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Speaker 1: Joining us right now for the half hour. David Rosenberg

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Speaker 1: of Rosenberg Research in Toronto. I need to explain this

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Speaker 1: to people that what is so important with David Rosenberg

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Speaker 1: is the heritage where you stole Merrill Lynch research for

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Speaker 1: no other reason, a guy named Farrell and a guy

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Speaker 1: named Rosenberg. He's continued that tradition. And if you steal

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Speaker 1: David Rosenberg's research, now it's about the re asserting of

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Speaker 1: a deflation area or disinflationary trend. David, do you once

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Speaker 1: again just say the permanence here is towards lower interest rates.

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Speaker 2: I do believe that wouldn't surprise me if the FAED

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Speaker 2: engages in what people would call a hawkish cut on

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Speaker 2: December eighteenth, signal a pause, and probably the dot plots

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Speaker 2: will go from four cuts to two, and then we

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Speaker 2: go to March, and I believe the data will then

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Speaker 2: push them back to predicting four cuts from two. So

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Speaker 2: these these dog thoughts move around a lot, because the

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Speaker 2: fed is just basically operates on a contemporaneous basis. But

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Speaker 2: I do believe that the trend in rates will be lower,

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Speaker 2: and I think that the trend in inflation is going

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Speaker 2: to be lower and I think that, you know, the

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Speaker 2: one thing that I'm confident of more now than it

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Speaker 2: was even a few weeks ago, is that we're not

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Speaker 2: going to be seeing the big terrifikes that were being

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Speaker 2: pledged during the campaign. It's very clear, just early on

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Speaker 2: before Trump's taken office, and we've seen how we standled

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Speaker 2: Mexico and Canada, that the tariffs are really being used

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Speaker 2: as a weapon to achieve, you know, other security goals.

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Speaker 2: I don't think we're going to get the big tariff increases.

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Speaker 2: I think that, you know, the economics team's put together

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Speaker 2: has been pretty impressive. I think that they're going to

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Speaker 2: incur ridge Trump to resist those temptations for a global

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Speaker 2: trade war, big tariff increases, and then what's left, what's

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Speaker 2: left is going to be a deficit reduction, and that's

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Speaker 2: not going to come from the President, but it's going

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Speaker 2: to come from Congress. David, the hunt and we're going

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Speaker 2: to get We're going to get deregulation and more oil production.

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Speaker 1: David, let me go to the heart of the method.

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Speaker 2: Of very difficult to believe that we're going to generate

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Speaker 2: an inflation cycle out of those developments.

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Speaker 1: David, the heart of the matter is that we had

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Speaker 1: a triple stimulus out of the pandemic. Let me a

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Speaker 1: question that many people ask, is the American exceptionalism. Is

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Speaker 1: the American boom and productivity nothing more than a follow

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Speaker 1: on of a unique stimulus that austere Europe didn't do.

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Speaker 2: Well. You know, the the productivity side really comes from

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Speaker 2: the supply side of the economy, not the demand side,

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Speaker 2: So there was really nothing. I don't think that we

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Speaker 2: can point to stimulus being the driver of productivity. Curiously enough,

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Speaker 2: what COVID managed to do and that's the reason why

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Speaker 2: productivity growth has been surprisingly strong. So we came out

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Speaker 2: of COVID with a productivity shift to the upside. And

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Speaker 2: the one sector actually that has led the growth in

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Speaker 2: productivity has not been technology or finance. It's actually been

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Speaker 2: the retail sector. Because during the pandemic and the lockdowns

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Speaker 2: and the aftermath, if you didn't digitize your business and

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Speaker 2: follow the Amazon model as a retailer, you're going to

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Speaker 2: go out of business. So even before what's happened on

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Speaker 2: the AI side, which the markets certainly believe that this

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Speaker 2: is going to be a productivity game changer, and it

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Speaker 2: probably will be. The post COVID environment and actually generated

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Speaker 2: this sort of productivity improvements that Japell has been talking about.

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Speaker 2: They're real. And then the question is going to be

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Speaker 2: for the next five or ten years, what will this

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Speaker 2: model shift from the inflection point on the technology curve

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Speaker 2: into the productivity in the future. And I will actually

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Speaker 2: tip my hat to the bulls who say that this

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Speaker 2: is going to be a game changer. David.

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Speaker 3: The Federal Reserve appears to be focusing on the labor market.

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Speaker 3: Here we got initial job as claims today a little

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Speaker 3: bit higher than expectations. What's your view of the US

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Speaker 3: labor market given that the Fed is really looking at it.

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Speaker 2: The way I would describe it is cooling but not contracting.

