Rosenberg, Gluskin Sheff's Long-Time Bull, Begins to Have Doubts

Tuesday, 19 Aug 2014 08:06 PM

By Dan Weil

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David Rosenberg, chief economist and market strategist for Gluskin Sheff + Associates, turned bullish on the U.S. economy and stocks in 2012. But now he's starting to have second thoughts.

"For a former bear-turned-bull . . . , the last few weeks have been more than just a bit frustrating," he wrote in a commentary obtained by

While he's not returning to the dark side now, Rosenberg said he has "no intention of sitting on a stale view," comparing his reassessment to a ratings agency putting "a doubtful debtor on credit watch."

Editor’s Note: 5 Shocking Reasons the Dow Will Hit 60,000

As for U.S. economic growth, "I don't think we're going to see a significant rebound—call it something better than 3 percent [growth] for the second half of the year," Rosenberg said.

"The spending numbers are lagging well behind whatever we're seeing in unemployment and income." Retail sales were unchanged in July, the worst showing in six months.

Stocks are vulnerable to a correction, but the long-term outlook is good, Rosenberg wrote. As long as the Federal Reserve keeps easing and there's no recession, "the path of least resistance is going to be up," he said.

Meanwhile, Irwin Kellner, chief economist for MarketWatch, says that stagnant consumer spending has mixed implications. "The good news is that it might stay the Federal Reserve’s hand when it comes to raising interest rates," he wrote.

"On the other hand, the bad news is that this implies that the U.S. economy will remain in the dumpster, since consumer spending now accounts for fully 70 percent of our GDP."

Editor’s Note: 5 Shocking Reasons the Dow Will Hit 60,000

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