Sorry!! The article you are trying to read is not available now.

David Rosenberg Says Recent Bout of Optimism Doesn't Compute

Print comment Post Comments
Fears of a relapse into recession, so pronounced this summer, have faded due to strong corporate earnings, better-than-expected economic data and a Federal Reserve that’s promised to do whatever it takes to prop up this fragile economy.

Investors are feeling bullish, believing that we might have just dodged a bullet and are now primed for some much welcomed re-acceleration. But at least one renowned investment strategist doesn’t buy this latest bout of optimism.

In his morning missive today, Gluskin Sheff’s David Rosenberg offers us his dependably bearish take on the latest economic data points. Optimism might now reign in the canyons of lower Manhattan, Rosie writes, but meanwhile….

• The Baltic Dry Index is sputtering, railway/trucking traffic is too, not to mention the fact that raw steel production has rolled over.

• Oh, but look at payrolls, we are told. Indeed, but what about the 1.1 million full-time jobs vanishing in the past five months?

• Oh, but look at the ripping ISM. Really? It was strong in September too — the same month industrial production fell 0.2%. Go figure. As for October’s ISM bounce, how come that was not confirmed by the manufacturing payroll diffusion index, which sagged to 42.1 from 54.3 and managed to hit the low-water mark for the year? Go figure.

• The global economy is screaming! Really? Is that because the recent speculative QE2-led run-up in commodity prices and equity valuation is signaling that? If that is the case, why is it that the OECD leading indicator has completely flat-lined in the past five months?

• Finally, if the U.S. economy is improving to the extent that so many pundits claim, why on earth is gasoline demand down 1.2% from year-ago levels (as per the SpendingPulse data from MasterCard Advisors)?
POSITION:  No positions in stocks mentioned.