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Bill Gross, Pimco’s co-founder who’s also known as the bond king, believes Donald Trump’s win in the U.S. presidential election in November would be more bearish for bond markets than Joe Biden’s re-election, he said in an interview with the Financial Times.
“Trump is the more bearish of the candidates simply because his programs advocate continued tax cuts and more expensive things,” the famed bond investor said.
Gross also noted that Biden’s administration has been responsible for trillions of dollars of deficit spending. Still, he believes Trump’s election would be “more disruptive.”
Gross recently said the “Total Return” bond investment strategy he helped create in the late-80s is dead. “It’s the deficit that is the culprit; a $2T [annual] increase in supply… is going to put some pressure on the market,” he told FT.
Instead, he prefers a closed-end fund investing in preferred securities, contingent capital and up to 20% private credit, he said.
As for the stock market, Gross said investors must “temper their expectations” instead of expecting a repeat of the S&P 500’s (SP500) 24% return last year. “Over time, the markets should mean revert. To me, that means prices going up less than they have.”
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