When I was at Merrill, all through 2007 I was asked: “Where is this recession you’ve been calling for, Rosenberg?”

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David Rosenberg: My recession call has the haters out in force, but I've been here before Back to video

The same salespeople on the equity desk who refused to take me to see clients that year became my best friends in 2008 (they know who they are).

I almost got fired twice for my calls in 2007, but my Institutional Investor All-Star rankings saved my skin. That summer, I had a CIO at a famed Houston-based mutual fund storm out of a meeting I gave and scold me as he exited the boardroom: “You have no clue about the housing market or the economy for that matter,” he said. I had the head of Merrill’s fixed-income sales physically throw my presentation package at me at an internal meeting and tell me in front of about 30 people that I was the worst Fed-watcher he ever saw.

One time, when I was walking around the trading floor, this guy called me over and handed me the phone and I thought it was a client, but it was his wife on the line and she said: “My husband asked me to ask you why it is you are so useless.”

So, you think I haven’t seen all this before?

Even today, we have an inbox for client queries and comments here at Rosenberg Research and let me tell you — much the same. I have one client, who shall remain nameless obviously, who hurls insults at me every single day.

Our bullish calls on Japan, Mexico, India and, more recently, Canada, have been overshadowed by our desire not to be involved with the most overvalued stock market on the planet. And while we had a tough year in 2022 on the bond call, since the yield peak last October, you have made money in Treasuries. And they do provide a ballast in the portfolio, but we are in a moment of time where risk-adjusted returns and capital preservation psychology are viewed as arcane relics to be ignored. Just go all-in on the Nasdaq 100, right? Oh, how short the memories are, considering that this index, red-hot in 2023, experienced an ice-cold decline of more than -30 per cent in 2022.

Go figure. It’s called human nature. Jacob, my middle son who doubles as my COO, told me the other day that the “hate mail” I have received on social media these past few weeks has been “off the charts.” Use that information any way you want — but it is a contrarian indicator.

I was called the “skunk at the picnic” and the “class clown” in 2007 and I was called a “Luddite” in 2000 because I didn’t understand how the Internet defeated the business cycle, so all I can say is that this isn’t the first time I have been early on the call, and certainly not the first time to face the wrath of “haters.”

The impatience and tempestuousness out there do not surprise me, either, having called the markets and the economy for nearly 40 years.

This was the title of a Cleveland Fed report in November 1989, just ahead of the 1990 recession: “How Soft a Landing?”

Here was a Market Insight column from December 2000 (the recession began three months later): “Making A Soft Landing Even Softer.”

And this was from September 2007, two months before the onset of the Global Financial Crisis, published by the Dallas Fed and picked up by Reuters: “U.S. economy on track for soft landing –Dallas Fed.”

“U.S. inflation pressures are easing and the economy should manage a soft landing, the Federal Reserve Bank of Dallas said on Wednesday,” according to the article. “‘The latest data reinforce the impression of an economy in which growth remains moderate and inflationary pressures are likely to continue to subside,’ it said in a national economic review written by senior Dallas Fed staff economist Tao Wu.”

Indeed, at the time of the article, it was true that growth “remains moderate.” But here’s the rub: it did not end up “remaining” moderate, now did it? Remember — the N.Y. Fed recession model only crossed over the 70 per cent “never-turn-back” level last November! It is now at 97 per cent! This model assesses recession probabilities over the next TWELVE months — not twelve days, not twelve weeks, but twelve months. Capiche, paisano?

Let’s see how things cook this fall before making any bold declarations that the business cycle has been repealed, which is really the tale the “soft landing” enthusiasts have been spinning.

The positive reading in real GDP growth in Q2 really was no surprise and was flagged by the Atlanta Fed Nowcast model ages ago. All of a sudden, we get the +2.4 per cent GDP print and it’s, “Look ma, no recession.” Right — to which I say: “Not yet!” The smugness and complacency are ubiquitous.

The positive GDP reading was also flashed ahead of time by the Conference Board’s index of coincident economic indicators (payrolls, incomes). In Q2, the coincident index was up at a +0.8 per cent annual rate but we had a massive divergence with the leading index which contracted at a -9.3 per cent annual rate. A divergence that is notable and important in terms of where we are heading, not where we are —or have been.

Divergences like the one we just saw in Q2 have only happened in the past at major turning points in the economic cycle.

These divergences, folks, are really important, and lamenting why the recession hasn’t started yet (and for reasons we know) is a colossal waste of time.

That the stock market has rallied big-time is explained by the fact that the onset of fundamental bear markets are always characterized by a sharp fall from the initial peak, a reflexive rally back towards the highs on soft-landing hopes and signs that the Fed is done tightening or is actually easing policy, and then the long and drawn-out decline to the lows.

There is nothing here that we haven’t seen before. My mistake this year was not identifying the reflexive rally, but this is still a bear market rally nonetheless. There is nothing I see that tells me we are into a fundamentally-based fresh bull market. Resolve is clearly being tested, and this isn’t the first time nor will it be the last time.

There will be plenty of opportunities to get back in and more than just for a multi-month trade in the future. I’ve been around the track enough times to know that.