BLACKROCK: THE RECOVERY IS REAL, GET ON BOARD
Bob Doll, Chief Equity Strategist at BlackRock, one of the world’s largest asset managers, is striking a very bullish tone in his latest strategy note. This is the polar opposite from his former Merrill Lynch companion, David Rosenberg, who says we are not recovering (see here). Doll says the recovery is the real deal and that you better jump on board the risk asset train before you get left behind. He says the March 2009 lows are here to stay and the withdrawal of government stimulus will actually prove the recovery to be quite real (yours truly is a bit more skeptical):
“In our view, March 2009 marked the primary low for this bear market. We are a year past that now and, barring a significant double dip in the economy, the odds point to 2010 as a positive year for equities and other risk assets. Some argue that the recovery process is artificial, mainly reflecting the impact of government intervention, and that the economy’s day of reckoning will come as stimulus is withdrawn. Skepticism about the durability of a recovery is common following recessions, especially after a severe one, but recent history suggests that the world economy almost always adapts and returns to growth. Minus any significant negative external shocks, we believe this recovery should follow suit.”
Doll is also very bullish about the jobs market. He thinks Q2 could produce 300,000 jobs:
“In fact, we would argue that the second quarter could bring as many as 300,000 new jobs given that the average work week, temporary hiring, productivity and profits—four leading indicators of job growth—have all moved up.”
He says the flows into equities, accommodative liquidity conditions, and a healing economy continue to justify the risk trade:
“Turning back to the markets, after six negative weeks, flows in equities have been positive for three weeks running. In our view, accommodative liquidity conditions, combined with a healing economy, continue to support a pro-growth investment stance. While this will be tempered by deleveraging and debt paydown, we would argue that a focus on risk assets, and especially equities, makes sense.”
I’ve read Bob Doll since he was a Merrill guy many years ago and like his former colleague, David Rosenberg, he tends to prefer a certain extreme and consistent market position. Nonetheless, as one of the largest asset managers on the planet, it would be foolish to ignore the opinion of BlackRock in general.
Yawn…
http://www.moneymarketing.co.uk/news/us-earning-growth-levels-in-low-single-digits/152220.article
Wonder if this guy is using Turbo Timmy’s Turbo Tax to do his calculations.
300,000 jobs in Q2 is till not enough to reduce unemployment…
Going back to at least 1973 – we have never had -% chg y/o/y in bank credit. I think we have a ways to go…
Fed Graph
“flows in equities have been positive for three weeks running” i guess all of that cash firepower on the sidelines is coming into the equity market! ;>)
Amazing huh? Even Bob Doll thinks the money on the sidelines myth is real. You might want to go back and read the end of our conversation Chris. New money ONLY comes into the market via new issuance or new real deposits. It’s that simple.
You should never listen to anyone who believes the money on the sideline myth because there is no such thing:
http://www.hussman.net/wmc/wmc060710.htm
As Mish says, “Moreover, it’s important not to confuse money with debt. Sideline cash is really sideline credit. There is actually very little real cash available relative to total debt and what is needed to service that debt.”
Sentiment, not sideline cash, is the driving force in stock prices.
http://globaleconomicanalysis.blogspot.com/2010/03/mutual-fund-cash-depletion-highest.html
Mish has done a fantastic job covering this debate. Chris would be wise to read his stuff.
Are you for real? I bet this guy was bullish back in sept 2008 when this jumbo jets nose went down 45 degrees. Folks this is no secret we need 1.5 million jobs per year to stay even, Dollar at 100 year low, no productive capacity, Banks are broke, etc, etc, so all this and we should invest in this, well you can count me out. When the Dollar is devalued 35% by December 2010 then the chickens will come home to roost. Dont believe these so called experts they are the ones that got everyone in this broken capitalism that was never meant to work for you and me only for them .
hey why not. 2010 feels like something completely new as far as trading this market. fundamentals are out the window. only technicals from here on and they look really good north bound. felt really good shorting yesterday thinking which of the PIIGS gets it next. until this morning’s ALL OUT ATTACK. felt “great” scrambling to cover. after yestedays close it felt like 1050S&Ps in a week. at this point I’ll believe 1500S&P based on technicals ONLY. why not this MKT is net long. no one cares about jobs. wall street has enough traders and definitely enough money. its all good here.
I believe this is the last great push to get the rest of the people bullish again. It will work for at least another quarter or two since dropping the hammer now would be obvious. I still stand by my call that we will end that year between 900-1000 (fair value for S&P). We are about to begin the tightening phase whether the FED like it or not. The Major BRIC (China) have been tightening for the last 3 months or so and their market has been on a nice steady glide down. I think Ben is also looking into such a possibility. In all I agree that the violent up/down moves are probably gone from the market for a long time (4-5 years). Just more gyrations around a big trading range of 200-250 S&P points. Longer term though (5 years out), the next bear market will probably result in the final capitulation stage of this secular bear.
Then again grown men and women still believe in Santa Clause. I mean the guys business depends on people sending him money that he takes a cut off the top win or lose. What do you expect him to say we are going down don’t send me your money anymore.
Folks do me a favor and think for yourself for once.
Bob Doll is a permabull hack. Abby Joseph Cohen lite, so to speak.
Yeah well, another Blackrock strategist says the games sucks so bad he has retired to a 2,300 acre dairy farm in the UK.
He’s not the only “money manager” to head for the hills or a farm in this awesome economic super “suck my bag if you don’t think it’s for real” recovery.
Being a bit of a skeptic, i would not be a bit surprised if mr Doll was smart enough to load up near the 03/2009 lows and now would like nothing better than to convince everyone to buy what he would love to sell – ie his appreciated inventory. This could very well be his exit strategy…