ROSENBERG THE PERMA-BULL?
Now here’s some commentary that will catch your eye. Long time bear David Rosenberg says there is light at the end of the tunnel and that he might be bullish as early as Thanksgiving of this year. In yesterday’s note he wrote:
“The future is brighter than you think. This does not mean we will not have another recession, by the way — we had a doozy within the first two years of the fabled Reagan presidency, but we endured nonetheless and came out stronger on the other side once the inflationary excesses of the day were purged (today, it is a case of curing a deflationary debt deleveraging). The structural tax reforms, a new approach for dealing with the Soviet Union, and the air traffic comptroller lockout (which forever changed management-union relations) ultimately ushered in a prolonged period of prosperity that would have seemed like a dream in the 1970s when families had to line up on different days of the week to fill their cars up with gas. What Reagan managed to do was instill confidence with a coherent, credible and cogent strategy that gave people — who make up the economy — a higher degree of certainty over the future. I cannot stress how important it is for any government to ensure at all times that households and businesses have as much clarity over the policy outlook as possible. That makes it easier to plan ahead. And in turn, it leads to better economic results.
I’m noticing a certain degree of despair these days, just as I am getting enthusiastic about the future. Much depends on what happens on November 6th and between now and then we still have the European mess, China hard landing risks and the U.S. debt ceiling issue to confront. Be that as it may, those with some dry powder on hand will have their clients in a solid position to take advantage of whatever forced “panic” selling takes place.
For the record, I do see a light at the end of the dark tunnel. Don’t be surprised if I end up turning bullish ahead of the pack — though it may not be until the like of my good friend, Jim Paulsen, is hiding under his desk screaming “uncle”! But the Rosenberg shift to perma-bull status — I was there in the 80s and 90s, but obscurity got in the way — could come as early as Thanksgiving, and the only ones who will know for sure, at least initially, will be our clients, and our portfolio managers.
I’m so excited I just can’t hide it. But for now, I’m keeping the powder dry.”
Source: Gluskin Sheff
Cullen Roche
Mr. Roche is the Founder of Orcam Financial Group, LLC. Orcam is a financial services firm offering research, private advisory, institutional consulting and educational services.
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55 Comments
To me it seems that he sees a major low ahead, from which a long term long position can be taken. That is hardly reassuring in the short run, is it? But it is interesting that he apparently thinks that almost enough purging has been done now.
I won’t agree or disagree over long term bullishness.
But all this ‘confidence fairy’ has to stop. Supply siders have done enough damage already.
Haha, couldn’t agree more that the children in Congress on both sides need to be told that “the confidence fairy” doesn’t exist. I’ll take my cold hard facts, numbers, and proven economic theory, thank you very much.
I also see GIANT opportunities in the near/distant future. The biggest challenge will be to keep enough dry powder to take advantage of those opportunities in that future.
Are your GIANT opportunities short positions?
Of course, short positions are also an opportunity. But those GIANT opportunities are “longs”.
I rarely agree with Hussman but my analytical work also has this amongst the worst places in history to be long since 1980.
The only places that rival this include pre-crash 87 at the top in 00 and the various retracement rally tops that came in 01/02 and before the waterfall selling in 08.
Not predicting a crash (how rare is 29 and 87) but this is just semantics – is a 20% loss in a few weeks or the threat thereof any different?
BF,
I am trying to reconcile your view and Cullen’s view, which are opposite of each other. Actually I think Cullen’s current view is “semi-bullish” or “accumulating”, but not outright buy. But still that is a far cry from your 20% fall call. It’s going to be interesting in the next couple of weeks for sure.
In order to have the 20% fall, you need a trigger, don’t you? Greek election leading to exit from EURO? No QE3 in next Fed meeting? Continued downbeat / even recessionary economic data? All of the above?
BF was guaranteeing S&P 1800 when Cullen was shorting a few months ago. Is this a person you really want advice from?
Here’s the deal SS, since you and BJM come here with one purpose – to grind your ax with me…
I was absolutely pound the table bullish into early April. I then began shorting the market as I believed we would correct 400 bps. BJM knows this because I told it to him in repeated emails as he always used to request my market opinion. My plan was to be long at 1360 after the correction. I was and we got that exact price. My thought was at that point we’d ramp higher for a sustained move to 1800. The jobs report at the beginning of May was supposed to be the day that move began. It didn’t – the market gapped ~8 pts lower @ 1380. At that point it was quite clear my thesis was WRONG and the short side was the correct side.
