CHICAGO – Discount clothing chain Goody's Family Clothing will begin liquidating its stores on Friday as the retailer becomes one of the year's first victims of the worsening economy.

The move, which comes less than four months after the privately held retailer emerged from Chapter 11 bankruptcy protection, affects the Knoxville, Tenn.-based chain's 287 stores scattered throughout 20 Midwestern and Southern states, said Cathy Hershcopf, a partner at Cooley Godward Kronish LLP.

The firm is working with Goody's vendors and its parent, PGDYS Lending LLC.

It's uncertain what will happen to the company's 9,800 workers after the liquidation — being handled by a joint venture between Gordon Brothers Retail Partners LLC and Hilco Merchant Resources LLC — is completed by the end of March. But without a last minute buyer or an investor to purchase high-performing stores, their job outlook is grim.

"I think every retailer experienced a great deal of pressure this holiday season because of the lack of consumer confidence," Hershcopf said. "But undercapitalized companies like Goody's experienced more pressure from their lenders and from their vendors."

Goody's filed for bankruptcy protection in June, saying at the time that the move would help it address "pressures from tightening credit markets, strain on merchandise flow and a sizable but isolated number of underperforming stores in the chain."

As part of its reorganization plan, the company closed and liquidated dozens of underperforming stores, shuttered a distribution center in Arkansas and a corporate office in New York. It also cut operating and corporate costs, ended its e-commerce business and an associated distribution center in Tennessee.

But that proved to be inadequate as shoppers tightened their belts amid the ongoing recession, causing a downright dismal holiday shopping period for retailers that usually bank on the Christmas spending to boost profits.

The 59-year-old retailer has now sought bankruptcy protection for a second time and executives with the company are speaking with competitors about whether they would like to purchase some of the chain's stores.

Goody's is owned by PGDYS Lending, which is managed by Prentice Capital Management.

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On the Net:

http://www.goodysonline.com

WASHINGTON (Reuters) – Politicians want American consumers to resume spending to pull the economy out of its tailspin, and the U.S. government is leading by example with a potential $1 trillion deficit in 2009 -- even before a massive stimulus plan.

The Congressional Budget Office is set to release its projections on Wednesday for the fiscal 2009 budget deficit and experts believe it will not just set a new record beyond the $455 billion set in 2008, but could hit $1 trillion as the economic recession saps federal revenues.

While that figure likely includes some of the impact of a $700 billion bailout package for the financial industry and U.S. automakers, it does not include any of economic stimulus measures Congress hopes to pass, which could cost another $775 billion over two years.

President-elect Barack Obama is contemplating large tax cuts to the tune of about $300 billion and potentially as much if not more in infrastructure projects and other spending to try to jolt the economy out of recession.

North Dakota Sen. Kent Conrad, chairman of the Senate Budget Committee, said that a $1 trillion deficit was not just a possibility for 2009, but that an average of $1 trillion could be added to the national debt annually over the next decade.

"We're on an unsustainable course," he said in an interview with Reuters, adding that he had not yet seen the CBO figures.

"It's obvious we have to have a recovery package," the North Dakota Democrat noted, but Congress must also address longer-term issues, such as the costs of the Medicare health care program and Social Security retirement system.

TOUGH CHOICES AHEAD

Obama said on Tuesday he expects to inherit a deficit approaching $1 trillion and his administration would have to make tough budget choices. But economists agree now is not the time for the country to tighten its belt.

"We don't want to lock ourselves into 30 years of budget deficits, but this crisis is so dangerous that it would be a mistake to adopt very, very conservative budget balancing policies in the middle of this," said Kenneth Rogoff, an economics professor at Harvard University.

Rogoff noted that the deficit would also swell from an expected steep dropoff in tax revenue and argued the U.S. economy could afford a large stimulus if necessary.

"No one quite knows how the stimulus is going to work and no one is even sure it will work," Rogoff said. "You certainly don't want to be tightening the budget into this recession if you don't have to."

Some Republicans and conservative Democrats have expressed concern that the stimulus package could bust the federal budget with new programs that will require funding for years to come.

"As the economy gets stronger, we're not going to need these programmatic initiatives," New Hampshire Sen. Judd Gregg, the ranking Republican on the Senate Budget Committee, said on CNBC.

To win over Republicans for the big stimulus package, the proposal Obama plans to offer Congress is expected to include tax breaks for individuals and businesses.

