Rosenberg: Economy – prognosis negative
The Treasury market is giving you a recessionary signal, says David Rosenberg, Gluskin Sheff & Associates, who adds that a decline in the GDP will not be that catastrophic but it could last a long time; with Doug Dachille, First Principles Capital Management.
Rosenberg’s points were summarized by Josh Brown of the Reformed Broker blog as follows:
* We are already in recession, and while this one may last awhile, there is no evidence to support claims that this recession will be as catastrophic as the one that began in 2007.
* Both gold and Treasuries have more room to run, but tactically-speaking, buyers should hold off at today’s prices as both are overdue for a short-term pullback.
* There’s no reason to be completely out of equities, but one should be underweight the amount of equities they’d own in a cyclical bull market, which this assuredly is not.
* The equities you do own ought to be defensive in nature and not cyclical, they should have good earnings visibility and solid dividends.
* The best type of stimulus the government could do would be something tied to energy. Natural gas infrastructure build-out for example would put legions of Americans to work and could eventually lead to much lower energy prices for consumers leading to a higher amount of disposable income.
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