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Strategist Bob Doll: Fed Is 'Held Hostage' by Global Markets

Strategist Bob Doll: Fed Is 'Held Hostage' by Global Markets

(Dollar Photo Club)

By    |   Tuesday, 04 October 2016 01:29 PM

 

 

 

Market expert Bob Doll said global stock market volatility is symbolically holding a gun to the head of the Federal Reserve.


"We're held hostage, but only to a slight degree," Doll told CNBC. He thinks we are currently in a "multiyear bottoming process for rates."

The senior portfolio manager and chief equity strategist of Nuveen Asset Management told CNBC that deflation in Japan and parts of Europe is one reason the Fed is hesitant to raise interest rates.

The central bank also fears that a rate hike will trigger a dollar rally and commodity sell-off, causing market instability that could ripple around the globe.

Doll expect the Fed to "gingerly move forward," trying to strike a delicate balance to keep the U.S. economy on a growth path while also maintaining global trade, which enables investors to "own cheaper, more cyclically oriented" stocks.

He also urged savvy investors to be cautious in today’s extremely volatile markets. "I think the valuation rubber band has been stretched very significantly," he warned.


Doll isn't alone in his distrust of the central bank.

And market guru John Hussman believes global central banks have helped inflate global  financial bubbles, pivoting on the idea that an investor can buy an asset now with the idea that “a greater fool” will be willing to pay more for it in the future.

Central banks like the Fed are nursing this idea with asset purchases that have created the third major bubble in the past 16 years, John Hussman, president of Hussman Investment Trust, says in a weekly commentary that discusses the limits of monetary policy on markets.

Stock-market benchmarks like the S&P 500 and the New York Stock Exchange Composite Index are showing signs of weakness, he says. The S&P 500 is about 3 percent higher than it was in December 2014, while the broader NYSE composite hasn’t set a record in more than two years.

“Over the past two years, the behavior of the stock market can be described less as an ongoing bull market than as the extended topping phase of what is now the third financial bubble since 2000,” Hussman says. “We continue to classify present conditions within the most hostile expected market return/risk profile we identify.”

(Newsmax wire services contributed to this report).

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Market expert Bob Doll said global stock market volatility is symbolically holding a gun to the head of the Federal Reserve.
bob doll, fed, hostage, global markets
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2016-29-04
Tuesday, 04 October 2016 01:29 PM
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