Former Merrill Lynch economist David Rosenberg, whose pessimistic forecasts have proved prescient, says the stock rally will soon end.
“It would be natural to see a testing process,” he tells Bloomberg TV.
“We’re going to have to get confirmation that the March lows are going to hold.” Recall that on March 6, the Standard & Poor’s 500 Index hit 667.
“In November of last year we got to 752 in the S&P 500,” Rosenberg points out.
“All the so-called experts were telling you that we hit bottom.”
Indeed, the market rallied by about 20 percent. “The conventional view was the November lows were going to hold,” Rosenberg says.
“And as we found out, in the opening weeks of March, no, those lows didn’t hold.”
The recent rally amounts to short-covering, Rosenberg says.
“Of course, it’s been accentuated by the so-called green shoots and all the hopes over second half recovery — (a recovery) that the FOMC minutes … more or less downplayed.”
Bottom line: “We’ll keep an open mind as to whether or not the lows of March are going to hold as we go into the second half of the year.”
Rosenberg isn’t alone in his pessimism.
Investment icon Jim Rogers told CNBC: “I’m not buying shares. The bottom will probably come later this year, next year, who knows when.”
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