David Rosenberg, founder and president of Rosenberg Research, believes recession odds are higher than 2022 despite nobody expecting one, pointing to Fed staff forecasting 50% recession probability and the most downbeat Beige Book since 1980. Rosenberg criticizes Powell for calling the economy "solid" while real GDP has been negative sequentially in 2 of the past 3 months and survey data suggests 1% contraction. He highlights a major market dichotomy with stocks up 24% while the dollar is in an 11% bear market, suggesting something is fundamentally wrong. The housing market faces a negative wealth effect as supply-demand gaps widen and prices start cracking.

Sponsors:

Monetary Metals: https://monetary-metals.com/julia⁠

Kalshi: ⁠https://kalshi.com/julia

Links:

https://rosenbergresearch.com/

https://x.com/EconguyRosie

Timestamps:

00:01 - Introduction: Dave Rosenberg, founder and president of Rosenberg Research

00:49 - "Meat grinder roller coaster ride" - elevated policy uncertainty

02:15 - Tail risks removed: no trade war, regional conflict, or fiscal cliff

05:35 - S&P 500 multiple expansion: 18 to 22 in three months (4 sigma event)

08:30 - Housing market in "huge state of disarray" - prices starting to crack

11:22 - Survey data consistent with economy contracting at 1% annual rate

13:20 - Real GDP negative sequentially in 2 of past 3 months

15:24 - Nobody talking about recession despite higher odds than 2022

18:18 - Recession probabilities are binary - "zero or 100, not 60% pregnant"

21:18 - Mistakes from 2022-2023: didn't anticipate fiscal stimulus scale

25:34 - Big beautiful bill not stimulative - just extending status quo

28:20 - Housing supply-demand gap widening, negative wealth effect coming

32:42 - S&P 500 became growth index, small caps still in correction

36:00 - Fed staff said recession odds equal to GDP baseline forecast (50%)

38:56 - Beige book: economy declining slightly, more downbeat than 2007

44:32 - Powell calling economy "solid" despite weak data - credibility issue

48:04 - Fed damaged by "transitory" mistake, protecting legacy

55:17 - Next Fed Chair speculation: wants someone he can "push around"

59:04 - US dollar down 11% in bear market while stocks up 24%

01:04:13 - Closing: importance of liquidity and diversification

Jonathan Sayer

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