Bob Doll Is Optimistic

Giving his annual 10 macroeconomic predictions for the new year ahead, Bob Doll, senior portfolio manager and chief equity strategist at Nuveen Asset Management, remains bullish.

Doll’s first prediction for 2018 is that U.S. real gross domestic product (GDP) growth will reach 3% and nominal GDP will reach 5% for the first time in over a decade. His second prediction is that global expansion will continue, with the fewest countries now in recession in history. Third, Doll predicted unemployment will fall to the lowest level in nearly 50 years—below 4%—as wage growth is the highest since the Great Recession. Fourth, he projected the yield curve will flatten but not invert, as he expects the 10-year Treasury yield to reach 3% for the first time since 2014.

Doll’s fifth prediction is that stocks will keep growing and this year surpass the previous longest bull market. Tied to this, he said, eventually the market could face at least a 5% correction after the longest period without one. “While we expect the bull market to continue and become the longest in history, we also expect the uninterrupted strings of advances to fade and occasional pullbacks as interest rates and inflation rise,” Doll said.

Sixth, he said, U.S. equity returns will lag earnings growth for the first time in six years, ending the longest streak in decades. Seventh, equities will beat bonds for the seventh consecutive year—for the first time in nearly a century. Eighth, corporate capital expenditures will increase at the expense of share buybacks. Ninth, telecommunication services, information technology and health care will outperform utilities, energy and materials.

Doll expects Republicans to lose the House, retain the Senate, “and further distance themselves from the president.”