David Rosenberg Has Identified The Four Horsemen Of Risk

David Rosenberg

Photo: Bloomberg TV

“We have identified four major downside risks for U.S. growth over the next four quarters,” writes David Rosenberg, the bearish strategist at Gluskin Sheff.He calls them “The Four Horsemen.”

Here’s the gist:

More adverse news out of Europe
“Sorry, but the situation in the euro area remains highly unstable and the fact that financial markets gyrate so violently with every passing comment from Mario Draghi says something about the manice mindset of today’s algorithm-dominated fast-money backdrop,” writes Rosenberg. 

The sharp run-up in food prices
“The U.S. is a massive food producer on a global scale and as such plays a keey role in influencing prices in the world market,” writes Rosenberg.  He reminds us that the U.S. is going through one of the worst droughts in history.  He also notes that food price increases trigger instability in other parts of the world. He cites the Arab Spring as an example.

Negative export shock
Rosenberg points to the intensifying euro area recession, which is having an increasingly unfavorable impact on its neighbouring economies and trading partners.  “[O]ne of the big pieces of data last week was the plunge in the ISM export orders index from 47.5 to 46.5 in July, to stand at its weakest level since the depths of the last global downturn in April 2009.

The proverbial fiscal cliff
This is the expiration of the $600 billion worth of tax cuts and spending programs, which threatens to lop off around 3-5 percentage points of GDP if Washington doesn’t act.

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