Shame you’re a perma bear

It’s a different process, why would you expect it to be the same??

Full employment, low interest rates, low inflation and capital spending on Tech to start. Not going to be a boom, but US is best positioned with the least secular issues relative to ROW.

Hi Michael, Thank you for getting back to me. I enjoyed your interview. I am still trying to learn more macro as an engineer who took only one econ class in college. it is very easy and clear to follow your rationale. First, full employment with good paying jobs or just bunch of uber/lyft drivers that struggle hard for living? if most of people are having a good jobs, shouldnt we see less uber drivers? as an Uber driver, they are making around 12 dollars per hour if lucky after all the cost but no benefits like health care or retirement. I spoke with too many Ubers and most of them either cannot find a full time job or the primary jobs aint paying enough. Also, I am doubtful of how government/Fed measures inflation/unemployment? I certainly do not believe inflation is below 2.5%. I think it is much higher than that. at least, i can feel the inflation from my daily grocery shopping. if i am right about inflation, then US are putting 99% of us in few % negative interest already so everyone is trying hard to protect the spending power but isnt that telling you a bubble is about to pop. how gold goes up if demand isn't there? the top 1% is getting start to harvest from 99% of us. US is certainly sliding from the top in demand/supply cycle but not yet reach the bottom yet. China is ready bouncing from the bottom at the cycle. China saved US on 2008 financial crisis. who will save US or willing to pay off debt black hole US creates? I think US is in far worse shape than ever. US borrowed too much from the far future and soon will pay for the price. I would never see a country doing so much stimulus while claiming it is the best economic ever. US GDP is still holding around 2% because of government spending/consumer spending/less importing. NO investment!! all companies are cutting back CAPEX and doing stock buy back like Apple!? where is the next new topic that keep wall street optimistic about the future? 5G topic will soon be realized that the high margin for corporate and low cost to consumer are not realistic. US cannot do cheaper 5G without Hauwei's help. I certainly agree with you that energy sector may be ready for a short term bullish. we are just seeing fictitious wealth from the stock market but 99% of people in US are not getting much from it. Too many indicators are diverging, which makes me believe the so-called great economic is all a lie. Well, hope to see your next interview soon.

German government is the smartest by the way. No one is too big to fail. "too big to fail" notion is widening the wealth gap between 99% and 1%

yup...its a load of garbage made up by macro folks to pretend they can predict markets

Markets may be manipulated across the cycle, but there is, and will always be, a business cycle. Neither the great moderation of the 80s and 90s nor QE and NIRP will prevent cycles. Whoever thinks the 80s and 90s were “normal” is greatly mistaken. You had two decades of collapsing interest and savings rates - that’s far from “normal” in the context of history.

There is no such thing as “normal” which is why our process treads lightly on regression models.

Agree, but leadership should have a more pro-cyclical tilt if PMIs are rising versus falling in 2019.

I did my first RV interview back October. That was 3 months ago! This was somewhat of a continuation with a great focus on valuation.

I would like to see David Rosenberg & Michael discussing these macro economic data in the same interview.

I’d be happy to do a bull/bear debate one day. That said, we’re far from raging bulls. Returns in 2020 are likely to be muted because credit spreads are already so low - an unusual starting point for a PMI rebound.

On your point #2, using the ISM "at a glance" table, the direction and rate of change describe from past month to present... I assume that's used for the narrative u quote from above. That means the remark u quote relates to the month over month data. Much simpler if u want to grasp and verify the direction of the ratio to simply compute it and plot it, as he did in the presentation. So in the transcript, pg 13, u can see the last value is calculated correctly, it indeed reflects your point above, but only for the single last month. Seems clear to me, he looks at the ratio graph and feels okay characterizing it as increasing. It's fair enough to me. Can't comment on #1.

When I say housing leads the ISM I am pointing specifically to leading indicators of housing - the NAHB index. A YoY point change in that indicators leads PMIs by about 9 months. The rest of the housing data, permits, starts and eventually prices follows suit.

It's a Patagonia bruhhh

It was quite comfortable in there - pretty close to room temperature.

Shiller’s “Irrational Exuberance” book has the 10yr relationship of PEs to returns. I’d argue that’s more a function of a business cycle having averaged about 9-10 years in the past.

It has the LEAST exposure to financial, industrials, energy and materials than ANY other major global index. This makes it more expensive just because of that. Europe has about 50% exposure to those sectors, Canada has 75%, etc. there is a strong correlation between those sectors’ weights in an index and its PE.

Totally. This is all about jobs. While Michael is likely right that lower interest rates keeps things juiced in the equity markets, the so-called "low inflation" that we have had in housing, food, healthcare and education are at levels that most Americans can't afford to the consumer engine going. We haven't seen large layoffs yet, but we're starting to see some. Aside from all of these sharp metrics and insights, it's always about jobs.