Before 2018, the last time it was the year of the dog was 2006, which just happened to be the final year of GDP growth in the previous economic cycle.

Calling himself the skunk at the picnic, Gluskin Sheff chief investment strategist David Rosenberg kicked off John Mauldin's annual Strategic Investment Conference by predicting a 20 percent correction in U.S. equities. The Toronto-based strategist also questioned the constant chorus of high-profile bond fund managers, often led by Bill Gross, who have been proclaiming that the secular bull market in bonds is over since 2010. Today's bubble in bonds isn't in Treasurys, "it's in corporate credit."

If there is a bubble, it is more likely to be found in stocks, not bonds. However, Rosenberg noted that some prognosticators like former Fed chairman Alan Greenspan believe there is a bubble in both financial asset classes.

Rosenberg cited a report from the San Francisco Fed predicting that current price-to-earnings ratios in U.S. stocks are predicting zero real price gains over the next decade. "I think we're going down 20%," he said, adding Gluskin Sheff has moved 25 percent of its $9 billion in assets to cash in recent months.

That will happen quite soon [like next year] just as millennials are finally finding their financial independence after reaching adulthood during the Great Recession that left many of them in a different state of mind than previous generations. Once again, "boomers screwed millennials," the former Merrill Lynch chief economist for North America told attendees. His 2006 prediction that the U.S. would enter a recession triggered by sub-prime mortgage loans didn't win him any friends at Merrill 12 years ago.

On this recent January 3, Rosenberg acknowledged he was stunned to read a prediction of "one more melt-up" of 60 percent by the widely respected Jeremy Grantham, who is often called a perma-bear. That kind of extreme prediction from a well-grounded, value investing legend was downright right scary to him, particularly as the U.S. stock market was starting to go vertical in January.

By the end of January, several observers in the Wall Street Journal were commenting that market behavior was reminiscent of January 1987. "When people remember 1987, they don't remember January; they remember October," said Rosenberg, who launched his own Wall Street career on October 19 of that year.

In his view,  what the S&P experienced in 2017 was nothing less than a "once in a century" phenomenon where there were only eight days of 1 percent up or down movements in the S&P 500. So far in 2018, there have been 16.

One of Rosenberg’s biggest problems with current equity valuations is that the surge in prices during this nine-year bull market has occurred against a backdrop of 2.1 percent GDP growth. Past bull markets typically have taken place during an average cycle of 3.8 percent GDP growth.

Factor that into one of his equations, and Rosenberg estimates the S&P 500 should be closer to 1,500. What he didn't say was that the working-age population during many previous bull markets was rising at a 1.5 or 2.0 percent rate, not the current 0.5 percent rate.

GDP growth equals productivity growth plus population growth and, while both have been soft for 15 years, the two post-2000 cycles obviously have been very different from the 20th Century. They fail to address the long tail of people living well past past traditonal retirement age. Longevity—and its implications— was a primary topic at Mauldin's event in the afternoon.

Another factor is misguided monetary policy; the Fed hasn't changed its inflation target of 2 percent for 25 years. "Maybe it [inflation] is really 1 percent" in a technology-driven world where falling prices for tech products are increasing their share of total GDP, Rosenberg suggested.

Like a cat chasing its tail, the Fed's relentless pursuit of an elusive goal is fueling asset price inflation. Even though the central bank has raised rates five times since 2015, we're still in an easy money world and the 10-year Treasury is unlikely to rise above 3.25 percent.

That doesn't mean advisors should expect a Bernanke-Yellen clone. "I think [new Fed Chair Jerome] Powell is going to be more hawkish than people think," he said.

Ultimately, he thinks there will be a recession in 2019 that will be a direct or indirect result of the Fed's tightening cycle. Since World War II, there have been only three central banking tightening cycles—in 1953, 1983 and 1994—that have managed to avert recessions and achieve "soft landings," largely due to luck.

Many Wall Street strategists have applauded the policies of the Trump administration but Rosenberg isn't one of them. There is no evidence in terms of GDP growth that trade deficits are bad or good.

But if a government increases its own spending and cuts taxes to increase consumer spending, it's inevitable that imports will rise. Tax cuts are viable instruments to combat recessions but of little value this late in the cycle, Rosenberg said.

While waging war on the trade deficit straw men, there is the more serious issue of U.S. federal budget deficits, which are expected to rise from $550 billion to over $900 million this year. Never have deficits been that high except during periods of recession or war, he observed.

Nor was Rosenberg a fan of Treasury Secretary Steven Mnuchin, who declared at this year's Davos conference that the U.S. wanted a weaker dollar. The last Treasury secretary to do that was James Baker on October 18, 1987. Rosenberg began his Wall Street career the very next day.

U.S. debt is surging to record levels, from $33 trillion at its pre-crisis peak to the current level of $50 trillion. In the four years after the Great Recession, it was the federal government that was creating all the debt.

However, in recent years it has been corporations issuing debt, largely to buy back stock. Rosenberg didn't say it, but some CEOs are going to look very stupid it their shares fall substantially below repurchase levels.

Everybody says, "Cycles don't die of old age, but they do die," Rosenberg told attendees. In the next recession, federal budget deficits could rise to 8 percent of GDP, or near their levels in the Great Recession.

When the next recession arrives, the Fed may have a few weak weapons in its arsenal if it continues to raise the Fed funds rate this year. But the federal government is already unloading most of its fiscal policy tools at the present, prompting many economists to think current fiscal stimulus will push a recession further into the future than 2019.

But as Rosenberg and others like Morgan Creek Capital's Mark Yusko have noted, the U.S. savings rate is near a historic low at 2 percent, and there are worrying signs like soaring delinquencies in the sub-prime auto loan markets. The notion of consumers being financially prepared for the next downturn is ludicrous.

Those are some of the reasons why Rosenberg believes there will be a recession next year. "In two years, I'll be very bullish," he told attendees.