Bob Doll Chief Equity Strategist BlackRock - Vidéos/Interviews

This is the trancript English interview with Bob Doll Chief Equity Strategist at BlackRock

Web TV www.labourseetlavie.com : We are today with you Bob Doll, thank you for joining us. Bob Doll (BlackRock) : Thank you.

You are the Chief Equity Strategist at BlackRock. First of all, I would like to know how is your feeling about the first half in the market.

Bob Doll (Chief Equity Strategist BlackRock) :

« The first half markets for risk assets equities in particular was certainly disappointing.

After the wonderful recovery we had in the last 9 months of 2009, got off to a good start and by mid-April many equity markets peaked.

It's rather ironic because the fundamentals, earnings in particular,

advanced right on thru the first half of the year, so it's valuation levels that have come down, and the reason is: people are concerned about what's going to happen next.

The double dip word has crept into our vocabulary, and it's pushed valuations down, and therefore the correction ».

Web TV www.labourseetlavie.com : Does it mean that you avoid the risk of double dip, or you are thinking about it ?

Bob Doll (Chief Equity Strategist BlackRock) :

« In my view, double dip is first all historically very rare. It has hardly ever happened; it's interesting to talk about it, it seems normal and natural, but the truth is, economies that are moving in a particular direction have to be hit over the head to change direction. So an economy that has been moving up, which this one has, it's unlikely to turn around and go right back down. No different than during the recession, it's hard to get it to come back in the other direction, so I think the probability of double dip remains pretty low. A slow-down ? Absolutely ! That happens every economic cycle and I think people are concerned that the slow-down is going to get worse because it's come at the same time that European credit problems have shown up. »

Web TV www.labourseetlavie.com :We see some last figures about the US, it's a period without strong growth for the first and second half, in Europe it's very hard, so it's not easy for you to invest.

Bob Doll (Chief Equity Strategist BlackRock) :

« That's correct, we are, whether we stayed on the trajectory we were on before,

with some slow-down, experiencing the slowest economic recovery on record.

Reason? There's some structural issues. We need to pay down debt, we need to delever the consumer, the financial system, the government, and that’s a head wind to growth.

So when I say economy is growing, I do agree, at a slow pace ».

Web TV www.labourseetlavie.com : During the last month we talked about the US consumer and the idea is that the US Consumer accounts have more debt and they are not reducing too much their debt. How it will come in the near future ?

Bob Doll (Chief Equity Strategist BlackRock) :

« First of all I think the US consumer has defied what the bears thought would happen.

The way I like to say it is that we thought of to have to go into a cave for several years, pay down our debt and delever. We tried that for a little while, got tired and started spending money. US consumer spending is moving up. Why ? because incomes are moving up. Hours worked has moved up and job growth has begun. We need more of that to sustain it, no question about it. And I would not make the case the US consumer is going to lead the US economy, he is going to follow it. »

Web TV www.labourseetlavie.com : For you, where is the main worries today? Is it again about the debt in the US? The debt in Europe?

Bob Doll (Chief Equity Strategist BlackRock) :

« I think the risk is even broader and beyond debt. Its called deflation and it includes debt's defaulting. The ability of all of us to pay our bills. We all pay our debts in nominal dollars.. it is difficult when growth is slow. And so we will have rolling debt problems. The most recent one of course has been the sovereign issues in the southern Europe. There will be other debt issues in the months and years to come, the question is: does it gang up on the global cycle of recovery and threaten it or does it to just keep it slow? My views are it will keep it slow. »

Web TV www.labourseetlavie.com : Now we have a lot of figures for the emerging markets and we see also China with a little bit less growth. Does it mean that the emerging markets too will have less growth for the next months?

Bob Doll (Chief Equity Strategist BlackRock) :

« Well ! it is pretty unlikely that China is going to continue to grow at 12% real. It is a big economy and it is a big number. So what's it going to do? slow down to 8 or 9? I think that's a phenomenal growth rate. So, yes it is slowing, probably to something that's more sustainable, and it will still be one of the leading engines of growth in the world. »

Web TV www.labourseetlavie.com : We are happy for the first time maybe in Europe, about the Euro currency because of the depreciation, but the strong dollar, does it change anything on your overall strategy ?

