A recession is virtually unavoidable this year, Wall Street bear David Rosenberg warns

One of Wall Street's biggest bears is warning the economy is on a collision course with a recession.

Gluskin Sheff's David Rosenberg has little doubt growth will turn negative in 2019 as the stock market flounders.

"We're going into a recession," the firm's chief economist and strategist said Wednesday on CNBC's "Trading Nation." "I think it will be this coming year."

Rosenberg predicted in November on the program that the historic bull run was cracking. However, he was uncertain whether it would cause an outright recession.

With the Dow and S&P 500 plunging 14 and 16 percent, respectively, from their all-time highs, that view has changed.

"We've got more than 80 percent chance of recession just based on the fact the Fed is tightening policy," he said. "This tightening of financial conditions that we've seen in the markets is going to end up having a cascading effect on the economy for the first few quarters of this year."

Rosenberg, who has been known as a perma-bear on Wall Street for decades, is not predicting a prolonged downturn. But its effects, he contends, will be downright painful — noting risk premiums are going up across asset classes.

"The severity of the recession doesn't give you a get out of jail free card when it comes to how the markets are going to respond," he said.

According to Rosenberg, getting out of the recession will be a serious dilemma for Washington.

"How are we going to stimulate fiscal policy? We already did that at the peak of the cycle," Rosenberg said. "We don't have the fiscal ammunition."


Trades to Watch

Trader Bios


Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

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 CNBC and 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.

Follow Michael Santoli on Twitter @michaelsantoli

Read more