Speaker · Updated
David Rosenberg: latest market views
Rosenberg Research
Summary
Economist and founder and president of Rosenberg Research (established January 2020), formerly chief economist and strategist at Gluskin Sheff and chief North American economist at Merrill Lynch, author of 'The Bear in the Bullring' and co-creator of the TSX-listed ROSY ETF.
Chorus has 43 views from David Rosenberg across 2 episodes on The Julia La Roche Show and MacroVoices since October 1, 2026. Their latest calls: bearish on CoreWeave and Oracle.
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Index strength is narrow; most stocks are in bear markets, so the bull market likely ended months ago.
Rosenberg argues the headline averages hide weak breadth. Ten stocks account for over 40% of market cap, and the index is still near all-time highs. Meanwhile the average and median stock are down almost 20%, and about 40% of the S&P 500 is in a bear market. He concludes the bull market probably ended a couple of months ago and that investors should derisk: reduce beta, keep a high Sharpe ratio, and not go all-in or all-out.
“we can see just how narrowly based it is. 10 stocks accounting for over 40% of the market cap. ... the average and median stock are down almost 20%. 40% of the S and P 500 is actually in a bear market right now.”at 3:22
The Julia La Roche Show: #422 David Rosenberg: The Fed Is Going to Trip, Recession Odds Now Above 50% ·
AI infrastructure & data centers
AI capex and data-centre construction are propping up GDP while other business investment contracts.
AI capital spending in volume terms is up more than 16% year over year. Data construction is up more than 60%. The rest of business capex is negative 0.7%, and commercial and industrial construction outside data centres is down 7%. Rosenberg contrasts this with the late-1990s internet boom, which lifted all boats. He argues the AI boom is draining resources and vitality from the rest of the economy, so headline growth of about 2% masks weakness underneath.
“AI capital spending in volume terms is up more than 16% year over year. That's a big number. ... unlike the Internet era in the late 1990s ... this AI boom ... it is sucking the vitality and resources out of other parts of the economy.”at 5:00
The Julia La Roche Show: #422 David Rosenberg: The Fed Is Going to Trip, Recession Odds Now Above 50% ·
The no-hire, no-fire labor market means roughly zero employment growth, a key economic overhang.
Employment growth was running at about 2.5% in the late-1990s boom and is now about 0.4%. Rosenberg says that 'no fire' is a good thing, but 'no hire' is the real overhang. Combined, the two mean roughly 0% employment growth, which is not a healthy equilibrium. He criticizes commentators who praise the no-hire, no-fire economy as resilient.
“But when you have no fire, no hire, what do you end up with? You end up with 0% employment growth, which is basically what we have in our hands.”at 7:23
The Julia La Roche Show: #422 David Rosenberg: The Fed Is Going to Trip, Recession Odds Now Above 50% ·
Consumer spending is running on wealth effects and a halved savings rate, which is fragile without income growth.
Real disposable income has barely grown over the past year, yet real consumer spending is near 2.5%. Rosenberg attributes this to the high end spending against its portfolio, a wealth effect from equities. The savings rate has fallen from 5.5% toward 4%, about half the pre-COVID norm of 8%. He argues that if the bull market has ended, with the average stock down about 20% and mega-caps propping up the index, low employment growth and a lower savings rate will pose a significant challenge to the economy in 2027.
“one of the biggest dichotomies that I'm seeing out there is that there's been almost no growth in real disposable personal income in the past twelve months. But consumer spending is running close to 2.5%”at 8:45
The Julia La Roche Show: #422 David Rosenberg: The Fed Is Going to Trip, Recession Odds Now Above 50% ·
Stock valuations are a bubble: negative equity risk premium, CAPE above 40, and no justification for stocks being safer than bonds.
The CAPE has been above 40 for five months, a level not seen since 2000. The equity earnings yield is about 2.5%, while the long-end real Treasury yield is above 3%, so the equity risk premium is negative, as it was in the late 1990s tech bubble. Rosenberg says the only way to rationalize this is to believe equities are riskless, which he rejects. Because bond yields are rising, the gap can only close if yields fall sharply or stocks correct hard. He says he believes the market is in a bubble, and that Wall Street is slow to use that word.
