An "Amazed" Bill Gross Slams Trump: "His Tenure Will Be Damaging"

Tyler Durden's picture

If yesterday we were surprised to note that shortly after predicting a market correction should Donald Trump win the presidency, Bridgewater's Ray Dalio was unexpectedly reborn as a Trump fan, writing that "it is possible that we might have very capable policy makers of the previously mentioned ideological persuasion in control", this morning that "other" investing legend, Bill Gross, has released an ad hoc letter of his own, which was more in line with conventional expectations, because unlike Dalio, Gross let's Trump have it from the first paragraph, alleging the "Trumpian Fox" only won the White House as a "result of Middle America's misinterpretation of what will make America great again."

Gross then slams Trump by saying that "in voting to deny Hillary Clinton the Henhouse, they "unwittingly" (lack of wit), let Donald Trump sneak in the side door. His tenure will be a short four years but is likely to be a damaging one for jobless and low-wage American voters" because "his 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 is a continuation of the status quo."

In other words, unlike Dalio, Gross refuses to even consider giving Trump the benefit of the doubt. Gross then lists some of the proposed Trump policies - such as the tax repatriation holiday or cutting corporate taxes - which in his opinion won't make any difference, although Gross is at least fair in saying that a Clinton Administration would "probably not have done much better" and adds the following:

Both the Clinton Democrats and almost all Republicans represent the corporate status quo that favors markets versus wages; Wall Street versus Main Street. That's why the American public and indeed global citizens will continually take a wrong turn in their efforts to neuter the establishment and to regain several decades' lost momentum in real wages versus real profits. Neither party as they now stand has bold policies beyond the reach of K Street Lobbyists. 

We fully agree with this statement, and we also agree with Gross' assessment that who the president is, will have little impact on the future of the US economy which is now pressured by factors which are largely beyond the control of the president: "corporations are fighting structural headwinds, such as demographic aging, technological displacement of jobs (robotization), deglobalization, and overleveraged balance sheets. They focus on the bottom line as opposed to the public welfare. Government must step in, not by reducing taxes, which will only increase profits at the expense of labor, but by being the employer of last resort in hopefully a productive way."

Gross is also just as pessimistic on the outlook for US investors:

Investors, as The Economist astutely pointed out, face a possible no-win situation. Unless the worker's share of GDP reverses its downward trend, and capital's share peaks, then populists worldwide will reject establishment parties in almost every future election – initiating in some cases growth-negative policies revolving around trade, immigration, and yes, in Trump's case, lower taxation that may lower GDP growth, not raise it. Global populism is the wave of the future, but it has taken a wrong turn in America. Investors must drive with caution, understanding that higher deficits resulting from lower taxes raise interest rates and inflation, which in turn have the potential to produce lower earnings and P/E ratios.

His conclusion is that there is "no new Trump bull market in the offing" and urges his readers to be "satisfied with 3-5% globally diversified returns. The Wall Street, finance-led hegemon is fading. The Populist sunrise has barely broken the horizon."

For now the market violently disagrees with Gross.

* * *

His full letter is below, courtesy of Janus

Populism Takes a Wrong Turn

 

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. Not having voted for either establishment party's candidate, I write in amazed, almost amused bewilderment at what American voters have done to themselves. A Reuters/Ipsos Election Day Survey of 10,000 voters revealed the extraordinary fury of the American populist movement. Almost 72% agreed that "the American economy is rigged to the advantage of the rich and powerful". Count me among them, yet in voting to deny Hillary Clinton the Henhouse, they "unwittingly" (lack of wit), let Donald Trump sneak in the side door. His tenure will be a short four years but is likely to be a damaging one for jobless and low-wage American voters. They were the force for Trump's flipping the Midwest into a Republican Electoral College victory. But while the Fox promised jobs and to make America great again, his 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 is a continuation of the status quo.

 

For example, Republican pleas for tax reform are centered around the argument that America has one of the highest corporate tax rates in the world at 35%. Not so. Of the S&P 500's largest 50 corporations, the average tax rate (including state, local and foreign regulations) is 24%. U.S. corporations rank among the world's most lightly, as opposed to heavily, taxed. Trump policies also appear to favor the repatriation of trillions of dollars of foreign profits at extremely low cost under the logic that the money will be spent for investment here in the U.S. Doubtful. The last time such a "pardon" was put into law in 2004, no noticeable pickup in investment took place. Of the $362 billion that earned a "tax holiday", most went to dividends, corporate bonuses, and stock buybacks. Apple or any other large U.S. corporation can borrow the money they need here in the U.S. at historically low interest rates to fund investment. A few have, but over $500 billion annually in recent years has gone to the repurchase of corporate stock and the increase of earnings per share, instead of earnings and GDP growth. Why would they need to repatriate anything for investment in the real economy?

