At the same time, the U.S. dollar will sink to a five-year low, and the 10-year U.S. Treasury yield will be approximately 1.5% by year’s end.
Sectors that will do well in 2021 include financials and health care, while utilities and energy will suffer, Doll said. Value stocks will outpace growth stocks; small caps will outperform large caps, and international, especially emerging markets, will benefit from a reviving world economy.
Financials have been one of the worst investments in recent years, but they will come back this year, Doll said.
Another stimulus package would benefit small businesses more than large ones, which accounts for the strong small cap prediction, he said.
Long-term federal debt will reach 100% of the level of GDP by the third quarter and will go on to surpass GDP by the end of the year.
The United States and China are trapped in an economic cold war that will continue, but the conversation will be “quieter and more multilateral” under a Biden administration, Doll said.
“Corporations that pay no taxes should be wary and high-net-worth taxpayers may see some tax increases,” he said.
“Polarization in Congress will continue but because President-elect Biden and Senate Majority Leader Mitch McConnell have worked together for decades, some compromise legislation will be possible,” Doll said.