New Rules for an Old School Fundamentalist with David Rosenberg
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A warm welcome to the Risk Reversal Podcast. Guy Adami, always joined by Dan Nathan. On March 21st of this year, we were joined by David Rosenberg. He's back again, Dan, of Rosenberg Research. Rosie, welcome back to the pod. Thanks for inviting me back. I was...

Starting to get worried that you guys lost faith in me, you know. Nothing to worry about. Three-month hiatus is like a lifetime. Well, you have your hand on the rudder in calm and unsettled seas. And I don't know what seas we're in right now, but it's clearly a market that doesn't seem to care about anything. So let's start there in terms of the broader market and the rally we've seen since basically the last time you were on the show. Well, look, it...

Even transcends when I was back with you guys three months ago. I mean, we first hit 6,000 on the S&P 500, like literally within days after the election. And then it's just been a meat grinder roller coaster ride ever since. When you really think about it from a big picture standpoint, I'm

We got eight months. Like if you just basically went to sleep in mid-November and just woke up, I mean, you would have missed a lot. But the market's about where it was eight months ago. And all you've had is just a ton of volatility and sleepless nights.

I guess we could talk about what happened shortly after we last met, which was Liberation Day, followed by reprieve, and then all the deals, which don't really exist. And then, of course, we have what's happened between Israel and Iran. And we have fears of oil supplies getting choked off. And then next thing you know, we have thumbs up for Israel.

Israel to engage in a war with Iran. And then all of a sudden, Trump let ceasefire and oil prices come right back down again. And the stock market rallies. And so it's just been, you know, what I refer to it as it's a news driven stock market. It is sentiment and momentum. It has nothing to do with the fundamentals. And when I say about the fundamentals, what I'll tell you is that analyst earnings revisions have only been going down.

not by a lot, but they've not been going up. You can't say that we're having the market chase earnings estimates to the upside. They've been going down. It's been sentiment-driven, headline-driven, certainly a momentum-based market, which we've seen time and again. It looks to me as though

Yeah, we're topping out somewhere around 6,000. You know, if you put your technical hat on, and I have a technical strategist who works with me, Walter Murphy, who I know you guys know, and he was the legendary Bob Farrell's right-hand man for like, I don't know, maybe it was 2,000 years. Walter is quite a bit younger, but older than me. And Walter made the observation, and Walter historically always has a bullish bias, right?

And you're going to find with most technical analysts like strategists, they will have a bullish bias. They will always give the stock market the benefit of the doubt. And he sent me a couple of emails just in the past couple of months, and especially off this vigorous rally of the post-liberation day lows, that this is one of two things based on his analysis of history and the chart work.

that what we're seeing is either the last gasp rally of the old bull market or the first rally of the new bear market. So pick your poison. But, you know, when you look at the chart in the past eight months, you'll see that there's just been a lot of volatility and you get to the level that we're at today for whatever reason, and it could be based on pure speculation, which I think it is,

And the 6,000 level, even if you're trading the market, has not been very kind to you because it's generally been met with a top. And if you look at the overall big picture, we're talking about eight months now, 6,000 has been a key source of resistance. And it looks to me as though we have a classic topping formation in place. So what I've been telling people is that everybody was crying when

When we had the declines from the February highs, and of course, we had all the tariff talk, and then we had Liberation Day, and we came pretty close to an actual bear market. A lot of sectors and stocks went into an official bear market. Then, of course, you rally off those lows like we've seen, and it just speaks to the volatility.

And what I was saying then is that to the people who are crying, why didn't they get out of the market in February, are now piling back into the market. And I'm telling them, just remember how you felt in March and through a good chunk of April, didn't feel so good. You're getting another opportunity now to cleanse your portfolio of undue risk, beta, cyclicality,

Narrow it down to your strongest conviction calls. Do not buy the index. Buy your best ideas and cull the portfolio to your top conviction themes and make sure you're diversified. But of course, when the market's rallying like it is, even though it's tough to pinpoint the real fundamental reason, in a momentum-based rally, people lose their minds.

not just lose their minds, but they lose their discipline and they lose their diligence. And that's just the nature of our business because so much of it, you asked me before, is this fundamentally based market. It's totally emotionally based.

