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Rosenberg bullish on energy stocks, cautious on growth due to oil shock

Earlier in the week, David Rosenberg wrote that he is bullish on energy stocks due to the exogenous shock that tensions in the Middle East are creating in the energy complex. However, this is not a bullish story for overall U.S. growth or for business profit margins. In the Bloomberg video below Rosenberg tells Margaret Brennan that he believes U.S. growth will slow in the second half of the year due to rising oil and food prices and the anti-stimulus state and local governments will apply starting in July for fiscal year 2012. Rosenberg points to the huge downdraft in Treasury yields as an indicator that this is a deflationary shock rather than an inflationary one.

The key to whether this shock is fatal for a nascent recovery has much to do with Saudi Arabia, Rosenberg says. He wrote:

"If Libya can spark a $10-a-barrel response, imagine what a similar uprising in Saudi Arabia could unleash. Do the math: we’d be talking about $200 oil."

Indeed, the Saudis are the key, not just in terms of threats over regime change in the Middle East but also in terms of increasing supply to meet global oil demand.

About 

Edward Harrison is the founder of Credit Writedowns and a former career diplomat, investment banker and technology executive with over twenty years of business experience. He is also a regular economic and financial commentator on BBC World News, CNBC Television, Business News Network, CBC, Fox Television and RT Television. He speaks six languages and reads another five, skills he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College. Edward also writes a premium financial newsletter. Sign up here for a free trial.