David Rosenberg, Chief Economist & Strategist at Gluskin Sheff, surprised everyone when he adopted a more bullish view in 2013.
On Friday he released a research note that included a brief and pretty optimistic summary of the US economy.
Here’s what it said:
In the US, the economy is starting to fire on all cylinders for the first time this cycle.
The strong US dollar is a source of margin support for importers which is great news for many consumer cyclicals. Tack on stepped consumer credit growth, job and wage gains, gasoline price relief, and we have the makings of a solid backdrop to this consumer space heading into the most important shopping season of the year.
Capex growth is picking up and spending plans on the rise, and so Industrials and Tech should be price focal areas — earnings revision ratios are now rising the fastest in the Industrials space, followed by Health Care and then Financials.
The Fed may have sounded dovish but their forecasts point to rising rates ahead and so the rate-sensitives should largely be avoided.
The rising likelihood of stronger-than-expected growth in the next several months means the high-priced defensive areas of the stock market will face the prospect of an outward rotation into the more cyclical segment, though the parts that are more domestic focused than foreign (given soft global growth and firm dollar) make the most sense.
That’s right. He said “rising likelihood of stronger-than-expected growth.”
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