And it's been that way for some time. Yeah. So, David, use the term diligence. And, you know, one of the first reads that I have every morning is early morning with Dave. You do extensive work on a daily basis. So it's well before the markets even open. And, you know, obviously you've been focused on inflation for a long time and you were in that camp that inflation will be coming down, that the Fed is likely to get to their target much sooner than a lot of folks who are kind of keep saying,

pounding the table on inflation and what that might mean for yields and the like here. So let's try to prioritize in your opinion, if you think we're in a topping formation here, if you think about, let's say, a trade deadline, July 9th, right? And that's something that you've been talking a lot about. If we don't get the deals, and you've suggested as we just talked about that the deals are really nothing there, right? We're not going to have some, you know, a

bunch of big bilateral deals. Okay. So there's trade. There's optimism though, that we're going to get a tax extension here, right? So you have these two things that seem to be competing a little bit. They were meant to go in the same direction. How important are they right now? Because we had a lot of that downside volatility in April, but then we got the taco trade, right? And so that seems to be like a lot of folks are just going to take that to the bank that

Trump will chicken out, especially if yields start to go back higher, the stock market starts to cream lower, the dollar goes much lower. Talk to us a little bit how you're thinking about trade, how you're thinking about tax and kind of what that means for this momentum driven market that you just spoke about. - Well, let's tackle the last one first, which is the big beautiful bill. I think the fact that President Trump walked back last Saturday with what he can claim is a very big win, and he can certainly claim that,

his approval rating is going to be going up. That's going to build him a lot of political capital on Capitol Hill. So I think that the odds that we get

The bill being reconciliated between the Senate and the House, I think you have to assume that the bill is going to get passed at this point. He's built up a lot of capital. You could argue it was a risky move, you know, taking out those nuclear installations. Of course, we don't know where these bombs are with 60% enrichment. But that aside, he's walked away with a very big win and proved his skeptics wrong. It's going to cause...

People who are on the fence to vote for the bill, including some of the arch fiscal conservatives. There's less to that than meets the eye because most of the quote stimulus is really just avoiding the fiscal cliff. Most of what they call the stimulus is really the extension of the 2017 bill.

income tax cuts on the personal side. So that's most of it. A lot of the future deficits are really a lot of that are the incremental interest payments on the debt. And of course, you got competing stuff between spending cuts and then tax relief on Social Security and tips and overtime, which is a bit of a wash. But I would say, sure, the markets will be comfortable with that 100%. The trade side,

I think that Donald Trump's behavior is such that we just have to assume he's going to change his mind all the time. I think what happened in the past couple of weeks tells the tale. At first, Israel goes in with that brilliant strike at the beginning, retains total control of the air systems in Iran. And Donald Trump initially sounded like he was angry.

Because even though the 60 days had passed while he was still negotiating, we don't know the extent to which that was a ruse or not. But then he moved from that to giving the IDF carte blanche to do what they want to do when he ran. And then we have taking out those three nuclear sites and then even talking about the prospect of regime change.

And then you flip the script a day and he's swearing on TV that the two sides don't know what they're effing doing. And, you know, he's got this ceasefire, you know. So one day Israel's got a carte blanche and the next day there's a ceasefire. One day you've got...

Liberation Day, to which I said, liberate us from what? Sanity? I guess so. And then walks that back. We have July 9th. You're right. What's he going to do? What's he going to do? He's going to go through with these reciprocal tariffs that brought the market down to its knees in April. Unlikely. He'll do what he always does. He'll punt it.

He'll try not to sound too much like Taco because he'll claim that I got deals and I'm negotiating deals on the side. Don't you worry. But they'll find a way to finagle. So this is what the markets are saying. July 9th is going to be another reprieve. Kick the can down the road. The market seems to believe that this Israel-Iran war is over. That's a little bit of a surprise, but at least...

