Rosenberg Talks Tapering, Inflation

Gluskin Sheff’s David Rosenberg thinks stocks will be stuck in a trading range for the next several months, and sees inflation on the horizon. Rosenberg tells Yahoo! Finance’s Breakout that if the Federal Reserve does begin to taper its asset-purchasing plans in September as he expects, the chance for multiple expansion will be very small, which, combined with near-zero earnings growth, means little in the way of market gains. He also thinks bonds are oversold and ready for a short-term rebound, though he sees Treasury yields rising to the 3% to 4% range in 2014. “My sense is that once this consumer deleveraging cycle is over, and there are signs that it is coming to an end if it hasn’t ended already, you’re going to see the velocity of money start to rise, against the backdrop of double-digit growth of the monetary base, and that is going to lead to inflation down the road,” he says.

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Rosenberg: U.S. Now On “Terra Firma”

Gluskin Sheff Chief Economist & Strategist David Rosenberg says that a “firmer floor” has developed under the U.S. economy, and he doesn’t see recession coming anytime soon. “I don’t see the prospect of a recession,” Rosenberg tells Yahoo!Finance’s Daily Ticker, saying that the major risks of a fiscal shock or monetary shock have passed for the U.S. “My new theme is escape velocity, no, but terra firma, yes. There’s a firmer floor under the U.S. economy now than there used to be [and the] downside risks… have diminished considerably.” Rosenberg says he expects moderate inflation and very modest growth in the next few years, but says the biggest risks to the U.S. will come not from home but from abroad.

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Rosenberg: Economy Picking Up Steam

The often-gloomy David Rosenberg of Gluskin Sheff says the June jobs report looks pretty strong, and indicates consumer spending should be strong through the summer months. Rosenberg says that in addition to the solid jobs-added number, the report also showed that income was up the most since February, and year-over-year wage growth was about 2.5% despite little or no overall inflation, showing “organic, real” purchasing power gains. He also says the Federal Reserve shouldn’t lower the 6.5% unemployment rate target it set as a guideline for when it would pull back from its stimulative policies. He says the Fed policy was designed to combat a potentially destabilizing, deflationary environment that the “fiscal cliff” might cause. But that’s not what’s happening now, he contends, saying the economy is growing moderately and appears to be picking up steam as we head into the second half of 2013.

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Rosenberg: Good News Behind Jobs Numbers

The often-bearish economist David Rosenberg is actually seeing some bright spots for the U.S. economy. Rosenberg tells Yahoo!Finance’s Daily Ticker that labor demand is rising, and firings are at an all-time low. Hiring has been weak, he says, because of a lack of skilled workers to take the job openings. Average work weeks and weekly earnings are increasing, he says, good news for those who have jobs. He thinks it could be the start of an important change in which a bigger portion of national income shifts from the corporate sector to the labor sector.

 

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