“the CAPE ... has been north of 40 for five months in a row. ... the earnings yield in the equity market is roughly 2.5%, whereas you're getting more than a 3% real yield at the long end of the Treasury curve. Ergo, the equity risk premium is negative.”at 11:35
The Julia La Roche Show: #422 David Rosenberg: The Fed Is Going to Trip, Recession Odds Now Above 50% ·
Shift equity allocation into Treasuries; real and nominal yields are attractive and Treasuries carry no default risk.
Rosenberg says he has been moving money from the S&P 500 into Treasuries, and that investors should do the same and start building Treasury positions because real and nominal yields are very attractive. He says that although Treasuries have duration, cyclical and inflation risk, they carry no real default risk, and he pushes back on the idea that equities are less risky than government bonds. He expects a bull steepener in the next twelve months as rates fall. He acknowledges the call is uncomfortable because inflation worries are high.
“I would suggest, which I've been doing, is making an allocation away from the S and P 500 towards treasuries. Hold your nose with treasuries.”at 18:07
The Julia La Roche Show: #422 David Rosenberg: The Fed Is Going to Trip, Recession Odds Now Above 50% ·
Recession odds are above 50-50 and a significant growth downturn is likely next year, even without a classic recession.
Real GDP is running barely above 2%, and the Street calls this a boom. Rosenberg compares it with the late-1990s boom, when growth was about 5%, and says 2% was once a recession warning. Employment growth is near zero, the consumer is spending against a shrinking savings cushion, and the Fed is tightening into a supply shock with a flat curve. He says recession odds are closer to above 50-50 and expects a significant growth turndown in 2027, even if it is not a classic recession.
“I'm not out there pounding my fist on the table about a recession, but I think that the odds ... are closer above fifty fifty, and I'm fully convinced that there's gonna be a significant growth turndown even if we don't get a classic recession.”at 25:18
The Julia La Roche Show: #422 David Rosenberg: The Fed Is Going to Trip, Recession Odds Now Above 50% ·
Fed hikes into a supply shock with a flat curve and weak growth is dangerous; the Fed will trip and rates will fall.
Rosenberg argues the Fed is responding to a headline PCE deflator, which he calls a meaningless statistic. The inflation is mostly from supply shocks such as oil, diesel and tariffs, which the Fed cannot control through demand. He notes the 2-10s curve was only about 30 basis points when the Fed started hiking, versus a historical norm near 120, and GDP was about 2% rather than 4%. He cites the Beige Book's report of virtually no consumer spending growth as evidence the Fed is ignoring qualitative data. He says that if rates come down, which he expects in the next twelve months with a bull steepener, the Fed may still hike once or twice more, but he doesn't think it needs to.
“I think pursuing a policy by saying over and over again that we have to do something, ... So you're gonna carry out policy now, which has lead times into the future based on what's happened in the past is like crying over spilt milk. ... And I think the Fed is gonna trip.”at 27:17
The Julia La Roche Show: #422 David Rosenberg: The Fed Is Going to Trip, Recession Odds Now Above 50% ·
US inflation is imported from exogenous supply shocks and tariffs, not an underlying problem; core is near 2.6%.
Rosenberg's team modeled four supply shocks since COVID (pandemic supply chains, Russia-Ukraine, tariffs, and the US-Iran war), plus stimulus-driven demand. Modeled headline and core inflation would be below 2%, so he argues there is no underlying US inflation problem. He says the tariff rate is 13% versus 2% before April 2025, but only about 25% of the shock reached final inflation. Core goods inflation was forecast to reach 4% but peaked at about 1.5% and is now 0.7%. Core inflation is 2.6%, versus 4.2% when Volcker left office, and he says it is strange that markets are so worried. He says oil and diesel are supply shocks the Fed cannot control.
