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Bob Doll: US Should Avoid Recession, Despite All the Omens

Bob Doll: US Should Avoid Recession, Despite All the Omens

By    |   Friday, 12 February 2016 11:32 AM

Respected investor Bob Doll sees a 50 percent probability of a recession amid all the recent global stock market carnage.

The chief equity strategist and senior portfolio manager for Nuveen Asset Management told CNBC that the S&P 500 is flirting with the 1,800 level, down 14 percent from its most recent peak.  "If we have one, we probably go to 1,600 [on the S&P], if we don't, we can creep back to 2,000. I'm in that camp, I don't think the U.S. will have a recession in 2016," he said.

U.S. stocks opened higher on Friday, led by a rebound in energy and financial stocks after a steep selloff through the week. The S&P 500 was up 13.32 points, or 0.73 percent, at 1,842.4. Oil jumped 6 percent, helping to lift energy company shares.

Doll believes oil is the main driver of recession fears. "When oil goes down, the fear is we're heading for a recession because nobody is buying oil, or, when oil goes down the fear is, 'Oh my goodness, all the bad loans on the banks related to energy, I better sell stocks,'" he explained.

The recent weakness in the dollar could be another catalyst for a move higher in stocks, Doll said. "Remember that negative earnings revisions last year all had to do with rising dollar and falling oil. If we can break both of those, we actually might have some up earnings."

The constant recession talk is a contributing fear in the market, he argued, saying that's why this sell-off feels a little more painful than the downturn in August and September.

But other prominent voices claim the nation is already suffering yet another deep economic downturn.

Billionaire businessman Donald Trump warns that the United States is in another recession, and the volatile "bubble" stock market only proves President Obama’s economic policies have failed.

“I think you’re sort of in a recession now, you’re certainly in a jobs recession now,” Trump recently told Breitbart News. 

“We have millions of people out of work, and the jobs they have are bad jobs. We’re in a bubble. We’re in a bubble. The sad part is it may not pop now, it may pop two weeks into the new administration and the new administration will be blamed for it. One of those things, right? But we’re in a bubble and it’s going to be ugly,” he said.

Politics aside, Wall Street's nerves are on edge as talk of a recession dominates conversation as stock and oil prices continue to slide.

Growth in the U.S. decelerated to a 0.7 percent annualized rate in the fourth quarter as companies contended with a slower global economy. The median probability for a U.S. recession in the next 12 months jumped to 19 percent in last month’s Bloomberg survey of economists, the highest since February 2013.

“While it’s always possible that a market correction becomes something more significant, we, at Blackstone, do not see a recession in the U.S.," Stephen Schwarzman, chairman and CEO, Blackstone Group LP, recently said. "We do believe that global GDP growth is slowing, and we’ve seen a slowdown within certain sectors and regions in our global portfolio as a result."

(Newsmax wire services contributed to this report).

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Respected investor Bob Doll sees a 50 percent probability of a recession amid all the recent global stock market carnage.
bob doll, economy, recession, investors
Friday, 12 February 2016 11:32 AM
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