Tags: Doll | volatility | bull | market

Nuveen's Doll: Ignore the Volatility, This Bull Market Still Has Room to Go

By    |   Tuesday, 28 October 2014 10:40 AM

The top has not been reached in the bull market, meaning stocks have not yet hit cyclical highs, according to an optimistic assessment from Bob Doll, chief equity strategist at Nuveen Asset Management.

In his view, ongoing volatility amounts more to distracting noise rather than an ominous sign of trouble around the corner. And he believes the U.S. can do well even if other global regions are weak.

"While stocks are likely to remain volatile, we believe the recent weakness is not the start of a bear market but rather little more than a mid-cycle correction," Doll wrote in his weekly commentary.

"While parts of the world are troubled (we would highlight Europe, where growth is quite weak) the United States remains solid thanks in part to an improving labor market, lower interest rates and falling energy prices."

Doll ticked off several reasons for his optimism:
  • Corporate earnings have topped Wall Street estimates by 4 percent so far.
  • Wages should soon begin to rise at last.
  • Government spending will begin rising again soon. "Regardless of who wins the next presidential election, the sequester is unlikely to hold past 2016. Republicans are eager to spend more on defense, while Democrats would like to see additional spending on infrastructure and other domestic programs."
His conclusion is that there is "little chance" either of a recession or deflation. "Investors are coping with new issues that are prompting higher levels of volatility (such as Ebola and heightened geopolitical risks) but the state of the U.S. economy remains solid.

"The evidence we see suggests we are still far away from the 'euphoria' phase that normally accompanies the top of a bull market. The U.S. financial system and housing market are healing, corporations are highly profitable and monetary policy remains accommodative," Doll noted.

"Additionally, the recent drop in oil prices and the longer-term decline in unemployment should help consumer spending. And with inflation not a near-term concern, the Federal Reserve has the flexibility it needs to proceed cautiously in tightening policy."

In another optimistic view, David Kostin, chief U.S. equities strategist at Goldman Sachs, is sticking with his forecast that the S&P 500 still has not hit its 2014 high, MarketWatch reported.

Kostin predicts the index will reach 2,050 by the end of the year, and then ascend another 10 percent to 2,150 during the next 12 months.

He dismissed the market's recent 8 percent slump as "remarkably like another average pullback."

Kostin said investors are ignoring the positive benefits of shrinking oil prices on most Americans, and should seek stocks that have high exposure to the U.S. economy, along with global cyclicals that have been beaten down.

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The top has not been reached in the bull market, meaning stocks have not yet hit cyclical highs, according to an optimistic assessment from Bob Doll, chief equity strategist at Nuveen Asset Management.
Doll, volatility, bull, market
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2014-40-28
Tuesday, 28 October 2014 10:40 AM
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