Are you a bull or a bear? Depending on how you answer that you could be a lunatic.
In today’s market, bears are certainly justified in being bears, especially considering that much of the growth that has transpired has been induced with monetary stimulus by the Federal Reserve. With record-low interest rates, $4 trillion of freshly printed money and quantitative easing, can one even say with a straight face that the economy is sound and that’s why the market has been making gains?
According to David Rosenberg, the Gluskin Sheff senior economist and strategist, perma-bears are on the cusp of the “lunatic fringe.” Rosenberg wrote in his popular “Breakfast with Dave” note which he distributes each day to clients that this community is more fanatical than Red Sox nation, the Tea Party and religious people.
“This is heavier than religion, the tea party or Red Sox Nation for that matter,” Rosenberg wrote Friday (via CNBC). “To these fanatics, if the market rallies, it is due to some unholy alliance somewhere, and if the market dives, it is a case of good triumphing over evil.”
He placidly added: “I think these guys should subject themselves to a New Year’s resolution: show respect because there are in fact two sides to every debate.”
The interesting element of his commentary is the fact that he wants perma-bears to show respect but then calls this segment of the market the “lunatic fringe.” Quite the hypocrisy, indeed.
What exactly makes the bears crazy? Is it because they can’t proclaim this as a successful economic recovery? Is it because they understand the dangers of artificial interest rates and vast money-printing? Is it because they continue to see price inflation in many parts of the economy?
Rosenberg wrote a few years ago that the U.S. is in a depression rather than a recession, and that is certainly correct. The labor force participation rate is at a 36-year low, the United States national debt is 106 percent of the gross domestic product, the real unemployment rate is somewhere in the low-20s, consumer debt is $12 trillion and the only thing that has kept the nation afloat all these years is a spiked punch bowl.
If he wants to call anybody a lunatic fringe then it should be those at the helm of the Fed.
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