It didn't take much to rattle investors today and reverse early gains after computer-maker Dell (DELL) cut its sales outlook and revenue forecast citing macroeconomic headwinds. With no near-term remedy or long-term strategy in place to improve the economy, it seems any bit of negative news could sway the market these days and fuel the crisis of confidence.
"I can rant and rave like so many of us... so I'll start there," says Bob Doll, the superstar Chief Equity Strategist at BlackRock, before laying out his wish list for getting America out of her economic "soft-patch."
Doll would love to see the President abandon his thinly veiled campaign tour of the Midwest and get back to work, bringing Congress with him. In his dream world DC would own up to the depths of America's economic woes and announce a coherent plan to do something about it now. But, he puts the odds of these events unfolding at "minus 2", using a scale from 1-10.
Just how bad is it out there? Doll characterizes the economy as being stuck in a "chicken and egg kind of thing" where one piece of negative data builds on another, chipping away at confidence until consumer spending, corporate hiring, and bank lending are all but frozen.
Despite that Circle of Confidence Death, Doll notes that earnings and jobs data have been relatively strong in the last few week, even "amidst all the nonsense" in stocks. The data points are no great shakes but lead him to project "1-2% growth" as opposed to negative 1 or 2. I believe the economy is on the happy side of zero or in a recession, but frankly that's a moot point. The economy is lousy, there's no solution in place, so you can label it however you wish.
When Congress and the President do get back to work, Doll wants pro-growth initiatives such as corporate tax credits for hiring; a plan which would ideally kick-start a virtuous cycle, as opposed to the one the economy is in at the moment. His final long-shot booster could come from across the pond. "Maybe the Europeans will get their act together," he offers somewhat wistfully.
The prospect of America being bailed out by the cast of characters running Europe right now may be the most depressing thought of all.
- Bob Doll