There is an economic storm brewing, 2023 will be a rough year for markets: David Rosenberg
“There is no evidence of the stock market ever bottoming as the central banks are still raising rates into an inverted yield curve,” Rosenberg said in TV interview on Tuesday.
Rosenberg explained that historically the stock market bottoms 16 months after the U.S. Federal Reserve pauses rate hikes.
"The real thing happens deep into the easing cycle and that's probably a story for late next year or into 2024,” he said.
Investors can find opportunities in a market bounce when central banks announce a pause or a pivot in their interest rate strategy, he explained, though he added that those dips will not be “the real thing.”
Central banks around the world are showing little sign of slowing down when it comes to raising interest rates, as they continue to fight runaway inflation.
The U.S. Federal Reserve began raising interest rates in 2022 with five rate hikes to date. The Bank of Canada also started an aggressive interest rate hiking cycle this year and will deliver its next rate decision on Oct 26.
“We all know, and the central bankers know, the impact of what they do has a lagged impact on the economy, with lags that are between six to 18 months— and they’ve already done a whole lot,” he stated.
Investors looking for what Rosenberg refers to as “the real tradable bounce” will need to be patient.
"The biggest rallies that you get in the markets actually happen in bear markets," he said.