David Rosenberg (David Rosenberg), president and chief economist of long-term Bear School on Wall Street and president and chief economist of Rosenberg Research, believes that the bond market is dealing with inflation correctly and that yields should not be traded at higher levels.
His reason is that inflation is a temporary phenomenon caused by huge pent-up demand and supply chain problems associated with the novel coronavirus pandemic.
"there is no doubt that the upward momentum of these data is shocking," Rosenberg said. But it's easy to explain. I don't understand why people want to use the data of the past few months to predict the future. "
So far, the U. S. bond market has not been affected by inflation. The yield on the benchmark 10-year treasury note fell to its lowest level since march 3 on Friday, closing at 1.45 per cent. The yield fell 7 per cent last week and nearly 11 per cent in the past month.
Rosenberg has been watching falling yields for months.
He said in an interview at the end of February that the bond market was "extremely oversold" and predicted that the yield on 10-year Treasuries would fall back to 1 per cent, when it was about 1.5 per cent.
"there is so much noise and distortion in the data that the most dangerous thing anyone can do is to infer what is happening right now," said Rosenberg, who was Merrill Lynch's chief North American analyst from 2002 to 2009. "
"I refuse to worry too much about inflation," he wrote in a report to investors on Friday. " The flip side of rapid growth, he argues, is stagnation.
"this is what happened in the second half of this year. The bond market is sniffing out this. My forecast is that growth is slowing, inflation is peaking and rolling, and the yield curve is leveling off. "
This prospect will cause trouble for the reopened trade. Rosenberg predicts that the consumer cyclical consumption index will fall out of favor later this year.
"growth stocks should outperform value stocks again," he said. You should pay more attention to defensive growth stocks and areas of the market that will benefit from lower bond yields. "
Rosenberg also believes that Bitcoin will usher in a recovery. The cryptocurrency has been hit hard in the past two months, down 38%. There are encouraging signs that Bitcoin is preparing to "soar again", Rosenberg wrote in a report on Friday. He further hinted that the technical side showed that the overbought situation was being lifted.
However, he still will not fully accept this kind of asset.
"I don't own Bitcoin," he said. I never recommended anyone to buy it. In my opinion, the cryptocurrency will continue to exist. There is no doubt that it is a facilitator and a medium of exchange. To me, Bitcoin is a speculative transaction. I don't think this is a real investment. "
Rosenberg prefers gold, an asset he has held for years. "I still want to say buy gold," he said. The volatility of gold is only 1/5 of that of Bitcoin. "