DAVID ROSENBERG TURNS BULLISH….
After trying to call the top in equities every other week for the last two years, David Rosenberg has finally thrown in the towel on the bearish calls. In his Wednesday research report he detailed why he believes equities have achieved a “holy grail” and should continue to move higher:
“On a very near-term basis, and despite my long-standing macro concern list, which has not gone away, it does look like the market is set to rise further. The technicals are suggesting as much, though I do await what Walter Murphy may have to say on the matter. I had said before that a breakout to new highs led by higher volume would be an important technical signpost. Well, we achieved that Holy Grail yesterday – both in level terms and with respect to the change. This is not throwing in the towel, it is an acknowledgment of what the market internals are flashing at the current time from a purely tactical and technical standpoint….
…All that said, we had a breakout to new highs yesterday and this time, the volume rose on the major exchanges, not to mention rising above the 50 DMA on the Nasdaq, which is a clear sign that the big boys are putting money to work. This market continues to impressively climb a wall of worry. Market internals are too strong to ignore right now – the NYSE advancers beat decliners by a 3 to 1 ratio yesterday; the Dow transports soared 1.9%; and the small caps beat their major benchmarks. My overall macro concerns have not gone away, but these market facts on the ground are tough to ignore.”
These permabears have been an important brick in the wall of worry. Richard Russell threw in the towel earlier this year and now Rosenberg appears to be throwing in the towel (despite his comments to the contrary). And that might be one reason to actually worry….
Source: Gluskin Sheff
A bombshell for bears.
On the other hand, Rosenberg is good at big picture and fundamentals. To capitulate on technical ground does not make a lot of sense. I am not sure he is good at it. It is probably a reflection on both reality and pressure from clients.
Life as a bear is hard.
It’s difficult to understand what drives the perma-anything mentality. I know it’s hard to admit being wrong, but you have to realize that the market is going to fool you most of the time – especially if you stay on one side of it for too long….Rosenberg is a great macro strategist and his negative outlook on the economy hasn’t been wrong, but when it comes to markets it’s a whole different story. Only a trader can understand that it doesn’t take a great economy to generate great moves in stocks. All it takes is an environment that is “better than expected”….
I think David still thinks that these are free and competitive markets, whereas they are constantly massaged and manipulated, both psychologically and financially. He also thinks there are some adults left doing proper asset allocation, whereas it has all become one giant casino. How naive of him.
InvestorX
X marks the spot and Investor X is spot on.
Life as a bear is hard… when you’re fighting the fed (a bunch of predators who can create unlimited investment funds at zero cost, and who operate in complete secrecy (which they call “independence” in their propaganda).
Funny. I know some other long-standing bears who covered their last short positions over the last few days. Now I am starting to worry. If short interest falls too low, it really begins to cut into the buy side impetus on dips, which may lead to bigger dips.
Bearish Capitulation?
You know what they say, Sell in May…
One could also argue that this is the sign Bears have been waiting for. A last run up before reality will kick in (disappointing GDP numbers e.g.).
What a loser! Him and all the other deflationista/bears.
David Rosenberg has been on the wrong side of the market for 2 years now but at least he has realised his mistake.
The gold medal for stupidity goes to Bob Precther and the silver medal goes to Bob Hoye and the bronze medal goes to Mike ‘Mish’ Shedlock.
Under a fiat money system, you CANNOT have deflation. Politicians can always print money and cause asset prices to rise.
Doesn’t Japan have fiat money system? I believe they have had a little bit of deflation.
Little bit
Japan’s money and credit supplies have NEVER contracted – therefore, Japan has NEVER experienced deflation.
Deflation is not a fall in prices; deflation is a contraction in the supply of money and credit within a system.
So, yes – Japan has never experienced deflation.
you just changed the definition of deflation…
No he didn’t change the definition, he just quoted the “Austrian School” definition.
..but that doesn’t make it the right definition either.
Japan’s private sector has deleveraged in the last 20 years. As a consequence, Japan’s retail sales have gone nowhere since 1990. In real terms, they were down from 1992 to 2000. That’s deflation.
Regardless of how much debt the public sector is willing to issue in efforts to counter the private sector deleveraging, it is the consumer’s balance sheet and spending behavior that will dictate the valuation of assets in the long run. That’s why the Japanese stock market is worth 25% of what is was worth in 1990.
