Bill Gross on the economic condition
Bill Gross said the economic environment is showing momentum. Inflation figures are also improving.
The economy could see a gradual rate hike process. The Fed announced at its December 2016 meeting that there could be three rate hikes in 2017. All these factors show that the economy is on a stronger path.
Gross on productivity
According to Bill Gross, investors must wait and see how Trump policies affect the US economy. According to him, Trump’s proposed policies would benefit the economy if they are applied at the right time.
Gross believes that the US economy will receive more investment during this presidency. Earlier, the company used the free cash available for dividends and share buybacks. He believes companies didn’t expand their capacities in the past because the US economy (QQQ) (SPY) was running at its full capacity. However, the productivity wasn’t enough to push economic growth up.
He believes companies will receive capital investment that will help them increase their capacity, and thus their productivity. Higher productivity is necessary for stronger economic growth (VFINX) (IVV) (VOO).
In the next part of this series, we’ll analyze Bill Gross’s view on the markets.