“if we could model out these shocks, where would headline and core inflation be right now? And the answer is less than 2%. ... there is not some underlying inflation problem in The United States. This is inflation that we have unfortunately imported from exogenous shocks from abroad.”at 33:01
The Julia La Roche Show: #422 David Rosenberg: The Fed Is Going to Trip, Recession Odds Now Above 50% ·
Labor market is weaker than perceived; wage growth is slowing and real incomes are contracting.
Rosenberg argues the labor market is weaker than commonly perceived, and that wage numbers show it. Nominal wage growth is slowing while a price shock is underway, so real work-based income is contracting. He cites a 0.5% month-over-month real income decline in September as evidence the labor market has hit a wall. He argues the lagged effect will be real declines in consumer spending, which he expects to push disinflation or deflation in the non-food and non-fuel CPI and PCE deflator.
“The labor market right now is weaker than commonly perceived, and you can see it in the wage numbers. Nominal wage growth is slowing down at a time when we're seeing this price shock, which means that real work based income is contracting.”at 37:16
The Julia La Roche Show: #422 David Rosenberg: The Fed Is Going to Trip, Recession Odds Now Above 50% ·
Underlying inflation is only 2.2%; current price pressure is a supply shock that will fade into disinflation.
Rosenberg says the Dallas Fed's trimmed-mean PCE, which strips out shocks and idiosyncratic data noise, is running at 2.2% year over year, down from 2.9% a year earlier. He argues the recent price rise is a supply shock, not an overheated economy with demand pressure. Because real incomes are falling, consumer spending will weaken with a lag, pushing down the roughly 80% of the deflator that is not food and fuel, in discretionary categories like travel, apparel and furniture. He says this is why the tariff inflation many predicted never arrived.
“Dallas Fed's Trim Mean PC Deflator, which right now is running at 2.2% year over year.”at 39:20
The Julia La Roche Show: #422 David Rosenberg: The Fed Is Going to Trip, Recession Odds Now Above 50% ·
Fed risks a policy mistake by hiking into a supply shock; markets pricing four hikes look wrong.
Rosenberg argues the Fed is about to make a policy mistake by looking at headline PCE and treating a supply shock as an overheating economy with demand pressure. Markets are priced for about four hikes, while before the new chair took over the dots still called for a cut. He says markets were not priced for hikes at Powell's last meeting, and that new Fed chairs historically hike early to flex anti-inflation credentials, so the current chair is following that script. He says he thinks the market is getting this wrong.
“To me, yeah, I think the Fed's on the precipice of making a policy mistake”at 41:11
The Julia La Roche Show: #422 David Rosenberg: The Fed Is Going to Trip, Recession Odds Now Above 50% ·
Recession odds are high; if the Fed follows markets, growth slows sharply, with real GDP below 1%.
Rosenberg says there is a reasonably high chance of recession, roughly a coin flip, and that even without one there will be a significant growth slowdown if the Fed delivers the hikes priced into money markets. Real GDP run-rate is a bit better than 2%, but he expects a year with real growth below 1%. Weak labour force participation would push unemployment higher, adding downward pressure on nominal wages. He notes that financial conditions have already tightened and that fiscal and AI supports are fading, and he caveats the call on the Fed following market pricing.
“I think that there is a reasonably high chance that we will have a recession. And I caveat it by saying, if the Fed follows through to what the money market is priced in, I think that we will have, if not a recession, a significant growth turndown.”at 44:09
The Julia La Roche Show: #422 David Rosenberg: The Fed Is Going to Trip, Recession Odds Now Above 50% ·
Fiscal impulse turns into a 0.6-point GDP drag next year, with midterm gridlock ahead.
Rosenberg says the One Big Beautiful Bill added more than half a point to GDP growth this year, but this is nonrecurring. As the boost fades, he expects a net drag of about 0.6 points on the economy next year. He expects Democrats to likely win the House and possibly the Senate after the November 3 midterms, creating divided government and fiscal gridlock, so no new fiscal support is coming. He notes Trump will keep foreign and trade policy power but be a lame duck on fiscal policy.
“I think that fiscal policy, when you look at the incremental impact on the economy next year, is gonna be a net drag of [0.]6%.”at 46:33
The Julia La Roche Show: #422 David Rosenberg: The Fed Is Going to Trip, Recession Odds Now Above 50% ·
AI bubble sits in investor behavior, not the technology; tech multiples are unsustainable.
