The Frontier

David Rosenberg notes that shifting from single-party rule to political gridlock historically leads to an economic slowdown, lower inflation, and declining bond yields 80% of the time over the subsequent two years.

David Rosenberg argues that the historic tariff increases under the Trump administration failed to trigger core inflation. In fact, the year-over-year core goods CPI trend decelerated from 1.5% to below 0.7%, hitting a four-year low.

David Rosenberg states that energy shocks only create sustained inflation when they feed into wages. This dynamic is absent today, meaning rising energy costs act primarily as a tax on consumer demand rather than a self-reinforcing wage-price spiral.

David Rosenberg attributes 90% of the recent surge in bond yields to rising real rates rather than inflation expectations. This shift reflects intense capital demand from tech hyperscalers funding their artificial intelligence infrastructure.

David Rosenberg argues that Kevin Warsh's hawkish policy shift is driving bond yields higher. Unlike previous leaders who prioritized core inflation, Warsh focuses on headline measures, despite previously favoring the Dallas Fed trimmed mean of 2.3%.

David Rosenberg highlights the upcoming November 4th Treasury funding announcement as a major market catalyst. A shift toward issuing short-term bills over long-term bonds could trigger a massive rally in the 10-year Treasury.

David Rosenberg points out that the US housing market is experiencing a quiet recession. Home builders are heavily discounting products, new home prices are down 8% to 12%, and residential rents continue to deflate.

Patrick Szna warns that the capitalization-weighted S&P 500 masks severe underlying stock market weakness. Only 20% of S&P 500 stocks remain above their 50-day moving average, and the median stock is down 16% from its peak.

David Rosenberg maintains that the secular bull market in gold remains intact despite rising real rates. Global central banks continue to diversify their foreign exchange reserves away from US dollars and into gold bullion.

Patrick Szna highlights a massive positioning pivot in the NASDAQ, where speculative net longs surged to the 100th percentile. This positioning spike was primarily driven by short covering rather than new long entries.