Daniel Ivascyn, the group chief investment officer at Pacific Investment Management Co., reportedly warns savvy investors that global economies are expanding at a highly unstable pace and could possibly overheat.
“A near-term risk is the potential for even slight economic overheating," he recently told the Financial News London.
"We have about 80% of global economies growing above capacity, unemployment rates in the U.S. likely to head below 4%. Other economies could see wage inflation creep up,” he said.
Ivascyn, manager of Pimco’s $100 billion Income Fund, warned that any moderate stimulus in, for example, the Trump-Republican tax-reform plan, could increase pressure on wages and pricing, the Financial News explained.
“[This is] something markets have not been accustomed to,” he said.
“If we see even moderate stimulus given where we are in the economic cycle, the Fed may need to do more than what is currently priced into markets. This may put pressure on the new Fed chair on day one,” he said.
Meanwhile, investors have flocked back to Pimco, pouring nearly $50 billion into the investment house as a rising star fund manager has emerged after bond king Bill Gross’ 2014 departure.
Pimco has staged a “remarkable turnround” to become the world’s best-selling active mutual fund manager, the Financial Times reported.
Ivascyn’s fund became the world’s largest actively managed bond fund earlier this year, prompting fears the company risks again becoming too reliant on a star manager.
“Ivascyn, 48, was one of the senior Pimco fund managers who, amid infighting at the company in 2014, threatened to resign if Gross did not,” the FT reported.
For his part, Ivascyn has warned that the constant controversies surrounding the White House have harmed the U.S. economic outlook.
President Donald Trump’s key initiatives such as a healthcare overhaul, tax cuts and fiscal stimulus are less likely to win approval before the 2018 mid-term elections as controversies build, Ivascyn recently told Bloomberg.
“We’re becoming a bit more cautious about the possibility of meaningful legislation,” Ivascyn said from his office in Newport Beach, California.
“These types of distractions are just going to make it even more difficult to gain consensus.”
(Newsmax wire services contributed to this report).
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