Nuveen Chief Equity Strategist and Senior Portfolio Manager Bob Doll says 2020 will be dominated by politics as the presidential election looms, and the reelection of incumbent President Donald Trump and maintaining status quo in Congress is what’s best for Wall Street.
“Donald Trump (gets) reelected, Democrats retain the House, Republicans retain the Senate — that’s the status quo; nothing changes,” Doll said on Yahoo Finance’s “The First Trade” program. “I think that will give the markets a sigh of relief. It will at least know what it will get, whether they like it or don’t like it.”
It was a banner year for the market in 2019, but investors shouldn’t expect a repeat in 2020, Doll said.
“The odd thing is this year’s the economy’s likely to be a bit better than last year, but the market’s probably not going to be as good,” he said. “That’s a weird juxtaposition.”
Since Trump won the 2016 election on Nov. 8, 2016, the Wall Street benchmark S&P 500 has surged a whopping 61%.
And though the market certainly loves Trump and his moves to deregulate, Doll argues that stocks will actually continue going up whether he is reelected or not — which is antithetical to what most other strategists say. Most say if a Democrat is elected the market will sink, and sink big time if Sens. Bernie Sanders or Elizabeth Warren, the No. 2 and No. 3 candidates respectively according to polling, are elected.
“Whether (Trump) gets elected, the bull market continues, in my view, unless and until we have a recession and there’s no sign of recession — none,” Doll said.
However, Doll did say there are some tensions weighing on the market, including the trade war between the U.S. and China, which Doll doesn’t see ending anytime soon, and rising tensions in the Middle East. Trump and Beijing have reached a phase one agreement that will be signed next week.
“The phase one deal means we’ve got 99 phases left if we’re going to solve all of the trade problems and could go on for years,” Doll said.
Iran also remains a major wild card, Doll said, even after Trump said Tehran looks to be “standing down.”
“No question about it … Iran’s an issue. Market’s have basically ignored it as you know,” Doll said. “I’m not sure that’s going to continue. But this one, like the China thing, is not new. We’ve been kind of fighting with Iran with words at a minimum for a long time. Let’s hope it doesn’t get a lot worse.”
Bob Doll’s Top 10 2020 Predictions
- The world avoids recession in 2020 as U.S. GDP grows over 2% and global GDP grows over 3%.
- Inflation and the 10-year U.S. Treasury yield end the year above 2% as the Fed stays on hold through the election.
- Earnings fall short of expectations, partially due to rising wage rates.
- Stocks, bonds and cash all return less than 5% for only the fourth time in 25 years.
- Non-U.S. stocks outpace U.S. stocks as the dollar retreats.
- Value and cyclicals outperform growth and defensive stocks.
- Financials, technology and health care outperform utilities, real estate and consumer discretionary.
- Active equity managers outperform their indexes for the first time in a decade.
- The cold wars within the U.S. and between the U.S. and China continue.
- The U.S. concludes a tumultuous political year with a status quo election.
Click here to read more on Doll’s positives and negatives for the market in 2020, as well as overarching themes.