It appears the Federal Reserve is also trying to restore confidence among consumers and corporations. Much of the slow growth that is plaguing the economy is due not only to the structural problems of ongoing deleveraging, but is also a result of the fact that companies and households are unwilling to spend in the current environment. The central bank is hopeful that by using its balance sheet to reflate the economy, confidence levels will improve and spending will resume.
The global economy seems to have decoupled to some extent, with the developing world still doing well and the developed world stuck in a soft patch. We do not expect this soft patch to result in a renewed recession, however. The United States appears to have stabilized into a low-growth environment and Japan has become more aggressive in terms of promoting growth. The European debt crisis has worsened recently, however, and that region is still struggling. Looking ahead, we believe the US economy will continue to struggle, but we are optimistic that the actions of the Federal Reserve and other policymakers will help to restore some measure of confidence.
About Bob Doll
Bob Doll is Chief Equity Strategist for Fundamental Equities at BlackRock® a premier provider of global investment management, risk management and advisory services. Mr. Doll is also Lead Portfolio Manager of BlackRock's Large Cap Series Funds. Prior to joining the firm, Mr. Doll was President and Chief Investment Officer at Merrill Lynch Investment Managers.
Sources: BlackRock; Bank Credit Analyst. This material is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed are as of September 27, 2010, and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and nonproprietary sources deemed by BlackRock to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. Past performance is no guarantee of future results. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader. Investment involves risks. International investing involves additional risks, including risks related to foreign currency, limited liquidity, less government regulation and the possibility of substantial volatility due to adverse political, economic or other developments. The two main risks related to fixed income investing are interest rate risk and credit risk. Typically, when interest rates rise, there is a corresponding decline in the market value of bonds. Credit risk refers to the possibility that the issuer of the bond will not be able to make principal and interest payments. Index performance is shown for illustrative purposes only. You cannot invest directly in an index.
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