David Rosenberg said the Santa Claus rally in stocks could come to an abrupt end with a “terrible January.”
He said past fiscal overhangs and rising interest rates were acting as headwinds, and the economy could weaken in 2024.
The head of Rosenberg Research issued the latest gloomy outlook in a research note this week.
Stock prices appear to be overextended after rising. santa claus rally And it is likely to retreat in January. And the U.S. economy is much weaker than it appears and could stagnate next year, David Rosenberg warned.
President of Rosenberg Research predicted a great recessionHowever, financial markets and the economy rebelled against his demands. dire predictions in recent years. Merrill Lynch’s former chief North American economist issued the latest gloomy outlook in a research note Thursday.
Here are the top five quotes, lightly edited for length and clarity.
1. “The stock market is looking increasingly overbought to even the most casual observer. The major averages, especially the Nasdaq, are hyperextending against their 50-day trendlines. Sentiment Indicators has become extreme from a bullish perspective.”
2. “It’s very likely we’ll be hit with Santa’s hangover early in the new year. Certainly, investors who wait until January to sell stocks for tax reasons are delaying that potential rebound. But it could end up being a nuisance.” January. “
3. “The economy is much more fragile than it looks.” Rosenberg pointed to recent surveys showing business conditions are deteriorating, including in nonfarm payrolls, housing starts, and consumer spending. , emphasized that the last 10 economic indicators released last month all showed downward revisions.)
4. “The fastest interest rate hike cycle since the 1980s is starting to hurt – just as experts and markets are committed to the ‘soft landing’ argument. Households are feeling the effects of the most aggressive tightening cycle since the 1980s. As a financial institution, we feel that the credit card and auto loan woes are reaching levels last seen during the global financial crisis in 2008, as layoffs increase and banks tighten lending conditions. , delinquencies on these loans are expected to increase further.”
5. “As in 1979, 1989, 2000, and 2007, we have been in a ‘soft landing’ all year long. A ‘soft landing’ is a period of transition from an expansionary phase of a business cycle “I think that’s going to be a story for next year. The Fed has locked itself into a recession,” Rosenberg said. It forecast a drag on growth, underscoring the delayed effects of the most extreme rate hike cycle in 40 years.
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