House Democratic leaders are pushing rules that would embrace the concept of tighter budget controls, but conservative Democrats want a commitment that new spending and tax cuts would be paid for elsewhere in the budget.

TREASURY TIPPING POINT

To finance the deficit, the government will need to issue an unprecedented amount of debt -- up to $2 trillion for fiscal 2009.

If investor appetite does not keep up with the flood of supply, yields on U.S. Treasury securities would rise, pushing up interest rates for a broad range of borrowers and blunting the benefits any stimulus plan would provide to the economy.

These concerns are already creeping into the market, with benchmark yields rising off record lows as the Treasury auctions a whopping $166 billion in securities this week.

But analysts say these worries may abate, particularly if the economy weakens further, driving more money into safe-haven Treasuries.

"There is plenty of demand for a borrowing program as large as contemplated by the (stimulus) proposals that are floating out there," said Lou Crandall, chief economist at Wrightson ICAP in Jersey City, New Jersey.

"That doesn't mean you can be complacent and just borrow indefinitely. If you were truly irresponsible on the fiscal front, it could be possible to overwhelm the demand and even before the recovery phase you could have a nasty interest rate response," he said.

(Editing by Gary Crosse)

NEW YORK (Reuters) – Alcoa Inc said on Tuesday it would slash more than 15,000 jobs, halve capital spending and sell four businesses as it reduces aluminum production in the face of the global economic downturn.

The largest U.S. aluminum producer said it imposed a global salary and hiring freeze as it seeks to cope with what Chief Executive Officer Klaus Kleinfeld called "extraordinary times."

The cuts, the third in as many months, come less than a week before Alcoa is scheduled to report its fourth-quarter results. Alcoa said it would take almost $1 billion in charges in the quarter. Analysts expect the company to post a 1-cent per-share loss, according to Reuters Estimates,.

In after-hours trading following the news, Alcoa's shares were down nearly 4 percent at $11.64.

"Alcoa is going to get hit by some really big metal price declines and the only way to fix it is to reduce output," said analyst Charles Bradford, of Bradford Research/Soleil. "I think they need to do more. That's the only thing you can do to get the price going."

Kevin Kruszenski, head of listed trading at KeyBanc Capital Markets in Cleveland, said the cuts could help Alcoa in the long run.

"As demand dropped off in the fourth quarter of 2008, steel companies were quick to cut production. I think the market will reward them for taking this capacity off line and cutting staff. It's smart in this environment."

Alcoa said targeted reductions, curtailments and plant closures and consolidations, mostly in the United States and Europe, including Russia, would reduce its headcount by more than 13,500 employees or 13 percent of the worldwide workforce by the end of 2009. An additional 1,700 contractor positions also will be eliminated.

Also, smelting reductions of more than 135,000 tonnes per year will be implemented, resulting in reduction of total primary aluminum output by more than 750,000 tonnes, or 18 percent of annualized output. In November, Alcoa said it would cut 350,000 tonnes of production and in October it curtailed output at its 265,000-tonne smelter in Rockdale, Texas.

Production of alumina, which is refined from bauxite and smelted into aluminum, also will be reduced accordingly to a total of 1.5 million tonnes in response to market conditions, Alcoa said. Curtailments will be fully implemented by the end of the first quarter 2009.

Alcoa said total charges for the fourth quarter due to restructuring, impairment and other special charges are expected to be between $900 million and $950 million after tax, or $1.13 to $1.19 per share, of which about 80 percent is non-cash.

The restructuring and divestiture program is expected to save about $450 million before taxes on an annualized basis, it said. Capital expenditures in 2009 are projected to be down to $1.8 billion, a 50-percent decrease from 2008.

Alcoa said it also intends to divest four non-core downstream businesses: Electrical and Electronic Systems; Global Foil; Cast Auto Wheels; and Transportation Products Europe. The businesses had 2008 combined revenues of $1.8 billion and an estimated after-tax operating loss of about $105 million. Expected net proceeds for the divestitures are estimated to be approximately $100 million.

The price of aluminum has slumped some 50 percent since peaking at $3,380 per tonne last July as the global economic downturn has hit demand for the metal which is used for aircraft and auto bodies and products such as kitchen foil and beverage cans. On Tuesday, aluminum was selling for around $1,600 per tonne.

