Jonathan Burton’s Life Savings: ‘From Bambi to Godzilla.’ Strategist David Rosenberg skewers the Federal Reserve as he sees a 30% hit to home prices and the S&P 500 returning to an early 2020 low

by | Oct 24, 2022 | Stock Market

The last time David Rosenberg shared his outlook for the U.S. stock market and the economy with MarketWatch, in late May, it was depressing enough. “I feel like I am reliving the summer of 2008,” Rosenberg wrote then. He speculated that the S&P 500
SPX,
+0.97%
— then trading above 3,900 points — would ultimately flirt with 3,300.

Rosenberg is the widely followed president and chief economist and strategist of Toronto-based Rosenberg Research & Associates Inc. His sobering outlook last May echoed his thinking from March 2022, when he called the Federal Reserve’s intention to hike U.S. interest rates “not a good idea” and predicted that the inflation-fighting move would trigger a painful economic recession. Five rate hikes later, with more expected, Rosenberg is even more pessimistic about the stock market and the economy in 2023 — and to say he’s disappointed with the Federal Reserve and Chairman Jerome Powell would put it mildly. “The Fed’s job is to take the punch bowl away as the party gets started, but this version of the Fed took the punch bowl away at 4 a.m.,” Rosenberg said, “when everybody was pissed drunk.” Many market experts and economists are now coming to Rosenberg’s side of the fence — criticizing the Fed for waiting too long to battle inflation and warning that the central bank now may be moving too fast and too far. But Rosenberg is leaning even further over the railing. Here’s what he says investors, homeowners and workers can expect in the year ahead: The S&P 500 tumbles to as low as 2,700 (the lowest since April 2020), U.S. home prices decline by 30%, and the unemployment rate rises. The U.S. economy sinks into a recession, for which the Fed — especially Powell — would be largely to blame. “He went from Bambi to Godzilla,” Rosenberg says of Powell’s radical and rapid transformation from inflation skeptic to inflation slayer. Adds Rosenberg: “Powell was getting compared to [disgraced 1970s Fed Chair] Arthur Burns. Nobody in central banking wants to be compared to Arthur …

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