Since that time I have not been bullish in ANY way.
So here we are at 1315 and I’ve been bearish since 1380.
So where have I been so wrong that you feel so compelled to make fun of me all the time? What are you trying to prove? That I’m wrong sometimes? Of course. Go read Market Wizards – half those guys admit to being wrong more than 50% of the time.
In the end I was bullish from 1100 to 1380 and have been bearish since then.
You contribute NOTHING to this site. Nothing at all. You come here to grind your ax with me and be the little troll that you are.
What do you want me to admit? I’ve got one testicle? I like little boys??? What would make you happy??
LOL – go get laid…
You’re a liar. You were “pound the table” bullish at S&P 1400 in early May. You didn’t flip flop to being bearish until after the market declined.
http://pragcap.com/ism-blows-past-expectations/comment-page-1#comment-107388
Fine – I am a liar. I’ve already admitted that to you. Everybody here knows I’m a liar. Great, can we move on?
I was short in early April down to 1360 and long from there. Pound the table bullish the day of ISM that you point out until we gapped lower at ~1380 on 5/4 (believe that was jobs number day) and since then I have been bearish ever since.
To prove I was shorting the market in early April BJM sent me an email titled “great call on the short” on 4/5. Two days earlier he sent me an email titled “just saw on prag that ur short” and asked…
Why all of the sudden? Jobs number this week?
So again, you contribute nothing to this site but to point out that I lie, when in reality we both know that isn’t true.
Jealousy, more than anything really.
Who knows what your position really is. At the top you guaranteed S&P 1800 and now you’re saying the market will fall 20%. Your calls are extreme and flip flopping every other day. Who cares what you think? Not me.
Your job is to make money..Kim Kardasian. Not to worry about haters talking about your fat ass as you deposit the $56,000,000 networks just gave you.
Your a liar B Ferro and I’ve got 275 e-mails to support your views as well as outperforming the SPX by 9% points based on you helping me.
Fuck em! Make your money and stop getting distracted by bath salt snorters trying to eat your face off.
I’ve actually been grinding my ax on VII’s ridiculous plagiarization of your work and then scolding the rest of us when we present an alternative view to his…oops, I mean yours.
Yes I’ve come out and respectfully disagreed with your view (and apologized when not so respectfully back when the market broke through almost to new highs and I came out against you saying “I will continue to pound the table on 1500 by July”), but I have not at all been seeking you out to “grind my ax”. Me coming out and taking an opposing view to your bearishness is no different than you coming on here on one of the big down days taunting, asking me if I was still buying (when I responded, “capitulated, went to 100% cash”. I honestly don’t see what is wrong with let’s call it trash talking. Everyone on here has an ego, and when we’re right, we’re going to come on here touting that we were right.
So all that to say, not entirely sure where you and I fell off the track….
What I don’t have any tolerance for is VII coming here chiding everyone for not following prices like he does, and acting like he has A) been doing it his entire career, when in fact he didn’t start until probably March of this year and B) LIKE IT IS HIS ORIGINAL WORK. So I have absolutely no problem coming on here pointing out when I’m right and using one of VII’s outlandish quotes as an example of the opposing view. NOTICE, I DO NOT do that with you. I often cite you as a phenomenal example of someone that is able to follow prices, interpret the current environment and change your mind on a dime if need be – my criticism has been limited to VII.
But of course VII will never be wrong b/c no matter which way the market goes, he will go with it and say that he is following what Mr. Market is telling him to do and generating returns in multiples of me….so it’s a pointless argument, and I’m done discussing on this cite.
Of course, we’re all open to other views. I want us all to disagree when reasonable. My problem is you doing victory laps around me when on the side, asking what my opinion was nearly daily in emails.
And criticize VII as you may for using my work given we help each other but also be aware that you’ve never come here really and cited your OWN work. I’ve heard lots of references to Zeal, Ned Davis, Hussman, ECRI, etc., but rarely if ever do you call out your OWN conclusions. How are you different from him then?
SS can call me a liar but in honesty I’m probably the most open, honest commentator here. I provide my own work, conclusions and real time trades. I admit when and where I am wrong.
