David Rosenberg discusses 'uncertainty' (February 5, 2025) and its implications for global trade, monetary policy, and investment strategy. He highlights political risk centered on Donald Trump (possible global trade war), repeated references to "uncertainty" in FOMC minutes under Jay Powell, and argues uncertainty should raise risk premia and push investors to be more conservative. He notes Warren Buffett holding ~30% cash as a signal of elevated risk and situates the moment as a potentially long-cycle ("60-year"/year of the wooden snake) event.
Chapters
The central theme I'm hearing from you is actually uncertainty. Yogi Berra famously said, it's always difficult making predictions, especially about the future. You know the Chinese proverb, may we live in interesting times. That's not a blessing, that's a curse. And this is the year in the Chinese zodiac, it is the year of the wooden snake, which happens every 60 years. So I would say that we're probably into a 60 year sort of event. And I think the uncertainty really comes from one specific corner, which is Donald Trump. Will he end up plunging the world into a global trade war, or will the rest of the world just, you know, acquiesce and do everything that he wants? Jay Powell and his brethren use the term uncertainty no fewer than a dozen times in those FOMC minutes. So I would just posit that, you know, if Jay Powell, who has more information than the rest of us, that much is true. If he's uncertain, then we should all be uncertain. And when you tie that into an investment philosophy, what does uncertainty mean? Uncertainty means, or what it should mean is higher risk premia across all asset classes. Ergo, become more conservative in your investment style. Because we are facing a different environment than we have in the past couple of years. And when things change, you should change. And then layered on top of that, we should all be asking the question, why is Warren Buffett sitting on a 30% cash position, which he's never done before? So what's Jay Powell saying that all the big bulls out there aren't saying? And why is Warren Buffett positioned the way that he is? Because I don't know anybody else. No, I don't know anybody else with the investment acumen, track record, or experience that Warren Buffett has that's sitting on 30% cash right now, maybe, except for me. Okay.