Alcoa's shares hit a 52-week high on the New York Stock Exchange of $44.76 in May 2008 and a 52-week low of $6.82 in November. It was the second-weakest performer in the Dow Jones Industrial Average during 2008.

(Reporting by Steve James with additional reporting by Nichola Groom; editing by Carol Bishopric)

WASHINGTON (Reuters) – The U.S. government is beefing up a task force to fight mortgage crimes and safeguard federal financial bailouts, the U.S. Justice Department said on Tuesday.

The Federal Reserve, the internal watchdog of the new federal financial rescue program and four other agencies will join the presidential Corporate Fraud Task Force, which was established in 2002.

The move comes amid calls by some lawmakers and other critics for a more aggressive federal crackdown on allegations of financial wrongdoing that have sent Wall Street reeling.

Critics have called for a special task force to handle many cases now being handled by regional offices.

They have also urged stricter supervision of the Troubled Asset Relief Program, or TARP, which is in charge of handing out $700 billion to shore up financial and other institutions.

"The new member agencies represent a continuing focus by the task force to crack down on mortgage fraud, particularly with regard to ongoing investigations into securitization fraud," the Justice Department said.

In addition to the Fed -- the top U.S. banking regulator -- other new agencies on the task force include the Federal Housing Finance Agency, the Office of the Comptroller of the Currency, the Office of Thrift Supervision, the Department of Housing and Urban Development, and the TARP's special inspector general.

They will join senior officials from the FBI, U.S. Attorneys offices, the Securities and Exchange Commission and several other agencies.

The task force was expanded to bring "the most direct pipelines possible" to agencies involved in the fraud-scarred market sectors, said Gil Soffer, top aide to Deputy Attorney General Mark Filip, who heads the task force.

"The crisis hasn't gone away and it called for an expansion of the task force so that we can get our arms around it as fully and completely as possible."

The task force has won nearly 1,300 corporate fraud convictions since 2002, according to the Justice Department. The FBI said last fall it was investigating 24 cases of corporate fraud related to mortgage lending.

Working with the TARP inspector general, the task force will also investigate and prosecute any fraud related to the bailouts, Soffer told Reuters.

He said the cooperation would not be limited to mortgage related cases.

"The critical aspect of the TARP is that a lot of dollars are going to be leaving the federal fist," Soffer told Reuters. "We are really forging a close collaboration."

Soffer declined to say whether there was any wider federal investigation of potential "Ponzi" schemes following the arrest last month of Bernard Madoff on charges of conducting a fraudulent scheme that cost investors $50 billion.

(Editing by Eric Beech)

WASHINGTON (Reuters) – The second-ranking Democrat of the U.S. Senate on Tuesday introduced legislation that would let bankruptcy judges erase some mortgage debt in an effort to stem foreclosures.

The bill drafted by Sen. Richard Durbin would help millions of families avoid foreclosure by easing their monthly payments, the Illinois lawmaker said in a statement.

"After committing over $1 trillion in taxpayer money to address the financial crisis, why don't we take a step that would indisputably reduce foreclosures and that would cost taxpayers nothing?" Durbin, the Senate Democratic whip, said in a statement.

A similar plan failed in the Senate last spring as President George W. Bush and many Republican lawmakers opposed it, but supporters of 'mortgage cram-down' believe that they will prevail as the housing crisis has deepened and President-elect Barack Obama prepares to take office.

OPPOSITION AHEAD

While the financial services industry is generally opposed to the reform, many consumer-rights advocates have come out in support of the plan that would give courts the same broad power to rewrite home loans as they can do for other debts.

"Reasonable and limited reforms of the bankruptcy laws would allow judges to readjust debt owed on primary residences, just as they can for vacation homes and family farms," 21 state attorneys general wrote on Tuesday in a letter to Congress.

While a national housing crisis has worsened in the last 12 months and foreclosures have climbed to record levels, the lending industry has warned that changes to bankruptcy law could stifle credit.

"The bills will increase the cost of borrowing for a home, at the exact moment we need home sales to restart," said Steve Bartlett, president of the Financial Services Roundtable.

The legislation could take many months to work its way through Congress. But the plan could also become law quickly if it is included in an economic stimulus package being drafted now by congressional leaders.

(Reporting by Patrick Rucker; Editing by Kenneth Barry)

NEW YORK (Reuters) – A California court has approved a jury verdict against Boeing Co (BA.N), which means the plane maker and defense contractor must pay former customer ICO Global Communications (Holdings) Ltd (ICOG.O) $631 million in damages, according to ICO on Tuesday.