I have no problem with open disagreement, but with you and SS it has turned rather personal, for some reason.
The difference between VII and I is that I actually CITE those guys, as you just referenced….if I was VII, I could come on here claiming to have those views with no citation. Also, as you know from our past emailing days, I have my own long-term market algorithm that I have no intention of detailing or discussing here – plus my 3-year outlook of the secular bear coming to an end around 10 times Schiller earnings or below 800 on the SPX is a pretty well-researched phenomenon that is difficult to make original. Very simply, secular cycles last for around 17 years and secular bears end below 10 times earnings. I could come on here pounding the table on that, but A) that’s not very interesting in the short-term and B) not very useful when interpreting sentiment/market techncials in the short-term. And even though I cite all of those guys, I learn from them then use what I’ve learned for my own good (not too dissimilar to what I’ve learned from you in interpreting price action) – so for example, I learned from you that the market tells you where it’s going next, and the recent churning up and down with a tendency to the upside, IMHO, is a sign the market wants to go higher, which jives with various research I read such as Ned Davis, Jeff Saut and my own algo, etc…. I like to use a mosaic approach, reading as much as possible, taking into account as many different investing/trading philosophy, such as your price-following approach, Cullen’s algo, Hussman’s long-term perma bearness, my own algo, my own interpretation of price action, my own interpretation of sentiment data, my own interpretation of put/call ratios etc….
However, my real original work is in buying individual securities, which I don’t discuss here…..
Nothing here is personal whatsoever – if it’s truly that offensive, I will discontinue running the occasional victory lap, and I apologize for any hard feelings I’ve created.
BJM-
Do I keep you up at night?
You need to move on. I’ve had some crazy bitches stalk me…but never because they wanted to control how I made money. What ever I have is working. And because of that I probably won’t change it. In spite of your continued unsolicited advicement.
But thanks for bringing it up again. We all get it BJM. Your right I’m wrong. Not because my returns are positive for the quarter but because you have not signed off on the morality of me not citing the sources. Because…Well BJM knows and doesn’t know what I write is mine and or someone elses. You can sniff out the truth like a Coke addict who’s nose has collapsed.
No one cares BJM. Only you. I’m tempted to file a TRO against you. Your getting creepy now. You can’t get me out of your thoughts. Should I be nervous?
BJM
Be honest. How much time have you spent trying to look me up on LinkdIn or Facebook? Should I be nervous? This is how all those Dateline pieces start. Some guy with an odd fetish for some other blogger. I don’t get it but I’m making notes just in case something happens to me.
Rosenberg said: “Light at the end of the tunnel”. I interpret that there’s still a fair amount/large stretch of tunnel to go through before we’re out of the tunnel. Where the sun shines brightly. And I agree.
All nonsense aside, is there a way for Cullen to set up a market prediction forum? The only money I manage is my 401k, but I’d love a chance to make calls and compare notes with the other commenters…
One should never attribute to policy what can be explained by demographics. . .
Given the history of preemptive calls …He will be buying at prices 10% higher from here at the very least ..
Realistically how can you not be bullish long term. Unless the world ends, all secular bears are followed by secular bulls. All we are discussing is where is the final low of this consolidation. Whomever is President at the time will take credit for the “new” bull.
Inflation has been beating the market for ages. No real growth for ages. This is not the new normal, but the old normal. No news here.
There is little sign that would change now, no single reason, several attempts at bubbles have failed miserably.
I’m long humanity but that does not mean the ‘nominal growth machine’ will continue. Off course corporations will rise and die and there will be always opportunity, but a market propelled by growth does not necessarily have to be the normal. You would see if you used a sample longer than 1 century or 2.
when Rosie was terrorizing (try to) the rest of the world S&P climbed over 1400, so now that he’s going to be ulta bull S&P will crater to 700. At that point everyone still alive will be bullish. Thanks Rosie… and what about your firm’s gain/losses… mmmmhhhh not so good eh ?
Rosie has had some pretty good calls on Treasuries, safe dividend payers. Those trades are pretty crowded now in total. He did call for a recession quarter 1 this year. I think his words were 99% sure there would be a recession. Not sure why he tries to time things. He is generally right but just early on his calls.
