'It's going to be a very deep recession': David Rosenberg
Bay Street veteran David Rosenberg is warning the domestic economy is facing war on an unprecedented number of fronts.
In an interview with BNN Bloomberg Wednesday, Rosenberg, the chief economist and strategist at Rosenberg Research and Associates, said Canada is taking body blows from all sides when it comes to the fallout from the COVID-19 outbreak.
“We have a global demand shock going on, we have global supply shock going on simultaneously … a negative wealth shock on spending,” he said. We also have an oil shock, which for producers like Canada and now the U.S., is another huge negative on capital spending and employment in a critical part of the economy. And on top of that, we have a credit shock.”
In the face of these major headwinds, the federal government announced $82 billion worth of support for the domestic economy Wednesday morning, equaling about three per cent of annual gross domestic product.
Rosenberg, widely known for having foreseen the meltdown in the U.S. subprime mortgage market ahead of the financial crisis in his capacity as the chief North American economist at Merrill Lynch, said the current financial conditions are unlike anything he’s seen.
“I was at Merrill on the front lines during the financial crisis in 07-08, I started at Merrill back in 2000 at the height of the dot-com crisis, I really don’t remember a time when we were fighting a five-pronged war here,” he said.
Rosenberg said even traditional safe havens like gold aren’t behaving normally in the current market conditions, creating even more unknowns for investors.
“We’re in this fog of uncertainty,” he said. “Gold’s back to where it was at the beginning of the year. You’d be thinking gold would be surging in this environment – it’s not. It’s being sold as collateral to meet margin requirements,” he said.
“Even the safe havens aren’t safe in this environment.”