One of the biggest surprises for investors this year may not come from the upset regime in Iran.
Rather, the after-effects on the U.S. economy from its own internal issues.
“Inside the U.S. [cold war] there are a lot of different dimensions. One is political, we have mass polarization. We have difference in opinion on the best economic system, according to age brackets. 18-29 [year olds] think that socialism is a better form for the economy than capitalism. That has never happened before in the United States,” explained Nuveen chief strategist Bob Doll on Yahoo Finance’s The First Trade.
Doll added, “Sadly, we have declining life expectancy for three years in a row in the U.S. That’s related to lots of things — much increased suicide rates, alcoholism, drug deaths. We have a lot of stuff going on. There is a cold war inside the U.S.”
The comments from Doll — which come by way of his annual list of 10 market surprises for the year ahead — are somewhat surprising to this writer. For starters, Doll is a long-time champion of the 10-year plus bull market in stocks. And for the most part, he continues to be upbeat on stocks in 2020 — it’s just that investors shouldn’t expect 30% returns as was the case in 2019 across many sectors.
Doll thinks economic and corporate earnings growth will improve modestly in 2020. Normally those conditions would be enough to warrant higher stock prices, Doll said. But this year, high valuations relative to historical norms and factors such as Doll’s aforementioned U.S. cold war could limit returns for investors.
All in, Doll believes stocks, bonds and cash will all return less than 5% this year.
Muted to say the very least, but no end to the bull market — Doll said — primarily because he isn’t predicting a U.S. recession.
A recession in 2020 would be one final surprise to us all, even Doll.