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Dave Rosenberg has not taken Birinyi Associates’ attack on his bearishness lying down. In fact, Big Dave has taken – like lightning – to his newsletter.
First, a broadside against his insufficiently ursine compatriots:
…when double-dip risks become the consensus forecast then we will know that ALL of the bad news is priced in. But let’s face it — when the ‘pessimistas’ like our friend Nouriel Roubini take their double-dip odds to 40& (that’s it?) as he did today, then you know that sentiment is hardly washed up… Jim Tisch reportedly has a 2% real GDP growth forecast and considers himself to be an optimist. When that estimate is down closer to 0%, it will likely be safer to tack on risk to the portfolio.
‘Pessimista’. Heh. Plus royaliste que le roi.
That’s before a curtly dismissive response in passing to Birinyi:
When you hit a true bottom, you don’t hear perma-bulls like Birinyi telling the folks at Bloomberg that ‘we continue to be optimistic and comfortably so’. We must be patient and wait for expectations to match the deflation realities of a post-bubble credit collapse, especially when the engines of the intermittent economic recovery start to sputter (notable the stimulus and the mini-inventory cycle). Outside of these factors, the economy did not actually expand at all in the past year — there is nothing “organic” or “sustainable” about the economy that continues to depend on government life support, which is why home sales are plumbing the depths in the aftermath of the tax credit expiry.
In our view, assuming that there was a real recovery to double-dip from, then it is no longer a forecast — it arrived in the current quarter. This will be as much a surprise to the consensus forecasting community as it was when the recession began in March 2001 but only gained acknowledgment in October of that year, and as it was in when the recession began in December 2007 and the widespread consensus view was that we were in a correction and a soft patch … all the way through to September 2008 when they switched to a hard landing view (only nine months late).
Breakfast with Dave? Apparently this morning’s menu included well-cooked Birinyi.
Related link: Everyone’s an Albert these days – FT Alphaville
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