Strategist David Rosenberg On Corporate Bonds, Treasuries, More MF Globals (Video)
11/28/2011 12:49:00 AM
David Rosenberg, Chief Economist and Strategist at Gluskin Sheff, was interviewed by Consuelo Mack WealthTrack on 11/11/2011. His view, which is nothing new, is that the U.S. is in "in the throes of a modern day depression much like Japan". Why does he think this? We've experienced a ten year period of no employment growth; the stock market hasn't appreciated in 12 years; the yield on the 3-month Treasury Bill is at one basis point (0.01%, actually closed at 0.02% on Friday); we're experiencing a "secular contraction of credit, especially in the household sector" (in the U.S. and Europe); and "deleveraging cycles can last 7-10 years".
On employment and the economy, Rosenberg said they both could "start contracting in the opening months of next year". On investment opportunities, Rosenberg believes "there is a possibility Treasury yields could go lower, maybe they go to 1.5% from 2%" (10-year note yield), but believes North American corporate bonds with "decent spreads", "quality balance sheets", and risk "mispriced for the economic outlook", present an attractive investment opportunity. Oh, and he thinks MF Global might be the Bear Stearns of 2011 (more to come). And the ECB's balance sheet and euro bonds ("hitched to Germany's credit rating") will decide the fate of the Eurozone. Watch the full interview below courtesy of WealthTrack.