David Rosenberg: The Fed Is Going to Trip, Recession Odds Now Above 50%

The current economic landscape exhibits extreme imbalances and fragility, signaling that the long-running bull market has likely entered a dangerous "bubble" phase. Mega-cap tech stocks currently mask significant underlying weakness, as the median stock has already entered a bear market. The Federal Reserve’s aggressive tightening into a supply-constrained economy with a flat yield curve risks a severe policy error, increasing recession odds to over 50-50. Investors should prioritize capital preservation by reducing equity exposure and reallocating toward Treasuries, which offer superior risk-adjusted returns and safety. With non-recurring fiscal stimulus fading and volatility rising in AI-related capital expenditures, the economy faces a substantial growth slowdown. David Rosenberg, founder of Rosenberg Research, emphasizes that maintaining liquidity and avoiding consensus-driven investment strategies are essential for navigating this period of heightened uncertainty and potential cyclical reversal.