David Rosenberg Just Gave This Devastating Presentation On The Sad State Of The Economy

rosenberg presentation

David Rosenberg, the veteran Wall Street economist and and bearish strategist at Gluskin Sheff, gave an intense presentation on Friday at John Mauldin’s Strategic Investment Conference.

Titled “Bernanke: The Wizard Of Potemkin,” this presentation offers a sobering look at the anemic U.S. economy, the labour market mess, and the Federal Reserve’s controversial efforts to get everything back on track.

Before you can even think about getting bullish, you must consider the eye-opening charts from Rosenberg’s presentation.

Thanks to Gluskin Sheff for giving us permission to feature this presentation.

Potemkin villages were fake and built to make people think things weren't as bad as they really were.

Meet the wizard of today's Potemkin village.

The stock market is nowhere near its highs when you consider it relative to the Fed's stimulus efforts.

The economy continues to be anemic.

Here are some rules to consider when analysing the economy.

People are getting increasingly worried about prices falling to fast.

The economy's potential to grow is much lower than usual.

And that falling potential to grow is a long-term problem.

Moves in the prices aren't encouraging moves in quantity.

After slashing debt, households are slowly accumulating more debt again.

The Fed's Janet Yellen warns that business investment is too low.

Here's a look at how low business spending growth is today.

CEOs confirm this trend in low business investment.

And businesses are blaming the government.

Yellen has also been very vocal about the sad state of the economy

The unemployed stay unemployed for much longer than usual.

Tens of millions of people are just giving up.

As a result, we're running out of hirable people.

The number of educated workers is also falling.

Jobs are going unfilled.

Private surveys confirm this trend.

Hiring activity is lagging.

Job openings as a percentage of hiring is on the rise.

These trends are forcing employers to do whatever they can to keep their workers.

Meanwhile, workers have no problem quitting their jobs.

Companies are making their workers work more.

All of this means the employed are getting paid more.

However, productivity growth is low.

This as labour costs rise.

labour costs closely track inflation.

Rising labour costs is bad news for corporate profit margins.

With profit margins getting squeezed, don't be surprised if we see a stock market correction.

Maybe all of this means the worst is over for the U.S. worker.

Ben Bernanke and the Federal Reserve are committed to do whatever it takes to get the labour market back on track.

This means ultra-low interest rates and tons of money printing.

Bernanke has been explicit in his intention to get corporate bond, home, and even the stock prices up.

The relationship between the stock market and the Fed's stimulus is undeniable.

Stock market dividends are way more generous than bond coupons.

It is incredibly cheap for troubled companies to borrow money.

There's no question that the Fed's hand is moving the bond market.

Something's gotta give.

The Phillips curve tells us that high unemployment is related to low inflation.

It's not easy to predict where the unemployment rate is heading.

GDP growth is way below potential growth.

Compare the U.S. to Japan.

The Taylor rule relates interest rate policy with inflation.

It's been a long time since we've seen the real Fed funds rate this low.

The Fed's Kocherlakota made an interesting statement about instability.

In the past, the Fed has pursued low interest rate policy multiple times.

And periods of low interest rate policy often come with bubbles.

Here's former Fed governor Mishkin on financial instability and bubbles.

Here's current Fed governor Stein from his recent paper on credit bubbles.

Cash returning financial assets have been doing well.

Here are investment themes to consider amid all of this.

Here are the sectors that are sensitive to prices.

Here's how you can get Dave Rosenberg's must-read daily commentary.

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