We're at the bottom on stocks, says Bob Doll, investment firm BlackRock's vice chairman, in a recent interview.
Doll said the floor was hit by the Dow and S&P after they both fell precipitously on June 26, with the Dow down 358.41 points, the S&P 500 down 38.82. These were lowest levels for stocks in 21 months, and they have fallen since.
At the beginning of the year an optimistic Doll had predicted that "equities would grind higher."
Despite the recent selloff, Doll said, "We still think that's the case for the second half. One of our [earlier] predictions was that we would see a new high. I think we're going to eat some crow on that one."
Doll is not predicting a quick, vigorous V-shaped comeback for stocks, and even though he thinks the bottom has been reached, it could be further tested in the immediate future.
"But as we said in mid-March, we think that was the low, [when] the S&P 500 got to 1,257. We're a couple of percents away, so this is test time," he says.
"The fact that we went from 1,250 to 1,450 in the S&P in two short months really surprised us. That we fell back was no surprise at all."
Serious problems still afflict the economy, Doll points out.
"We still have inflation problems, slowing growth, the credit issues, you know the litany. Therefore, stocks can only grind higher. It's going to be a difficult environment, we think."
Grind seems the operative word in his comments, suggesting a slow, laborious climb back for stocks.
"The worst of the credit crunch is behind us. Some things have gotten better. Markets anticipate, markets make bottoms before all the fundamentals do. We know that. This is obviously a test time. We may get some more tests along the way.
"We believe that all that happened, the Fed opening the window, the crisis in [consumer and investor] confidence, all the measures of bullishness, bearishness, cash on the sidelines, a lot of that pointed to a pretty important bottom in March, we think."
Could continually rising oil prices derail the market's upward momentum?
"As the global economy slows, oil prices keep going up," says Doll. "That is certainly a monkey wrench."
Doll has also predicted that the dollar would rise against the euro but fall against some of the developing market countries. He has not backed away from his forecast.
"The European economy is slowing," he said. "We have a pretty aggressive monetary and fiscal policy."
"In Europe...[they] have a pretty stubborn monetary and fiscal policy, and therefore I think that we have some ingredients in this country for some better news on the currency at least relative to the troubled euro."
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