Hedgeye Investing Summit Spring 2026 | David Rosenberg, Rosenberg Research & Associates

Key Concepts

• Macro Tourism: A derogatory term for investors who lack a rigorous, data-driven process and instead chase narratives or mainstream media trends.
• K-Shaped Economy: A divergence where different sectors or socioeconomic groups experience vastly different economic outcomes (e.g., wealth accumulation for the affluent vs. stagnant real income for the working class).
• Equity Wealth Effect: The phenomenon where rising stock market valuations lead consumers to feel wealthier and spend more of their current income, masking underlying income stagnation.
• Rate of Change (ROC): A technical analytical tool used to measure the momentum and direction of economic growth, rather than just absolute levels.
• Fiscal Rectitude: A shift toward disciplined government spending and higher taxation, which the speakers anticipate as a potential political response to rising inequality.
• Base Effects: The impact of comparing current data against previous periods; specifically, the difficulty of maintaining growth rates when compared against high-performance benchmarks from the prior year.

1. Investment Process and Methodology

Keith McCullough and David Rosenberg emphasize that successful investing requires a disciplined, repeatable process rather than reliance on "noise" or mainstream media.

• The "Grind": Both speakers advocate for waking up early (4:00–4:30 AM) to synthesize data, read multiple sources, and update models daily.
• Deliberate Study: They argue that writing down observations and notating research is a "competitive weapon" that improves cognitive retention and clarity.
• Synthesis: The goal is to connect macro data points (policy, geopolitics, economic indicators) to form a coherent investment thesis. Rosenberg describes this as looking at a "constant collage" to determine if the "color of gray" in the probability curve is shifting.

2. Geopolitical Risk and War

The discussion highlights the difficulty of modeling the impact of the current conflict involving Iran.

• Irrational Actors: Unlike the Cold War, where actors were largely rational, the current conflict involves ideological fanaticism. Rosenberg notes that the Iranian regime does not view life as "sacred," making traditional deterrence models less effective.
• Market Impact: Wars are cyclical in market impact but secular in their long-term consequences. The speakers suggest that if the conflict leads to a prolonged naval blockade or energy supply disruption, a US recession becomes the "base case" scenario.

3. The K-Shaped Economy and Political Shifts

The speakers argue that the K-shaped economy is reaching a breaking point, leading to a potential political shift.

• Labor vs. Capital: Rosenberg predicts a shift toward labor and away from capital, driven by a move to the left in US politics. He anticipates higher corporate taxes (potentially returning to 35%) and policies aimed at redressing income inequality.
• Consumer Behavior: While real consumer spending appears robust (2.5%), real disposable income growth is near zero. The economy is currently being propped up by the "equity wealth effect" and credit usage (Buy Now, Pay Later).
• Actionable Insight: Rosenberg suggests that if this political shift occurs, investors might consider favoring discount retailers (e.g., TJX, Ross Stores, Five Below) while avoiding luxury goods.

4. Economic Outlook and Fed Policy

• Growth Turn Down: McCullough’s model indicates a peak in growth in Q1, followed by a "decisive growth turn down."
• Interest Rates: Despite current inflation, both speakers agree that the Federal Reserve will eventually be forced to cut rates as the economy slows, leading to a steepening of the yield curve.
• The "Hope-Based Rally": The current market strength is characterized as a "hope-based rally," which may face significant headwinds post-November as base effects become more challenging.

5. Notable Quotes

• David Rosenberg: "The long term is the sum of all the data points you get over the short term."
• David Rosenberg: "Anything that can't last forever by definition won't."
• Keith McCullough: "Computing power has made the lazy lazier and the shortcuts shorter."
• David Rosenberg: "You know when you're successful in this business... when you can't even tell when work stops and fun begins."

Synthesis

The conversation underscores a transition from a period of excess and "hope-based" market performance to a more challenging environment defined by geopolitical instability and a potential political pivot toward fiscal tightening. The speakers conclude that while the US economy is currently showing a "growth turn down," the sustainability of consumer spending is fragile due to the disconnect between spending and real income. Investors are advised to maintain a rigorous, data-driven process, focus on the "rate of change" in economic data, and prepare for a potential shift in the political landscape that could favor labor-centric economic policies.