In the latest move of a long-running legal dispute over a satellite contract, the Los Angeles Superior Court backed a jury's decision in October to award ICO compensatory damages of $371 million, punitive damages of $236 million, plus prejudgment interest.

If it does not pay immediately, Boeing must also pay ICO 10 percent of the total each year, worth about $63 million, ICO said.

Boeing did not immediately return a call seeking comment on the judgment. The company said at the time of the verdict that it would seek an appeal that could take several years to run its course, and that it believed it did not break the law or breach any contract.

The dispute dates back to a $2 billion contract initially awarded in 1995 by ICO to Hughes Electronics, which was acquired by Boeing in 2000.

ICO's plan was to build and launch a dozen satellites that would form the basis of a new global communications network, but according to arguments presented in the case, only one satellite was ever launched into space, another exploded on launch, and 10 more are incomplete and in storage.

ICO, a satellite communications company based in Reston, Virginia, was taken over by wireless pioneer Craig McCaw in 2000.

Chicago-based Boeing initially sued ICO in 2004 after ICO terminated its contract for the satellites. ICO countersued, accusing Boeing of breach of contract and fraud, and sought $2 billion in damages.

Boeing has denied any wrongdoing and said ICO's problems stemmed from a bad business decision betting on the future of satellite phones.

(Reporting by Bill Rigby; editing by Richard Chang)

NEW YORK (Reuters) – Stocks gained on Tuesday on the increased likelihood of a government stimulus package after the release of minutes from the last Federal Reserve policy meeting painted a dismal picture of the U.S. economy.

Investors bet technology stocks would benefit from President-elect Barack Obama's proposed economic plan that would include the largest U.S. infrastructure investment since the 1950s.

Microsoft (MSFT.O) added 1.2 percent to $20.76 after the software maker said it sold 28 million units worldwide of its Xbox 360 video game console through the end of 2008, extending the Xbox's lead over rival Sony Corp's (6758.T)(SNE.N) PlayStation 3.

The Federal Reserve, in minutes from its December 15-16 meeting, warned of uncomfortably low levels of inflation and said the economic outlook will be weak for some time.

"There is a little bit of a honeymoon period with the ushering in of the new calendar year, people are anticipating bold initiatives in the stimulus package," said Todd Clark, managing director of stock trading at Nollenberger Capital Partners in San Francisco.

"It seems like there is some willingness to take risks again."

The Dow Jones industrial average (.DJI) was up 62.21 points, or 0.69 percent, to 9,015.10. The Standard & Poor's 500 Index (.SPX) gained 7.25 points, or 0.78 percent, to 934.70. The Nasdaq Composite Index (.IXIC) added 24.35 points, or 1.50 percent, to 1,652.38.

The Dow has risen six of the last eight trading sessions and is down 28 percent from one year ago.

Retailers rose ahead of closely monitored same-store sales figures -- an industry benchmark -- later in the week after the latest report on U.S. chain stores provided a small sign of relief. After a dismal holiday shopping season, the data showed sales rose 1.4 percent last week over the prior period and fell less than the same week a year earlier. The S&P retail index (.RLX) rose 2.3 percent.

Materials and mining companies were among the top advancers on Tuesday as a global commodities benchmark (.CRB) settled at its highest level since November 28, helped in part by a rally in precious and base metals, soft commodities and some energy futures.

The S&P index of materials companies (.GSPM) rose 1.9 percent, while an ETF tracking both metal and mining companies (XME.P) jumped 3.6 percent.

But in after-the-bell trade, shares of Alcoa (AA.N) sank after the aluminum producer said it will cut production and reduce about 13,500 jobs, or about 13 percent of its global workforce, in an effort to save cash and reduce costs in response to the economic downturn.

Shares of Alcoa, a Dow component, were down 4.3 percent in after-market trade.

Earlier in the session, weaker-than-expected new orders received by U.S. factories in November and a seven-year low in pending home sales for that month spurred concerns about mounting job losses and the deepening U.S. recession.

Technology shares, which are seen as better prepared to weather the economic downturn due to large cash reserves, were a particular bright spot. International Business Machines Corp (IBM.N) and Hewlett-Packard Co (HPQ.N) pushed the Dow higher, rising 2.8 percent and 8.2 percent respectively.

