In his most recent newsletter, Populism Takes A Wrong Turn, Bill Gross, Portfolio Manager-Global Macro Fixed Income, argues that President elect Donald Trump’s policies will not actually remedy America’s problems, and will actually lead to lower GDP growth and higher inflation. His negative assessment is summed up in the following quote, which actually blames the “idiot electorate” in his opinion, for the result:
“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.”
His argument against the Trump economic plan is as follows:
“Trump’s policies of greater defense and infrastructure spending combined with lower corporate taxes to invigorate the private sector continue to favor capital versus labor, markets versus wages, and are a continuation of the status quo.”
His argument totally discounts any simultaneous actions to create “fair” trade pacts which Trump campaigned on. He portrays this activity as “negative policies revolving around trade.” I suppose the idiot electorate sees this issue a little differently from the ground level.
Bill Gross obviously gets what is happening from an economic and government standpoint; but, unlike Trump's outrageous statements on the campaign trail that were successful in tapping many supporters in America, Gross is not connecting with many in the investment community with his rants, and certainly not many Americans who voted for Trump. Maybe he should get on-board and ride the wave that is about to be created, rather than complain so much that things are not fixable.