The economic news is good and bad, exactly as it has been for about two years now. Just as there are signs that the turmoil of the Great Recession is easing in the United States, there are ominous signs that the global marketplace is in trouble — particularly in Greece and other European countries where the love affair with the European Union is waning.
And though the U.S. economy is looking a lot better, there are still large-scale freezes on hiring and lending, not to mention political turmoil, that are making progress tough. Bob Doll sees this from his position as the chief investment strategist at BlackRock, the multi-trillion-dollar financial firm that operates at 1 University Square. Doll oversees more than $3.6 trillion in assets for the company.
Doll, who is positive about the U.S. economic outlook this year, will be the keynote speaker at the Princeton Chamber Mercer County Economic Summit on Thursday, April 12, at 1 p.m. at the Conference Center at Mercer County Community College in West Windsor. Cost: $75. Call 609-924-1776 or visit www.princetonchamber.org.
Doll will not be discussing the Mercer County economy, but rather will offer a global perspective and a look at how world markets are (and in some cases are not) shaping up. He also will discuss the U.S. picture, including a presentation on his 10 predictions for 2012, as released in December.
Doll, who earned his bachelor’s in accounting and economics from Lehigh and his MBA from Penn joined, BlackRock in 1999. Prior to that, he was an executive vice president and chief investment officer at Oppenheimer Funds.
While Doll is cooler on the European market, where Greece’s defaults on loans threaten to topple French banks the way firms like Lehman Brothers took down American ones and where investors are shying away overall, he does see signs that his predictions for 2012 are already coming true, he says.
Though it is still a bottleneck, the jobs market has improved, equity markets have improved, and “the economy is doing better than expected,” Doll says. He is particularly pleased with the progress of the healthcare and education markets, which he says are and will continue to be strong sectors.
As for real estate, the ultimate nail in the coffin to the U.S. economy in 2008, Doll says that we have, mercifully, gotten out of the overbuild/oversell market cycle. And we have, thanks to having been stung, become wiser about lending and borrowing. “The healing that’s taking place,” he says, “is in the credit areas. “Things look more favorable in the margins.”
Thanks to smarter money management and better credit management, Doll expects double-digit returns on investments to come back into play this year. And though he says the China and India markets are slowing, all signs there point to positive news as well.
Doll’s 10 predictions for 2012:
1. The European debt crisis begins to ease, even as Europe experiences a recession. Despite mounting concerns with loan defaults and not-so-eager investment, Doll believes the causes of the European recession market will stabilize. Even so, there appears to be no one European recession.
According to Standard & Poor’s, some stalwart northern economies, such as Germany, are expected to yield sluggish-but-steady growth by the end of the year, while southern economies such as Italy and Spain are expected to sink deeper into recession. Spain in particular is making investors nervous at the moment, with its increasing debt yields.
2. The U.S. economy continues to muddle through yet again. It has not been easy, but the American economy has trudged on, Doll says. And it will continue to do so. Doll, known to err on the side of optimism when it comes to U.S. market trends, also predicts that:
3. U.S. earnings grow modestly, but fail to exceed estimates for the first time since the Great Recession.
4. Despite slowing growth, China and India contribute more than half of the world’s economic growth. As leaders of the global software development market, India and China should maintain growing markets, Doll says. However, as of the end of March, violence in India and civil unrest in China have caused some market experts to question whether the growth investors have come to expect from these two powerhouses is guaranteed.
5. Treasury rates rise. According to market forecast website SignalTrend.com, experts expect an almost 2 percent gain in U.S. Treasury rates by this time next year.
6. U.S. equities experience a double-digit percentage return as multiples rise modestly for the first time since the Great Recession. While still not back to its bull market days, the U.S. market, Doll says, should yield double-digit returns for investors. He made the same prediction in 2011, but his estimates fell noticeably short.
7. U.S. stocks outperform non-U.S. stocks for the third year in a row. Given the current shakiness of other global markets, Doll has so far come out right on the money here.
8. Dividends and buybacks hit a record high. Apple is leading this prediction straight into the truth column. The computer giant has announced that it expects to return as much as $10 billion in dividends per year for the next three years to its investors. Between dividends and buybacks, it has been reported that Apple could have $180 billion in cash by the end of its 2013 fiscal year — a good sign for the U.S. economy overall.
9. Healthcare and energy outperform utilities and financials. Doll sees much promise in the healthcare fields. In the Princeton region alone, where two major new hospitals and the accompanying growth in medical specialists are occurring as we speak, this prediction is looking good.
10. Republicans capture the Senate, retain the House and defeat President Obama.
Doll does not expect much to change in how well the federal government runs the show this year and next, but he does expect voters to oust the current administration.
“Will the new elected folks do anything in 2013?” he asks. “Depends on who’s elected.”