I’m sorry. To be “right,” you have to get the direction AND the timing correct. Being “right” but early is exactly the same thing as being WRONG.
Fine. He is right in his calls but wrong on timing. So I guess he is wrong in your book. My point is he just needs to stop trying to predict exact timing to the month or even the quarter. Timing has always been historically difficult. Now throw in global central bank intervention and it is nearly impossible. How many articles have you read that say gold will be at $3,000 by end of 2011, oil will be at $300 per barrel (Goldman 2007), etc. etc. I am thinking of starting a website to document all of these “experts” and their wrong predictions. Seems nobody ever revisits them. I love this site but wild predictions abound.
That would be an awesome site! I’ve thought about the same but am too lazy…
I was thinking through this while shaving this morning…
As I understand it: In the early ’80s, we had falling inflation, falling interest rates, falling unemployment, relatively low leverage and the Boomers entering their strong earning years. That was also before the Gramm–Leach–Bliley Act and before the endowment model of financializing the commodity market.
Today, we have low inflation (with disinflation risks), record low interest rates, stagnant employment-population ratios, still somewhat high leverage(?) and the Boomers retiring. Super-Mega-Banks are more complex than ever and every individual investor wants to own a commodities ETF or mutual fund.
:-/
He was bearish for quarters on end as the equity market rose. God help us all.
I might be wrong ,but I think when this guy talks about a bull market he may not be talking about it in the way many people define it.
By that I mean I suspect his idea of a bull market comprises ,fair value P/E’s,slow ,but steady growth ,probably low volatility ,probably growing through dividend returns invested rather than great bursts in capital returns.Conditions commensurate with growing dividends which means ,fairly stable input costs from labour and materials,less speculative orientated managament etc etc. In other words the opposite of markets over the last decade which have soared and swooped depending primarily on central bank intevention ,or errors in same.
In essence he’s looking for an equity market driven by the blowback factors that entered the fray post GFC.
Seems he’s betting on Robama after O’Bomney gets tossed out due to a stock market downturn. He thinks Robama is going to be a lot better with O’Bomneys polices. Or do I have it backwards. I can’t remember which one is which.
Hmm, what’s with the handle? Did Wells Fargo deny you a loan or something?
I personally am against fraudulent accounting, marking up bad loans to 100 cents on the dollar and the continuing taxpayer funding of failed enterprises and believe a few major banks should be rightsized. WF is first on my list because they ripped me off on bogus fees, and I have declared a jihad against them until I destroy them personally or they are destroyed.
that’s a lot of physical and emotional energy you’re spending there…. good luck storming the castle.
Nah. It’s just a web name and an occasional post on a blog when I run across an article. But it keeps a negative image in the mind of hundreds and potentially costs Wells Fargo money with loss of accounts. Not a bad bang for no bucks.
The Washington Post just today has a front page story on the stink at Wells:
http://www.washingtonpost.com/business/economy/former-wells-fargo-loan-officer-testifies-in-baltimore-mortgage-lawsuit/2012/06/12/gJQA6EGtXV_story.html?hpid=z2
Seems he’s betting on Robama after O’Bomney gets tossed out due to a stock market downturn. He thinks Robama is going to be a lot better with O’Bomneys polices. Or do I have it backwards. I can’t remember which one is which.
Rosenberg has changed his story over time to hedge his calls. He’s been wrong about the economy for years and years. I ignore him now.
Nobody gets ‘em right all the time. In fact, very, very few get ‘em right often enough to rule out random chance. How many “superstars” can we name who got anointed as such for one or two good calls, only to be found swimming naked later? Opinions in this business are about as dangerous as (VII, insert your funnier-than-mine metaphor here).
The winners in this business are the guys who get it right once in awhile and then don’t get off the train too early, and who also jump off the train faster than (VII, it’s your turn again) when they’re wrong. That’s it.
Gluskin Sheff is public in Canada and they just reported earnings recently. It’s interesting that their performance fees are increasing and their AUM are also rising. Rosenberg is obviously not hurting the firm with his outlook.
“During the quarter, AUM increased to $5.5 billion as at March 31, 2012 from December 31, 2011 due to positive investment performance of $193 million and net additions of $1 million. AUM decreased by $585 million from March 31, 2011 ($6.1 billion) to March 31, 2012 ($5.5 billion). This decrease in AUM is attributable to negative investment performance of $217 million and net withdrawals of $368 million.
