In a feature column in this morning’s Financial Post, market guru David Rosenberg is looking for a significant market turndown and if traditional market patterns hold a recession to start any time from October 2017 to May 2018.
Rosenberg says he’s not sure if this is the seventh inning or the ninth in the market cycle, but it is somewhere in between.
He notes, and this will not be a surprise to investors who closely follow the market, that the TSX has not made a new high in over two years and the broad New York Stock Exchange Composite stock index in 17 months.
He also points to tight credit spreads and a flattening of the yield curve where short and longer term interest rates flatten, which confirms late in the economic cycle pricing.
Rosenberg says that we are past the sales peak in auto sales and as we in the lower mainland have witnessed first-hand, the housing market has peaked.
He also points to the fact that unemployment numbers are now stuck and have ceased their downward move.
However, Rosenberg states that the downturn or whatever correction or even bear market we see, the selloff should be limited and no, it will not look anything like 2008/09.
A word of caution only, but it would not be bad advice to keep some cash ready to take advantage on some bargains that will appear in any significant downturn.