The president-elect’s plan to reduce taxes and increase infrastructure spending is unlikely to bolster economic growth or equities, Gross, manager of the $1.68 billion Janus Global Unconstrained 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 favors 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.
Asian stocks rose with U.K. equity index futures, and Treasuries edged higher ahead of American inflation data and testimony from Federal Reserve Chair Janet Yellen that will help shape U.S. interest-rate expectations.
The MSCI Asia Pacific Index was up 0.1 percent, extending Wednesday’s 0.4 percent gain.
Japanese stocks ended marginally higher on Thursday as stocks were bought after the central bank's first fixed-rate debt purchasing operation weakened the yen.
The Nikkei ended flat at 17,862.63 in choppy trade, while the Topix rose 0.1 percent to 1,423.08. The JPX-Nikkei Index 400 also gained 0.1percent, to 12,786.58.
China stocks closed slightly higher on Thursday, snapping a two-session losing streak, as gains for big-cap infrastructure stocks offset a weak resources sector.
The blue-chip CSI300 index rose 0.2 percent, to 3,436.54, while the Shanghai Composite Index gained 0.1 percent to 3,208.45 points.
Reference: Reuters, Bloomberg
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