Longest bull market in history is cracking as 'artificial support' fades, David Rosenberg warns

David Rosenberg sees cracks in the longest bull market ever.

The Gluskin Sheff chief economist and strategist blames the record run's "artificial support," citing the boost stock and credit markets have been receiving from central banks around the world. But now, he predicts it could all come crumbling down as easy money policies fade.

"Keep in context how weird it is to have the longest bull market in equities in the context of the weakest economic expansion of all time, and how do you square that circle?" he asked Wednesday on CNBC's "Trading Nation." "It's because of the long arm of the central banks."

He predicted on the show in late July that widening credit spreads could tear apart the bull market. It's a scenario that's still high on his radar.

"The big risk is in the corporate bond market," he said. "We're going to have a severe tightening in financial conditions, and that's going to reverberate back into most risk assets including equities."

According to Rosenberg, it's an issue that could spill into quarterly corporate earnings reports as early as next year.

"We'll probably start to see earnings estimates come down and more earnings disappointments than we've seen over the course of the last several years," Rosenberg said.

'Very late cycle'

Yet he isn't discounting this week's milestone: As of Wednesday, the S&P 500 had gone a record 3,452 days without a 20 percent or more decline. Rosenberg acknowledged how impressive the nearly 9½-year bull run is, but he insisted that the record streak is in serious jeopardy.

"We are very late cycle," he said. "We are going to be renting the movie backwards."

Even though Rosenberg became one of the first strategists to turn bullish as the U.S. was recovering from the 2008 financial crisis, he has been known as a perma-bear on Wall Street for decades.

Despite his cautiousness, Rosenberg isn't abandoning the stock market. He's bullish on defensive names such as consumer staples, health care, utilities and telecom — four groups that have been outperforming the S&P 500 over the past three months.

"Those are the things you actually want to own when the economy is going to be slowing down, which I am sure it will," Rosenberg said.

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Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

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