 

But could a Clinton Administration have done much better? Probably not. Both the Clinton Democrats and almost all Republicans represent the corporate status quo that favors markets versus wages; Wall Street versus Main Street. That's why the American public and indeed global citizens will continually take a wrong turn in their efforts to neuter the establishment and to regain several decades' lost momentum in real wages versus real profits. Neither party as they now stand has bold policies beyond the reach of K Street Lobbyists. To my mind, there are better solutions than either party's election platform, such as a Keynesian/FDR job corps or a Kennedyesque AmeriCorps that puts people to work helping other people. Such programs were never emphasized by either candidate. Let's supplement welfare with a patriotic "Help America" jobs program, even if government organized. Would it be as efficient as a corporate-led effort? Of course not, but corporations are fighting structural headwinds, such as demographic aging, technological displacement of jobs (robotization), deglobalization, and overleveraged balance sheets. They focus on the bottom line as opposed to the public welfare. Government must step in, not by reducing taxes, which will only increase profits at the expense of labor, but by being the employer of last resort in hopefully a productive way.

 

Populism is on the march and a Trump victory will do little to halt its advance in future decades. If anything, it is demographically baked in the cake. Investors, as The Economist astutely pointed out, face a possible no-win situation. Unless the worker's share of GDP reverses its downward trend, and capital's share peaks, then populists worldwide will reject establishment parties in almost every future election – initiating in some cases growth-negative policies revolving around trade, immigration, and yes, in Trump's case, lower taxation that may lower GDP growth, not raise it. Global populism is the wave of the future, but it has taken a wrong turn in America. Investors must drive with caution, understanding that higher deficits resulting from lower taxes raise interest rates and inflation, which in turn have the potential to produce lower earnings and P/E ratios. There is no new Trump bull market in the offing. Be satisfied with 3-5% globally diversified returns. The Wall Street, finance-led hegemon is fading. The Populist sunrise has barely broken the horizon.

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VinceFostersGhost's picture

 

 

 

There goes his pardon.

 

We'll take those cufflinks back now......got anything else to say?

HopefulCynical's picture

A crony capitalist is mad Trump won. Color me amazed.

NidStyles's picture

Labor comes from capital.

 

This guy's view of the world is so upside down thanks to decades of being a paid stooge.

tmosley's picture

The kvetching is palpable.

Enjoyment.

NidStyles's picture

I can hear the "OY VEYing" and dry hand rubbing over here in the southwest.

 

Even our local chosenites are freaking out.

 

It puts a smile on my face.

Dead Canary's picture

I think Trump will do what Trump always does. Amaze his detractors.

J S Bach's picture

The light-bulb head get's dimmer by the day.  Why do we have to waste our brain cells reading about him?  (hint to Tyler)

VinceFostersGhost's picture

 

 

Whom the gods would destroy......they first make mad.

Vatican_cameo's picture

 

Are Liberals are buying "Stupid Pills" on the street, or do you need a prescription?

bigkahuna's picture

Way to go there Gross with your blue falcon flying high - I hope it turns around and flies up your ass.

BigJim's picture

We all hate Clinton, and with damn good reason, but let's not pretend Trump is some kind of Libertarian Austrian economist.

His infrastructure spending plan is pure, pointless (deleterious, actually) Keynesian stimulus. The US economy isn't being held back by its infrastructure, but by bad trade deals, endless regulation and government meddling, financialisation, Triffin's paradox, pointless (wicked, really) wars, military spending and maintenance of empire. And that's before we start falling into the AIPAC rabbithole.

I'm delighted Clinton lost; who wants to see evil triumph and flourish? If Trump averts war with Russia that's good enough for me, but let's not pretend he probably won't be a disaster in practically every other respect.

MillionDollarBonus_'s picture

I’ve gained some respect for Bill Gross after this, although I’ve taken offense to his monetary policy recommendations in the past. His description of a Trump Presidency is absolutely right. Union leaders support Hillary because they realize that open borders, outsourcing and high corporate taxes benefit workers, not harm them. Trump’s economic policies are going to be an absolute disaster for working people and the middle class!

