David Rosenberg Sees 2002 Redux, Not Fazed By SPY Breakout

Thursday, July 23, 2009

David Rosenberg Sees 2002 Redux, Not Fazed By SPY Breakout

$SPY breakouts don't faze David Rosenberg... He's still bearish. The Chief Economist and Strategist at Gluskin Sheff & Associates was on Bloomberg Radio today (July 23) - Bloomberg.com Audio Link, Windows Media Player.

Tom Keene: "David Rosenberg you say it is a redux of 2002, what do you mean by that, what is a redux of 2002?"

Rosenberg: "Well what I was saying was that you know today we talk about the green shoots and back then we were talking about V-shaped recoveries. Essentially what I was talking about Tom was that the stock market on September 24, 2001 hit what everybody believed at the time was going to be the low for the cycle. 955 on the S&P 500 that was universally believed to be THE low and we didn't bail out banks at that point but we were bailing out airlines, tremendous fiscal monetary stimulus and people were building in this view that we were going to have post 9/11 reconstruction, gobs of fiscal stimulus, the FED had cut rates dramatically and of course the fabled inventory rebuild which we saw and it took the ISM above 50 into the opening months of 2002 and it was all good. The Nasdaq rallied about 40%, all the major averages were surging, bonds were getting killed and the primary view was that we were going to get a really nice post recession recovery and the problem of course is that in an asset deflation cycle which that was, it wasn't easy street it took about a year and a half before we got a durable sustainable economic recovery. This time around it wasn't just asset deflation times three, it was coupled with a credit collapse and here we have this universally held view that the March lows are going to hold. Everybody believes that and maybe they will but I'm a bit of a Maverick contrarian at heart. Everybody believes those March lows are going to hold and everybody is talking about the green shoots and the onset of the economic recovery and of course we're probably going to see a positive third quarter GDP number because of the rebuilding of inventories in the auto sector and everybody is extrapolating that into the future as they did in the opening months of 2002."

"...We actually didn't put in the conclusive low in the stock market until 2003 which was a year after the recession ended.." (Listen to full 17:24 audio)

Other David Rosenberg interviews:
Rosenberg: Secular Bear Market at Halfway Point (CNBC Video) (July 7, 2009)
$SPY Testing May 2008 Downtrend, Technical Views From Strategists (June 9, 2009)

Market Bottom Chart Comparisons:
1973-75 Recession History, Chart, 2009 Comparison? (June 6)
Charts Comparing 1974, 1982, 2002 Market Bottoms To Today, 80s Recovery (June 7)

*Good find Pragmatic Capitalist.

Tom Keene: "David Rosenberg you say it is a redux of 2002, what do you mean by that, what is a redux of 2002?"

Rosenberg: "Well what I was saying was that you know today we talk about the green shoots and back then we were talking about V-shaped recoveries. Essentially what I was talking about Tom was that the stock market on September 24, 2001 hit what everybody believed at the time was going to be the low for the cycle. 955 on the S&P 500 that was universally believed to be THE low and we didn't bail out banks at that point but we were bailing out airlines, tremendous fiscal monetary stimulus and people were building in this view that we were going to have post 9/11 reconstruction, gobs of fiscal stimulus, the FED had cut rates dramatically and of course the fabled inventory rebuild which we saw and it took the ISM above 50 into the opening months of 2002 and it was all good. The Nasdaq rallied about 40%, all the major averages were surging, bonds were getting killed and the primary view was that we were going to get a really nice post recession recovery and the problem of course is that in an asset deflation cycle which that was, it wasn't easy street it took about a year and a half before we got a durable sustainable economic recovery. This time around it wasn't just asset deflation times three, it was coupled with a credit collapse and here we have this universally held view that the March lows are going to hold. Everybody believes that and maybe they will but I'm a bit of a Maverick contrarian at heart. Everybody believes those March lows are going to hold and everybody is talking about the green shoots and the onset of the economic recovery and of course we're probably going to see a positive third quarter GDP number because of the rebuilding of inventories in the auto sector and everybody is extrapolating that into the future as they did in the opening months of 2002."

"...We actually didn't put in the conclusive low in the stock market until 2003 which was a year after the recession ended.." (Listen to full 17:24 audio)