Bob Doll, chief equity strategist at Nuveen.

If investors don’t see real economic progress on the political front, Bob Doll thinks equity markets may begin to react negatively.

Doll, senior portfolio manager and chief equity strategist at Nuveen Asset Management, discussed why he thinks political expectations may be too high in his weekly market commentary.

“Equity prices have been rallying on expectations that the president and Congress will enact tax reform, fiscal spending and regulatory changes that will boost growth,” he writes. “However, President Trump’s legislative agenda appears to be stalled. Health care reform seems delayed over timing and specifics. And tax and spending legislation appears caught in a battle between those favoring growth and those concerned about the budget.”

Doll says that economic confidence may fade over the coming year.

“Clarity around tax and regulatory policy would help, but we expect economic uncertainty to rise,” he writes.

According to Doll, higher interest rates and a rising U.S. dollar could also be negative for the economy over time.

(On Friday, Janet Yellen said the Federal Reserve will likely raise interest rates this month.)

Doll says that inflation is not yet problematic, although he says it could slow global economic growth in the coming years

In a video on the Nuveen website, Doll discussed how politics seem “more important than usual” to equity market performance.

“At the end of the day, I would still argue it’s economic growth and more importantly earnings growth that drive stocks, but the political noise – the noise level as high as it is – certainly has an impact,” he said.

Doll cautioned investors to be wary of the volatility caused by Trump’s actions.

“[Trump] goes back and forth on stuff,” Doll said in the video. “I think that back and forth is going to cause a lot of people to be really confused. So we are in for a wild ride.”

In the video, Chris Davis, vice president of investment communications at Nuveen, and Doll discuss how the Trump administration could affect clients’ portfolios.

As Davis points out, “it’s not surprising to wake up on any given morning and see that Donald Trump has made a statement, tweeted about a specific company and that company’s stock goes down as a result.”

Doll explained how he’s dealing with these political realities as someone who’s managing money for clients.

“In my view, anticipating it isn’t possible,” Doll said. “So we don’t deal with it at the front end, saying ‘Tonight he might pick on XYZ.’”

Instead, Doll waits for Trump to act and the market to react.

“He picked on [XYZ], the stock is down, now what do I do?” Doll said. “If I like that stock, chances are I’m buying it because it’s a temporary hit. The company’s not going to change big time because of what he said most likely. So we use it as a chance to add positions.”

In his weekly commentary, Doll explained where investors can find value in the markets.

“Global equity markets are more expensive than several years ago and are probably fairly valued. Government bond yields are likely to rise, suggesting bond prices may be at risk. And very low short-term interest rates mean cash offers meager returns. So what to do?”

Doll expects equity prices and bond yields to “grind unevenly higher” over the coming months. Because of this, he also expects equities to continue to outperform bonds and cash.

Doll – who expressed a “moderately pro-growth investment stance” – believes U.S. stocks are better positioned than most non-U.S. markets.

“The eurozone, Japan and many emerging markets would appear to offer better long-term growth prospects, and international equities look generally more attractively valued,” he wrote. “We expect equity market leadership to shift at some point, but for now U.S. stocks should benefit from stronger growth tailwinds.”

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