‘There is no new Trump bull market’, Gross says

PLAN FALLACIOUS

Bond Fund, wrote Wednesday in a November commentary.

“There is no new Trump bull market in the offing,” said Gross. “Investors must drive with caution, understanding that higher deficits resulting from lower taxes raise interest rates and inflation, which in turn have the potential to produce lower earnings” and price/earnings ratios.

Since Trump’s stunning election victory, money managers have been grappling to interpret the result and offer insight to clients. The vote has also whipsawed the financial markets, triggering a rally in equities and soaring bond yields on the expectation that Trump and a Republican-controlled Congress will champion programs to fuel growth.

In a piece he titled “Populism Takes a Wrong Turn,” Gross said many of the policies Trump favours represent the status quo — and a Clinton administration would have been no better. “Neither party as they now stand has bold policies beyond the reach of K Street lobbyists,” he wrote.

Gross questioned the need for corporate tax cuts, saying that U.S. companies are among the world’s most lightly taxed. Another popular Republican idea, the repatriation of trillions of dollars of corporate profits held overseas, probably won’t lead to more investment in America, he said.

Pundits who think that Trump’s win represents a victory for middle-class America are mistaken, he said, using a fox-in-the-henhouse metaphor.

“The Trumpian Fox has entered the Populist Henhouse, not so much by stealth but as a result of Middle America’s misinterpretation of what will make America great again,” he said. Trump’s “tenure will be a short four years but is likely to be a damaging one for jobless and low-wage American voters.”

Gross, who said he didn’t vote for either major party candidate for president, said the U.S. would be better served by a jobs program