For you non-financial types, Bill Gross of PIMCO investments is considered “the Bond King”. Dan Fuss from Loomis Sales has easily beaten Gross at his own game over the last 15 years. To be successful and perform as Gross and Fuss have, bond investors must be able to paint a macro vision of the economy and the interactions that make it work. So it pays to listen to their opinion. In this article Dan Fuss is none to optimistic. His main points are…
Speaking by phone from his office on the 34th floor, Fuss paints a gloomy economic picture, especially for the U.S. He points out that economic growth is slowing just as prices are rising – a miserable mixture that could lead to an era of stagflation reminiscent of the 1970s.
He says the federal government has promised “the old folks” health and retirement benefits that it can’t deliver without hiking taxes or cutting spending, yet it shows little inclination to do either.
Instead, he expects federal borrowing to grow, sending the yield on the ten-year Treasury, now 5%, to 6.25% over the next few years. That’s bad news for Treasurys, because rising rates cause prices to fall.
It’s hard to argue with his vision, but the market does have a mind of its’ own. And for you investment types, Fuss is bullish on the New Zealand dollar.
