Taps Coogan – December 10th, 2022

David Rosenberg of Rosenberg Research recently spoke with Macro Voice’s Erik Townsend for a wide ranging discussion about his bearish, deflationary outlook for markets going into 2023.

Mr. Rosenberg has been predicting a disinflationary recession since late 2020. That made him quite a bit off-target in the second half of 2020 and 2021. We even critiqued his insistence that inflation would start dropping in early 2021. Timing aside, Mr. Rosenberg’s deflationary arguments are still compelling and probably now coming into more immediate relevancy.

If the scenario that Mr. Rosenberg details does indeed come into effect, the next question will be what happens when the federal government tries to stimulate from our current deficit levels. Just how slow will the Fed be to pivot to more QE? Will inflation be below 2% when that happens?

Depending on the answers to those questions, the next recession may force us to finally confront the elephant in the room: corrupt, wasteful, and unhinged deficit spending.