Rising speculative risk in equity markets, says Rosenberg Research's David Rosenberg

Summary

David Rosenberg, founder and president of Rosenberg Research, joins The Exchange to discuss record-high Russell 2000 and rising speculative risk in equity markets. He argues the small-cap rally is junky and prefers the quality-focused S&P 600. He also says AI dominance is spreading through the market but the total addressable market is uncertain, and he expects inflation to surprise to the downside, supporting Fed cuts and long-duration Treasuries.

• Russell 2000 hits record highs and outperforms the S&P, raising speculative-risk concerns.
• Rosenberg calls Russell 2000 the junkiest index and prefers S&P 600 quality.
• Unprofitable companies have outperformed profitable ones by 2,000 basis points since Liberation Day.
• AI and technology dominance has spread into energy infrastructure, utilities, pipelines, and financials.
• Rosenberg questions AI total addressable market and compares investor behavior to the late-1990s internet bubble.
• Inflation data were described as strong, with core inflation near target after stripping out tariffs.
• Shelter disinflation and lower food and agriculture commodity inflation are seen driving downside inflation surprises through 2026.
• The Fed is expected to cut rates eventually but is currently on hold and sounding hawkish until a new chair arrives.