Rosenberg says the internet was a game changer for productivity, but the bubble is in investment behavior, driven by fear and greed. He calls the last episode a broad technology bubble, noting the largest company at the 2000 peak was Microsoft, not a dot-com. He says he agrees with Jamie Dimon, who called a bubble a year ago. He argues today's valuations are not sustainable even under a new-era view, as they were not in the late nineties.
“You did not see this in the last bubble. It was a bubble. Look. The bubble is not in the technology. The bubble is in investment behavior, the extreme emotions of fear and greed.”at 47:05
The Julia La Roche Show: #422 David Rosenberg: The Fed Is Going to Trip, Recession Odds Now Above 50% ·
AI faces a public backlash, with job-loss fear near record highs, unlike the internet era.
Rosenberg argues AI is a different animal from the internet, which faced no political backlash. AI raises new issues like intrusiveness, fraud and environmental impact. He cites the University of Michigan survey, which asks about fear of job loss over the next five years, as bordering on an all-time high. He sees this public fear as a backlash that could weigh on AI investment and data center buildout.
“Consumer Sentiment Survey does ask the question about fear of job loss over the next five years. It's bordering on an all time high.”at 48:48
The Julia La Roche Show: #422 David Rosenberg: The Fed Is Going to Trip, Recession Odds Now Above 50% ·
AI infrastructure & data centers
Data-center pullbacks could subtract 0.7 points from US GDP next year, on top of fiscal drag.
Rosenberg calls AI data center construction the big elephant in the room. He says cancellations and postponements are already happening in real time, which did not occur in the internet era. He estimates the resulting pullback will subtract another 0.7 points, which he adds to a 0.6-point fiscal drag to get a 1.3-point negative contribution to GDP next year against a run rate near 2%. He cites mountains of capex, with investors doubting their initial ROI estimates, and a growing political backlash against AI as drivers.
“We've estimated so far with all the cancellations and postponements, the impact that that could have, the pullback, is another 0.7.”at 48:59
The Julia La Roche Show: #422 David Rosenberg: The Fed Is Going to Trip, Recession Odds Now Above 50% ·
Financial conditions already tightened about 140bp in three months, like five extra Fed hikes.
Rosenberg counters the claim that financial conditions are not restrictive. The dollar, equity and debt cost of capital, credit spreads and market rates including mortgage rates have all risen. He estimates financial conditions have tightened about 140 basis points in three months, which is equivalent to the Fed having already hiked at least five times on top of past moves. He says this will hit the economy with a lag unless reversed.
“It's tightened a 140 basis points in the past three months. It's as if the Fed's already tightened, at least six times... Call it at least five times in addition to what they've already done.”at 50:08
The Julia La Roche Show: #422 David Rosenberg: The Fed Is Going to Trip, Recession Odds Now Above 50% ·
Stretched CAPE multiples will mean-revert, risking a bad bear market.
Rosenberg argues the price-earnings multiple, not earnings, drives stock markets, and the CAPE multiple is far above sustainable levels. If it mean-reverts, he expects a bad bear market, even if earnings hold. He notes that the economy and stock market have decoupled and that a savings-rate reversion would add a consumer recession. He cites the 2001 Nasdaq collapse of about 60% during a very mild recession. He expects heightened volatility in both directions over the next twelve to eighteen months.
“You'll get a bad bear market. ... These are not sustainable multiples. They were not sustainable in the last new era in the late nineties and 2000.”at 53:08
The Julia La Roche Show: #422 David Rosenberg: The Fed Is Going to Trip, Recession Odds Now Above 50% ·
Savings rate reverting could trigger a severe consumer recession and disinflationary pressure.
Rosenberg argues the personal savings rate has fallen only because of the equity wealth effect. If it mean-reverts, the arithmetic implies a very bad consumer recession. This applies to the marginal spending decision of about 160 million households based on their after-tax income and portfolio values. He describes it as a monumental disinflationary force. He notes this is a math exercise rather than a forecast, but that the risk is underappreciated.
