Over the weekend, we presented the latest note from Gluskin Sheff's David Rosenberg which analyzed the May payroll report and had a decidedly pessimistic undertone, one which according to Henry Blodget suggested that "David Rosenberg thinks we're headed for a recession." While Rosenberg was quick to talk back this take (especially in light of the dramatic ramp in stocks in the two days since Friday) on CNBC yesterday, the truth is that his assessment of the US economy was substantially gloomier from what he told the WSJ in February when he said that he puts “odds of a U.S. recession in the next year as close to zero as anything could be close to zero.” As a reminder, this is what he said late on Friday:
I don’t want to alarm anyone but the facts are the facts, and the facts here is simply that this is precisely the sort of rundown we saw in November 1969, May 1974, December 1979, October 1989, November 2000 and May 2007. Each one of these periods presaged a recession just a few months later — the average being five months.
The truth is that Rosenberg's shift back to "less than bullish" did not take place overnight, and was documented in 106 slides at the Mauldin Strategic Investment Conference, in a presentation titled "What Went Wrong", and starts with an amusingly retrospective slide that take aims at the economic bulls (we wonder if that includes the author).
Alas, none of the predicted economic recovery took place (and stocks are still trading where they were a year ago), and instead the world is now on central banker life support with unprecedented financial repression pushing yields on over $10 trillion in global bonds below 0%, just to herd everyone who needs to generate a return into ever riskier assets.
Below is Rosenberg's full - and very thorough and impressive - explanation in some 106 slides, of why the consensus was so wrong (pdf link).