easiest thing is to always extrapolate the most current experience into the future. That’s where the mistake may be for 2024: All those years were soft landing years, followed unexpectedly by hard landings or recessions.
That said, the consensus does not see any major problems on the horizon....
....MUCH MORE
One thing to keep in mind, a point made by others but hammered on by ZeroHedge: except for the early eighties when rates were coming down from Paul Volker's inflation cure, the only times we've seen six or more consecutive rate cuts was when the economy was in recession. At last look the market was pricing in seven cuts.
And on Mr. Rosenberg, coming out of the Great Financial Crisis Bob Janjuah, Albert Edwards, Russel Napier and David Rosenberg seemed to be in a race to see who could forecast the lowest target for the S&P. We named the race The Gloomster Stakes, July 2011:
Napier is at 400
Albert says 450
Bob Janjuah trails at 550.
December 2010
....It is the same situation that Gluskin Sheff's David Rosenberg ran into with the U.S. economy, he may or may not have been right about our economic quagmire but he seriously underestimated the effects of the government's reaction in delaying the worst-case realization:
I usually don't have much time for Gluskin Sheff's David Rosenberg. His pig-headed refusal to listen to the market as the averages advanced more than 70% was not only arrogant but expensive for his firm's clients.
I can handle arrogant as long as you're right, hell I can tolerate a fat guy in a grass skirt and spike heel Manolo Blahniks if he's right.
It would be fun to watch him tottering around.
But Mr. Rosenberg hasn't been right for a while and he's not funny.
The thing is, you have to be correct about both the doom and the timing. If you are predicting the end of the world it is usually best to make the occurance far enough into the future that your audience is either dead or demented on the appointed date.
If you insist on a call that even your clients with alzheimers can remember you have to do serious analysis and consider the millions of moving parts that go into a dynamic system.
In the case of China the government can delay the day of reckoning long enough to really hurt the time adjusted returns of the shorts.
If you have a situation that will fall 30% and it happens in a year you've put up some professional level numbers.
If it takes two years, your annualized gain is down to 14.5% and your 2 and 20 are at risk.
Funny is important if you're doing the Angel of Death schtick. Here's our thinking:Unlike his fellow gloomster David Rosenberg, Société Générale's Albert Edwards amuses* as he forecasts gloom, doom and despair. They both bow to the master, the Telegraph's international business editor, Ambrose Evans-Pritchard whose writing I once described as a "continuum that ranges from morose to suicidal.
Here he is at his despondent best...Back in October we posted "Gluskin Sheff’s David Rosenberg has finally lost it":We haven't posted much, if anything, from Mr. Rosenberg. His adamant refusal to acknowledge the rising market is at odds with our approach, playing the cards you're dealt.
Unlike our gloomy pal Ambrose Evans-Pritchard who can be downright funny in the depths of his despair, Mr. Rosenberg is a strategist. He'll be right one of these days, we hope we are too.
Oh well, here's the story from FT Alphaville:
November 2014
"The Theory Of Reflexivity: A Primer For Today’s Market"This is where hard core bears, exemplified by David Rosenberg, got it wrong. Although they were probably right on where the markets would have gone absent fiscal stimulus and monetary machinations, when the stimulus came and the central banks acted they could not change their advice.December 2013
Crazy.
It's a dynamic system.
Rosenberg did finally, after four or so years, get bullish but there are guys like Bob Janjuah who still haven't.
Really crazy.
Rosie Scenario: Replacing Aged Plant, Property and Equipment To Boost Main Street
Changing his mind was better than not changing his mind but boy it feels odd to read Rosenberg these days.
Mr. Rosenberg seems much more flexible these days.
