David Rosenberg prediction

I think that last year he said that there was a very low chance of a recession in 2024. he’s changed his mind a bit:

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Meh, perma bears just have to wait long enough and they will eventually be right.

This is what he said one year ago:
2/7/23

stocks could plunge another 30%: ‘The recession’s just starting’

Quick guess as to how stocks performed the rest of 2023 after that stellar prediction?

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What do Yogi Berra and Niels Bohr have in common?

Prediction is very difficult, especially if it’s about the future! - NB

It’s tough to make predictions, especially about the future. - YB

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Making predictions is easy.

Getting them right is hard!

The Captain

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Even a stopped clock is right twice a day!!

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Um, who is David Rosenberg?

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The stock market and economy goes up about two-thirds of the time. Predicting a downturn is a fool’s errand.

intercst

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Curious that he’s a former analyst for Merrill. I wonder how that came to be?

Here’s a guy who’s actually employed with a quite different prediction. (Gift article, if I’ve done it correctly.)

https://www.wsj.com/economy/goldman-sachss-chief-economist-has-nailed-big-calls-heres-his-next-one-84122b35?st=mehnnymrqife8q9&reflink=desktopwebshare_permalink

Goldman Sachs’s Chief Economist Has Nailed Big Calls. Here’s His Next One.

Jan Hatzius was prescient on housing in 2008 and a soft landing in 2023

[Goldman Sachs] is upbeat about the economy this year. Its economists see healthy growth of 2.3%, unemployment staying below 4%, and the probability of recession at just 15%—all more optimistic than the consensus. And they see inflation, excluding food and energy, continuing to fall, to a little over 2% (using the Federal Reserve’s preferred measure) by year-end.

Forecasts are a dime a dozen. Why care about Goldman’s? First, because its economists have been firmly in the soft-landing camp, which now looks prescient.

Second, Jan Hatzius, the firm’s chief economist, made an equally out-of-consensus, and prescient, call in the opposite direction in 2008. Back then, he correctly warned that mortgage defaults could cause a severe recession

Nailing one big call might be luck; nailing two gets you a following. Hatzius is one of the most closely followed economists on Wall Street and in Washington.

Here is my prediction, (partially cribbed from Barron’s):

Start looking at dividend stocks. Not the ultra high but “pretty high”, well supported by stalwart companies.

Thesis: at the moment cash is paying well. Bonds, bills, even money markets paying 5% and better, CD’s doing the same. If/when the Fed begins lowering rates (my prediction: 3rd quarter best, more likely 4th) all the cash now earning that easy money dividend income will be looking for someplace to go. The easiest one to negotiate will be Dividend Champions (or semi-equivalent). The dividend will be secure, and the inflow of cash will drive the stock price as well. If you get there early you will reap the rewards both ways, if you wait the yield will go down. It will still be OK, just not as lucrative as you might manage by beating the crowd.

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I have no idea what this group’s track record is, but for your consideration … (cue The Twighlight Zone music)

The economy looks set to grow 2.2% this year after adjusting for inflation, according to the National Association for Business Economics. That’s up from the 1.3% that economists from universities, businesses and investment firms predicted in the association’s prior survey, which was conducted in November.

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ARM Holdings (ARM) made a new all time high premarket this morning, up 21% since I bought my first lot 12 days ago. Follow the money not the seers!

The Captain

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Is Nvidia using a bunch of ARM’s patents? Why is ARM going up?

Because “they” think it will also participate in the great AI goldmine.

Growth plus high margins.
“We project revenue to increase 18%…We project gross margins to remain over 95% in the foreseeable future (96.7% in Dec-Q vs. 96.3% a year earlier), far superior to the broader chip industry, given the licensing/royalty nature of ARM’s business model.”
~ CFRA, S&P Global

DB2

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A thread on ARM could be interesting…

Because every single Nvidia super chip uses multiple Arm cores. Not Intel. Not AMD. Not RISC-V.

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The other thing about ARM right now is that the float (the number of shares available for trading compared to the total number of shares existing) is very low. I suspect that at some point, Softbank will slowly sell some shares to raise cash for other investments. I think the float is still less than 10% of total shares or thereabouts.

The thing I like about ARM is the huge number of products its architecture is in and they are collecting royalties like there is no tomorrow. iPhones a few millions, Tesla EVs a few million, Nvidia, probably a few million. Back on 12/19/1999 I wrote: “Their customers are a Who is Who in Telecosm.”

Back to ARMHY. If we compare it to Intel, it is overvalued. If we compare it to DELL, it is undervalued. So let’s look at the stories. Intel is inside mainly personal computers and servers while ARMHY is inside everything mobile and intelligent and therefore ARM should ship many more units than Intel. Intel has bricks and mortar and fabs while ARM does not and therefore ARM should be able to earn higher margins. Customers like to have second sources for their products and Intel has no choice but to have competition. I believe they have licensed the manufacture of Pentiums to IBM and others and there are several competitors such as AMD. Since ARM is fabless and it has several “partners” who do the manufacturing, it has a better solution to the second source problem. Finally, I love ARM’s marketing, it is what I call “Marketing by Name Dropping.” When I had a management consulting firm that is the way we did our marketing. We determined which were the most powerful families in Venezuela and we practically gave away our work to the first two that were willing to hire us. After that we used their names in our advertising: “Join the Happy Family of Satisfied G&S Clients.” and we then gave out a list of customers and their telephone numbers. ARM is doing something similar. Visit their home page and see all the name dropping they do. Their customers are a Who is Who in Telecosm.

That was a quarter century ago and they are just getting better. Two key ingredients are RISC vs, CISC architecture and low power consumption. If power was an issue 25 years ago now it’s even more so with the Global Warming crisis. AI or no AI, ARM is a fabulous company.

The Captain

ARMHY articles at Software Times

https://www.google.com/search?q="armhy"+site%3Asoftwaretimes.com&newwindow=1&safe=images&sca_esv=85af15397c77c0f6&hl=en&as_qdr=all&sxsrf=ACQVn09D1bFzcPA1F0BcPuhpplchqgtM3Q%3A1709055316269&ei=VB3eZdLiD7GP9u8PpOGcCA&ved=0ahUKEwjS3JuYh8yEAxWxh_0HHaQwBwEQ4dUDCBA&uact=5&oq="armhy"+site%3Asoftwaretimes.com&gs_lp=Egxnd3Mtd2l6LXNlcnAiHiJhcm1oeSIgc2l0ZTpzb2Z0d2FyZXRpbWVzLmNvbUihRVCIGFjxLnACeACQAQCYAbUBoAGhAqoBAzAuMrgBA8gBAPgBAZgCAKACAJgDAIgGAZIHAA&sclient=gws-wiz-serp#ip=1

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Ah, ARM

Another score of a useful METAR thread.

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