However, after initially rising and helping to lift the Nasdaq in the wake of an Oppenheimer & Co upgrade, shares of Apple Inc (AAPL.O) retreated as its performance at the Macworld expo in San Francisco disappointed investors. Apple, which had previously introduced the iPhone at Macworld, frustrated investors with its lack of big news.

Shares of Apple slipped 1.7 percent to $93.02.

Volume on the New York Stock Exchange totaled about 1.33 billion shares, and about 2.17 billion shares traded on the Nasdaq.

Advancers outnumbered decliners on the New York Stock Exchange by a ratio of about 7 to 2, while on the Nasdaq the ratio was about five to two.

(Additional reporting by Deepa Seetharaman; Editing by Leslie Adler)

In yet another move to get Apple's iPhone into more retail outlets, Best Buy on Tuesday became the first retailer to offer refurbished iPhone 3Gs at stores nationwide.

The news follows two similar moves in December. That's when AT&T began offering refurbished iPhone 3Gs even as Wal-Mart inked a deal with Apple to sell brand-new iPhone 3Gs at a $5 discount at its stores.

"The refreshed iPhone is a great example of the depth of our offering, and clear evidence of why Best Buy is the best place to purchase a mobile phone," said Scott Moore, vice president of marketing for Best Buy Mobile. "Where else can you get everything you need to make sure your phone can be utilized to its fullest?"

Best Buy's Best Service

Best Buy Mobile stores are now selling the 'refreshed' iPhone 3G at $149 for the 8GB model and $249 for the 16G model. Consumers are required to sign a two-year service contract with AT&T. By contrast, new iPhone 3Gs currently retail for $199 for the 8GB model and and $299 for the 16GB model at Best Buy Mobile.

With the purchase of a refurbished iPhone, Best Buy Mobile customers are guaranteed what the retailer calls Complimentary Walk Out Working. Best Buy promises customers won't leave the store without multimedia and smartphone setup and personalization -- such as e-mail and data transfer -- ensuring that the phone is operating as intended.

Even though the phones are in like-new operating condition -- they were returned during a 30-day trial period and refurbished -- Best Buy also offers extra protection. In addition to a full one-year standard warranty on the refurbished iPhone 3G, customers can also purchase a two-year Geek Squad Black Tie Protection service plan.

Apple's Ambitious Goals

"This actually could be problematic for Apple. Part of Apple's cache is the exclusivity of its toys. Apple for many years has played the BMW card in the IT industry," said Charles King, principal analyst at Pund-IT Research. "You pay a premium for the products and you are getting a superior user experience and superior styling."

When the iPhone first came to market, it cost $599 at the high end, roughly twice the price of competing smartphones. People lined up in the streets for what was marketed as exclusive technology. But King said the reality of the cell-phone market -- and the economy -- could be changing Apple's tune. Or, he added, it could be that Apple has a larger goal than it does with its desktop computers, where it has just about 10 percent of the market share.

"This may simply reflect the fact that Apple does have very large ambitions in the cell-phone market," King said. "It could be that Apple is not going to be content to be at the high end targeting deep-pocketed consumers, but wants to get the brand out there as widely and deeply into the public consciousness as the iPod is."

Initially the phones will only be available at 350 Best Buy stores nationwide. But the retailing giant said the program will expand to all U.S. Best Buy stores that offer AT&T by the end of January.

BLAUBEUREN, Germany (Reuters) – German billionaire Adolf Merckle has committed suicide, in despair over the huge losses suffered by his business empire during the financial crisis, his family said on Tuesday.

The media-shy billionaire, whose family controls some of Germany's best-known companies, was hit by a train on Monday evening, local officials said.

"The desperate situation of his companies caused by the financial crisis, the uncertainties of the last few weeks and his powerlessness to act, have broken the passionate family entrepreneur and he took his own life," a family statement said.

State prosecutors from the southern city of Ulm said Merckle, 74, left work on Monday and died after being hit by a train near the town of Blaubeuren. He left behind a suicide note to his family, they added.

There was no sign of anyone else being involved, they said.

In 2008 Merckle was ranked as the world's 94th-richest person and Germany's fifth-wealthiest by Forbes magazine.

On Tuesday pale blood stains still dotted the snow along the railway track where he died. The area looked deserted apart from a police car nearby.