WHY THE ELECTORAL COLLEGE NEEDS TO BE ABOLISHED

BigJim's picture

MDB_, may I quickly say here: I love your work, dude.

Your satire is pure fucking genius! The comments alone on accredited-times.com are out-of-this-world hilarious, and it's good to see your twin, Trav777 in action.

MalteseFalcon's picture

This is Gross talking his book as always.

The Trump economic plan is simple:  take from the paper pushers and give to the working man.

There is more than enough money there.

Pinto Currency's picture

Gross played a role in the inflating of the greatest debt bubble in history over the past 35 years.

That bubble is now collapsing and will require extraordinary action.

Gross mentions none of this.

froze25's picture

Ahh, Mr. Gross. Unlike the Loony Left, the "Alt-Right" isn't retarded and we do follow the market, we do look at the employment Numbers including the employment participation rate. If Mr. Trump doesn't deliver and things don't improve he will lose in 4 years. If things to improve you will once again loss what little credibility you have left. I am already making money thanks to Harry Dent's guidance on a Mr. Trump win, the Yen is losing value, the 10 year Treasury note's yield is about 2.23, I already have reason to thank Mr. Trump. China has changed its tune appropriately now that they know their agent Hillary lost and along with it much of their influence and they have to deal with a MAN instead of Obama. The Russian people can breath again now that they aren't afraid of a nuclear war. So Mr. Gross go jump in a lake, you need to scrub the scum off of your body.

The Saint's picture
The Saint (not verified) froze25 Nov 16, 2016 11:12 AM

Your comments are truly Gross, Bill.

 

PrayingMantis's picture

... hey Bill Gross, this is for you too! >>> >>> http://www.liveleak.com/view?i=e4d_1479313951 ...

... "... Trump Warrior Queen: "I'm not giving you a name I'm giving you a fuck you ...   Notice how she isn't using illegitimate arguments like racist or sexist as the [retarded] left like to use.   But man! this girl is high-energy.
 Instead of taking a dose of red pills I think she downed the entire bottle.   She says: “Bigotry but married to an immigrant, right? Make sure you get that on camera." ..."

 

 

TerminalLiability's picture

Agreed, the old sour cunt can rant until he wheezes. He's about as relevant as Soros when it comes to lecturing others on what they "should" do or "regret" etc. Fuck him.

Uzda Farce's picture
Uzda Farce (not verified) Pinto Currency Nov 16, 2016 11:27 AM

"In May 2008, Gross made a large donation to Jeffrey Sachs Millennium Villages Project at Columbia University... In September 2008, Gross's bond funds netted U.S. $1.7 billion after the federal takeover of Fannie Mae and Freddie Mac, for which he had lobbied..." -- Wikipedia

Bill Gross and Jeffrey Sachs are globalists. Sachs is a member of the Rockefeller/CFR, and director of the Rockefeller/Columbia Earth Institute which coordinates the "global governance" and "sustainable development" projects of the Rockefeller sponsored U.N. organization.

http://www.earthinstitute.columbia.edu/articles/view/1950.html

Pinto Currency's picture

Jeff Sachs was a central figure in the looting of Russia in the early 1990s helping Soros (later kicked out of Russia) and the Oligarchs steal these assets.

Encroaching Darkness's picture

This is me not caring what Bill Gross thinks or says.

Out of touch elites not understanding the common man? Out of touch? Out of the freaking solar system! Not within range of a radio telescope!

It will take a little while, but people like Gross and Dimon and Blankfein and Geithner are going to find out how little they really matter. Incompetent economists are about to become an endangered species due to starvation (would you pay / feed someone this clueless?)

Golden Phoenix's picture

Did you swallow or spit after that?

MK13's picture

Yeah, milliondollarbaby is back, rejoice!! Soros is still stimulating the economy by paying him to post!!

Anyone who says 'government had to step in ... as employer of last resort' loses any credit he had going in. Why don't you break out Marx and Engels while you were at it, and proclaim 'to each from his ability to each for his needs' or some other such garbage.

VZ58's picture

Aw shucks, she's back. The DNC decided to renew the contract for our little Fillipino mom ghost editorial writer after all. I'm thrilled. Thought we had lost you. Glad they are supporting our allies again. Can't wait for another four years of DNC talking points from you. 

pods's picture

Fuck off cunt. You have now moved past simple lovable troll into dangerous asshole spouting ideas that will end the Republic once and for all.

