LONDON (Reuters) - BlackRock, the giant U.S. investment fund with some $1.36 trillion in assets under management, reckons the banking crisis is not over and companies are delaying expansion plans and in some case cutting spending.
But in a note, Bob Doll, the firm's global chief investment officer for equities, says there are nonetheless 10 positive factors underlying U.S. equities.
Here they are:
1) Investor and consumer sentiment measures are very pessimistic, which often marks the bottom of equity market falls.
2) Monetary policy in the United States is being eased earlier and more rapidly than is usual.
3) U.S. households are about to get fiscal stimulus checks from the government.
4) The current earnings recession of negative year-over-year comparisons will last four quarters. Q2 2008 will be the fourth.
5) The cheap U.S. dollar means boom conditions for U.S. exports, a significant offset to the residential real estate recession.
6) The health of the non-financial corporate sector remains strong, with healthy cash flows.
7) Credit-related downturns often include the failure of an important financial organization, followed by double-digit growth in the S&P 500 .SPX. The failure of Bear Stearns on March 17 has passed.
8 Credit markets have improved noticeably since Bear Stearns' failure.
9) Technical factors have also improved since March 17, including the fact that up-day volume has been heavier than down-day volume.
10) The earnings yields of equities compared with 10-year Treasuries are at their best level in 30 years.