The tail risk of oil going under $30 a barrel, well, that didn't happen. And so that's what the market's looking at right now. The big, beautiful bill stands a very good chance of being passed now that you're going to see Trump's approval rating going up, and that's going to play well on Peoria. And so the market right now just has stock glasses half full. The glass is just completely full.

You know, that's how I would interpret everything that's been happening. On the trade side, you know, we've already got the 10% tariffs. The baseline's already there. Question is, what are going to be the add-ons? He's done add-ons already on autos and aluminum and steel. We'll see what else he does. But I think the markets are thinking that he's going to...

find a way to provide more extensions. You have said, and I've seen you, I think you were on CNBC at the end of May, and you've said that soft data will become hard data and that the ultimate leading indicator is typically found in the housing market, something we've talked about and something that I think, and I'll choose this word, has been deteriorating now for quite some time. And, you know,

I don't think the market is clearly paying enough attention to that. I think it's a warning sign in terms of what it means for a growth slowdown. And I understand that different metrics we talk about are not timing indicators, but it's very hard to reconcile a market that's trading at 23 times next year's numbers in a slowing growth environment. So speak to what you're seeing sort of on the housing front and how it sort of all connects the dots back to growth. I mean, all you really ever had to do was look at...

one part of the market that hasn't really come back a whole lot that is still down something like 35 from the highs and that's the HGX I mean the home building stocks have been absolutely crushed I mean if that ever happened to uh the AI trade I mean people would be jumping out the window uh but the home building stocks are a tiny percentage but it does have very important uh

messages for the broader economy. About the housing market, I think that there's been a very significant shift from when we last spoke three months ago.

which is that you're seeing a really significant thaw on the supply side. And here's what's happened that's very interesting, because people like me who missed the recession call in 2022, 2023, when the Fed went ballistic on interest rates, and the people that said, well, everybody's locked in, they were right. I mean, there were other things. We had the $2 trillion of excess pandemic savings from Uncle Sam's generosity, and all that money got spent.

But it's true. Everybody refinanced at those generational lows on rates. There was no refinancing activity. People were stuck in their home. They were stuck in their home. However, they didn't face interest rate shock. But you see what's happening now is that there's a growing share of existing homeowners who are now refinancing.

and they are facing interest rate shock. And we all talk about the delinquency rates in autos and credit cards and the like, and starting to go up from a very low level in the housing market. So you're starting to see these people that were locked up in their homes are now selling their homes. The number of homes with the for sale sign in front of them

is up more than 20% in the past year. The backlog of unsold housing inventory, you want to see a chart that looks like it's in a bull market pointing north. That's the chart. You have a situation where over the past year, the growth in housing supply has outpaced the growth of housing demand by 25 percentage points.

And so what is that supply-demand backdrop? And this is a big shift in the past few months from a seller's market to a buyer's market is decay in home prices. You're seeing it in the new home price index. You're seeing it seasonally adjusted in the existing home prices, which we just got yesterday. And didn't we just get Case-Shiller?

Negative 0.3, Case-Shiller now down two months in a row. We're talking about something like an $80 trillion asset class on household balance sheets has been contracting now.

for three straight quarters. And nobody talks about it except for me. Housing, not equities. Housing is the prized asset on household balance sheets and it is deflating. Case Shiller down two months in a row. And when you look at the supply demand balance shifting, home prices are going to continue to deflate. At the same time that we know, given where the apartment vacancy rate is nationwide,

that the rental deflation story is still not in the rearview mirror. That's also still staring us in the face. So this is going to come and people talk to me about tariffs and inflation. You mentioned it before.

