#422 David Rosenberg: The Fed Is Going to Trip, Recession Odds Now Above 50%

<p>David Rosenberg, founder of Rosenberg Research and author of <em>Bear in the Bull Ring</em>, says he has never seen so many imbalances in the economy and markets in his 40-year career. He argues we’re in an AI-driven bubble, now in “extra innings.” Ten stocks make up over 40% of market cap while the median stock is down nearly 20%. The Shiller CAPE has topped 40 and the equity risk premium has turned negative. Beneath roughly 2% GDP growth, he sees an economy held up by AI capex, a falling savings rate and stock-market wealth effects, while hiring stalls and real incomes shrink. Rosenberg warns that Kevin Warsh’s Fed risks a policy mistake by hiking into a supply shock with a flat yield curve. He also flags fading fiscal stimulus, midterm gridlock and canceled data center projects as headwinds that put recession odds above 50-50 for 2027. His prescription is to de-risk without going to zero equities: shift toward Treasuries (two-year and 10-year notes), defensive sectors like utilities, healthcare and REITs, gold, and some cash, so you’re one of the “strong hands” when the cycle turns.</p><p><br></p><p>Thank you to our partners </p><p><strong>Augusta Precious Metals </strong>— To learn more, visit <a href="https://juliabuysgold.com/" target="_blank">https://juliabuysgold.com/</a> or text “Julia&quot; to 35052</p><p><strong>Monetary Metals</strong> - learn more at https://www.monetary-metals.com/julia/</p><p><br></p><p>Links: </p><p>Book: https://www.amazon.com/Bear-Bullring-Independent-Thinking-Protects</p><p>Website: https://rosenbergresearch.com/</p><p>X: https://x.com/EconguyRosie</p><p><br></p><p>Timestamps: </p><p>0:00 Intro: Protect your capital</p><p>0:21 Welcome David Rosenberg</p><p>1:36 Most imbalances in 40 years: a narrow market &amp; fragile economy</p><p>6:57 What’s propping up the economy: AI spending &amp; the wealth effect</p><p>10:23 Market call: CAPE above 40 &amp; a negative equity risk premium</p><p>13:46 Why nobody calls it a bubble until it bursts</p><p>18:29 Don’t extrapolate: lessons from oil in 2008</p><p>23:17 Fed chasing headline inflation &amp; recession odds</p><p>26:09 Is Warsh’s Fed dangerous?</p><p>31:32 Four supply shocks &amp; where tariff inflation went</p><p>36:09 Labor market weaker than perceived</p><p>37:51 Will the Fed be forced to cut? The rookie Fed chair pattern</p><p>41:49 Greenspan, 1987 &amp; testing a new Fed chair</p><p>42:40 Midterms, fiscal gridlock &amp; a growth slowdown</p><p>45:47 AI backlash &amp;