Doubling Down on Declining Yields

Published on
October 19th, 2019
39 minutes

Doubling Down on Declining Yields

Investment Ideas ·
Featuring David Rosenberg

Published on: October 19th, 2019 • Duration: 39 minutes

David Rosenberg, chief economist at Glushkin Sheff & Associates, sits down with Real Vision's Ed Harrsion to discuss his investment thesis for today's turbulent times. He sees interest rates continuing to decline as central banks scramble to prop-up a lofty equity market to avoid a deflationary spiral. Rosenberg expands on his bullish play on long-term Treasurys and suggests that investors "buy what is scarce" — in this case, counter-cyclical stocks, high-quality long-term bonds, and gold. Rosenberg also touches on political risk, demographic change, and wealth inequality. Filmed on October 4, 2019 in Toronto.



  • RL
    Ruby L.
    31 May 2020 @ 15:15
    He sure was correct
  • SS
    Simeon S.
    20 October 2019 @ 13:17
    Has predicted more than 15 recessions in the last ten years, has missed one big bull market in equities
    • JC
      John C.
      26 October 2019 @ 19:24
      It's a very fair criticism. While he's technically correct many times, being right early is as good as being wrong as you miss out on the shorter-term investment opportunities.
    • ST
      Shannon T.
      1 April 2020 @ 02:52
      A broken clock is right twice per day - permabear
  • VS
    Victor S. | Contributor
    22 October 2019 @ 14:29
    Dave make believe you have a 100MM $ ( maybe you do) -do you put your paper currency in the Bank? Then your subject to “BAIL-IN LAWS!! If the bank fails you get a bank IOU with no maturity date in exchange for your paper currency > that is the reason for negative interest rates -not your math in a recession and REAL interest rates? Think about putting $100 million in Deutsche bank? Suicide! Rather give it to Germany and know you get most of you paper back. Eventually it all goes to gold as rates drop, and go negative further .
    • PZ
      Pavel Z.
      27 October 2019 @ 10:47
      Bitcoin fixes this
  • Hv
    Hannah v.
    23 October 2019 @ 18:52
    Thanks for the Canadian content! It's really helpful to get a mini macro summary (i.e. "C-C-C" cannabis, condos and crude, and 500k/yr immigration driving the economy.) On another note, I'm throwing a series idea out here for y'all.. How about an ongoing Mini-Macro Summary Series? Pull the stats on RV's subscriber-base, choose the top 5 foreign countries (hopefully Canada will be in there), and do a quarterly program about the macro landscape of those countries. I tell ya, I am beyond hungry for Canadian-based Macro and need to hear content from out beyond our socialist-justice-warrior-liberal-voting POV.
    • PC
      Peter C.
      26 October 2019 @ 22:57
      I'm with you for more Canadian content. Plus we, Canada, has the best opportunities for investing in GOLD (but shit if you are going to trade options on these Canadian gold stocks, you have to go to their US listings).
  • JK
    Jay K.
    19 October 2019 @ 14:55
    Things are falling apart. No one is talking about how to stop the disaster.
    • JC
      John C.
      26 October 2019 @ 19:35
      So true. And nobody in the mainstream media or financial services industry can even touch on the real issues. Even on RV it's tricky. Cananda, the EU and even US are stuck in a very long low-growth cycle that doesn't seem to have a light at the end of the tunnel and will cause even more social upheavals.
  • TM
    Tom M.
    20 October 2019 @ 01:45
    GDP growth through government assistance to immigrants. Meaning the local working population subsidizes immigration that also undercuts their wages. This is why there are rebellions breaking out all over the world, and why Elizabeth Warren might win the presidency.
    • JC
      John C.
      26 October 2019 @ 19:29
      Not to mention they can't even get GDP growth to match immigration growth (!).
  • JM
    John M.
    20 October 2019 @ 03:36
    Another reason (among many) that Canada is doing poorly is that the Trudeau Liberal gov't is trying to constrain Alberta's fossil fuel industry (by denying approval for pipeline expansion) in order to meet Paris Accord Targets for GHG emissions. Capital investment in the industry is sharply down.
    • JC
      John C.
      26 October 2019 @ 19:26
      The Paris Accord is a joke. China is the biggest polluter on the planet and building coal plants at home and via OBOR and has no intention of following the plan. Mike Shellenberger does a good job of breaking this all down and how renewables are not anywhere as good as they are made out to be and can't provide for peak energy. Fact is we rely on fossil fuels and need them to transition to nuclear and other forms of green energy.
  • AR
    Anthony R.
    20 October 2019 @ 16:27
    Would be helpful if someone would help me understand the mechanics of a 'debt jubilee' that he refers to. I've heard the term before - and understand the general concept - but not the mechanics of execution (and its consequences for winners and losers) . Thanks.
