David Rosenberg: “Every Bubble Pops” — Markets Aren’t Ready

David Rosenberg argues markets are in a bubble driven by investor behavior, leverage, positioning, and valuations rather than AI technology itself. He explains his Rosenberg Research ETF strategy: a diversified, low-to-moderate-risk approach with about 50% equities, 35% bonds, and 15% hard assets, emphasizing front-end Treasurys, under-owned bonds, and emerging Asia. He expects labor-market weakness to become the key fourth-quarter surprise and sees investors and the Fed shifting focus from inflation back to recession risk. - Rosenberg calls AI/tech a bubble in investor behavior, citing margin debt up 50%, 78% bullish sentiment, 1% mutual fund cash, record 73% household equity allocation, and Shiller CAPE at 41. - His model portfolio and ETF have not owned direct tech stocks or tech ETFs and are positioned as a diversified, lower-beta multi-asset strategy. - Current allocation is about 50% equities, 35% bonds, and 15% hard assets/commodities. - He is bullish on front-end Treasurys, especially two-year notes, as a Fed-cut and labor-market/regime-shift bet. - He likes bonds broadly because they are under-owned and sees post-midterm fiscal gridlock as a Treasury positive. - He uses emerging Asia/MSCI Asia exposure to retain indirect AI and semiconductor exposure without direct expensive tech ownership. - He expects the labor market to surprise in Q4 with repeated negative payrolls and rising unemployment, shifting attention from inflation to recession.