So, we noticed when his tone took a decidedly optimistic turn this month.
In recent days, he has offered 10 reasons to love the June jobs report, he has declared the death of the deleveraging headwind, and he has reassured us that the rising mortgage rates would not deliver the death blow to the housing recovery.
But in the wake of a recent Business Insider post highlighting this change, Rosenberg followed up with some clarification.
“My friends at the widely respected Business Insider blog runs with an article titled One of the Most Bearish Economists Since The Financial Crisis Is Now A Straight Up Bull,” he said in today’s Breakfast With Dave note. “So now is the time to set the record straight.”
Rosenberg says its a mistake to label him a “perma bear” or a “straight up bull.”
“The markets don’t trade off of “good” or “bad” — levels don’t matter much,” he wrote. “But rates of change do. So what matters for markets is “worse or “better.” And my sense is that the outlook has been getting “better” or at the very least, the economy has a firmer floor underneath it than it did before.”
Indeed, not everything is roses.
“While I have become incrementally more positive on the outlook for the U.S. economy, there is still no shortage of financial risks that have to be addressed at this point,” he added. “All the more so with the more than just a whiff of complacency seeping back into the markets, with the S&P 500 making it six up-days in a row and back to new all-time highs, with a discernible rotation out of safety and into the cyclicals.”
Rosenberg offers nine place “where the pitfalls may lie. We paraphrase:
- The economy is coming off of a Q2 slowdown, which makes it challenging for the Fed to forecast growth.
- Europe is not out of the woods.
- China is slowing.
- The Fed is divided.
- Family Dollar is gaining grocery market share, which suggests the low-end consumer base is growing.
- Rising mortgage rates and gas prices will hinder spending growth.
- “Congress is as dysfunctional as ever.”
- The investment landscape is tough. The deflation theme is alive.
- Valuations are stretched, signaling low investment returns.
So, while he has upgraded his macro outlook, he nevertheless sees no shortage of risks.
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