Gundlach says Fed making mistake in way it's ending asset buying
Jeffrey Gundlach, manager of the $36 billion DoubleLine Total Return Bond Fund, said
the U.S. Federal Reserve is making a “big mistake” in the way it ends its unprecedented asset-purchase program.
“We thought the Fed wouldn't walk away from QE,” or quantitative easing, and would buy securities until targeted yields were reached like in Japan and Europe, Gundlach said Tuesday during a webcast for DoubleLine Capital LP's investors. Instead, the central bank is opting for a “seat of the pants” way of handling policy, said the manager, whose firm is based in Los Angeles.
Pimco's El-Erian says Fed to end easing to prevent excessive risk taking
Pacific Investment Management Co.'s Mohamed El-Erian said
the U.S. Federal Reserve will start to reduce its unprecedented asset purchases because it sees the economy healing and aims to prevent unintended consequences of its monetary policy, such as excessive risk taking.
“In all likelihood, the Fed will taper for a mix of reasons,” El-Erian, chief executive officer and co-chief investment officer of the Newport Beach, California-based firm along with Bill Gross, wrote in a September viewpoint published on Pimco's website. “It will likely be comforted by the notion that the American economy continues to heal, but also frustrated by the gradualism of the recovery and the threat of collateral damage."
'Equity market remains in pause mode,' Bob Doll writes
The equity market
remains in pause mode in the short term due to numerous uncertainties and subdued growth outlook. Over 6 to 12 months, we believe global conditions favor equities over bonds and support a moderately pro-growth investment stance. A slowly improving global economy may provide tailwinds for equities and certain risk assets, with potential headwinds for most bonds, particularly those issued by G7 governments. Risks remain for the economic outlook as markets cope with the looming shift in global monetary policy as the Fed starts tapering. There may be disruptions from the U.S. debt ceiling and announcement of the next Fed Chairman, as well as potential geopolitical tremors from the Middle East. But for now, we do not expect any of these issues to deflect the underlying trend.
(Bob Doll is chief equity strategist and senior portfolio manager at Nuveen Asset Management LLC.)
