Brace for stocks and long-dated bonds to slump and the US economy to falter, Bill Gross has warned.
"You want to be very careful in terms of valuations here on stocks, despite AI and despite momentum going forward," Gross said,The US stock market has soared this year, fueled by frantic buzz around artificial intelligence, and mounting hopes that inflation will recede, the Federal Reserve will cut interest rates, and the economy will escape a recession.
"A thriving, finance-based economy can't do well if low-risk investments yield more than high-risk investments," he said."That's just a perverted yield curve and it won't do well for the economy going forward."predicted "Once that's used up, we're going to start to see the effect of a 2% real rate on consumers and consumption going forward, therefore lower real GDP and therefore inflation around 3%," he said.
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