Recession in the eurozone is almost a certainty even if policymakers find a solution to the bloc’s debt crisis, according to BlackRock’s Bob Doll.
Writing in his Weekly Investment Commentary, the asset manager’s chief equity strategist for fundamental equities says a new European recession appears to be a “foregone conclusion” and the only question remaining is over its severity.
“Should policymakers be able to come to an effective resolution soon, the recession is likely to be shallow, but risks are growing that the recession could be deeper,” he adds.
Doll (pictured) also says the measures unveiled so far by policymakers to stem the debt crisis have been insufficient. He argues that commonly issued eurobond could be the best option to fix the region’s problems, but this depends on Germany dropping its resistance to this solution. (article continues below)
In addition, Doll downplays the failure of the US ‘supercommittee’ tasked with reducing the country’s deficit, noting that its deadline was arbitrary and pointing out that Congress still has time to develop another deficit reduction plans.
“The failure of the super committee to provide a plan to reduce the deficit was certainly disappointing, but it would be a mistake to put too much stock in that specific incident,” he adds.
Doll maintains that the eurozone debt crisis remains the most critical issue affecting markets, but adds that the intertwined nature of the global credit markets means it has the ability to damage the credit ability of the US and many other countries.
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