Larry Berman: Market outlook for 2019 with David Rosenberg
It’s been a while since I have had Gluskin Sheff + Associates’ Chief Economist David Rosenberg on the show to get his outlook on markets. I’ve been a follower of Rosenberg since he was the chief economist for Merrill Lynch 20 years ago, and I was at a competing firm CIBC. Rosenberg is one of the best “forensic” economists on the planet. Today, we are going to look at the economic and market behaviour outlook for 2019.
He said this in a recent tweet:
Rosenberg believes we have at least one foot in the recession already.
Over the weekend, the worst-case scenario did not play out and markets are cheering the 90-day truce between the U.S. and China on trade. Rosenberg has been discussing the slowing impact of trade policy, inflation pressures, and world equities since Trump first put tariffs on washing machines and solar panels in January 2018. Let’s have a look at world market performance YTD.
Rosenberg s a big fan of Bob Farrell and his famous 10 market rules.
Market breadth — the number of stocks going up versus going down — is a huge factor. Many investors are "Dow-obsessed," following with trance-like concentration every zig and zag of that particular market average. And while there's much to be gained from a focus on the popular averages, the strength of a market move is determined by the underlying strength of the market as a whole. Let’s look at the number of stocks that are above their long term trends in the Bloomberg World Index:
Market breadth has been weak all year and would suggest like in 2015 and 2016 that the average stock is in a bear market. So does it recover from here or is it going to get worse? That will depend largely on the tightness of monetary conditions.
Rosenberg has also opined that Canada is cheap, but what releases the value? My call is that Canada stays cheap depending on if we can get enough pipeline capacity to improve the output of our largest export.
Our fall roadshow is now over, we have raised over $25,000 from BNN viewers for Children’s cancer research at the Sick Kids Hospital and Alzheimer’s and dementia research at the Baycrest Hospital. Since starting the roadshows in 2009, we have raised almost $400,000 for these charities.
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