2015 Ten Predictions

Mid-Year Update from Bob Doll
Robert C. Doll, CFA
Senior Portfolio Manager,
Chief Equity Strategist
Nuveen Asset Management, LLC

Expect the Economy, Earnings and Equities to Improve

Our guiding theme for 2015 has been that we believe this is a year when investor sentiment would shift from skepticism to optimism. While investors remain uneasy over a number of issues, we are starting to see signs that conditions are improving. As a result, more predictions are trending in the right direction than the wrong one.

View Full Mid-Year Update

01 Wrong Direction U.S. GDP grows 3% for the first time since 2005.

We still believe the U.S. economy will grow 3% for the rest of the year, but the weak first quarter will make it difficult for the year as a whole to average 3%. We expect the consumer areas of the economy to lead the way from here, and better growth should go a long way toward helping both corporate earnings and equity markets.

02 Right Direction Core inflation remains contained, but wage growth begins to increase.

Energy prices have recovered from earlier in the year, but have remained low enough to keep core inflation in check. Wage levels have increased slightly. Our overall view of inflation is that it is bottoming and starting to move slowly higher.

03 Too Early to Call The Federal Reserve raises interest rates, as short-term rates rise more than long-term rates.

The Fed has yet to act, but we expect one or possibly two rate increases before the year draws to a close. Short-term rates remain relatively unchanged for the year, but longer-term rates have been moving higher in anticipation of Fed moves.1

04 Correct The European Central Bank institutes a large-scale quantitative easing program.

The ECB surprised us by launching this program earlier than we expected, and we are already seeing signs of improving growth in Europe. Should the Greece crisis worsen or other countries experience more serious debt woes, we would not be surprised to see additional stimulus from the central bank.

05 Right Direction The U.S. contributes more to global GDP growth than China for the first time since 2006.

U.S. growth appears to be accelerating and China is experiencing a notable slowdown, so this one is heading in the right direction. Two key Chinese growth indicators, imports and rail freight activity, are in negative territory on a year-over-year basis.2

06 Too Early to Call U.S. equities enjoy another good yet volatile year, as corporate earnings and the U.S. dollar rise.

This is the seventh year of the bull market in the United States. The S&P 500 Index has never risen for seven consecutive calendar years.3 Yet this is a distinct possibility in 2015, even if only by a modest amount. Corporate earnings have been weak so far, but we expect improvements. The U.S. Dollar Index (DXY) fell during the second quarter, but is still up 5.8% for the year.3

07 Right Direction The technology, health care and telecom sectors outperform utilities, energy and materials.

If we were scoring these predictions in degree of correctness, this one would top the list. As of quarter-end, our favored sectors are up an average of 4.5% for the year while the other three are down 5.0%.3 The technology and health care sectors have been benefiting from strong unit growth, while demand remains low for the energy and materials sectors. Regarding the two income-producing sectors, telecom has been handily beating utilities.

08 Too Early to Call Oil prices fall further before ending the year higher than where they began.

West Texas Intermediate oil prices fell to a low of $43 in March before staging a comeback to end the quarter at $59.3 If the year ended today, this one would receive a “correct” score. But commodities tend to be quite volatile, and we expect to see ongoing back and forth in oil prices. So we will leave this as “too early to call” for now.

09 Wrong Direction U.S. equity mutual funds show their first significant inflows since 2004.

Barring a miraculous turnaround, we are almost certain to get this prediction wrong. Equity mutual fund flows have actually been negative so far this year as investors have been moving out of stocks.4 We expect investor confidence will pick up and flows will increase, but not enough to get this one right.

10 Too Early to Call The Republican and Democratic presidential nominations remain wide open.

The list of Republican candidates is longer than virtually anyone predicted and seems to be growing by the day. While Hillary Clinton remains the Democratic front runner, her candidacy is not without its difficulties.

1 Source: Morningstar Direct, Bloomberg and FactSet as of 6/30/15
2 Source: Chinese National Bureau of Statistics
3 Source: Morningstar Direct, Bloomberg and FactSet as of 6/30/15
4 Source: Investment Company Institute

Nuveen 2015 Mid-Year Equity Outlook Portfolio

Subscribe to Bob Doll's
Weekly Commentary

Hear about the latest developments in the equity markets each week.

Follow @BobDollNuveen on Twitter for up-to-date insight on the equity markets

Market Update with Bob Doll – August 2015

Bob discusses where he believes the equity markets may head.

Watch video

A Word on Risk
The views and opinions expressed are for informational and educational purposes only as of the date of writing and may change at any time based on market or other conditions and may not come to pass. This material is not intended to be relied upon as investment advice or recommendations, does not constitute a solicitation to buy or sell securities and should not be considered specific legal, investment or tax advice. The information provided does not take into account the specific objectives, financial situation, or particular needs of any specific person. All investments carry a certain degree of risk and there is no assurance that an investment will provide positive performance over any period of time. Dividends are not guaranteed. Prices of equity securities may decline significantly over short or extended periods of time. Debt or fixed income securities are subject to market risk, credit risk, and interest rate risk, call risk, tax risk, political and economic risk and income risk. Interest rate risk, as interest rates rise, bond prices fall. Investors should contact their tax advisor regarding the suitability of tax-exempt investments in their portfolio. If sold prior to maturity, municipal securities are subject to gain/losses based on the level of interest rates, market conditions and the credit quality of the issuer. Income may be subject to the alternative minimum tax (AMT) and/or state and local taxes, based on state of residence. Income from municipal bonds held by a portfolio could be declared taxable because of unfavorable changes in tax laws, adverse interpretations by the Internal Revenue Service or state tax authorities, or noncompliant conduct of a bond issuer. Below investment grade or high yield debt securities are subject to liquidity risk and heightened credit risk. Non‐U.S. investments involve risks such as currency fluctuation, political and economic instability, lack of liquidity and differing legal and accounting standards. These risks are magnified in emerging markets. Commodity futures and forward contract prices are highly volatile. Investments in commodities may be affected by overall market movements, changes in interest rates, and other factors such as weather, disease, embargoes, and international economic and political developments.

Nuveen Asset Management, LLC is a registered investment adviser and an affiliate of Nuveen Investments, Inc.

Not registered?

Register for access to investment team commentary, detailed portfolio information, and other advisor resources. For instant access, register now.

Your Contacts

Our goal is to deliver lasting value to our clients. For assistance, please call or email our advisor service team or contact your personal Nuveen Service Team.

Log in to nuveen.com to access your personal Nuveen Service Team.

Financial Advisors


Registered Investment Advisors


Account Access

For more information on Mutual Fund Vision, FAN Mail, or accessing client accounts, please visit our advisor account access page.

Advisor Access

Investor Access