The consensus for the economy is bullish. After a 6.4% annualized increase in real GDP, that’s without inflation, in the first quarter, recent forecasts are for 10% GDP growth in the second quarter, 7.5% in the 3rd, and 5% in the fourth.
As for inflation expectations, they are up. Again the consensus is that the combination of a rapidly rebounding economy, supply shortages and tight labor market will lead to a sustained rise in prices.
The most prominent skeptic on that front is Federal Reserve Chairman Jerome Powell and other Fed officials who believe the price increases we are seeing now are transitory.
This week’s guest, influential economist Dave Rosenberg is in the Powell camp on this one and believes the recent jump in inflation is temporary and that the overall bullishness on the economy and markets is wrong and will be challenged before the year ends.
Dave Rosenberg is the outspoken and often contrarian Chief Economist and Strategist at his independent economic consulting firm Rosenberg Research.
I began the interview by asking Rosenberg why he is as convinced that the bullish consensus is wrong as he was when he went against the crowd at the height of the tech bubble in 2000 and the housing bubble in 2007.
WEALTHTRACK Episode #1750; Originally Broadcast on June 11, 2021
Listen to the audio-only version here:
For more detail about the evidence behind Dave Rosenberg’s convictions, he is generously sharing a recent comprehensive report, “No New Era” with us. Sign up to get your copy.
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DAVE ROSENBERG
- Chief Economist & Strategist
- Rosenberg Research & Associates
ACTION POIN
PREPARE FOR SOMETHING ELSE HAPPENING BESIDES THE CONSENSUS VIEW
Bob Farrell’s Market Rule #9: When All the Experts & Forecasts Agree, Something Else Is Going to Happen
- Consensus View:
- Pro Inflation
- Pro Economic Boom
- Pro Bull Market
- Anti Consensus Investments: Defensive Growth Including
- Big U.S. Tech
- Consumer Defensive
- Utilities
- Long-Term U.S. Treasury Bonds
ONE INVESTMENT
BETTING WITH THE FED
- Economy slows
- Inflation subsides
- Buy 30-year U.S. Treasury Bond or 30-year Zero Coupon Treasury Bond
FROM THE ARCHIVE
David Rosenberg from WEALTHTRACK the Archives:
WEB EXTRA
PERSEVERANCE UNDER PRESSURE
Influential economist and strategist Dave Rosenberg has had several times in his career, most notably at the height of the tech bubble in 2000 and another leading up to the global financial crisis in 2007, when he was so out of consensus by being bearish that his colleagues and clients pressured him to change his forecasts. At one point a former firm refused to let him use the “B” word in his research reports and the head of the bond desk threw his charts package at him in disgust. He explains how he withstands similar pressures now.
