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May 06, 2016 at 07:09 AM
DoubleLine Capital’s Jeffrey Gundlach said Donald Trump, if he’s elected president, would help the U.S. economy recover by going further into debt, just as Ronald Reagan fueled growth in the 1980s.
“Trump is going to win, and Trump is going to increase the deficit,” Gundlach said during a panel discussion Thursday in New York. Reagan “did it by taking three or four decades of stable nonfinancial debt-to-GDP ratio and putting it on a hockey stick higher.”
Gundlach, 56, isn’t endorsing any candidate, according to Loren Fleckenstein, a DoubleLine analyst. The fund manager, who has been predicting a Trump election victory since February, noted that Trump’s campaign slogan, “Make America Great Again,” resembles Reagan’s “Let’s Make America Great Again.”
Under Reagan, the U.S. debt grew to more than $2.3 trillion at the end of 1988 from $807 billion eight years earlier, according to data compiled by Bloomberg. The total U.S. debt as of Dec. 31 was $15.1 trillion.
‘Growth Scare’
Markets might not react favorably to a Trump election at first, because the Republican presidential candidate has criticized international trade agreements, according to the fund manager.
“First, I think you’re going to get a global growth scare, trade-based,” Gundlach said. “That could cause a market rollover which to me looks like it’s already under way.”