You want to advertise your fucking website troll?  Buy some space.

If not, FOAD.

pods

VinceFostersGhost's picture

 

 

let's not pretend he probably won't be a disaster in practically every other respect.

 

Well, I know you're not the President Elect......so maybe you should STFU!

 

Let's get through the first day......and then you can shoot your mouth off.

JRobby's picture

So Bill "The Bond King" is upset with bond market losses?

But surely, "The Bond King" must know that rates would not stay ZIRP, NIRP forever and that trillions in new debt had been issued at these rates?

I mean, He's "The Fucking Bond King!!!!" Elitist Fraternity (Insider) Scum Bag

Spigot's picture

Yeah, Billy is definely gonna hate the bond bubble reset which has just been triggered.

When we eat the rich what BBQ sauce you want with that??

jcaz's picture

Bill "Master of the Universe"  has had only ONE idea for the past 35 years- Be Long Bonds.

Too bad, Bill- gonna need a new strategy.....

divingengineer's picture

You men eat your dinner, eat your pork and beans. I eat more brokerthan any man ever seen, yeah, yeah.

JRobby's picture

Pour battery acid and lye on the rich. I will have a hot dog and popcorn while I watch.

No one, even Bill, saw the election as a "trigger event"??? They got transfixed by QE and the FED's idiotic ping pong game?

flaminratzazz's picture

It has to be sweet baby rays, you can eat cardboard with sbr on it and think you just finished a 5 star. of course economists and bankers are nastier than cardboard, it will be more like trying to eat turds.

Spigot's picture

sbr fan here too. There aren't enough rich for everyone to have a full plate so we're gonna ask people to just take a few bites worth so everyone can get a bit.

BigJim's picture

Of course, Trump has made much of the trade deals, but if he winds up introducing a 21st century Smoot Hawley...

Handful of Dust's picture

I just 'unliked' Bill on the FB page.

Manthong's picture

Any doubts I had that Gross is nothing more than a lucky idiot have been erased.

sodbuster's picture

Hey Billy boy- In case you haven't noticed- the last 8 years have been a fricking disaster!! But you never said a thing about that, have you, you dumb bastard.

divingengineer's picture

They're so worried that Trump's plan could work. 

They wouldn't piss in our mouths if our teeth were on fire. 

 

tmosley's picture

You act as though those other points you listed weren't central points of his campaign.

Spigot's picture

That's the point. 'merica is a bankrupt country. He's the fixer, and you'll be glad he's the one working the workout deal for you and me. Sure is gonna hurt like hell but that's where we are and where we are going.

Boscovius's picture

So then, I take it that outside of Trumps infrastructure spending plan, you are in complete agreement with all his other policy objectives you have listed?

ATM's picture

Tiffin's paradox and a fiat dollar are the source of the demise of the middle class and that middle class can never come back until the dollar is removed from reserve status.

Even then the destruction to the country from that occurrance will be devastating as those trillions and trillions of dollars held globally rush back to the USA in an attempt to buy anything and everything of value.

That's where our inflation hides. It's overseas waiting for the trigger. 

PT's picture

Considering what Trump is up against, I will be amazed if he manages to achieve anything.  He's got the Ds, the Rs, the MSM, paid protestors all against him.  At least half the FBI and DoJ are working against him.  His best work has already been done - exposing the hypocrites for what they are.  Come out into the light you liars, thieves and colluders.  Keep exposing yourselves for the world to see.  Keep showing us who has been compromised.

Dear Status Quo
It's not like he didn't give you plenty of warning:
https://www.youtube.com/watch?v=SEPs17_AkTI

keep the bastards honest's picture

I thought fixng roads, bridges, train lines hospitals etc airports... all these 3rd world utilites in the US would be plain good housekeeping, good management.  Who cares about Keynes. Failing empires put too much money into war and the core rots.

MalteseFalcon's picture

Trump is going to deal with bad trade deals, endless war and needless regulation.

He going to stop paying paper pushers and pay people who make things.

Economics to one side, if Trump just drains the swamp, he's a success.

WillyGroper's picture

now didn't obutthole tell us all about "shovel ready" jobs?

if there's any plan for infrastructure, it's going to be for total control stack n pack blade runner cities.

i seriously doubt if dt will do anything to derail that.