    • TC
      Thomas C.
      20 October 2019 @ 17:12
      i agree. I would like some more detail on what a debt jubilee could look like. Maybe one aspect is cities and states with bankrupt pensions issue bonds to cover pension deficits, and the Fed prints money to buy these bonds?
    • AM
      Alonso M.
      21 October 2019 @ 14:55
      Yes please. Specifically which country is going to start a debt jubilee (Japan?), how will this impact the nation's currency unit measured against other countries that have not gone down debt jubilee street, how this will impact the economy of that country, will other countries follow this direction and make it a global phenomenon, does that mean all currency units will hold hands, and what does this mean for gold and bitcoin.
    • RW
      Raymond W.
      21 October 2019 @ 22:18
      The Japanese government already prints 30% of what they spend. The US has started printing 60 billion per month. Gold might be the way to go. Perhaps gold mining stocks instead physical gold. Owning physical gold has been outlawed in the past and it could happen again.
    • JC
      John C.
      26 October 2019 @ 19:23
      Basically a "debt jubilee' means as a country's central bank or other entity ends up buying and owning most of their debt, it becomes an interparty transaction that can be effectively cancelled out. It's a long road to this exercise, and along the way it's like that the Japan route is the template (whereby the government ends up owning most, if not all, of their sovereign debt and even equities). Along the way you see rates approach zero to lessen the impact and crowding out (of productive capital) factor of huge debtloads. Eventually the government owns all the debt, and would supposedly just cancel it out as if it were some type of intercompany loan in a corporation. I think MMT would be a logical endgame (where XYZ country doesn't even bother to issue debt (since it's all either owned by its Central Bank or has zero or negative interest rates, with no interest)). In theory while this could happen you would also see massive hyperinflation at the end and it would become a game of musical chairs as all countries tried to one-up each other on the debt monetization. Hello bitcoin! :))
  • FD
    Francis D.
    20 October 2019 @ 22:09
    >Fiscal stimulus >Where are you going to get the workers? >Oh the racism and the xenophobia!! Implying you need....more immigration of course, completely ignoring the case of Canada where population growth through immigration is outpacing GDP growth... We need accelerating wages and less reliance on consumer credit which is always bound to get tightened up. You don't get that with an infinite supply of affordable labor.
    • JC
      John C.
      26 October 2019 @ 19:16
      I think his point was that Canada's mass immigration isn't really working in that GDP growth is less than immigration growth whereas you'd think it would be the same or higher.
  • AR
    Anthony R.
    20 October 2019 @ 22:27
    Regarding Rosenberg's comments about immigration, labor shortages, etc. He has a point there. Just anecdotally, I see the shortages in high paying Tech jobs and hear of massive data center builds being behind schedule because there aren't enough workers available who can pass a drug test and operate equipment. So that begs the question: do we really need more immigration, or do we just need our existing population to get their act together, stop frying their noggins and learn how to work? I say that as someone who once did that work, and put himself through school (construction, restaurants, whatever it took) not some elitist. The labor participation rate is still way too low. That's what needs to be addressed. And part of the problem, IMHO, is cultural -aka 'bottom up' - not something a 'policy' can address. If you don't have your personal act together, it doesn't matter how hot the economy gets or how low rates go, if you're not prepared at the most basic level - you can't participate. And that's not the fault of those who do the work to prepare. I'd be interested in what folks here think the best way is to address THAT issue.
    • JS
      Johannes S.
      26 October 2019 @ 09:23
      Simple: Immigration. They are very motivated to work harder than the local population and create a better future for their families.
    • JC
      John C.
      26 October 2019 @ 19:15
      No you don't need mass-scale immigration. As it stands, Canada and the US will eventually end up being solely places where people from poorer countries go for economic opportunities and to build wealth, while keeping connections with their mother countries. If you are not doing this you will end up not having the competitive advantages and the access to home markets that others have (e.g. Asian immigrants). As these Western countries continue to decay and implode (both financially and socially), it will be interesting to see how things work when you have massively disparate population segments with little in common other than a desire to 'make some money..' Canada, the US etc. can't be 'all things to everyone' and we're seeing that now.
  • FA
    Frank A.
    21 October 2019 @ 17:43
    I quit after he started talking polls.........polls are absolutely worthless in the political & economic environment we've been in for a decade now..... and the results of elections vs the polls confirms that.......
    • JC
      John C.
      26 October 2019 @ 19:08
      Fair enough. But while polls might have been way off in the past, the mainstream investor crowd pays attention to them and news about Warren as the front runner on the Democratic side definitely has an impact on investor sentiment. Or at least it will if she continues to do well. I think that is all that Rosenberg is saying.
  • TS
    Tom S.
    25 October 2019 @ 02:38
    Smart smart guy.
