Sure, David Rosenberg might have been turning increasingly bullish recently. But there are still things that concern him.
In his latest Breakfast with Dave note, Rosenberg identifies 10 global economic and political concerns.
We paraphrase here:
- Emerging market balance of payments/currency problems that are reminiscent of the 1997 Asian financial crisis.
- Looming debt ceiling debate in Washington.
- Fed tapering isn’t a sure thing for September, ” but if not, it speaks to weakening economic backdrop.”
- A third Greek bailout and that while Europe might have emerged from a recession, there is no catalyst for a recovery.
- U.S. GDP estimates are being revised down.
- Recent economic data shows that Canada has hit a “rough patch.”
- “Some countries are contracting now (Thailand, Mexico and Netherlands).”
- “Sharp bond spasm… spillover effects to other markets? Long bond is -17.5% in total return in the past 3+ months (which only happened twice before).”
- Poor earnings for American retailers and a weak start to the back-to-school shopping season.
- The “leadership vacuum at the Fed.” The absence of a Bernanke speech at Jackson Hole also makes the policy backdrop unclear.
If these prove to be correct, they “point to a near-term drop in bond yields, weaker commodities/resource currencies, more volatility equity markets and an overall better tone of the rate-sensitive equity sectors (SIRP), and likely put a bid into the USD, yen, Swiss franc, Sterling (defensive currencies),” he writes.
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