While we hear a lot of positives about the economy, we could count on Dave Rosenberg to put things into perspective and give us a “cooler” (or more bearish?) view of the economy. I found his latest piece a good summary of what’s going on (click here if you want to subscribe to his newsletter).
Dave Rosenberg’s key points for me are as follows:
1-While improving, the current economic situation is still not strong: we need QE2, tax cuts and extended benefits because the Fed and politics are worried of putting the economy back in clear recession territory
2- The US debt/GDP ratio is getting out of control and into ratios consistent with downgrades in other countries (Canada back a couple decades, EU periphery today)
3- Gas is back up above $3, often consistent with slowing of growth in future quarters
4- Yields are up, which will make home financing more difficult…
5- …speaking of homes, prices are down 3 months in a row the last time since March-May 2009!
6- Finally the situation in Europe will not be good for the US, Europe representing 25% of US exports.
I think it’s a good time to be cautious and look for high quality, reasonably priced invesments consistent with avalue approach!
Many happy returns,
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.