BlackRock's Bob Doll: Bears Are Too Negative

Stocks could be in a 'base-building' phase, says Doll.

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Some encouraging words from BlackRock's Bob Doll:

Although economic data continues to be weak, we still believe that the bears are too negative. By our analysis, payroll figures, unemployment levels, manufacturing data and retail sales numbers, while hardly robust, do not signal recessionary levels. Additionally, monetary and fiscal stimulus has been aggressive, exports continue to provide a strong tailwind and corporate balance sheets remain flush with cash, which should help with liquidity. At this point, we expect first-quarter gross domestic product to be up slightly and expect that the second quarter will be helped by the pending tax rebate checks.

From a markets perspective, we said a couple of weeks ago that stocks were entering a bottoming process. The important low that occurred in mid-January was echoed on March 17, and we think conditions are looking more positive.... Looking ahead, we believe the extent to which the markets are able to absorb additional bad economic news will determine whether equities are in a base-building phase (as we think) or whether the action since late January represents a temporary reprieve. There will, no doubt, be an ongoing stream of weak data to test the markets, but we remain optimistic that the positive factors we have cited support our contention that markets are in a bottoming process.