The ‘Great Repression’ is here and it will make past downturns look tame, economist says.........."In the “base case†for the U.S. economy, published by his firm, Rosenberg Research, the economy “reopens†in May, in a staggered approach across industries and regions. There are “periodic setbacks in terms of COVID-19 case counts…sufficient to make people less comfortable and confident about spending then they did prior to the crisis. A vaccine is not developed in this forecast, but treatment that alleviates the worst respiratory symptoms†is developed within the next six months, he writes.
What does that mean for the economy and financial markets?
A 30% contraction in real gross domestic product in the second quarter, negative year-over-year consumer price growth for 5 quarters, and an unemployment rate of 14.2% by the end of 2020, averaging 13% throughout 2021.
The 10-year Treasury yield TMUBMUSD10Y, 0.669% sinks lower and lower each quarter, to 31 basis points by the fourth quarter, and averages 18 basis points throughout 2021. Yields fall as bond prices rise. ......
..........Rosenberg assumes stocks sink 30% in the coming months, then spend most of the next 18 months grinding higher to valuations about 10% lower than today’s levels.
Rosenberg also lays out a “best case,†which depends on a vaccine or treatment emerging in the next six to 12 months. That outlook includes an unemployment rate averaging about 9% for the next two years, a stock-market bottom of 2,500 for the S&P 500 in Q2, and a cyclical low of 29 basis points for the 10-year note in 2021...........
https://www.marketwatch.com/story/the-great-repression-is-here-and-it-will-make-past-downturns-look-tame-economist-says-2020-04-27?mod=home-page
