Bob Doll, Chief Equity Strategist at BlackRock, one of the world’s largest asset managers, is striking a very bullish tone in his latest strategy note. This is the polar opposite from his former Merrill Lynch companion, David Rosenberg, who says we are not recovering (see here). Doll says the recovery is the real deal and that you better jump on board the risk asset train before you get left behind. He says the March 2009 lows are here to stay and the withdrawal of government stimulus will actually prove the recovery to be quite real (yours truly is a bit more skeptical):
“In our view, March 2009 marked the primary low for this bear market. We are a year past that now and, barring a significant double dip in the economy, the odds point to 2010 as a positive year for equities and other risk assets. Some argue that the recovery process is artificial, mainly reflecting the impact of government intervention, and that the economy’s day of reckoning will come as stimulus is withdrawn. Skepticism about the durability of a recovery is common following recessions, especially after a severe one, but recent history suggests that the world economy almost always adapts and returns to growth. Minus any significant negative external shocks, we believe this recovery should follow suit.”
Doll is also very bullish about the jobs market. He thinks Q2 could produce 300,000 jobs:
“In fact, we would argue that the second quarter could bring as many as 300,000 new jobs given that the average work week, temporary hiring, productivity and profits—four leading indicators of job growth—have all moved up.”
He says the flows into equities, accommodative liquidity conditions, and a healing economy continue to justify the risk trade:
“Turning back to the markets, after six negative weeks, flows in equities have been positive for three weeks running. In our view, accommodative liquidity conditions, combined with a healing economy, continue to support a pro-growth investment stance. While this will be tempered by deleveraging and debt paydown, we would argue that a focus on risk assets, and especially equities, makes sense.”
I’ve read Bob Doll since he was a Merrill guy many years ago and like his former colleague, David Rosenberg, he tends to prefer a certain extreme and consistent market position. Nonetheless, as one of the largest asset managers on the planet, it would be foolish to ignore the opinion of BlackRock in general.
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.