David Rosenberg | Betting Against on the ‘Powell Put’ and the Return of the 'Risk-Off' Trade

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David Rosenberg | Betting Against on the ‘Powell Put’ and the Return of the 'Risk-Off' Trade 5
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In Episode 91 of Hidden Forces, Demetri Kofinas speaks with Chief Economist and Strategist at Gluskin Sheff, David Rosenberg, about the latest Fed rate decision and his outlook for the global economy. In the overtime to this week’s episode, David provides listeners with a look into his investment strategy and how he is positioning himself and his clients for a global slowdown that he believes may already be underway.
David Rosenberg and Demetri recorded this episode only hours after the FOMC concluded its two-day meeting this past Wednesday. The Federal Open Market Committee decided to keep the fed funds rate unchanged, while simultaneously signaling a strong willingness to begin easing, possibly as soon as next month.

It is David Rosenberg’s conviction that the Federal Reserve has over tightened monetary policy during this cycle possibly by as many as one-hundred basis points – four rate hikes - and that Jay Powell and the board of governors at the Fed are worried that they may have precipitated the bursting of another bubble. This time, however, the bubble isn’t in housing or consumer credit. The bubble in 2019 is in the corporate bond market where multinational corporations have feasted on the issuance of trillions of dollars of new debt used to finance mergers, acquisitions, and share buybacks, while simultaneously cutting back on the capital investment needed to grow their businesses and service their debts long-term.
The last ten years have been a great time for stocks, fueled by a bonanza of free money and an implicit guarantee by the Fed to support asset prices at all costs. But the question has always lingered, “What will happen as the Fed continues to raise rates, normalize its balance sheet and tighten monetary policy?” Is this a new financial paradigm where fundamentals no longer matter and perpetual liquidity is the name of the game or does the global economy’s increased reliance on debt financing in order to drive earnings and levitate asset prices remain as unsustainable today as it has been in any prior historical period? Is this time truly different?



💬 Comments on the video
Author

Always great Demetri, but a little too much interjection on your part in this one.

Author — Gene D

Author

Excellent interview!!! David's an outstanding guest

Author — Simon W.

Author

Thanks for another great interview. You ask some really good questions.

Author — SpaceWalkTraveller

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Let me just say I have worked with many government officials and they aren't really knowledgeable on what's happening and just always react after something already happens. So the FED will react to after the downturn and not knowing what's happening. In my book, government lost all integrity in American people.

Author — Jason Good

Author

We need a recession. The longer the central bank fueled boom, the worse the bust. And we have had a decade long artifically long business cycle. This one will be equal or worse than 2008

Author — Bob Smith

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Long lesson... government lies, totally corrupt system...meets insolvency avoiding.
Buy gold

Author — Rob F

Author

That was amazing . 
The great unwashed of main streets financial education has been greatly increased thanks to fantastic conversations like this, thank you so much .

Author — Damien Wright

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Interest on excess reserves will force the Federal Reserve back to the zero bound! To get the banks off the TIT!

Author — Thomas Kauser

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Banks have interest payments from the Federal Reserve and doesn't need another building or a Starbucks on site recession?

Author — Thomas Kauser

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I love your podcast man, but that intro is way too long for a sub-hour podcast.

Author — D J

Author

I wonder what helicopter Ben has to say about the policy conundrum his policy approach has created for Yellen and now Powell. From 2002 onwards, Ben publicly suggested that an eventual withdrawal of surplus liquidity and scaling back asset purchases will be easy. Seventeen years later, the Fed struggles to normalize policy. The time has long past for Ben to admit he sponsored a policy mistake.

Author — AlphaDog

Author

Eh there isn't some huge racial issue. It's all propaganda. The 60's and 70's had huge riots..

Author — Rob F

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Too much blahblahblah in the beginning

Author — MrThezous

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"If you want to scare people into spending money, which is what you want to do, then put a tax on money" If 40% of households can't come up with $400.00 in an emergency, then what money are you going to scare them into spending???

Author — Dan Adcock

Author

The scariest thing is they have no idea what they are doing. The government is clueless just doing what they always do. Rep will cut taxes. Democrats will spend on anything. Both sides will spend to much on military. They will keep doing this until it comes to a crisis and they will be forced to stop.

Author — Jamie Kloer

Author

but they did do debt monetization....when you can't shrink your balance sheet back to where you started....you've monetized the

Author — Bite the Bullet

Author

Are we in a recession ? Demand has collapsed except for VISA charges!

Author — Thomas Kauser

Author

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10 years later, 2019, the first Pi units are being mined on phone.
50, 000 active users already within 12 weeks.
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Author — Aaron Venema