Nobody talks about what's happening to the housing market. The housing market now is not just contracting in physical volume terms when you look at sales or housing starts or building permits, but the prices are starting to deflate, which is great news, I suppose, for wannabe first-time buyers who've been shut out of the market for so long.

but you're an existing homeowner and you have a wealth effect variable in your spending decision, which we all do. We all focus a lot on the stock market, but the housing market is where the rubber meets the road on the household balance sheet. And you guys tell me, and this is what I was writing back in '06 and '07, and I was crazy early then,

But I was seeing the cracks in the housing market start to come to the fore. I never realized that the housing deflation would bring my own firm, Merrill Lynch, down for the count. But you go back over the decades, periods of home price deflation never end well. They are the biggest asset on the household balance sheet, and they're the biggest asset

on the commercial bank balance sheet. And so this is the early stages of real estate deflation. And I made a career out of looking in a direction that everybody else is not looking at because everybody's still stuck on the tariff led inflation without recognizing that that affects a subset of the CPI.

60% of the CPI is not goods. 60% of the CPI is services. And now you're seeing a broader way of services. Services, which had been the primary source of inflation three years ago and two years ago, is going in the other direction right now. You live in airfares. They're down four months in a row. Restaurants.

movie theaters, hotels and motels, recreation services, they're either deflating or they're disinflating. And that's why, even with the tariffs...

These CPI numbers, and then we'll get the PC deflator number at 0.1. That'll be the third month in a row, 0.1 of the core PC deflator. At what point is that no longer a blip on a screen, but actually a pattern for all the hawks on the FOMC? The services side, which the Fed was preoccupied with, even when goods prices were falling, we were focused on service sector prices. Now the tables have turned, but you see services are 60% of the index price.

Goods are 40%. And it's not even clear that there's going to be enough pricing power in the goods sector to pass on those tariff increases. So companies will have to figure out how they can cut costs in other areas, raise their productivity ratios, or eat it on their margins. Because when we talk about inflation all the time, inflation, inflation, inflation, I come back to the question because inflation, of course, is part of economics. And economics by its nature is a behavioral social science.

is what is inflation, guys? Is inflation the price that companies would love to charge their customers? Or is inflation the price that customers are willing and able to pay? And the other thing that's changed, far different than 2021, 2022, 2023, is we have a softening labor market on our hands. We do not have a hot labor market. Wages are going to be decelerating.

into a labor market that's going to be creating more slack, which the Fed actually added more slack in their forecast that they published last week. The quits rate, voluntary quits rate, I call it the take this job and shove it index. The quit rate, which is the pulse of worker confidence index,

That's going way down. Hiring rates, way down. Job opening rates, the bellwether for labor demand, way down. Now, it's not showing up, by the way, in non-farm payrolls. But most of the non-farm payrolls, like two-thirds of the non-farm payroll growth in the past year,

They did not come from the survey. I had to actually shake people upside down. Do you understand that the BLS has the birth-death model? I know you guys know what I'm talking about, and it's not about having babies. It's about they add another calculation on the number of new businesses minus business failures to come up with something more dynamic. They add that to the survey. Two-thirds of the job gains in the past year did not come from the survey. It came from the model, the birth-death model.

The labor market is showing cracks. I cannot believe that Jay Powell could get up there at the podium and say the labor market is solid. What? 130, even if you believe that number, 139,000 on main non-farm payrolls, even if you believe that number,

Never mind the big demo revisions the previous two months. Never mind the skew for the birth-death model. You adjust for all that. Employment was almost flat. And we know that the household survey was deeply negative, all in full-time jobs. But he has the temerity to say the labor market is solid. And you see, when you're talking to me about the stock market, okay, guys, you have a lot of viewers and you have a lot of people that are watching this on CNBC or reading about it. If Jay Powell

says the labor market is solid. There is no recession. And if there's no recession, why wouldn't I be risk on?

Now, of course, he feels he has to say that because he doesn't want to cut rates. He's not going to give you my labor market story because, frankly, if I was running the Fed, I would be cutting rates irrespective of what Donald Trump is saying. In fact, I think what Donald Trump is doing is self-defeating because the Fed as an institution will always protect its independence more than anything else. That's a moral code.

But be that as it may, there's two things happening here. The housing market is cracking, okay? And I'm talking about prices because the volumes have been cracking for the past year. The prices, the valuation. And now you've got the labor market is showing cracks beneath the surface.

