Up is down, black is white, dogs and cats are living together and now reliable bear David Rosenberg is going bull.
Rosenberg (left), former economist at Merrill Lynch & Co. who now is chief economist and strategist of the Canadian firm Gluskin Sheff, wrote commentary this week titled “Parting of the Clouds?” that is causing quite a stir.
The reason for his sudden optimism? Gov. Scott Walker’s survival of the recent recall in Wisconsin, combined with austerity measures approved by voters in San Diego and San Jose, Calif.
“If liberal California recognizes the depths of its public-sector union problems, no doubt others will too,” he noted, quoting an Investor’s Business Daily editorial before adding, “Amen to that.”
“As it stands, the average college student has an average debt load of $30,000 and the male unemployment rate for those between 20 and 24 years old is 14%,” he wrote, temporarily echoing his pessimistic persona. “That, my friends, is the statistic that keeps me up most at night.”
Explaining that it’s all about “resolve, courage, discipline … and the right political moment to strike,” he added that he could “sense it coming down the pike.”
“I may be cautious on the outlook for risk assets and cyclical securities over the near- and intermediate term. But change is always at the margin. And it usually starts in the political sphere. The future is brighter than you think.”
However, it’s not all sunshine and roses (this is Rosenberg, after all), and he noted the possibility of another recession, just as the country experienced in the first two years of the Reagan presidency, “but we endured nonetheless and came out stronger on the other side once the inflationary excesses of the day were purged (today, it is a case of curing a deflationary debt deleveraging).”
“I’m noticing a certain degree of despair these days, just as I am getting enthusiastic about the future,” he wrote. “Much depends on what happens on Nov. 6, and between now and then we still have the European mess, China hard-landing risks and the U.S. debt ceiling issue to confront.”
Be that as it may, he concluded that those “with some dry powder on hand will have their clients in a solid position to take advantage of whatever forced ‘panic’ selling takes place. For the record, I do see a light at the end of the dark tunnel.
“I’m so excited I just can’t hide it. But for now, I’m keeping the powder dry.”