Guru watch

“This bear is a different type of animal,” David Rosenberg, founder of Rosenberg Research & Associates, tells Michelle Makori of Kitco News. Normally, he says, the market copes well when the Federal Reserve starts to raise interest rates. But this time, markets stumbled almost as soon as rates started to rise.

Why? There are two main reasons. Firstly, the Fed left it too long to act and so “the inflationary situation is out of control”. Secondly, inflation is being driven mostly by supply-chain disruptions, and the only way central banks can tackle that is by “crushing demand”. That, he says, is why “a recession is staring us in the face”. In fact, central bank efforts mean that, contrary to most people’s views, “inflation is gonna melt in the coming year”.

What does that imply for markets? Gold remains useful as a source of “ballast” for your portfolio. Industrial metals have been falling back in recent months due to the stronger US dollar, but the agriculture and energy sectors are both enjoying “secular tailwinds”. Oil prices are unlikely to go up during a recession, he says, “but I don’t see us going back to $50 or $60” a barrel.

But the best bet for 2023, as far as Rosenberg is concerned, is likely to be government bonds. “Treasury yields always go down in a recession” – which was even the case in the inflationary 1970s, stresses Rosenberg – and so longterm US government bonds “are going to be a great place to be”. If you are investing in stocks, choose “high-quality, defensive” ones that “pay a decent dividend”.