“Do you know if we mean reverted the personal savings rate, which has only gone down because of the equity wealth effect, we would get, just arithmetically, a very bad consumer recession.”at 53:28
The Julia La Roche Show: #422 David Rosenberg: The Fed Is Going to Trip, Recession Odds Now Above 50% ·
Own long Treasuries: a recession would lower yields, and the 10-year is unlikely to reach 6%.
Rosenberg holds long-duration Treasuries in his model portfolio. He argues that if the Fed hikes four or five times, a recession follows, and there has never been a recession where bond yields did not fall. He thinks the 10-year yield needs to break 6% for investors to lose money over twelve months, which he does not expect. He sees the 10-year moving to about 4.5%, which would give roughly a 14% total return. He argues the backup in yields has been driven by the reset in Fed expectations rather than inflation, bonds are under-owned, and Treasuries offer safety that no other asset class has.
“[If the Fed does hike four or five times,] I own a whack of tens because we will have a recession.”at 55:41
The Julia La Roche Show: #422 David Rosenberg: The Fed Is Going to Trip, Recession Odds Now Above 50% ·
Market sentiment, positioning & volatility
Household equity share at a record 73%, far above the 35% he thinks it should be.
Rosenberg says equities are 73% of US household financial assets, a new record that exceeds the dot-com peak, and the boomer share is about 55% when it should be closer to 35%. Bonds are heavily under-owned. He cites bullish sentiment of 78% in the net speculative long positioning data and says fear and greed are unchanging. With the S&P 500 dividend yield near 1% against Treasury yields around 5%, he says people are being underpaid for the equity risk they are taking.
“Yeah. New record high. Takes out the .com peak.”at 56:25
The Julia La Roche Show: #422 David Rosenberg: The Fed Is Going to Trip, Recession Odds Now Above 50% ·
CoreWeaveBearish
CoreWeave's CDS prices very high default risk, making it a weak link in the AI trade.
Rosenberg points to CoreWeave's credit default swaps as a signal of distress, saying they are pricing a very high probability of default, which he describes as over 50%. He calls CoreWeave one of the weakest links in the AI trade. He presents this as part of a domino risk to the AI complex and early warnings that credit strains are emerging in bubble areas.
“Look at their CDS. It's basically priced down over 50% of default, the weakest links in the AI trade.”at 1:03:18
The Julia La Roche Show: #422 David Rosenberg: The Fed Is Going to Trip, Recession Odds Now Above 50% ·
OracleBearish
Oracle's CDS trades wider than in 2008, an early warning of AI-linked credit strain.
Rosenberg says Oracle's credit default swaps are trading wider than they were in the summer of 2008. He treats this as an early warning sign of credit strains in the bubble area of the market, where credit leads equities. He points to hyperscalers and the weakest links in the AI trade, and compares the pattern to early signs of trouble at New Century Financial before the 2007 subprime bust.
“Oracle's CDS is trading wider than it was in the summer of [20]08.”at 1:03:18
The Julia La Roche Show: #422 David Rosenberg: The Fed Is Going to Trip, Recession Odds Now Above 50% ·
Gold will do very well; firm support above $4,100 despite real-rate headwinds.
Rosenberg says gold has had a rough year because real rates have backed up and the dollar has surged on the reset of Fed expectations. Still, gold has held north of about $4,100, which he calls firm support. He argues that if he is right that too much Fed tightening is priced in, real rates will fall and gold will benefit. He describes himself as a gold bull.
“Gold will do very well.”at 1:05:37
The Julia La Roche Show: #422 David Rosenberg: The Fed Is Going to Trip, Recession Odds Now Above 50% ·
Tariff shock never passed through to persistent core goods inflation; core goods CPI is at a four-year low.
Media and pundits warned of a mountain of imported inflation from the Trump tariffs, but it never materialised. The net effective tariff rate rose by the biggest amount since the early-to-mid 1930s, yet there was never a sustained pass-through to final inflation in core goods, where it should have shown up most. A year ago core goods CPI was running at 1.5% year over year; it is now below 0.7%, a four-year low. Rosenberg concludes that someone absorbed the tariff increase (exporters, importers or margins), and inflation is not the big threat it is made out to be.