I'm going to tell you right now, I am not a once burned, twice shy guy. I don't cry over spilled milk. I try and learn from my mistakes and I drive on. But you'll never hear me say I'm not calling for a recession, even though I believe it's going to come because I got the last one wrong. That is not me. OK, I actually have more convictions.

that the recession may already be starting, may already be starting. And let me tell you why. You talked at the beginning about the soft data. I would talk about the soft data and the soft data leads the hard data. The beauty about the soft data is that it is behavioral. It's not a hard dollar number, but it tells you something about shifts in behavior. And a lot of it is survey data. But we have a model that has dozens of survey data. A lot of it, by the way, from the Fed.

And of course, we've got another number today, the Consumer Confidence Report. And we modeled that out in terms of what is it consistent with? This whole gamut of the soft data is consistent with real GDP, negative one, negative one. Now you'll say, okay, but we know that it's positive. Admittedly, GDP is positive. We see the hard data that we trade off of.

And the hard data that makes its way on the front page of the Wall Street Journal, the Financial Times, and the New York Times, the hard data gets revised, right? The hard data gets revised. Everything is done on a sample. Everything, the first release of everything is done on a sample, then it gets revised. So the hard data, though,

is now officially following what the soft data has been telling us for at least the past six months, which is that the recession is starting. And I'm talking about GDP, not GDP on a quarterly basis, because the quarters, those are quarterly averages. You don't see how things are shifting at the margin on a quarterly average. The monthly data through April, we have monthly real GDP data, is actually running negative.

negative on a three-month basis, negative on a six-month basis.

And did you know that the year-for-year trend in real GDP through to April, and there's nothing in May telling me that things have turned around, the year-for-year trend in real GDP is plus 1.3%. The three and six-month trends are negative. The year-for-year is down to 1.3%. And of course, when I say this story to people, they say, well, it's still got a plus sign in front of it, doesn't it? And this is how this business has changed from when I started in the mid-1980s

When if you got down to low ones on real GDP, I would have been inundated with questions about when's the recession starting. Today, you're down to plus 1.3 year over year in real GDP. And the comment is, well, there's still a plus sign in front of it, isn't there? Which I say, yeah, there is, but not on a three and six month basis. So I'm saying to you that, look, the thing is that denial is a wonderful thing. Or maybe it comes down to

What sort of market are you investing in? What sort of market are you investing in? Because it could very well be the case, looking at the data, that this recession that nobody sees happening. By the way, what's very interesting was the Beige Book, the May Beige Book. What did it say? Three quarters of the country are either contracting or stagnating.

In the previous six weeks and 12 weeks, it was half. We're up to three quarters. The tone of the base book, you know, we run some data science on the base book. I'm going to tell you right now, this was weaker, weaker. The tone of this was weaker than the one

In the same month of the recession, that started in December of 07, or the one in 01, this was actually, I'm reading the base book, and we actually have serious eyeballs on the base book. Okay? And I'll tell you, it was never this week in 2022, 2023. This is why I'm saying my conviction level isn't even higher. I'm not going to worry about...

would happen back then, except because I'm focused on the here and now. You see, I'm old school, right? I'm an old school. I could call this. I'll write my report. If we have a recession and the market continues to hit new highs, I will say, no market for old fundamentalists. I'll write that movie script.

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You just talked about a lot of things that we're talking about. I think at the root of this housing thing is the labor market is not nearly as strong as whatever numbers you want to look at at the surface suggest. And I think that's what's going on. I think it's people sort of

feel the earth moving under their feet in terms of labor, that's when housing moves in the wrong direction. By definition, that means the economy will slow down, which in my opinion, David, means that you're not paying 23 times for a dollar's worth of earnings in the S&P 500. Historically, in the kind of slowdown that you're talking about, it's mid-teens. So you're talking about a market...

Given everything you've just talked about, that's probably two, three standard deviations too expensive just in terms of a price to earnings. Is that somewhat accurate?

