Despite the Dow reaching record highs following the Federal Reserve’s optimistic outlook and plans to cut interest rates in 2024, economist David Rosenberg is cautioning against premature celebration. He contends that the Fed’s growth projections signal overvalued stocks and a looming recession.
Rosenberg’s Warning
In a series of posts on December 13, 2023, Rosenberg questioned the disconnect between the stock market’s anticipation of a 10% rise in corporate earnings and the Fed’s more conservative projection of 3.8% nominal economic growth in 2024. He argues that the disparity suggests investors may be overly optimistic, overlooking potential recession risks indicated by the Fed’s growth forecast. Rosenberg’s analysis highlights concerns about achieving the projected economic growth and raises questions about the sustainability of current market valuations.
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Source: Business Insider