  • EK
    Edward K.
    22 October 2019 @ 16:33
    Good interview especially emphasizing how the retail investor narrowly focus on equities. May be right that the big consideration is 2020 election of a democrat and especially Warren. He believes that debt monetization perhaps culminating in a debt jubilee is a possibility. HOWEVER the hardest thing to do is to move into or stay in cash which would have been a recommendation from everyone. The opportunity and carry costs are enormous and the sense of having missed it let alone FOMO are real. Hard not to have "recency bias" when equities have been on the march for over a decade - think Hussman. No doubt he is right but timing is excruciating.
  • DB
    Doug B.
    22 October 2019 @ 02:59
    Great interview, but somewhere around ~19:00 Ed asks a question that takes close to a minute and a half to unfold. I'm definitely a fan of more succinct questioning ...
    • EH
      Edward H. | Real Vision
      22 October 2019 @ 15:34
      Doug, you caught me! I gave your comment a thumbs up because I usually try to keep my part of the interview to a minimum. But I have to say, I wasn’t very succinct this time. I promise, next time will be better on that score.
  • AP
    Ash P.
    22 October 2019 @ 00:17
    Great to see a fellow Toronto boy on Real Vision and I agree with a lot here - not the limitations of Fiscal in the EU though - unemployment is well above double digits in Spain and Greece, and close to double digits in the large economies of France and Germany. These workers will move for the jobs. And I buy Juliette Declercq's catchy comment a few weeks ago on here that if there is anything Germans hate more than spending money, it's negative yield. The tide has turned on the Draghi Project.
    • AP
      Ash P.
      22 October 2019 @ 14:52
      I meant 'France and Italy' - not Germany.
  • MW
    Mike W.
    22 October 2019 @ 01:11
    Ed - fantastic job. I get Breakfast with Dave and Dinner with Dave but his message for us and the message for Institutional investors carries a lot of weight. If rates in US mirror deflation and rates go to Feds inflation mandate we should see near negative rates, more balance sheet influence at $60B per enty and my favorite - elections with a good chance for minority leaders and voters attempting to fund their ethnicity and race agenda via programs that pay them in perpetuity. Look at my home state in CA. Where are investors going to put their money other than vanilla ETF and purebred equitiesthat pay dividends no matter what GDP goes.
  • JP
    Janusz P.
    19 October 2019 @ 06:02
    I think you guys need to correct the charts in the video.
    • RM
      Robert M.
      19 October 2019 @ 16:27
      They have that SP500 chart where I believe he was talking about ISM.
    • tr
      tom r.
      21 October 2019 @ 23:26
      A critical area Rosenberg forgot about is the demographics of the US. The largest segment of the population is millennials. They are just entering their peak earning and spending years which should last for about 15 years. That could be a huge factor which could extend the stock market rally for a long time. He is too sure of himself and the economic impact. The market always prices in everything and it is early. It says Trump will win in a landslide. Pocahontas and the left are dying and rightfully so.
  • KA
    Kevin A.
    21 October 2019 @ 20:24
    Great interview from David and Ed. I skip a lot of interviews but usually watch Ed’s. I think that David is wrong about one thing and that is people thinking about next year’s US election. In my circle of friends, it is the #1 issue we talk about - now - with respect to our investments. It is not something we will be talking about next year. It is here and now and is the biggest threat to our financial investments because of all the potential hits at the corporate level and at the individual level. If the Dems sweep, passive income tax rates are going to go up and it is going to be painful. Even if they only keep the House and capture the Oval Office, I would not want to be overly exposed to equities.
  • DN
    Douglas N.
    21 October 2019 @ 18:07
    @15:43 "Look at the xenophobia. Look at the, you know, the hate, the racism..." oy vey
    • FD
      Francis D.
      21 October 2019 @ 20:21
      I noticed
  • DF
    David F.
    21 October 2019 @ 17:25
    Spot on Canada's economy Thank you Ed for an excellent interview.
  • GJ
    Geoff J.
    21 October 2019 @ 11:52
    Useless. I don't pay a subscription fee for this useless macro tourist political pontification. The catalyst is the data, talk about the data.
  • GG
    Gary G.
    20 October 2019 @ 22:57
  • PC
    Peter C.
    20 October 2019 @ 22:26
    I really enjoyed & felt the depth of David's understanding. He is a best guest & Ed, as usual, is an honour to watch. I am following David's strategy to the T with a big extra Canadian, since I am one, play on net positive immigration to big Canadian cities through mostly REITs with a concentration in Toronto like Cap REIT (multi family rentals), SMU (industrials), & AP (the real version of WeWork).
  • PC
    Peter C.
    20 October 2019 @ 22:15
    RVTV, please post the interviews quicker despite the markets moving exactly the opposite as David predicted during these 2 weeks.
