Well Known Wall Streeter Speaks out about "Hard Times Coming" .....

DAVID ROSENBERG: I don't want to alarm anyone but ...

David Rosenberg, Contributor

David Rosenberg Background:

http://www.businessinsider.com/david-rosenberg-warns-of-recession-2016-6?op=1

David Rosenberg is chief economist and strategist at Gluskin Sheff, and was previously the chief North America economist at Merrill Lynch.

Before getting into the details of the jobs report, let me just quickly state the broad conclusions up front.

My forecast is that the long lineup of Fed officials who were so vocal about raising rates this summer are going to be too busy at summer school (as they go back to the drawing board) to tighten monetary policy.

Hopefully they have been silenced for good and learned a valuable lesson that they really should cast their vote at the FOMC meeting rather than in front of the TV cameras.

As for the markets, the data imply a reversal in investor-based odds of a rate hike, which had moved to a better than 50/50 bet for late July, and that in turn is bearish for the U.S. dollar, but bullish for Treasurys, curve-steepening trades, gold, emerging markets and rate-sensitive stocks like utilities and telecom services.

Defense sectors like consumer staples should benefit, but the banks that had been hoping for the Fed to provide some net interest margin expansion are certainly not going to be celebrating today's data.

We had been saying for some time that if there was something in recession in the U.S. it was productivity and that a huge gap had opened up over the past six months between weak business output growth and the pace of job creation.

Well, now we know how that gap is being resolved - with the latter playing catch-down to the former.

As everyone is left wondering "what happened?" here is what happened.

Productivity declined at a 1.7% annual rate in Q4 of last year and followed that up with a 1.0% drop in Q1. On average, labor input expanded at nearly a 2½% annual rate and nonfarm business output growth barely averaged 1%.

So do the math.