David Rosenberg Brought Down The House With This Depressing Presentation At A Conference This Week.

Joe Weisenthal and Rob Wile | Oct. 12, 2012, 7:33 PM

One of the speakers at this week’s Big Picture Conference was David Rosenberg, the famously bearish chief economist of Canadian wealth management firm Gluskin-Sheff.

 

Rosenberg is often labeled a perma-bear, which is something he denied vehemently, but he definitely presented a glass-half-full view of the economy, using charts to argue that the U.S. will be facing demographic and debt-related headwinds for years to come.

According to Rosenberg — who jokingly put on a pair of rose-tinted glasses at the start of his presentation — the U.S. is at best halfway through the deleveraging. The stock market, he says, is only up by dint of Fed intervention, and that there are already signs that the latest bout of QE-Open Ended is not having the same effect as last time.

Regardless of what you think of him as an investor (he has clearly been too negative on equities since the bottom of the crisis) he is an extremely impressive economist, with a wealth of charts and historical datapoints to draw on.

His presentation was definitely a highlight of the conference, and everyone was blown away (not just by the presentation but also his stagemanship).

Big thanks to Gluskin-Sheff for giving us permission to run the entire feature.

Alfred E. Newman used to ask “What, me worry?” but it was never clear what he had to worry about.

A recent Fed Minutes revealed all kinds of nervousness about “headwinds” and “uncertainty” in the market and the economy.

A recent Fed Minutes revealed all kinds of nervousness about "headwinds" and "uncertainty" in the market and the economy.

David Rosenberg/Gluskin Sheff

Bad news: We’re not done crashing, even with all the stimulus.

Bad news: We're not done crashing, even with all the stimulus.

David Rosenberg/Gluskin Sheff

Bear in mind, this recovery stinks by any kind of historical standard.

Bear in mind, this recovery stinks by any kind of historical standard.

David Rosenberg/Gluskin Sheff

Unemployment: still awful.

Unemployment: still awful.

David Rosenberg/Gluskin Sheff

Meanwhile, there are all kinds of drags.

Meanwhile, there are all kinds of drags.

David Rosenberg/Gluskin Sheff

Why was this recession so bad? Basically, unprecedented asset collapse and deleveraging.

Why was this recession so bad? Basically, unprecedented asset collapse and deleveraging.

David Rosenberg/Gluskin Sheff

This is the defining chart of the crisis. It shows the wealth of the Baby Boomers evaporating.

This is the defining chart of the crisis. It shows the wealth of the Baby Boomers evaporating.

David Rosenberg/Gluskin Sheff

Bad news though: Debt ratios are still way too thigh.

Bad news though: Debt ratios are still way too thigh.

David Rosenberg/Gluskin Sheff

And just based on historical averages, the deleveraging probably isn’t over.

And just based on historical averages, the deleveraging probably isn't over.

David Rosenberg/Gluskin Sheff

The old normal: High likelihood of good returns. New normal: Narrow likelihood of moderate returns with high “tail” risk.

The old normal: High likelihood of good returns. New normal: Narrow likelihood of moderate returns with high "tail" risk.

David Rosenberg/Gluskin Sheff

The government debt has always been an issue.

The government debt has always been an issue.

David Rosenberg/Gluskin Sheff

And yes, our debt-to-GDP ratio is huge.

And yes, our debt-to-GDP ratio is huge.

David Rosenberg/Gluskin Sheff

Worry.

Worry.

David Rosenberg/Gluskin Sheff

Safe governments are collapsing everywhere.

Safe governments are collapsing everywhere.

David Rosenberg/Gluskin Sheff

The world has too much debt, and crucially, 2008 did not break that.

The world has too much debt, and crucially, 2008 did not break that.

David Rosenberg/Gluskin Sheff

GLOOM.

GLOOM.

David Rosenberg/Gluskin Sheff

Europe is already turning down.

Europe is already turning down.

David Rosenberg/Gluskin Sheff

And there’s no sign of a turnaround.

And there's no sign of a turnaround.

David Rosenberg/Gluskin Sheff

The US isn’t decoupling. Don’t confuse a lag with a decoupling.

The US isn't decoupling. Don't confuse a lag with a decoupling.

David Rosenberg/Gluskin Sheff

Europe is crushing Asia.

Europe is crushing Asia.

David Rosenberg/Gluskin Sheff

If all that weren’t enough, the fiscal cliff is also an issue.

If all that weren't enough, the fiscal cliff is also an issue.

David Rosenberg/Gluskin Sheff

If we hit the fiscal cliff, it will be like nothing the country has ever seen before.

If we hit the fiscal cliff, it will be like nothing the country has ever seen before.

David Rosenberg/Gluskin Sheff

If rates turn up, watch out. The US government willg et slammed.

