David Rosenberg Sees Another Recession Coming (KFT, ABX, XOM, SLW)

Noted bear David Rosenberg of Gluskin-Sheff was just on CNBC and Rosenberg thinks we may be headed for another recession, and that there are more risks to the recovery than there were in 209. Rosenberg said he sees a recession on the horizon, as food and energy costs are going to hit the consumer, perhaps as early as the second quarter. Rosenberg cited the fact that average weekly earnings are down four months in a row. He said that the payroll tax cut enacted in December has helped, but the incremental benefit of this subsides after this quarter. Rosenberg said he thinks that the U.S. consumer will cut discretionary spending later in the year. He doesn't believe that the consumer can handle rising oil prices. When asked how he could solve this, he said there could be additional monetary and fiscal policy changes, but he doesn't see QE3 happening because of potentially high inflation. Rosenberg noted that there is an 86% correlation between the size of the Federal Reserve's balance sheet and the stock market. He said to buy large cap names versus small cap names, and specifically, energy, food, and precious metal miners. Names in these spaces include Kraft KFT, Exxon Mobil XOM, Silver Wheaton SLW and Barrick Gold ABX. Rosenberg said to focus on strong balance sheets. Rosenberg was also very bullish on precious metals, as they have now become plays on recurring event risks, such as what we saw happen in Japan.