Merckle, a father of four, inherited the basis of his fortune from his Bohemian grandfather, but went on to build up the chemical wholesale company into Germany's largest drugs wholesaler.

The passionate skiier and mountain climber assembled a business conglomerate with about 100,000 employees and 30 billion euros ($40.45 billion) in annual sales.

His family controls a number of German companies including cement maker HeidelbergCement and generic drug company Ratiopharm.

But the empire was rocked last year by wrong-way bets made on shares in Volkswagen after a surprise stakeholding announcement from Porsche sent the VW share price rocketing as short sellers scrambled to cover their positions.

Banking sources had told Reuters the family lost hundreds of millions of euros on investments, with about 400 million euros lost on Volkswagen shares alone.

Since then the family has been in talks for weeks with banks to renegotiate loans. Banking sources said on Tuesday his death was not expected to affect loan agreements with the family.

Shares in HeidelbergCement fell as much as 12.5 percent following the news of Merckle's death and ended the day down 6.2 percent at 31.25 euros.

"Some investors are afraid that there will be no one to lead negotiations during this sensitive situation for the company," one trader in Frankfurt said.

Psychologists and other mental health experts have said suicide rates could creep up as a result of the financial crisis.

Last month Frenchman Thierry Magon de la Villehuchet, 65, a co-founder of money manager Access International, was found dead in a New York office building, reportedly distraught over losing up to $1.4 billion in client money to Bernard Madoff's alleged fraud. He slit his wrists with box cutters.

(Reporting by Frank Siebelt, Maria Sheahan, Ludwig Burger, Andrea Lentz, and Eva Kuehnen; Editing by Greg Mahlich)

NEW YORK (Reuters) – The U.S. stock market could gain as much 12 percent in 2009 from current levels, despite a recession that will last at least into the first half of the year, a top executive with asset manager BlackRock said on Tuesday.

Robert Doll, chief investment officer of global equities at the largest publicly traded U.S. asset manager, said the Standard & Poor's 500 (.SPX) could hit 1,000 to 1,050 by year-end, and emerging market equities would fare even better.

"With record fiscal and monetary stimulus, substantially lower oil prices, much cheaper valuations, significant negative sentiment and lots of cash on the sidelines, it is likely that stocks will begin to look 'over the valley' sometime in 2009 and experience a noticeable rally," Doll said at a press briefing.

The bottoming process for U.S. equity markets began on October 10, 2008, when the S&P 500 closed below 900, and was confirmed by a second market low on November 21, when the S&P hit an 11-year low, Doll said.

Any economic recovery, however, will likely be muted and market volatility will continue throughout 2009, Doll said.

"We should see multiple-digit percent rallies as well as declines all through the year" in U.S. stocks, he said.

Doll expects global economic growth to be below 2 percent this year for the first time since 1991, and U.S. gross domestic product to be negative for at least the first half of 2009, which would mark the longest and deepest U.S. recession in more than 50 years.

U.S. STOCKS SEEN BETTER VS EUROPE

This year, U.S. equities should outperform European stocks, he said.

A better capital situation in the U.S. and a slower policy response in Europe are among factors that will cause European equities to lag their U.S. counterparts, he said.

Shares in emerging markets, in the meantime, are poised for a stronger rebound than those in developed markets due to a steeper drop in 2008 and a recovery from less painful, cyclical economic downturns rather than more severe, structural ones, he said.

Among sectors, Doll sees energy, health care and technology outperforming utilities, financials and materials in 2009.

"From a sector standpoint, we prefer health care for defensiveness, information technology for some stability and some cyclicality, and energy for cyclicality and cheapness," he said.

With an expected improvement in economic activity in the second half of 2009, Doll expects higher demand for commodities, with crude oil trading between $60 and $80 per barrel.

In New York, crude futures were down 12 cents at $48.69 in midday trading on Tuesday, well below the record peak of about $147 set last July.

The U.S. budget deficit is expected to rise above the $1 trillion mark in 2009, while the Treasury market yield curve, or the gap of longer maturities' yields over shorter maturities, is expected to steepen through the end of the year, he said.

Doll expects the yield spreads of corporate and municipal bonds over Treasuries will narrow this year as investors will likely tip-toe back into these riskier assets and away from low-risk Treasuries, whose yields are hovering at historic lows.

"As fear levels recede and confidence is slowly rebuilt, risky assets can begin to outperform safe assets once again," he said.

(Editing by Leslie Adler)