Recession Fears Premature to Bob Doll, Who Sees Stocks Rising

(Bloomberg) -- Worries that the U.S. economy will tip into a recession are overblown for now and stocks can extend their recent rebound even as economic growth slows, according to Bob Doll at Nuveen Asset Management LLC.

Stocks are unlikely to retest all-time highs this year, though they will hand investors positive returns, the veteran money manager said in a Bloomberg TV interview. While he sees the S&P 500 Index climbing as much as 7 percent from Tuesday’s closing level, his preference is for emerging markets where he sees a weaker dollar boosting returns.

Strong payrolls data and soothing words about a potential for pausing rate hikes from Federal Reserve Chairman Jerome Powell last week are emboldening those who believe an almost 10 percent rally in the S&P 500 since Christmas Eve has further to run. Still, there’s a myriad of concerns that may hamper any advance for the equity market in 2019, Doll cautioned, saying his best guess is for the S&P 500 to rise to 2,650 or 2,750 by the end of the year.

“When the dust settles, if it ever does, the fear of recession will prove to be premature,” Doll, the 64-year-old senior portfolio manager at Nuveen, said. “We will have growth, yes, slowed from the 2018 pace and we will have up earnings, yes, slowed from the 2018 pace, but acceptable for investors and that will allow equity markets to move higher.”

Doll’s optimism isn’t a lone voice in financial markets. Citigroup Inc. and Bank of America strategists have advised buying stocks after the recent sell-off, though factors from Brexit to the U.S.-China trade tensions could flare up during the course of the year and dampen risk appetite.

“It’s a complicated list of issues that could make it better or worse than our 2,650-2,750 guess for the end of this year,” he said. The S&P 500 climbed 1 percent to 2,574.41 on Tuesday.

Still, the world’s biggest economy is growing at a healthy clip and the U.S. government shut-down is unlikely to dent growth that will remain above its long-term trend, said Doll.

“If we get a long shutdown, sure GDP gets hurt, but in a matter of days or weeks, not really,” he said. “Especially given the jobs number from last week, the good news out of the Fed and their commentary, all that tells us that the government shutdown issue becomes less and less important.”

To contact the reporters on this story: Adam Haigh in Sydney at ahaigh1@bloomberg.net;Shery Ahn in New York at sahn53@bloomberg.net

To contact the editors responsible for this story: Christopher Anstey at canstey@bloomberg.net, Joanna Ossinger, Cormac Mullen

©2019 Bloomberg L.P.