2024’s harsh reality: brace for recession and real estate woes – David Rosenberg

As 2023 ends, economic signals indicate a turbulent 2024, according to David Rosenberg, President of Rosenberg Research.

Rosenberg forecasts an impending recession but describes it as a natural phase in the business cycle. 

“Next year is going to be a recession year. It’s not the end of the world. It’s part of the business cycle, and next year will be a hard landing year,” Rosenberg told Jeremy Szafron, Anchor of Kitco News. 

Rosenberg’s stark outlook for 2024 is grounded in tangible economic indicators, and he warns investors to be vigilant of optimistic financial news. 

The economist pointed out the troublingly low American savings rate as a critical sign of diminished consumer economic resilience. “Who would have thought that we’d be sitting here today with the personal savings rate at 3%,” he said, emphasizing the historical anomaly of this situation. “Historically, Americans, out of every after-tax dollar they earn, put 10 cents in the piggy bank. Now they’re putting in three cents.” 

Rosenberg also cast a wary eye on the real estate sector, foreseeing a grave cycle of delinquencies and defaults. “We’re going to have a severe delinquency and default cycle… a lot of property being transferred from weak hands to strong hands, but we’re going to have a very significant real estate deflation,” he noted, highlighting the potential for a dramatic downturn in property values.

For an in-depth analysis of Rosenberg’s 2024 recession prediction, watch the video above.

The Bond-Bullion Barbell Strategy: Embracing Gold’s Peak

Given the economic uncertainties of 2024, Rosenberg endorsed the bond-bullion barbell strategy. 

“My theme is the bond bullion barbell [strategy]… you want to own bonds,” he said, noting its suitability in a declining interest rate environment. The bond-bullion barbell strategy, as Rosenberg suggests, follows a barbell method where half the portfolio consists of long-term bonds, and the other half comprises short-term bonds. This setup is complemented by gold investments, providing a hedge against inflation and market uncertainties.

With gold trading near record highs, Rosenberg emphasized its strategic role in investment portfolios. “As far as gold’s concerned, I was very impressed… before this latest run-up on how well gold was performing.” 

Gold’s robust performance, especially as a hedge against inflation, complements the stability and predictability of bonds. He pointed to the historical success of this approach during similar financial climates. Rosenberg emphasized gold’s value, particularly its strong performance in uncertain economies, highlighting its role as a reliable asset for risk mitigation and portfolio diversification.

Learn more about this strategy and its relevance in the current economic climate by watching Rosenberg’s detailed explanation in the video above.

Interest Rate Outlook 2024

With just one monetary policy meeting left this year, all eyes are on the Federal Reserve’s interest rate strategy, and Wall Street is heavily divided on the outcome.

Bill Ackman, CEO of Pershing Square Capital, predicts an early rate cut by Q1, while Rosenberg takes a more cautious approach, forecasting a May rate cut. “The Fed’s last rate hike was in July… if they skip December, which it looks like they have to… that will make it five months where the Fed has been on the sidelines,” he said. Based on past trends, the Fed’s next move is always a rate cut, Rosenberg added.

Hear Rosenberg’s take on the Federal Reserve’s interest rate decisions for 2024 in the full video above.