  • MU
    Mo U.
    20 October 2019 @ 21:17
    David is one of the most lucid minds in the world of finance, and Ed always comes well prepared for his interviewed.
  • SS
    Stephen S.
    20 October 2019 @ 17:55
    Dave is always excellent, and this was no exception. Would have appreciated another question about asset allocation, e.g., If your normal asset mix is 60/40, what should it be now? The flashing of Ben Franklin before and after every graph is extremely annoying! Please stop that. Also, the music/noise that you play adds nothing to the presentation.
  • TC
    Thomas C.
    20 October 2019 @ 17:15
    I thought this was one of Dave's better interviews, and I have seen dozens over the years. It is interesting indeed how the markets might react if the probability of a Warren presidency, and also a Dem sweep of BOTH the house and senate, start becoming higher.
  • dm
    dude m.
    19 October 2019 @ 21:59
    I'm a real David Rosenberg fan. This guy is awesome. But, I found the interview was awful. Specifically, I would have liked a more focused interview. Rather, David seems to be left aimlessly rambling.
    • TC
      Thomas C.
      20 October 2019 @ 17:07
      Funny I disagree. I have listened to and watched probably 20+ Rosenburg interviews and I thought this was one of the better ones I've seen. A lot of advice spoken very clearly.
  • AH
    Andreas H.
    20 October 2019 @ 08:14
    recency bias! the sweet spot for bonds is over, from 1.5% to 0 is covex, yes, but the risk from 0 to 1.5% as well, who wants to bear that timing risk, if you are only of a bit, you get crushed. All that bond frenzy remembers me to the 99 stock bubble. If you have been long since Q4 of 2018 (like Raoul recomemded!!!!), fine ride it further, but do not get in here fresh. the risk of a cyclical value rally is real. Oh by the way Trump is going to win.
  • SR
    Steve R.
    20 October 2019 @ 07:14
    "The world is tearing itself apart...", "Choking on too much debt..." - couldn't agree more!
  • JW
    James W.
    20 October 2019 @ 06:37
    Rosenberg has just gotten better and better since fully absorbing the lessons of 2008. H'e caught non-stop crap for 10 solid years. One of the few mainstream economists who totally nailed the tech bubble.
  • JA
    James A.
    20 October 2019 @ 05:30
    Think this video went out a bit too early before getting the sign off from the editorial desk! Need to update the graphs guys
  • AS
    Arman S.
    20 October 2019 @ 02:55
    thank you for a great interview. I think some of the graphs are missing and the s&p graph keeps showing instead of the relevant figures. I'm sure an easy task for the RV editing crew. cheers.
  • KE
    Kathryn E.
    20 October 2019 @ 00:48
    Great interview with David as usual
  • DH
    Daniel H.
    20 October 2019 @ 00:19
    Rosenberg is always interesting. My summary of his views is that we have a deflationary bust ahead of us. And his recommendations are similar to Raoul Pal's except he did not recommend bitcoin.
  • PB
    Pieter B.
    19 October 2019 @ 19:33
    I really enjoyed this interview! Thanks a lot!
  • VB
    Vladimir B.
    19 October 2019 @ 17:59
    The options market is also supposedly seeing the first large bets on Warren's presidency. More here
  • RM
    Robert M.
    19 October 2019 @ 16:26
    Excellent interview. David is known as a bear, but his analysis is worthwhile. Like Lacy Hunt, he sees rates going down due to a flight to safety and a coming recession. 180 degree view from the interview with John Kolovos. Good to hear both sides of the trade.
  • MG
    Mark G.
    19 October 2019 @ 15:18
    I've always enjoyed your interviews with David Rosenberg, and hope you continue to interview him on Real Vision. The immigration story in Canada is a big one, and it would be interesting to see some analysis of the knock on effect beyond the housing sector, for example, in international education, where the Canada government's numbers indicate foreign students contributed $21 billion to the country's economy in 2019.
  • BG
    Bernd G.
    19 October 2019 @ 13:17
    i dont think that we get a deflation in Germany. the ecb will make Sure that the euro becomes worth less. If we get a -3% cpi helicopter Money will be the number one choice.
  • MP
    Matthew P.
    19 October 2019 @ 13:02
    Thx for posting on saturday
  • GC
    George C.
    19 October 2019 @ 11:41
    Rosenberg is clear about what he sees as the end game. Worth considering.
  • RW
    Ryan W.
    19 October 2019 @ 08:09
    Great show, but the charts in here show only a small history of gold. The 70's saw a 10x rise in price. It took the next 20 years to retrace half (fibonacci line here.) The following 10 years tripled gold's price before you get to what's in the chart. I'd choose something else to be trading. As an investor I agree gold is bullish; stepping back, it always has been.