To counteract the very negative call from Gary Shilling, we got a pro stock call.
Dan Fuss of Loomis Sayles & Co, is a legendary bond manager, who spends 50 years (yes 50!) of his career searching for bonds from all over the globe for distinguish niche Institutional Investors.
This guy, 76, whom we have not heard of has a stellar track record. He is not as well known as Bill Gross of Pimco, but among the well learned people take what he says into consideration.
What happens when someone who manages bonds all his career favors stocks instead?
Specifically he sees interest rates moving up, just not known at what speed. Move up fast and we have a hyper inflationary scenario, but a gradual move up could be good for equities.
The unemployment rate is going to be the main factor in when the Federal Reserve Bank starts to raise interest rates in earnest, Mr. Fuss said.
If the unemployment rate falls to between 6% and 7%, it’s likely that the Fed will stop buying up two-year Treasury notes and 30-year Treasury bonds, which has been keeping the interest rate on the 10-year Treasury bill artificially low, Mr. Fuss said.
“Once that happens, you need to get out of the market risk that’s in fixed-income and into the company-specific risk you can find in stocks,” he said.
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