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David Rosenberg is Founder and President of Rosenberg Research. Brian Belski is Chief Investment Strategist of BMO Capital Markets. They both sat down with me for separate interviews at The 2023 MoneyShow Toronto to share their take on markets – and their outlooks could not be more divergent.

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David believes the Canadian economy is already in recession, and the U.S. is on the threshold of one. He believes past interest rate hikes, elevated debt-service burdens, and tighter lending standards will combine to push both of those economies over the edge, and he recommends defensive investments like long-term government bonds and high-quality corporate debt.

He also believes monetary policymakers will have to backtrack on their “higher for longer” interest rate stance, and he favors “investing around the cycle” by limiting stock market exposure. Among his parting words: “This is a period of capital preservation.”

Brian is much more optimistic in his segment. He notes that stocks are positive seven years out of 10 on average. He stresses that recent recession calls simply haven’t panned out, and he says investors shouldn’t worry so much about the macroeconomic backdrop. He specifically highlights the balance sheet strength of U.S. and Canadian banks as a bulwark against credit problems – and says a solid job market will help consumers cope with higher debt loads and debt payments.

On the Fed, he acknowledges that Powell and Co. were late to start hiking rates to combat inflation, but he thinks they’re back on track now. He favors more offensive stock market sectors like financials and technology, as well as communications services in the U.S. and materials in Canada. Finally, he thinks the S&P 500 could beat his base-case target of 4,550 and finish closer to his “bold case” level of 5,050.

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