It’s getting harder and harder to find bears lately, with major stock averages forging two-year highs. And even one consistent, well-known bear — Gluskin Sheff’s David Rosenberg — is a shade less bearish.
Rosenberg in his daily morning “musings” today carries just a hint of submission, though he’s quick to say he’s not changing his views – he remains a secular bond bull, sees GDP growth only around 2% next year and “core inflation will remain in a declining trend.”
But while he sees some European countries needing to undergo debt restructuring, which would raise risk premia in general, “this will likely take more time to play out than I had thought before,” Rosenberg writes. For now, “expect upward revisions to Q4 and by extension Q1 2011 GDP and hence earnings; therefore, over the near-term, it may not be a bad idea, tactically, to lighten up on the bearishness,” Rosenberg says.
It’s not a big change, just “think of it as a company lifting the bottom of its revenue forecasts,” he adds.
There’s still plenty to worry about, Rosenberg says, including a Treasury market that could come “unglued,” further sharp increases in energy prices, renewed fiscal problems in Europe, increased inflation in emerging markets, more severe cutbacks at the state and local level and sharper declines in home prices. But none are likely to be “immediate threats,” he says.
Rosenberg may’ve softened his stance a little, but another stalwart bear — Hussman Funds’ John Hussman — is still on guard against what he calls the “overvalued, overbought, overbullish” conditions in the stock market. But it isn’t easy.
“It’s not pleasant to adhere to our discipline here, but I believe that it is essential to do so, because conditions like these are often where it matters most, despite the discomfort.” While his Growth Fund has slipped, he’s not jumping on the risk-trade bandwagon, inspired as it is by the Fed.
After all, the Greenspan Put and Bernanke Put didn’t manage to avoid massive sell-offs in 2000-2002 and 2007-2009, he notes. “The only put options that investors can rely on here are the contractual kind.”
Paul Vigna contributed to this post.