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Speaker 2: Even if we get the consensus estimate of call it

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Speaker 2: close to two hundred thousand tomorrow, you know, in the

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Speaker 2: context of what happened in October, that leaves you with

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Speaker 2: an average of about one hundred thousand. So the trend

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Speaker 2: is cooling off. I expect that that will continue. And

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Speaker 2: like most of the other parts of the economic pie,

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Speaker 2: I mean, the incoming data, I've just been so confusing.

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Speaker 2: I mean, you get the numbers from Jolts and they

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Speaker 2: show openings up but hirings down. You get the ADP

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Speaker 2: number out, and the ADP showed that hiring amongst large

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Speaker 2: businesses surged, but yet small companies, which are really in

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Speaker 2: the weeds of the economy a lot more than big companies.

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Speaker 2: Small companies on net have let people go in three

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Speaker 2: of the past four months. I read the bag Book yesterday,

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Speaker 2: and you know, I'm shrugging my shoulders as to how J.

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Speaker 2: Powell can talk about the economy being strong when the

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Speaker 2: bag Book itself had about two hundred and fifty references

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Speaker 2: to the economy either being slightly growing, modestly growing, or

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Speaker 2: just outright week only twenty nine times was the word

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Speaker 2: strong used in the Beige Book, and a fifty one

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Speaker 2: page document to which I say, you know, mister Powell,

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Speaker 2: if you're going to spend all the time, resources and

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Speaker 2: money on the Beige Book, why don't you at least

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Speaker 2: listen to it. What was very striking in the Beige Book?

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Speaker 2: And I would still say it's qualitative, it's not quantitative,

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Speaker 2: but it's not revised. It just gets updated every six weeks.

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Speaker 2: And I don't know if you guys went through it.

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Speaker 2: I went through it tooth and nail because that's what

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Speaker 2: I have to do. It's the most pleasurable reading in

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Speaker 2: the world. The labor market. I mean, there are elements

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Speaker 2: that improved in the past six weeks overall economic activity yes,

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Speaker 2: the consumer yes. But funny enough, the labor market was downgraded,

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Speaker 2: and there were numerous comments on how wage growth is cooling.

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Speaker 2: So how do you get wage growth cooling in the

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Speaker 2: labor market that everybody thinks is tight or tightening. So again,

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Speaker 2: we just are riddled with all these anomalies and inconsistencies.

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Speaker 2: But I would say that if you want to trend

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Speaker 2: out the data, labor market not contracting yet, but it

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Speaker 2: is cooling off.

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Speaker 1: David. One final question quickly here it is the Rosenberg

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Speaker 1: bull market.

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Speaker 2: Can you buy? Can you own stacks?

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Speaker 1: Here? David Rosenberg?

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Speaker 2: Well, I'm having my own epiphany right now on this

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Speaker 2: topic because, let's face it, it was the best year for

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Speaker 2: the stock market since twenty nineteen. I'm not alone. I mean,

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Speaker 2: the consensus at the end of last year for the

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Speaker 2: end of this year for the S and P five

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Speaker 2: hundred was forty nine hundred, and we've just blown through

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Speaker 2: six thousand, and I think that there's a couple of

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Speaker 2: things that are happening that should have you feeling bullish.

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Speaker 2: I'm still concerned over market positioning and sentiment is off

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Speaker 2: the charts, and I am expecting in your term correction.

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Speaker 2: The question is, which would be normal? Is what you

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Speaker 2: do if we get the debt? And I think that

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Speaker 2: you'd want to buy the debt. And I say that

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Speaker 2: because you know, I've been calling this a bub for

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Speaker 2: a while, but it's maybe a bubble if you look

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Speaker 2: at trailing P multiples or one year four P multiples.

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Speaker 2: But if in fact we've had an inflection point on

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Speaker 2: the technology curve, if we've had a model shift when

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Speaker 2: it comes to what AI is going to deliver in

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Speaker 2: terms of future profitability and productivity, I'm thinking that the

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Speaker 2: market is sending you a message that it is taken

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Speaker 2: that investors have basically lengthened their time horizons. So all

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Speaker 2: the classic evaluation metrics that I've been using, I'm not

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Speaker 2: going to say they're obsolete, but they're probably just not

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Speaker 2: relevant to today's backdrop. So I would say that, yeah,

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Speaker 2: I guess if you can want to color me more

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Speaker 2: probably more positive on the stock market on a secutor basis,

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Speaker 2: based on everything that I've seen this year in particular,

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Speaker 2: then yeah, I would say that, you know, expect the

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Speaker 2: near term correction. I think it would be normal considering

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Speaker 2: the nose levels rat However, I think it's a depth

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Speaker 2: that you probably will want to buy.

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Speaker 1: We're out of time, but next time you're on, we

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Speaker 1: want to talk to you about Canada as at fifty

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Speaker 1: first State and I'll love to see how that goes.

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Speaker 1: David Rosenberg's with Rosenberg at Research