Long-time bear David Rosenberg warns of massive bubbles in stocks and bitcoin
Rosenberg believes the bubble is not going to burst as long as the US Federal Reserve continues to hold the benchmark interest rate near zero.
January 04, 2021 / 09:17 AM IST
Former Merrill Lynch economist and long-time bear, David Rosenberg, believes the sharp rally in the stock markets and bitcoin has pushed the two asset classes to the "bubble" zone.
In an interview with CNBC, Rosenberg said crowded trades amid a struggling has pushed the stock market to bubble-like levels, although he believes it is not going to burst as long as the US Federal Reserve continues to hold the benchmark interest rate near zero.
"Based on our [stock market] valuation work, we are anywhere from 20 percent to 30 percent overvalued based on a whole bunch of different metrics," the economist told CNBC’s "Trading Nation".
"We have to understand though we are investing in a bubble."
The headline indices in the US kicked off calendar 2021 in record territory. The S&P 500 and Dow closed at all-time highs on Thursday, rising 16.3 percent and 7.3 percent, respectively, in the year gone by. Meanwhile, the tech-heavy Nasdaq had its best year since 2009, surging almost 44 percent in 2020.
Rosenberg voiced similar concerns over bitcoin, which rose over 300 percent in 2020, its best annual performance since 2017. The world's largest currency crossed the $30,000 mark recently for the first time.