Rosenberg warns of most stretched market in his 40-year career

David Rosenberg said the United States stock market was increasingly looking like a bubble, with valuations, leverage and investor positioning at extremes unseen in his 40-year career.

The founder of Toronto-based Rosenberg Research & Associates Inc. sees a bull market much more hooked on the fate of artificial intelligence advancements than stocks were on tech in the run-up to the dot-com bubble. He said he’s been buying Treasuries and overseas equities in his portfolios, arguing the U.S. is “the epicentre of the technology boom” that investors are overpaying for.

“I have been in the business 40 years, and I don’t remember a time when I’ve seen so many divergences, extremes and imbalances, not just in the market, but in the economy as I do today,” he said at the Grant’s Annual Fall Conference in New York. “I won’t call it a bubble if you don’t want me to. But I’m looking at stuff I haven’t seen before.”

Rosenberg, known for his bearish tilt, gained prominence after warning of a U.S. housing bubble ahead of the 2008 financial crisis when he was chief North American economist at Merrill Lynch & Co. Later, after more than a decade at Gluskin Sheff, he left to set up his own research firm.

As well as the reliance on AI to power further market gains, Rosenberg warned of fragilities in the underlying U.S. economy. In particular, he sees consumers increasingly reliant on further stock-market gains to finance their lifestyles.

“I am really concerned about the social ramifications of the next bear market,” Rosenberg said, citing how workers who retire early to live off their portfolios will face bleak choices. “What’s going to happen with these people? They’re going to run to Walmart to get a job as a cashier? To find that a robot’s taking over that job?”