November 16, 2016
By Jonathan Stempel
NEW YORK, Nov 16 (Reuters) - President-elect Donald Trumpwill last no more than four years in the White House, a periodwhen corporations and Wall Street will retain the upper handover the struggling workers who helped elect him in a populistwave, bond manager Bill Gross of Janus Capital Group Inc said on Wednesday.
In his monthly investment outlook, "Populism Takes a WrongTurn," Gross also said "there is no new Trump bull market in theoffing," and that global diversified investors should be"satisfied" with 3 percent to 5 percent annual returns.
"The Trumpian Fox has entered the Populist Henhouse, not somuch by stealth but as a result of Middle America'smisinterpretation of what will make America great again," Grosswrote.
"[Trump's] tenure will be a short four years but is likelyto be a damaging one for jobless and low-wage American voters,"Gross added. "I write in amazed, almost amused bewilderment atwhat American voters have done to themselves."
Gross became the world's most famous bond fund manager atAllianz SE's Pacific Investment Management Co, wherehe ran Pimco Total Return and worked until 2014, whenhe joined Janus.
He now oversees the $1.7 billion Janus Global UnconstrainedBond Fund.
In his outlook, Gross said he did not vote for theRepublican Trump or Democratic rival Hillary Clinton, andadmitted that Clinton probably would not have done much betterredistributing wages toward the working class.
He said it was "doubtful" that Trump's plan to repatriatehuge corporate profits to the United States for infrastructurespending would succeed, saying that a similar effort in 2004resulted in large stock buybacks, dividend payouts and corporatebonuses, but no noticeable pickup in investment.
Gross said Trump's policies mark a "continuation of thestatus quo," and that government could step in with a "HelpAmerica" jobs program to bolster labor in ways thatoverleveraged, cost-conscious corporations might not.
Regardless, Gross said "populism is on the march" and couldlast for decades unless workers' share of gross domestic productreverses its downward trend. Trump's immigration, tax and tradepolicies might not promote that outcome, he said.
"Global populism is the wave of the future, but it has takena wrong turn in America," he wrote.
"Investors must drive with caution, understanding thathigher deficits resulting from lower taxes raise interest ratesand inflation, which in turn have the potential to produce lowerearnings and P/E (price-earnings) ratios," Gross added.
Gross' fund through Monday returned 4.5 percent this year,outpacing 68 percent of its peers, according to Morningstar Incdata. Janus last month announced a plan to merge withLondon-based Henderson Group Plc. (Reporting by Jonathan Stempel in New York; Editing by BernardOrr)
