David Rosenberg
David Rosenberg is the founder and president of Rosenberg Research and the former chief economist at Gluskin Sheff and Merrill Lynch. He's known for his bearish macro calls and his focus on recession risk.
This post summarizes his talking points.
David Rosenberg: The Fed Is Going to Trip, Recession Odds Now Above 50% (October 20, 2026)
He's been in the business for 40 years and he doesn't remember a time when there were so many divergences and extremes in the market and the economy.
- 10 stocks are 40% of the market cap.
- Average and median stock are down 20%.
- 40% of S&P 500 is in a bear market right now.
When Powell hiked rates 500 bp, there wasn't a recession cause consumers were awash with $2 trillion of pandemic free money.
The economy is supported by just a couple of factors. AI capital spending.
GDP is growing 2%. A boom is the 90s when GDP growth was 5%.
Consumer spending growth is at the high end and is dominated by the equity wealth effect.
The CAPE (aka Shiller P/E) has been more than 40 for 5 months in a row. We haven't seen this since 2000. Implies an earnings yield of ~2.5%.
The real yield at the long end of the Treasury curve is 3%.
Ergo, the equity risk premium is negative (like the late 1990s).
We've been very fiscally reckless for the last 5-6 years and no party wants to deal with the deficit.
He thinks we're in a bubble.
A market bubble is not a point in time - it's an extreme phase in the investment cycle. We are in extra innings now.
You need to manage your portfolio with a mind towards protecting what you made and preserving your capital.
Derisk and reduce your beta. Allocate away from the S&P 500 and towards Treasuries.
The real and nominal yields for Treasuries are attractive.
Reallocate to utilities and healthcare.
Fed usually starts a tightening cycle with a steep yield curve, but the yield curve is pretty flat right now.
Fed also usually tightens into a hot economy, but our economy is only growing at 2% right now.
We are tightening into a supply shock that the Fed has no control over. How far will they go to get to the holy grail 2% inflation?
Warsh will need to create a massive deflationary pressure in the majority of the economy if he wants headline 2% inflation.
He thinks recession odds are 50%.
Inflation is a rate of change, not a level.
Rosie thinks we're freaking out about inflation that isn't even too bad.
We've had many major shocks in the past 6 years.
- COVID, supply chain issues
- stupidity of the government to hand out checks to everyone for 2 years and pay them not to work, extending unemployment
- Russia/Ukraine
- Tariff shock
- Iran war shock
They modeled out these shocks, and they computed that inflation would be less than 2% without these supply shocks.
He finds it amazing that core inflation is only 2.6%.
The labor market is weaker than commonly perceived.
There was no political backlash to the internet. AI is a different animal. There are more issues with AI that are causing public backlash.
These are not sustainable multiples. The personal savings rate also isn't sustainable.
It will be humongously disinflationary if consumers decide to start saving more.
Jeffrey Gundlach doesn't think that bond yields will come down in the next recession, but Rosie thinks they will come down by a lot.
US household wealth is 73% equities. They're only 7% in bonds.
AI will not change the primal emotions of fear and greed.
He is a contrarian. He likes the 10-year Treasury right now.
He thinks we'll either have a recession or a significant growth turndown.
He thinks gold will do very well.
The economy is a stable beast. The economy is not dictated by animal spirits, but the markets are.
At the peak of the bubble phase, you want to be diversifying into bonds.
He thinks there is a 0% risk that Uncle Sam defaults.
Bonds have been shunned and nobody has diversified this cycle.