Bond-investing guru Jeffrey Gundlach predicts President Donald Trump will survive the impeachment inquiry to win a second term while the U.S. avoids a recession.
“If you have a recession, a negative sign in front of GDP, especially nominal GDP, that would just be horrific,” Gundlach, told Fox Business Network.
“I think there is just nothing for Trump to run on if the economy is negative,” said the CEO and chief investment officer of the Los Angeles-based DoubleLine Capital, which has $140 billion in assets.
“There's some numbers rolling off in the next few months, it will mean there's a good risk of the leading indicators going to zero,” he said. “And the reason why that matters is there hasn't been a recession in decades of economic tracking, there has not been a recession ever without leading indicators first going negative,” he said.
While keeping the economy stable at best is critical, Gundlach also says the Trump administration could borrow a page from President Barack Obama’s playbook, Fox Business Network explained.
“If you cut payroll taxes it absolutely helps the economy because that's money that's all at the middle-class level and it’s all going straight into the paycheck,” Gundlach said. “So that might actually help to put a monkey wrench into these indicators...if the economy is left alone.”
Trump could also eliminate the tariffs on Chinese goods in order to stimulate the economy, Gundlach says.
“What if we just pull all the tariffs in I don’t know March, we just eliminate them,” he said.
“That would probably create a pretty big pent up demand. I mean if you were thinking of buying something that has a tariff on it. Well, maybe you're waiting for the tariff to be removed.”
Meanwhile, the move by Democrats in the U.S. Congress on Tuesday to launch a formal impeachment inquiry into Trump has caused nervousness on Wall Street — but history suggests investors need not worry, Reuters reported.
While the uncertainty created by the move roiled the market, investors said the year-long U.S.-China trade war and damage it could do to the global economy remained the most pressing issues.
The removal of Trump, a Republican, from office appeared unlikely since it would require the Republican-controlled Senate to convict him in a trial by a two-thirds majority.
"It's not going to happen, where you have a Republican Senate convict a sitting Republican president," said BB&T Wealth Management Senior Vice President Bucky Hellwig, characterizing the 1998 impeachment of President Bill Clinton as a "nothing burger."
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