We are each day closer to the point where it finally sinks for market players that it’s simply not possible to have sustained nominal GDP growth rates above 2% while the private sector is deleveraging. FED asset swaps with banks or further debt issuance will not bring new money into the real economy – much like in Japan it won’t increase private lending or encourage additional spending.
When this happens, banks, HFTs and hedge funds will be forced to stop playing musical chairs among themselves in the stock markets by a fresh new wave of mutual fund selling by private investors, much like in 2008. That will crush the commodities bubble once again.
Thomas,
Inflation is the increase in the quantity of money and credit in the system.
Deflation is the decrease in the quantity of money and credit in the system.
It doesn’t matter whether the government is expanding credit or the private sector is expanding credit – this is irrelevant.
What matters is whether TOTAL money supply and credit combined are rising or falling. Today, total credit in the US is at a record high, so we have inflation.
If you want to learn more about inflation, go and read the book ‘What has the government done to our money’ by Rothbard. You will learn more from this one book than from all the nonsense spewed out by Hoisington, Richard Koo and Krugman.
Inflation is always a monetary phenomenon and it is the inflation of credit which causes the purchasing power of each unit of money to decline; thereby increasing prices. Deflation is the opposite; it causes money and credit to become scarce – therefore, more valuable.
Japan has NEVER experienced deflation – just falling asset prices. Falling asset prices are known as a bear market, not deflation.
For all the guys who call David Rosenberg, Mish etc losers, you have to understand that they have been long precious metals and / or high yield all the time and these markets have outperformed equities by a wide margin. So it is not that they have been in cash. They made a wrong absolute call on equities, but made more money with less drawdowns than equity bulls.
InvestorX
This is correct – David’s calls on high yield, PMs, and SOME equities performed outstandingly well. We, as investors, had a freedom to choose between his calls, and it’s our fault if we chose the wrong one.
And, to my knowledge, there is no heavy-weight strategists left now who are bearish. So, this part of the wall of worry is behind us…. What’s next???
Glad to hear more people point out how right Rosenberg has been when it comes to his investment calls, as opposed to broad market calls (which have actually been better than he is given credit for the last two years.) A mix of precious metals, commodities, credit and dividend paying equities has worked pretty darn well. True hedge funds have done less well, but as part of an allocation I doubt crippling.
Who are you kidding? Rosenberg thought the world was ending. His analysis wasn’t as wrong as the hyerinflation guys who all said we should buy commodities because of the demise of paper assets, but it was pretty close. Commodities and the assets that Rosenberg was bullish about have rallied for the exact reasons he didn’t expect them to – the global economy is strong. There is a big difference between being right and being lucky. When it comes to those assets Rosenberg has just been lucky.
Oh, so that you believe his portfolios were lucky is being held against him? How about everybody else, who I can make an argument were far more lucky. Rosenberg in my mind advised exactly the right thing. Advise people to buy things which would would do very well if everything did well, but would be far safer if the economy and markets did very poorly. That is called good advice.
Nor did he say the world was ending, though who knows, except for some real luck we might have had things turn out much worse. If so, people who are crowing about being right (I would call lucky) would be looking pretty stupid right now. Rosenberg served his clients well in ether scenario, which sounds more skillful than lucky. Lucky is being “right.” Good is growing your money regardless of whether evrything you are concerned about or hope for occurs. If he had really been betting on the end of the world as you claim (and falsely) his advice would have been very different. No equities, no credit, just treasuries, extensive short positions and maybe gold. He didn’t do that, because he didn’t predict the end of the world. He predicted an underperforming economy, he worried about things geting much worse (which he should have) and he designed a portfolio that would do well either way, but wasn’t betting on any one way outcome, based on value. As a client I would be real pissed about that. sheeesh.
Never follow one economist. This time Rosenberg has been totally wrong.
> Under a fiat money system, you CANNOT have deflation.
> Politicians can always print money
Correction. Under a fully fiat monetary system, there never NEEDS to be deflation. Politicians can always direct policy to productively manage aggregate demand …. but that doesn’t mean that they will.
All mistakes are active decisions.
The market is telling us that China inflation, US unemployment, wage deflation, housing double dip, US gov. debt, US consumer debt, European debt and possible haircuts, commodity bubble, and oil prices, DO NOT MATTER. If there is something out there to worry about, we haven’t discovered it. When this bubble starts to feel like “goldilocks” again, watch out!