Bob Doll (Chief Equity Strategist BlackRock) :

« Yes, a strong dollar, I would rather say a weak Euro, because the dollar really hasn't done a lot of good things to strengthen, this the Euro struggling. Certainly creates a challenge for some of the profits that US companies owned in Europe. My guess is that the US profits come about 13% from the Europe, so if you look at the change in the currency, it probably takes about 1.5% points of growth away from the US. Worth commenting on, but not the main story. »

Web TV www.labourseetlavie.com : How about Europe? Are you pessimistic or optimistic? Do you think that Europe can change, move to find again growth?

Bob Doll (Chief Equity Strategist BlackRock) :

« I think it's going to be very difficult, I think Europe will grow but at a slow pace, it will be non-uniform, the countries that have had the most trouble, are going to experience another recession. The countries that have been the strongest, tend to be the northern Europe and Germany for example, Germany.. parts of Germany are booming. And with the declining Euro, the exports will be helped to swell. I think when you put Europe together, you get a slow but nevertheless a positive GDP picture. »

Web TV www.labourseetlavie.com : You are a global investor but because of the crisis, do you think you have a suitable advice to invest in each country and to choose the right country because of the risk ?

Bob Doll (Chief Equity Strategist BlackRock) :

« Yeah.. country choices have proven to be pretty important. As you and I commented earlier, the United States is doing a little better. The USA stock market has out-performed the developed world market for the last 12 months, and in dollar terms, down less in the corrections as a result of the strong stimulus.

So yes getting countries right is absolutely the key. Avoiding countries that are going to have debt problems has certainly, in the rear view mirror, been an important thing to do

and I think it will be important going forward. »

Web TV www.labourseetlavie.com : If you are talking about a sector in the market, do you avoid always the financial sectors or do you think there are values and shares and that it's possible to invest?

Bob Doll (Chief Equity Strategist BlackRock) :

« Well, part of what I do have living is manage money for clients and in the US portfolios that I manage, I have under-weighted the financial sector. I think we don't know what normalized earnings are, we don't know what the business models are going to look like in a lower pyramided leveraged world, we still have some credit issues we have been discussing, so I don't think you avoid the financial sector but just be careful how much of it you own. »

Web TV www.labourseetlavie.com : So in your point of view, there will not be strong growth for the next months, so how do you choose your sectors.

Bob Doll (Chief Equity Strategist BlackRock) :

« I think that because we are in global cyclical recovery, you need some global cyclicals. Some industries, some energy, some metals, some technology...On the other hand, because growth is so slow, you need some growth independent companies like health care, other forms of technology like software and services. So I think you need a balanced industry selection in this environment. »

Web TV www.labourseetlavie.com : What about commodities.. about that have a lot of questions, is there an opportunity or should you be cautious ?

Bob Doll (Chief Equity Strategist BlackRock) :

« Well, if you are in the camp that I am, that global cyclical recovery is alive and I'll say reasonably well, not great but good enough, it's hard to make the case that the commodity prices are not going to resume their upward move. They got ahead of themselves with 20:20 hindsight, the emerging markets, the areas of fastest growth,

despite slightly slower as we discussed, are still strong enough they are going to use any incremental commodities and that is likely to make the path of push for the commodities to the upside. »

Web TV www.labourseetlavie.com : Last question about... if you are an investor, a personal investor, you know about the market .. but if you are a personal investor, is it possible to say what choice you have to make now to maybe have a good choice in five years.

Bob Doll (Chief Equity Strategist BlackRock) :

« Yeah.. I think that many investors have very conservative portfolios.. they have underweight equities compared to mayve normally they want to be, or have been,

and because of the weakness, and I would argue also the cheapness in equity prices, I think slowly but surely dollar cost averaging into equities makes sense.

I believe the next noticeable move is likely to be towards the upside, not necessarily today, tomorrow, the next day, so I don't think you have to be a hero about it, but I think if your time horizon is in five years from now, equities purchased today,

well chosen and timed properly, especially into weakness, I think will look as good purchases five years from now. »

Web TV www.labourseetlavie.com : That's all, thank you ever Bob Doll so much.

Bod Doll : « Thank you »

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