Should investors brace for another recession? Jason Trennert, chief investment strategist at managing partner at Strategas Research Partners and David Rosenberg, chief economist and strategist at Gluskin Sheff & Associates shared their insights.
In the near-term, Trennert has a bullish outlook on the markets and believes the S&P 500could reach 1,480 at some point in 2011. Strategas also recently raised its GDP forecast for next year to 4.2 percent from 3.7 percent.
However, the problem comes later because of the stimulus that is coming from the combination of tax cuts and ongoing deficit spending.
“You’re almost baking in the cake—unless you’re continuing to kick the can down the road—a recession in either the end of 2012, [or in] 2013, because eventually you’re going to have some sort of fiscal restraint,” Trennert told CNBC.
Although Rosenberg raised his GDP forecast for 2011, he has a much more modest outlook for next year. He's estimating 2.3 percent growth, up from a prior view of 1.8 percent.
This is just one example of the range of estimates currently out there for GDP next year.
Rosenberg's view draws from his expectation that the housing industry will continue to struggle, especially with mortgage interest rates beginning to climb and home prices continuing to fall.
“2012 is going to be a much bigger struggle because a lot of this temporary fiscal stimulus is going to roll off,” he explained. “Housing is probably going to bounce along the bottom at best…If you count all the foreclosed inventories, the shadow banking inventory, you have roughly a 2-year supply of housing on the market and it’s going to take several years to work off the excesses.”
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More Market Intelligence:
- Stocks Likely to See 8-12% Upside Next Year: Chief Investor
- Stock Market 'Looking Good' For Next 2 Quarters: Pro
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Scorecard—What They Said:
- Rosenberg's Previous Appearance on CNBC (Oct. 12, 2010)
- Trennert's Previous Appearance on CNBC (Oct. 25, 2010)
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Disclosures:
No immediate information was available for Rosenberg or Trennert.
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