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Bill Gross: ‘All Asset Prices Elevated to Artificial Levels’

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Part 4
Bill Gross: ‘All Asset Prices Elevated to Artificial Levels’ PART 4 OF 6

Why Bill Gross Believes the Fed Will Be Dovish under Trump

Bill Gross on the Fed

Bill Gross believes that going forward, we may see a dovish Fed under the Trump presidency. He said in an interview with CNBC that Trump might prefer dovish Fed officials.

Why Bill Gross Believes the Fed Will Be Dovish under Trump

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Gross said, “In terms of Yellen, I think it’s interesting that he’s reversed there as well. He likes Yellen now. He thinks that maybe he’ll reappoint her. He’s got three to five appointments going forward in terms of the Fed.”

On Trump’s Federal Reserve policy, Gross said, “You know, I would expect him to appoint dovish types of governors and presidents so expect a dovish Fed going forward and easy money policy as well.”

Why Trump might prefer a dovish Fed

During his election campaign, Trump said he will introduce more fiscal stimulus (IVV) (VOO) (VFINX) and increase infrastructure and defense spending (SPX-INDEX) (SPY). An easy monetary policy will help the government introduce various fiscal stimulus packages (QQQ).

The Fed increased its key interest rate by 25 basis points on March 15, 2017. That was the third rate hike in a decade. The first rate hike was in December 2015, and the second was in December 2016. Many fund managers are expecting the Fed to continue its gradual rate hike process if the economic data support it. However, Gross believes Trump may choose a dovish Fed during his term.

In the next part of this series, we’ll analyze what Gross believes are investment opportunities.

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