Exactly. When people start to believe the stock market knows more than the real economy, you know we’re in for a crash. It’s happened twice in the last 11 years, and number 3 is imminent. You can just feel the craziness…
Earnings. S&P 500 companies are in the sweet spot. Lean and mean, paying no raises, laying people off, funding @ sick levels in the bond market and just, winning.
Factor in the low rates, and voila – spx 1500
Still so much negativity! What if, just what if, there is a global boom underway and we are in the beginning stages of a new secular bull market. I’m not saying I agree with this view, but what if? The company results seem to suggest something huge is underway, if even it is all EM driven.
China is going to burst. Imagine what kind of boom that is going to be.
Just like the internet bubble was going to burst beginning in 1996 when the Netscape IPO went to the moon along with AOL, etc.
As someone who read Rosenberg every day until his site went paid last month, I can vouch confidently for the fact that Rosenberg knows his fundamentals better than anyone on the planet but the stock market is a foreign language for him… which he does not speak. My impression is that he is so lost in the minutiae of fundamentals that he could never be a success at the market because he simply doesn’t follow anything else. His buddy Murphy (who is mentioned in the article above)is also pretty useless as well. It is heartbreakingly tragic that this brilliant man should have so little success investing. No wonder the poor guy was booted out of Merrill Lynch.
He also has this irritating sidekick who writes all the premables to his posts and gives the day’s news. His prose is riddled with all the Wall Street cliches and jargon and it is such a relief when Rosenberg ‘takes over’.
right, rosenberg is a great macroeconomist but and awfull trader, his calls turn to be right but unfortunately too soon. However, Russell Napier recently turned bearish whereas last september made a call targeting spx 1450 till 2013 and now changed his view. Unlike rosenberg, napier has a much great deal of economic history having read his book anatomy of bear markets.
It does not appear that Rosie has turned “bullish”, rather it appears that he has given up. There is a big difference.
Fighting technical analysis is futile. It is just a whole lot easier than doing the homework behind fundamental analysis approach. Don’t have to wait a long time for value to show up in the stock price as well. In this age of instant gratification, it is obvious why everyone prefers TA.
It is what it is. Just don’t have a comfy, long-term feeling about it.
Bullish on equities…. he been bullish on other asset classes all along. When Bill Gross and PIMCO capitulate, look right into the camera and say “I am not smarter than a 5th grader” then we need to take notice.
$5.00 gas is also in the cards real soon if the trends do not reverse.
When no sense makes sense $5.00 gas ought cause the market to REALLY rip!
I think he’s just called the top. Be fearful when the bears turn greedy.
Another victim of fighting the fed…he’s capitulating at the end QE2.
Rosenberg is Zero Hedge in different clothing. They’ve been wrong about everything for 2 years, but now they’re latching onto the commodity call as if they’ve been right about everything. Ahem, the hyperinflation never happened. And in the case of Rosenberg the deflation never happened. The smart money isn’t fooled by these jokers.
I wonder when the top looser Bob Prechter is going to give up predicting the top… I happened to read his August 2009 membership letter in which he stated “No more bullish”… Imagine the member who got out of long positions… or even worse — started to short the market back then.
Market fools many — including Prechter who seems to think that he has found the keys to the market’s price action… Arrogance and ignorance.
Prechter turned bullish several days before the market bottom in March 2009 and remained so until Dow 10,000. And..anytime I’ve seen him recommend a short on anything…he has done so with a defined stop and in small positions. He doesn’t get them all right (nor have I ever heard or read of him claiming to do so)…but neither does anyone else. I’m not here to defend him or his associates…just making sure you knew there was more to it than what you had mentioned in your comment.
Cullen, This one is one of the statements of the year “Only a trader can understand that it doesn’t take a great economy to generate great moves in stocks. All it takes is an environment that is “better than expected”….”
I only wish I had read these words only two years ago. Anyway, the good thing about life is that you always get more shots at it.
BTW, I am looking forward to your post on just released GDP and jobless claims number.
Rosenberg Bullish?!? Time to sell everything!!!
this market will top within the next two weeks. expect some major
selling to occur. why who knows who knows why it keeps going up.
watch and see
and I just called a top “again”
seriously – either we top out around here or we are going vertical, aka blowoff.
