Signs the Recession May Be Past its Peak

Still, investors should brace for more volatility.

By SHARE

Here's some optimistic market commentary to help offset today's gloomy market (from BlackRock's global CIO of equities, Bob Doll). Bold is mine:

On the broader economic front, there have been some signs that the economic recession may be moving past its peak. Lately, housing, retail sales and durable goods orders all have come in at better-than-expected levels, and the Federal Reserve’s recent announcement of its bond purchase program has helped drive up the levels of mortgage refinancing. Additionally, we anticipate two major tailwinds for consumer spending for the remainder of this year: Tax cuts start to take effect on April 1, and the opportunities for home refinancing should continue. Outside the United States, there are signs that conditions may be starting to improve (or at least are not becoming worse). Both Japan and Korea recently announced multi billion dollar jobs packages, and there is increasing evidence of an economic rebound in China.

To be sure, there is still much negative news out there, including high levels of unemployment, a very troubled auto industry and an extremely fragile financial system that could still be subject to negative risks. On balance, we believe the fourth quarter of last year and the first quarter of this year should mark the weakest six-month period of the current recession. We expect economic growth should be less negative in the second quarter and could approach zero with a chance of positive growth in the second half of 2009.

Doll's advice for investors? Remain patient and brace for more volatility.