“a year ago, the year over year trend in the core good CPI was running at one and a half percent. Today, it's running below 0.7%. It's at a four year low.”at 5:06
MacroVoices: MacroVoices #552 David Rosenberg: Navigating The Noise ·
Energy prices will stay elevated rather than reverse sharply like 1990; inflation momentum stops once energy peaks.
He disagrees with the thesis that refinery damage and a diesel shortage will keep pushing refined product prices higher. In Gulf War one, WTI went from 20 to 40 and fell straight back to 20 once the war ended, but this time he expects prices to stay at an elevated level. Hormuz traffic is higher than at any point since the war began, and Gulf exports, especially via the Saudi East-West pipeline, are ramping significantly, so relief won't come from a big fall in prices. Inflation is a rate of change, not a level. Even if prices stay where they are, the inflation rate falls out of the data over twelve months. All that's needed to stop the momentum is for energy prices to peak, which he thinks will happen.
“I think that the relief won't come from prices coming down significantly. They'll stay elevated.”at 8:31
MacroVoices: MacroVoices #552 David Rosenberg: Navigating The Noise ·
Energy shock won't become sustained inflation unless it feeds into wages, and wages are decelerating.
A diesel and fuel price shock is not self-sustaining unless it passes into wages. Labour is about 30% of retail cost, six times the weight of energy, and wages are what turn a one-off price shock into persistent inflation. Without that feed-through, the shock acts like a tax increase: negative real wages cut real consumer demand, and demand destruction in cyclical goods and services pushes the other 80-85% of the price basket down. Nominal wages are decelerating and the labour market lacks the 2021-22 surge in quits, hiring and openings. NY Fed's John Williams said on September 29 he sees no evidence price shocks are entering wages. Rosenberg will wait for collective bargaining agreements and average hourly earnings to escalate before calling it sustained inflation. He attributes the 2021-23 wage-price spiral to COVID stimulus checks and paying people not to work.
“This is what's critical. Prices have to feed into wages. Because if the price shock doesn't feed into wages, it hits the wall in the labor market.”at 10:45
MacroVoices: MacroVoices #552 David Rosenberg: Navigating The Noise ·
Hyperscalers now borrow long-dated bonds to fund AI capex, competing with government and lifting real rates.
Hyperscalers are dramatically increasing capex commitments, and three of the four biggest are now net free cash flow negative. They can no longer fund the AI spending boom from their cash flows, so they go to the bond market and the long end of the curve in multiple currencies. Corporate credit demand is now competing with government credit demand, which is one reason real rates have risen. Rosenberg contrasts this with the debt narrative: the 10-year yield dipped below 4% in February, when the national debt was $39 trillion, and nobody talked about the debt rising to $40 trillion then.
“These hyperscalers dramatically increasing their CapEx commitments, and now three of the biggest of the four are now net free cash flow negative. So they're going to the bond market, and they're going to the long end of the bond market in multiple currencies to fund their CapEx boom.”at 15:17
MacroVoices: MacroVoices #552 David Rosenberg: Navigating The Noise ·
Reset in Fed rate expectations explains most of the Treasury yield rise since February lows.
Yields have risen more than 100 basis points across the Treasury curve. In February markets priced one or two rate cuts. The Fed then switched to a tightening bias, hiked, and markets now price three or four more hikes. That reset from an accommodative to a tighter Fed explains most of the run-up from the late-February lows and almost all of the rise since Warsh took over in June. The Fed has taken away the cost-to-carry. With such a flat curve, investors have no reason to take duration and hide in the front end and T-bills. Bond investors are not really vigilantes; they are looking at how the Fed will affect the cost of carry in Treasuries.
“The biggest change has been the reset of Fed expectations. That explains most of the run up in yields we've had from the lows in late February.”at 19:53
MacroVoices: MacroVoices #552 David Rosenberg: Navigating The Noise ·
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