Prechter did say that the market can retrace either of the Fibo lines — up to 62%. But that would be just that — retracement or counter-trend. Take a look at retail sector, which has recently made ALL TIME HIGH!
Also, Prechter was dead wrong on Silver…
Using your example…just because the retail sector is at an all time high…I would be willing to guess that not all components of the retail sector are at all time highs. Sectors have many components…and markets are made up of many sectors. The NASDAQ has stocks that have seen or are close to all time highs recently…but we know the NASDAQ most certainly isn’t.
As for silver..Prechter has always recommended having a core position (to each his own as to the size of this position) in precious metals..and any shorts I know he has recommended have been on amounts above core positions..and again with defined stops.
Again..I’m not his defender…but he is 1 of the many I follow on a regular basis.
If the music is playing, you have to get up and dance.
The music is still playing.
For now.
Perma Bear?
Have you doddos read his research. It’s filled with investment ideas that have outperformed your stupid Bernanke Put stock gains. He’s been Uber Bullish on Gold, Commodoties, Canada, BB rated Bonds Etc. He’s also VERY BULLISH on the inability for Cullen Roche and the rest of his MMTers that they will get blown up once again.
History does repeat itself and MMT or what ever non-sense you think is exactly why we have boom and busts. In the interest of Capatilsm we should cut off our arm to save our body. because if we don’t the entire body will die.
MMT is the the second dumbest thing I’ve heard being sold. The first is MPT.
Cheers….now go back and read what David actually wrote and has been writing. Maybe some of you can profit from his ability to save you ass in the coming months. Again he’s Uber bullish on investors stupidity. Which I seem to read alot here.
MMT is just a description of a modern fiat monetary system so if you think it’s stupid then that’s fine. But it’s just a description of the world in which we live. Your comment is kind of like saying that it is stupid that we all have to breath this oxygen stuff in order to live. That might be true, but it doesn’t make it “wrong”.
Ok Cullen. I appreciate you taking the time.
I flew off the handle a little bit. I’m sorry.
From my perspective.
The bashing of anyone who gives objective advice on Wall St.(now Toronto) like Rosie is misguided. His detailed analysis has served me and my clients well. One is not a bear simply because they question the consensus or chooses not to drink the kool aid. The lemmings seem to run right by the Rosies of the investment world with arrogance as the fall to there death explaining how much money they made not listening to him.
It reminds me of my 45 year old 65 lb over weight office manager explaining why Kobe Bryant has lost a step. She like some of the people taking pot shots at an excellant resource like Rosie don’t have a clue what it takes to do what they do.
My apologies regarding MMT. Thank you for taking the time to respond.
I’ve been quick to defend Rosenberg over the years. He has, however, been very wrong about the US equity markets. You can’t win them all. I don’t read his analysis EVERY day because I think it’s garbage so yes, the attacks on him are not entirely fair.
I worked for Merrill Lynch for many years and still have a book of business because of this man. I am in an SEC RIA . Rosie is usually correct, only two years too early. My clients all have paid up home ( Bubble Trouble circa 2005) because of his call on housing two years too early. They also have 50% of their portfolio in laddered 6% CD’s due to him calling the top of interest rates in 2007. So, it goes back to straight forward asset allocation. Ok, he’s a bear. That just mean allocate correctly to stocks say 40% to 50% ( Yale Endowment has only 7% domestic equites). The problem lies in how brokers are compensated. They will alway hold 65% equities to get a higher payout. the prevous author was correct. Rosie has given great ideas on commodites, hybrids, high yield. So, look for you equity calls elsewhere. You have to do all of the work.
I like Rosenberg tried to short the market for the last 2 years and have lost my shirt doing it. Alas, now is the time to realize that the stock market as well a precious metals have become early indicators for future inflation and soon to be hyperinflation. With the Fed feeding this monster on a daily basis, even if they stop, the momentum of retail investors coming into the market will cause more upside.
Of course this it a boom or bust gamble by the FED and may very well end up in disaster. But as in the movie Dr. Strangelove, I’m going to “stop worrying and love the bomb”
If Rosenberg has “sold out” all hope is gone–indeed The Jig Is Up.
screw Rosenberg! What a deceptive person.