MW Veteran strategist says a recession is coming that will hit 'cup entirely full' stock market

By Steve Goldstein

David Rosenberg, who's made recession calls before, says he has it right this time.

A veteran stock-market strategist says equities will get hit by a coming recession - it not a current one - as traders are now fully putting to the side worries over tariffs, taxes, war and the economy.

"This is not a cup-half-full narrative from the stock market. This is a case of the cup-being entirely-full, and that's where we are today," said David Rosenberg, the longtime Merrill Lynch strategist who now runs his own firm, Rosenberg Research, on the Macro Voices podcast.

"I have a different view than the markets, and we'll see how it plays out, but that is the signal from the market pricing as we sit here today," he said in an interview recorded Tuesday afternoon.

He said the tailwinds of valuation are keeping him not entirely sidelined but on the cautious side.

"I believe there's always shades of gray, but I like to invest when there are tailwinds behind me, and the 22 multiple benchmarked against a 4%, plus risk free interest rate is just not arithmetic that is compelling. My money is on the bond market, and the bond market is unloved, and it is under owned, and it's actually rather maligned," he said.

Rosenberg said he does expect the U.S. to head into recession. "People say to me, well, you thought so in 2022 and 2023,' and that much is true. But I don't cry over spilt milk," he said.

Rosenberg last year offered up an apology for his pessimism. But his bearish view has returned.

Homeowners were sheltered from the Fed raising interest rates but their loans are now starting to roll over. Now, refinancings are up, and the growth in new supply is 25 percentage points higher than demand, he says. The Case-Shiller 20-city composite house price index, on a seasonally adjusted basis, dropped for a second month in April.

Another difference is that the labor market is cooling off, he says, and inflation has been tame. "The Fed, of course, is on the sidelines like a deer in the headlights, because it wants to make sure that this is going to be sustained. By the time they cut rates again, it'll be too late to save the economy," he says.

Rosenberg adds that services, that are not being tariffed, are on a significant disinflationary trend right now. "I fall into the camp that: A) Inflation is a lagging indicator. B) Whatever we get on tariffs, most likely will be a one-off, maybe a two-off, or three-off series of increases. Those increases will get snuffed out by a loosening labor market, and because these tariffs will be damaging, target demand will end up next year with inflation lower than would otherwise have been the case without the tariffs," he said.

"I think that's what the dollar market and the bond market are telling you, that is at odds with the stock market's telling you right now. So, who's your money with? The dollar and bonds, or the S&P 500? That's because at some point there will be the convergence. My money is on what the dollar is saying and what the bond market is saying, and if they are right, the S&P 500 is not going to be sitting above 6000 for a whole lot longer," he added.

The S&P 500 SPX ended Thursday just shy of a record high at 6,141. The U.S. dollar index DXY has dropped 10% while the yield on the 10-year Treasury BX:TMUBMUSD10Y, which moves in the opposite direction to prices, has dropped 32 basis points in 2025.

-Steve Goldstein

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June 27, 2025 05:30 ET (09:30 GMT)

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