If rates turn up, watch out. The US government willg et slammed.

David Rosenberg/Gluskin Sheff

THIS is the big red flag: Core CAPEX and retail sales falling. This shows nervousness!

THIS is the big red flag: Core CAPEX and retail sales falling. This shows nervousness!

David Rosenberg/Gluskin Sheff

What you think housing is coming back?

What you think housing is coming back?

David Rosenberg/Gluskin Sheff

In context, the recent housing recovery is “pathetic.”

In context, the recent housing recovery is "pathetic."

David Rosenberg/Gluskin Sheff

Ditto with home sales.

Ditto with home sales.

David Rosenberg/Gluskin Sheff

Meanwhile, the Fed keeps getting more and more pessimistic.

Meanwhile, the Fed keeps getting more and more pessimistic.

David Rosenberg/Gluskin Sheff

Again, this is despite extraordinary efforts by the Fed.

Again, this is despite extraordinary efforts by the Fed.

David Rosenberg/Gluskin Sheff

The Fed’s balance sheet has exploded.

The Fed's balance sheet has exploded.

David Rosenberg/Gluskin Sheff

One reason to like bonds is that the Fed has #timestamped low rates for a long time.

One reason to like bonds is that the Fed has #timestamped low rates for a long time.

David Rosenberg/Gluskin Sheff

An overview of the QEs like crazy.

An overview of the QEs like crazy.

David Rosenberg/Gluskin Sheff

Make no mistake, Bernanke is clearly targeting asset prices and promoting a wealth effect.

Make no mistake, Bernanke is clearly targeting asset prices and promoting a wealth effect.

David Rosenberg/Gluskin Sheff

When the Fed does QE, the market rallies. Period.

When the Fed does QE, the market rallies. Period.

David Rosenberg/Gluskin Sheff

All that being said, the market has been incredibly volatile.

All that being said, the market has been incredibly volatile.

David Rosenberg/Gluskin Sheff

Here’s the problem. The raw fundamentals are awful.

Here's the problem. The raw fundamentals are awful.

David Rosenberg/Gluskin Sheff

Earnings are on the way back down.

Earnings are on the way back down.

David Rosenberg/Gluskin Sheff

Here’s the crazy part. The Fed announced QE Open Ended as inflation expectations have reached a high

Here's the crazy part. The Fed announced QE Open Ended as inflation expectations have reached a high

David Rosenberg/Gluskin Sheff

The new QE is coming as the dollar breaks down and gold surges.

The new QE is coming as the dollar breaks down and gold surges.

David Rosenberg/Gluskin Sheff

Real rates are collapsing.

Real rates are collapsing.

David Rosenberg/Gluskin Sheff

There’s one big reason to buy equities: The dividend yield is far superior to the yield on bonds now.

There's one big reason to buy equities: The dividend yield is far superior to the yield on bonds now.

David Rosenberg/Gluskin Sheff

Dividend income has grown for the economy while interest income (thanks to QE) is super-low.

Dividend income has grown for the economy while interest income (thanks to QE) is super-low.

David Rosenberg/Gluskin Sheff

Still, dividend payout ratios are at record lows.

Still, dividend payout ratios are at record lows.

David Rosenberg/Gluskin Sheff

Corporate bond yields are super-low.

Corporate bond yields are super-low.

David Rosenberg/Gluskin Sheff

Meanwhile, there’s a lot of room for an uptick in defaults.

Meanwhile, there's a lot of room for an uptick in defaults.

David Rosenberg/Gluskin Sheff

The good news is that corporate sector finances are generally in good shape.

The good news is that corporate sector finances are generally in good shape.

David Rosenberg/Gluskin Sheff

So this is why there’s so much gloom.

So this is why there's so much gloom.

David Rosenberg/Gluskin Sheff

You have to link bonds, because investors are still underinvested.

You have to link bonds, because investors are still underinvested.

David Rosenberg/Gluskin Sheff

But the flows are definitely happening.

But the flows are definitely happening.

David Rosenberg/Gluskin Sheff

The retiring boomers are a huge force.

The retiring boomers are a huge force.

David Rosenberg/Gluskin Sheff

Getting older and older.

Getting older and older.

David Rosenberg/Gluskin Sheff

Fact is, there’s no fighting demographics.

Fact is, there's no fighting demographics.

David Rosenberg/Gluskin Sheff

Here’s a look at different returns.

Here's a look at different returns.

David Rosenberg/Gluskin Sheff

The proper investment strategy: Safety And Income At A Reasonable Price.

The proper investment strategy: Safety And Income At A Reasonable Price.

David Rosenberg/Gluskin Sheff

More on markets…

More on markets...

Read more: http://www.businessinsider.com/david-rosenberg-navigating-the-new-normal-2012-10?op=1#ixzz2AKGTAlfh

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