Yeah, and I'd go a step further. Firstly, I don't think the economy is slowing anymore. I think the economy is contracting. The monthly GDP numbers are telling me that the economy is no longer just slowing. It's actually contracting. I'm not trying to be a wise guy. That's not semantics. There's obviously a difference between, and I'm not smart enough to know what it is, so the difference between contraction and slowing. Contraction is slowing is reduced momentum.

And contraction is actually negative. So it's like we're going going from two percent to one percent to slow it. Going from one to negative one is contraction. So and there's a difference between slowing. And I think we're beyond slowing right now, but it's not in the market. And I find that the Fed is extremely disingenuous in how it's portraying the economy. And people pay attention to what the Fed is saying, by the way.

They were saying the same thing. If you remember, Ben Bernanke is telling everybody not to worry about hope prices never decline nationwide and the problems subprimes remain contained. And then Alan Greenspan, who I actually for a long time idolized, back in the tech rec, he was talking in his testimonies about there being just an inventory correction.

which you didn't see it for what it was, which was that it was basically a meltdown in the technology capital stock. And the next thing you know, the first trading day of the year, January 3rd, 2001, he's cutting rates in a reading by 50 basis points. Okay. So that, you know, you read the Fed beige book and then you go read the transcripts from the FOMC meeting from Powell. And you're just,

My hand is spinning. Like I'm there saying the Beige Book is the most comprehensive analysis qualitatively of U.S. industry and of all the regions. Comes out every six weeks. The Fed's been doing it since 1970. And if I was in the media scrum, and I don't think they'd ever allow me in there because I would only ask one question, which is that why do you spend so much money and resources on the Beige Book when you don't even listen to it?

Never mind that. Look at the, not this meeting, but we have the minutes from the meeting, correct? What did the Fed staff do? You know, at the beginning of the FOMC minutes, the Fed staff forecast is always front and center right at the beginning of the minutes. What did they say? They lowered.

Now, this is the cooling off. They lowered their growth forecast for this year and next year. And they said as they did that, the odds of recession were the same, identical to their newly minted lower GDP growth forecast. They told you then, recession, not inevitable, but it's 50-50. Now, this is the Fed staff. I'm not going to say their gospel, but I'm going to say like these FOMC officials and the voters, like,

To what extent are they tone deaf? Or maybe they should fire the Fed staff and stop doing the base book if they're not going to listen to them. And the question we have to ask ourselves as market practitioners is what asset class out there is priced even for 50% recession odds? And there isn't. And maybe it doesn't matter. Maybe the cycle doesn't matter. Maybe economics doesn't matter. Maybe this is just turned into one giant casino. You know, it's really hard to make book. You're 100% right.

23 multiple on the market, think of the earnings yield. Think of what the stock market is telling you. Stock market is telling you if the business cycle still matters, let's assume that it does, it's telling you there's no recession. It's telling you fade the Beige Book, fade the Fed staff, fade these recent readings and real GDP in the past three and six months, just fade them. But what else is the market telling you? And this is actually what keeps me up at night.

is when you have an ERP that's zero, the stock market's telling you that the S&P 500 is as riskless as an asset class as treasury bills or treasury notes. Now, treasuries have different risks, duration risk, there's inflation risk, there's cyclical risk. No, the answer is no, I don't believe there's default risk at all. But what treasuries don't have is capital risk. They don't have capital risk.

It's the only asset class where you know definitively what you're going to be getting paid on maturity. Stocks don't mature. You know you're getting paid and you know what your coupon is going to be. You don't always know what your dividend is going to be. It's just what makes bonds different.

this is where i always push back on the 60 40 doesn't work anymore no you don't understand nobody buys bonds to make a killing you buy bonds like you buy fire insurance or auto insurance or theft insurance it is a ballast in the portfolio and it has a different characteristic than equities because of the guaranteed payment characteristics which equities don't have so it's a perfect

diversifier in the portfolio. When I hear about 60, 40 doesn't work anymore. It's nice to say for a couple of years, it might not work, but theoretically it's the most ridiculous comment I've ever heard. We have a stock market telling you, we have stock market investors. If you're buying this market today, you're buying the SPX today. You are basically making a call that equities belong in the same risk bucket as treasury bills.

