He’s known as one of Wall Street’s longtime bears.
But David Rosenberg appears to exude more optimism than pessimism these days.
The chief economist and strategist at Rosenberg Research sees signs the economy doesn’t require a second coronavirus aid package right now.
“Maybe we don’t need to have another stimulus package this quickly because the first one was so huge,” he told CNBC’s “Trading Nation” on Thursday. “We still have a personal savings rate in the U.S. of 19%. It’s almost triple what it was in the pre-Covid norm.”
Rosenberg builds his case on proprietary research that shows only half of the stimulus checks issued in the spring have been spent.
“There’s a lot of dry powder left over from the first package. So, that’s one of the reasons why I think … the stock market hasn’t had a conniption because of the stalemate in Washington,” he said. “It’s because of the knowledge that the household sector is still sitting on a tremendous amount of cash.”
The cash, according to Rosenberg, is what’s helping mega-cap growth stocks surge during the pandemic.
“They’re not catering to a booming economy, he said. “Whether it’s Home Depot or Walmarts or Targets, they’re really geared towards they stay-at-home and work-from-home economy.”
Rosenberg, who served as Merrill Lynch’s top economist from 2002 to 2009, acknowledges his outlook is a departure from his normally bearish tilt.
“I have been saying for so long that it can’t last, and it keeps lasting,” he said “I’m thinking the moment that I say that I’m sure it’s going to last, it’s going to roll over.”
He’s willing to take that risk.
Rosenberg believes economically sensitive or cyclical stocks should stage a breakout.
“It’s a waiting game. These stocks are so cheap. They just need to have the catalyst,” he said. “That will be a spring coil when the time comes for when things really start to reaccelerate, and we’re not stuck in this low interest rate environment.”