For the three months ended March 31, 2012, Base Management Fees decreased to $18.1 million from $20.7 million for the three months ended March 31, 2011, a decrease of 13% due primarily to the decrease in average AUM to $5.4 billion from $6.0 billion and a decrease in average Base Management Fee percentage to 1.34% from 1.39%.
Performance Fees for the three months ended March 31, 2012 were $0.4 million, compared to $1.7 million for the three months ended March 31, 2011.
Net Income was $5.0 million or $0.17 per common share, on a basic and diluted basis, for the three months ended March 31, 2012, down from $7.2 million or $0.25 per common share ($0.24 per common share, diluted) for the three months ended March 31, 2011.
“We are pleased to report growth in our Assets Under Management as a result of both positive investment performance and modest net additions this quarter,” commented Jeremy Freedman, President & Chief Executive Officer. “Our Firm has made great progress in recent months, including the application of more tactical approaches to our asset mix and the positioning of our long/short portfolios, and the continued integration of exceptional talent to our team. We are excited about the way these improvements are benefitting our clients and are strengthening our Firm.”
What I take form this article is:
after the election, people will be more confident
that government will no longer be shackling the
free market as much. This position, of course, is
based on the assumption that the current
disaster-of-an-administration will no longer
be in power.
A big Duh is in order
A lot of people say there is no difference between Robama and O’Bomney. Sounds like you are on the right track. The difference between them like black and white.
Uh-oh, confidence fairy alert! You guys should focus on the numbers, not the rhetoric. Either Congress will run a deficit, or it will pull back and put us into a 2013 recession. The rest is just theatre – might well bring some popcorn.
BJM
Be honest. How much time have you spent trying to look me up on LinkdIn or Facebook? Should I be nervous? This is how all those Dateline pieces start. Some guy with an odd fetish for some other blogger. I don’t get it but I’m making notes just in case something happens to me.
VII – I continue to appreciate your candid and entertaining commentary. Tough market so really respect your willingness to share positions — source whether collaborative or original doesn’t matter in the end as long as you are the one pulling the trigger and living with results. I know it’s tough to hear criticism from folks like BJMan…just let it pass by and know that other readers appreciate your input.
So who gives a flying f$ck who’s right or wrong? If I change my predictions six times in a week but get it right enough to make money am I an idiot? Like VII said, it’s about making money, not being right. Don’t care if anyone lies about their record either, it doesn’t effect my money. Come to think of it the reason I quit reading comments and making them was bullshit like this. Too distracting. Think I’ll read some charts or something I can make money on.
Memo to Mr. Rosenberg,
While I agree with a lot of what Reagan did, I think one of his primary accomplishments was becoming President almost exactly when the Baby Boomers reached their prime working years, and as women flooded the workforce (taking home salaries to their families, and expanding the pie). Demography hugely benefited Reagan. I think it’s easy for an ideologue to want to ignore it. And ideologues can get away with that (since they are never held accountable for anything). But you’re not an ideologue. And demographics do not favor us now in the way they did in 1980-1985.
The good news is that at least we are better off than Europe, Japan, and even China in this regard.
Regards,
Mr. Dumb E. Money
+1. Couldn’t agree more about the favorable demographics of the 80′s.
Great communicator, but Reagan was also a Keynesian in disguise, despite what he preached. (See Krugman’s latest article.) Some was a dem congress, some was Reagan juicing the economy through military spending w/o a war to drag things down.
He might be thinking that with financial repression you’re better off in equities, but don’t expect more than 1-3% real gains. Raging bull, I dunno.
Some further info … http://www.theglobeandmail.com/globe-investor/investment-ideas/rosenberg-eyes-more-bullish-stance/article4254100/
I like this quote:
“The U.S. tax system is highly inefficient. There is more than a $1-trillion worth of … what is otherwise known as loopholes, and it really leads to a resource misallocation”
Translating: just as Reagan started a policy of redistributing income from producers to rentiers via capital gains fueled by Fed driven asset price inflation, if arch-rentier Mitt Romney is elected (“Thanksgiving”) there will be no limit to asset price inflation and wage reductions, boosting booked earnings.