With markets in a funk, advisors will need to look for tactical opportunities to make money for clients, according to one prominent market strategist.
“I see more muddle through” from U.S. stocks, said Bob Doll, a senior portfolio manager and chief equity strategist at Nuveen Asset Management.
The recovery in the U.S. is better than the headlines suggest, he said, but global growth is still challenged and the “whiff of deflation” continues to dampen the markets, Doll told advisors Wednesday at the spring conference of the National Association of Personal Financial Advisors in Phoenix.
Concerns about a possible recession, oil prices, China, interest rate increases and the presidential election have been whipsawing markets, Doll said.
But many of those fears have been overdone, creating some tactical trading opportunities.
“The probability of a recession in the U.S. is around zero,” he said. The consumer is still spending, although traditional retailers are struggling. Wages are moving up as well.
Oil prices have probably bottomed after being severely oversold, Doll said, with supply and demand in better balance now. Doll predicts a “multiyear period of chop” of between $30 to $60 per barrel.
The “dividend” from lower energy prices “is more powerful than the biggest tax cut [consumers] ever got,” Doll said, but has yet to play out. Consumers are only spending a third of the oil dividend and saving two-thirds of it. “Now, you all know consumers very well, and U.S. consumers do not save two-thirds of anything.”
Fears about China being a “big black hole” that will take down the global economy are irrational, he said.
Early this year, an advisor asked him if the recession in China would lead to a recession in the U.S. “I asked him, ‘Where do you get that?’ Here’s someone in our business who knew so little, and actually believed China was in a recession [when] it’s the second fastest-growing economy on the planet. … We’d be delighted to have China’s worst quarter” of economic growth.