Unprecedented optimism over the country’s economy is leaving traders highly vulnerable to negative surprises on growth, said Doll, the Chicago-based chief equity strategist and senior portfolio manager at Nuveen Asset Management, which oversees nearly $230 billion.
Doll stays bullish on longer-term equities, saying that assets and high-yield bonds may suffer in the short-term with risks of a deeper sell-off growing.
“We remain constructive in the medium-and long-term toward risk assets but are growing increasingly cautious about the short-term outlook. More than politics, the economy probably presents a more probable roadblock for equities,” the analyst wrote in a letter, seen by Bloomberg.
Doll highlighted a lack of progress on a budget agreement and some hurdles on tax reform. All in all, a tax bill will be passed, but it may be more limited in scope than expected, according to the expert.
However, the bull-run in US stocks lasting for eight years used to deceive pessimists, who forecast declines in the market. Doll acknowledged that it was not clear yet which factor may evoke a new wave of defensive reactions.
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“We are not expecting a significant economic slowdown, but the nearly non-stop pace of positive economic data is unlikely to continue. At some point, a setback will likely be triggered by a manufacturing decline, soft oil prices, weakening data from China or some other factor, which could spark a risk-off phase,” he said.
Article source: https://www.rt.com/business/383463-economy-threatens-us-stocks-strategist/?utm_source=rss&utm_medium=rss&utm_campaign=RSS
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