And I'm not there. I think the only time I will ever be there is when I turn into Joe Biden and the marbles start to roll around in my head that I will ever say that, you see, Guy, your comment about the 23 multiple would work just fine if the risk-free rate was 1%.

There was a time, by the way, when we would have had multiples that high, but the relative value to the risk-free rate or to treasury note yields would still make it palatable. So you're 100% right. The stock market is trading today as if treasury yields were at 1% where they were four years ago. So the math just does not add up for

All right, David, you have been, you used this term ballast. I've been reading your work. I've gotten to know you over the last 15 years, but I've been reading your work for the last 20 years. Honestly, I've never heard you this decisive about a lot of things that's going on in the markets. And obviously, this is not just about stock markets. You've talked about equity risk premium. You've talked about your view on yields and inflation and the list goes on and on. It seems like you...

are really focused on something that a lot of other folks are not. And I think that if I go back and I think of your career, that's something that has made you very unique of an economist as a strategist on the street. So I think our listeners, you know, really appreciate all that. Here's one thing that I think is very different this time. We just really talked about the makeup for all intents and purposes of 500 stocks that go into the S&P 500 that

are this sensitive to rates or this sensitive to geopoliticals, this or dollar strength or weakness, this or whatever. Here's one pocket of risk they think is being massively underappreciated. And it comes from the capital that flows into it from pension funds, from a whole host of other different sources. And that is the private equity market. And we could talk about private credit, but we don't have enough time to do that.

When you think about the multi-billion dollars, and I'm not talking about companies that are forming with multi-billion dollars, I'm talking about multi-billion dollar capital raises. Okay, OpenAI, right before the bottom fell out of the equity market and the public markets, raised $40 billion.

at a $300 billion valuation, and you're going to love this, SoftBank led that round with $30 billion. Now, I could also tell you, remember that term unicorn? It almost seems cute. That came up, I think was coined in like 2013, 14, after we saw Facebook and Twitter and a few of the other names go public. They're double the number that they were in 2021. So what I'm trying to get at is we had an

outright, you know, like frenzy for risk back in 2020 and 2021. And people are just talking about all the innovation that's going on in private tech, but the valuations are unlike anything we've ever seen before. And I just don't think that is being accounted for. If you look at a mosaic as investors generally think about risk, just speak to that a little bit. I know that's not an area that you're so focused on, but

It's out there, man. It's over here and no one's paying attention because they are so convinced that generative AI is going to change the world. But there are hundreds of companies that have raised either hundreds of millions or billions globally that are not going to be around in one, two, five years.

And look, you're also starting to see, and this is why I was saying before about the per-debt model, you're starting to see an insolvency cycle start to take place at the margin. I am very nervous about private equity. I have for a while. Look, it's very opaque, but what has me concerned the most is, and I think from my knowledge, the market for private debt is even a bigger worry, but tremendous leverage is

and illiquidity in overvalued assets does not lead to very good investment outcomes. And then the question is, who will be doing the bleeding? And I think that you're 100% right. You mentioned at the get-go, if you're going to ask me what is going to be the next crisis, it's not the banks. It's going to be the pension funds because that is where they've been concentrating

their portfolio over the course of the past several years. You heard it here first, the next crisis, not regional banks, not money center banks, not investment banks. You talk about real estate, but the pension funds. We're going to have to get you back and we can drill down on that, David, because unfortunately our time is up, but we always appreciate you coming on with us. There's a lot to sort of digest here.

But I think, you know, you're clear-eyed in terms of these observations, and I don't think enough people are sort of taking heed of the warning. So, as always, thanks for joining us, David. My pleasure, guys. And just remember, one last bullish thought.

The Bond Bullion Barbell. That's been my mainstay this year. I love it. Well, if you guys want more of this, Mornings with Dave, go to Rosenberg Research. Like I said, it's one of my first things that I read every morning. It's very in-depth, and it'll get you all sorted out for the trading day. So, David, we really appreciate it. We appreciate your work. Thanks so much. Okay, guys. Take care.