If true, I will completely reverse my bearish stance on markets and blow out of my very profitable TLT position. But the truth of the matter is, western governments are not in a position to bloat their budgets with bridges to nowhere, unless of course Trump gets in and proposes that we BUILD THE WALL and have Mexico pay for it.
Being that rates are very low, it’s not hard to imagine fiscal stimulus being approved in this country and in the EU. But we haven’t heard anything of it and last I checked the only stimulus that has infiltrated America happened in a vacuum, inside the military-industrial complex–who has depleted out treasury for $5t since the wars in the middle east began more than a decade ago.
What Gundlach might be alluding to is the radical idea of helicopter money–a wild eyed scheme that entails giving away money to the plebs so that they might cavort around shopping malls and purchase extra lattes. It’s all rot.
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The Federal Government has wasted or given away through entitlements many trillions of dollars, all we have to show for it is mostly debt. I suppose spending a few more trillion on something really worthwhile should be a layup.
US gov’t spent 59 billion on individual welfare and 92 billion on corporate welfare in 2014- 3% and 5% respectively.
The military/defense spending was over 600 billion in 2015, under eight years of a liberal (though moderate) president.
When you talk about entitlements being the problem, you’re ignoring the 800 pound elephant and King Kong in the room.
My guess is that if Mr Trump wins infrastructure spending will happen pretty quickly and impressively. Obama will be berated for having let America fall behind and fall apart. America will be made great again.
So Gundlach has some kind of short on and wants bond prices to go down, or he has a bunch of sidelined cash and is looking for a better entry point?
Gundlach makes a lot of sense.
Earlier this year he was recommending to stay out of utilities and instead buy up REITs, namely REM. While the utilities have gone up, they are overpriced already, even after the pullback of recent.
Getting out of bonds and into high yielding stocks is the play, especially ones that are underpriced. So, I’m looking energy, materials and financials…
What’s your play looking forward the next 2-3 months?