- David Rosenberg expects US stocks to underperform in 2021 as they've climbed too high.
- The veteran economist warned the end of fiscal stimulus will erode economic growth.
- Rosenberg said the Federal Reserve can't prevent the next market correction.
- See more stories on Insider's business page.
David Rosenberg sounded the alarm on US stocks, predicted an economic slowdown next year, and warned the Federal Reserve won't be able to stop the next market slump in a recent RealVision interview.
The chief economist and strategist of Rosenberg Research & Associates also called out the Fed for shoring up asset prices, trumpeted Japanese stocks, and asserted the Evergrande fiasco could dampen global growth.
Here are Rosenberg's best 10 quotes from the interview, lightly edited and condensed for clarity:
1. "At this point in the stock market, you're chasing nickels in front of the steamroller. We've harvested all these returns, there's not much left."
2. "The US stock market is trading at multiples that we've only seen one other time in the past century. And that was in 1999 to 2000, during the dot-com bubble."
3. "If I was a long-only equity investor and I had to be fully invested in equities, I would not be in the S&P 500 right now. I would be in Japan, their valuations are just much more compelling. The earnings stream that you're paying for in Japan is so much more compelling than in the US stock market right now."
4. "It's going to be a challenging year for equities. Not everything is going to go down, but if you're a passive investor, chances are you'd be better off just being in cash than being in equity market indices."
5. "We're in a tremendous bog of uncertainty in so many different respects - financial, political, economic."
6. "I shudder to think what the next recession is going to bring. Global debt is $300 trillion, it's 350% of GDP. Be careful what you wish for as rates go into the next rate cycle, because it's probably going to be enough to tip the balance towards a recession - maybe not next year, but probably the year after that."
7. "Your taper did nothing for the labor market, your quantitative easing just boosted risk appetite and animal spirits and had nothing to do with the labor market. Why don't you come out and just say, 'We're doing QE because we think we're in an asset bubble, and we're trying to defuse it?'" - criticizing the Federal Reserve.
8. "We're going to have the mother of all fiscal-stimulus withdrawals next year. It's equivalent to almost 3 percentage points of GDP. The fiscal squeeze next year is going to be equivalent to 250 basis points of Fed rate hikes."
9. "The Fed is not going to be able to control the market that much. They will come in guns blazing, but they will not prevent the correction. But they'll be there to pick up the pieces."
10. "The Evergrande situation is really emblematic of what happened in terms of China's debt and property bubble. It may well be contained within China from a financial standpoint since they basically own all the bonds. But China is almost 20% of global GDP, so it's certainly going to have a global economic effect."