Difficult Times Ahead For The US Economy Says Pimco CEO

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The United States economy has been predicted to see harder times ahead, at the beginning of 2020 as per Emmanuel Roman, CEO of Pimco, on Thursday.

At the DAC (Delivering Alpha conference) by Institutional Investor and CNBC, the economy of U.S. is declining. For the starting half of year 2020, the country is marginally above 1% and the biggest threat is the ongoing trade war of the country with China.

Since previous year, an ugly trade war has kept both the U.S. and China engaged in imposing tariffs on goods worth BN of dollars. The battle has increased distress on worldwide economic growth and U.S. and expansion of corporate profit. Even the markets are experiencing increased volatility. In 2019, over 30 changes of 1% have been posted by S&P 500.

It was also highlighted by Roman that issues such as increased geopolitical concerns in S. Arabia and Brexit has dampened the scenario. Pimco is among the biggest managers of money globally having $1.8 T under management.

Roman added that although the significant position of the American economy is the consumer, however, the manufacturing sector and capex have started slumping. The initial half of 2020 will observe nose-dive but during the second half things will improve. The panel consisted several important delegates and the discussion revolved around ruling returns of investment throughout the world.

A sharp fall has been observed this year in the bond yields as world central banks have continued easing out policies in a way to withstand economic growth. The U.S. FD on Wed prunes rates of interest this year for the 2nd time.

As per MAM’s (Marathon Asset Management) Richards, U.S. economy’s biggest threat is the fading of consumer confidence. Although, consumer is performing fine now, but once this confidence starts dwindling things might turn ugly, as 2/3rd of American economy is constituted by the consumer. Currently, the corporate confidence is bearing the burn of decline.

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