Seven 'Cautiously Optimistic' Forecasts

Taken from Bob Doll's weekly investment commentary:

Looking ahead, our cautiously optimistic view is based on several broad forecasts:

1) the U.S. economy should avoid a recession, but faces several quarters of sluggish growth

2) slower economic growth and credit market strains will lead to continued easing in monetary policy

3) as a result of credit issues, there will be a continued movement toward conservative lending and borrowing behavior

4) fears about near-term inflation eventually will prove to be misplaced

5) the dollar is in a bottoming process against other major currencies, but further weakness is likely versus emerging market currencies

6) we believe the predominant risks to our views are deflationary rather than inflationary, meaning we are more likely to see the credit crunch intensifying than inflation spiking

7) equity markets are likely to churn unevenly until credit market pressures ease, but we believe valuations are reasonable in most countries and expect prices to be higher 12 months from now