Rosenberg says strong possibility Fed does not raise rates this year

Tue May 26, 2015 3:31pm EDT
 
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By Jennifer Ablan

NEW YORK (Reuters) - David Rosenberg, chief economist and strategist of Canadian asset manager Gluskin Sheff, said on Tuesday he believes there is a strong possibility the U.S. Federal Reserve will not raise interest rates this year.

"I'm not going to say this economy is strong," Rosenberg told Reuters. "To me, the bar is set fairly high."

Rosenberg, a highly regarded economist, has often been labeled a "permabear" for his gloomy outlook on the U.S. economy in the past.

He joins a growing list of investors, strategists and economists who believe the Fed could hold off raising short-term interest rates until 2016.

Earlier this month, Jeffrey Gundlach, chief executive of investment firm DoubleLine Capital, said the lack of wage inflation will keep the Fed from hiking rates for the first time in nine years.

"They've waited this long, what's the hurry?" Rosenberg said. Fed chair Janet Yellen's speech on Friday was a reiteration of the transitory nature of the U.S. economic slowdown, but her case for an interest-rate cycle came with "so many caveats. I believe they can stay lower for longer."

Rosenberg, whose Toronto-based firm had $8.6 billion in assets under management, said the fundamental bull market in global stocks is still intact because of accommodative central banks and that his firm has been moving aggressively into Japanese equities.

"We haven't taken profits in the U.S.," he said. "We are much more selective in this market."   Continued...