okay so even though the Dow closed at another record high our next guest is warning that he's seeing some recession indicators flashing red David Rosenberg runs Rosenberg research I I want you to really dive deep into the specifics here David because as we said pce came in where it's expected you've got unemployment holding stady at 4.3% you have some earnings reports that have surprised to the upside even if stock performance has failed to follow suit so where are you see warnings well for for one thing uh you're talking about earnings for the last quarter which
is in the rearview mirror it's interesting to me that you're seeing the stock market go up uh and yet earnings estimates for the rest of the year have actually uh started to come down over the course of the past couple of months and there's been no change uh from the analyst for 2025 so this has been purely multiple expansion related and you mentioned uh the consumer and yeah the consumer is really exceeding expectations there's no doubt about it but we have this wide divide right now uh that's really incredible because real personal disposable income after
tax income in real terms is growing 1% over the past year and your real consumer spending running almost 3% over the past year so the followup from that is we're seeing this Relentless decline in the personal savings rate uh I mean this time last year the savings rate was already pretty low at 42% today it's 2.9 it's only been this low in the past uh 5% of the time it's a 1 12 event so I look at the consumer I know what you're saying but it's really the consumer spending report I would say is a
low quality report because it's not being generated by real income growth it's been generated by continued draw down on the savings rate to historically low levels and when we talk about the recession we seeing recession in real Capital spending the industrial sector is in recession and the housing market has rolled back in a recession these aren't the biggest components of GDP of course that's the consumer but there are segments of the economy that um are operating below the zero line admittedly not the consumer dot dot dot not yet as for your comment on the unemployment
rate you know it's not stable at all uh it's gone up 80 basis points in the past year and that's what's caught the eye of uh J Powell that's the only reason why they're cutting interest rates is they're concern now that there's too much slack being built up in the jobs market so that's the story is that you're not you're not seeing job loss but the unemployment rate is going up and Pal's already told us that is the most important statistic for him right now so David do you think uh do you think that the
FED is behind the curve on this or do you think that this was unavoidable just a just a two-prong answer and and do you think that the recession whether we're in one now or there's there's one that's coming do you think that it's a first quarter next year issue or a fourth quarter this year well it's a it's a no-brainer that the fed's behind the curve and the the yield curve uh speaking of Curves I've been telling you that for quite a while but but J Powell told us that both at the last uh press
conference after the uh July meeting and then last week at Jackson Hall uh when he's talking about how the economy is normalized inflation has normalized to a very large extent and the labor market is not just normalized but there's more slack in the labor market now than it was uh before Co so is he behind the curve well you know a it everything is normal except the FED funds rate and the fed's own admission in terms of where it's guesstimate of where neutral is is 2 and 3/4% that is the normal interest rate for normalized
economy and the normalized economy is what the fed's talking about and they've got the funds rate of 5 and 38 per. so recession or not of course they're behind the curve hey David it's Tim thanks for joining us uh you know I guess I shared that view uh and I I share your view at least that uh Recession Proof uh your term sectors are places at least to be thinking about it's it's fascinating that it's a year where you've had a bit of a barbell already I mean there certainly has been a very defensive uh
play to the market if you look at what's been going on with gold what's been going on with with Healthcare certainly what's going on with utilities how do you how do you characterize uh what you do from here on out because based upon the moves we've had in some of those defensive spaces that's telling you it certainly is a read on some of the things you're thinking have we missed the move in some of these sectors that are not terribly cheap at this point well I of course what happens in those uh defensive sectors is
that they they get rated when investors start to see the economy cooling off and the economy is cooling off uh it's not it's not in recession right now and I think the consensus is that it's not going to go into recession but you know we have the supply side of the economy expanding over 4% and GDP which is what we all focus on let's assume it's running at two and a half to three that's what I'm talking about is we're building up disinflationary slack in the economy so I think what's happening here is that interest
rates have been coming down uh the FED hasn't cut yet but market rate and they will continue to come down so I would say that the certainly the rate sensitive sectors in this environment get rated uh with a higher multiple and I expect that that's going to continue what I call bonds and drag you mentioned utilities which of course has defensive growth characteristics too bonds and drag in the stock market so whether you're talking REITs or Telecom Services utilities yes I think that they're very appropriate right now and being rated appropriately because of the interest
rate Outlook for
