David Rosenberg writes an excellent daily newsletter, and he’s always quick to highlight some of the most bearish data points for markets and the economy.
Just yesterday he showed us how when the orders-to-inventory level from ISM manufacturing data hits its current level, history argues that recessions usually follow. He also derided the notion that bonds were in a bubble. Fair enough, but here’s the funny thing — once you cut through the noise his actual economic outlook is pretty bullish.
Sift through his shocking anecdotes and rhetoric, and you find this:
“We fully anticipate sluggish economic growth for the remainder of this year and the latest tonnage numbers are reflecting that slowdown.”
Sluggish economic growth in the second half of 2010… as in low-but-positive GDP growth… as in the economic view most stock market bulls hold.
Given that the U.S. already achieved 3.7% and 1.7% GDP growth for the first and second quarters, even a very sluggish 1% GDP growth for the entire second half of the year still equates to 1.8% GDP growth for 2010.
Sluggish growth isn’t great, but it’s not a disaster, and thus we wouldn’t be surprised if markets were to perform well even as Mr. Rosenberg’s view is proven correct. He’s far less bearish than his soundbites make him out to be.