December 05, 2024 at 08:12PM
Well-known market watcher (and often bear) David Rosenberg appears to have given up on his bearish call on the market. That’s the kind of thing that can often indicate that market sentiment is going into overdrive.
He specifically says he “is in no way throwing in any towel” but it sure sounds like he is as he talks about a new valuation paradigm (at least for 2025) around AI.
“I have shifted from my view that we are in a classic bubble to now questioning — not totally abandoning, but indeed questioning — that thesis,” he writes.
Rosenberg notes:
Market is pricing in a “Model Shift” driven by AI revolution and productivity gains
Traditional P/E metrics may not capture long-term earnings potential from AI transformation
Pro-business Trump policies (deregulation, energy) adding support for corporate margins
Bond outlook improving as productivity gains could offset inflation concerns
Still expects near-term 5-10% correction but now advocates “buying the dip”
He compares the current period to the 1995-2000 tech boom.
For sure he’s not the first to make these points but it’s notable for sentiment that a bear is giving up. That’s certainly not something you see in the early innings of a bull market but it highlights the potential for a capitulation from bears, or a 2021-style mania.
“I do hate to ever use the term ‘new era’ or ‘it’s different this time,’ but we do not have a large sample size of data points historically on such major inflection points on the technology curve,” Rosenberg writes, nothing that he’s keeping an open mind about 2025.
Read the full note here.
This article was written by Adam Button at www.forexlive.com.
