Real gross domestic product in the US is expected to recover to last year’s level by the end of 2021 while inflation will rise slowly, the head of the Pacific Investment Management Company said.
This will mean the Federal Reserve will probably keep interest rates low, Emmanuel Roman told a Bloomberg web event on Tuesday evening.
A high degree of uncertainty still exists in the US economy, with several unknowns in sectors such as retail, leisure and oil and gas and leisure, he said.
As the Covid-19 infection rate increases in most states, consumer behaviour remains fickle, meaning the uptake of air travel or use of movie theatres remain hard to predict.
“When I think about the next 12 months, the error rate has to be much higher, in terms of predictions,” Mr Roman said.
After unemployment hit a record low last year, the US economy ended its longest-ever expansionary run this year as the Covid-19 pandemic forced the government to close borders and shut all-but essential businesses to curb the spread of the virus.
The US is the country hardest hit by the pandemic, with more than 2.3 million infections and more than 120,000 deaths, according to Johns Hopkins University.
The Trump administration poured about $3 trillion (Dh11tn) into the economy after unemployment claims peaked at about 37 million last month, the highest level in decades.
However, as states reopen and economic momentum picks up, the rate of infections is also soaring, stoking fears of another lockdown.
The US Federal Reserve has also unveiled monetary easing measures such as cutting interest rates to near zero and buying bonds and securities to bring stability to financial markets.
The S&P 500 Index and Dow Jones Industrial Average, which both fell into bear market territory in March, have largely recovered their losses.
Pimco economists project that inflation will make a slow recovery to 2.3 and 2.4 per cent over the next couple of years, Mr Roman said.
“The days of inflation that we grew up with are gone. It [inflation] is something we have to look at but we don’t think the Fed is going to raise the rates for a very long time,” he said.
The Fed “learnt the lessons [of] hiking interest rates too fast” in 2005, 2008 and 2018, he said.
Pimco, which has $1.8tn worth of assets under management, is raising at least $6 billion to take advantage of distressed credit and corporate debt opportunities.
It also looks to return as an originator of collateralised loan obligations for the first time since 2006, and expects to charge higher interest rates and impose stricter underwriting standards than in pre-pandemic issues, Bloomberg reported.
“If you look at the US cycles, distress is a long cycle and the ability to [allocate] capital to restructuring ... is actually the opportunity to deliver outsized returns," Mr Roman said.
"It is something we are focusing on and there are opportunities to buy cheap businesses and credit. [With] the ability to put them in the correct fund structure and correct liquidity, I think the industry will deliver outsize returns.”
He stressed that Pimco is bullish on the US housing sector and said the mortgage market provides steady opportunities.
“We think housing in the US doesn’t have enough supply and the prices, give or take, are stable, given what we know,” he said.
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Paris Can Wait
Dir: Eleanor Coppola
Starring: Alec Baldwin, Diane Lane, Arnaud Viard
Two stars
if you go
The flights
Air Astana flies direct from Dubai to Almaty from Dh2,440 per person return, and to Astana (via Almaty) from Dh2,930 return, both including taxes.
The hotels
Rooms at the Ritz-Carlton Almaty cost from Dh1,944 per night including taxes; and in Astana the new Ritz-Carlton Astana (www.marriott) costs from Dh1,325; alternatively, the new St Regis Astana costs from Dh1,458 per night including taxes.
When to visit
March-May and September-November
Visas
Citizens of many countries, including the UAE do not need a visa to enter Kazakhstan for up to 30 days. Contact the nearest Kazakhstan embassy or consulate.
The specs
Engine: 2.0-litre 4cyl turbo
Power: 261hp at 5,500rpm
Torque: 405Nm at 1,750-3,500rpm
Transmission: 9-speed auto
Fuel consumption: 6.9L/100km
On sale: Now
Price: From Dh117,059
How it works
Booklava works on a subscription model. On signing up you receive a free book as part of a 30-day-trial period, after which you pay US$9.99 (Dh36.70) per month to gain access to a library of books and discounts of up to 30 per cent on selected titles. You can cancel your subscription at any time. For more details go to www.booklava.com
KILLING OF QASSEM SULEIMANI
MATCH INFO
What: India v Afghanistan, first Test
When: Starts Thursday
Where: M Chinnaswamy Stadium, Bengalaru
Killing of Qassem Suleimani
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UAE currency: the story behind the money in your pockets
UPI facts
More than 2.2 million Indian tourists arrived in UAE in 2023
More than 3.5 million Indians reside in UAE
Indian tourists can make purchases in UAE using rupee accounts in India through QR-code-based UPI real-time payment systems
Indian residents in UAE can use their non-resident NRO and NRE accounts held in Indian banks linked to a UAE mobile number for UPI transactions
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MATCH INFO
Crawley Town 3 (Tsaroulla 50', Nadesan 53', Tunnicliffe 70')
Leeds United 0
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Zayed Sustainability Prize
Mohammed bin Zayed Majlis
More from Neighbourhood Watch:
Florida: The critical Sunshine State
Though mostly conservative, Florida is usually always “close” in presidential elections. In most elections, the candidate that wins the Sunshine State almost always wins the election, as evidenced in 2016 when Trump took Florida, a state which has not had a democratic governor since 1991.
Joe Biden’s campaign has spent $100 million there to turn things around, understandable given the state’s crucial 29 electoral votes.
In 2016, Mr Trump’s democratic rival Hillary Clinton paid frequent visits to Florida though analysts concluded that she failed to appeal towards middle-class voters, whom Barack Obama won over in the previous election.
Killing of Qassem Suleimani
HIJRA
Starring: Lamar Faden, Khairiah Nathmy, Nawaf Al-Dhufairy
Director: Shahad Ameen
Rating: 3/5
The specs
Engine: 2.0-litre 4-cylinder turbo
Power: 258hp from 5,000-6,500rpm
Torque: 400Nm from 1,550-4,000rpm
Transmission: Eight-speed auto
Fuel consumption: 6.1L/100km
Price: from Dh362,500
On sale: now
The specs
Engine: Long-range single or dual motor with 200kW or 400kW battery
Transmission: Single-speed automatic
Max touring range: 620km / 590km
Price: From Dh250,000 (estimated)
Company profile
Name: Fruitful Day
Founders: Marie-Christine Luijckx, Lyla Dalal AlRawi, Lindsey Fournie
Based: Dubai, UAE
Founded: 2015
Number of employees: 30
Sector: F&B
Funding so far: Dh3 million
Future funding plans: None at present
Future markets: Saudi Arabia, potentially Kuwait and other GCC countries
The Voice of Hind Rajab
Starring: Saja Kilani, Clara Khoury, Motaz Malhees
Director: Kaouther Ben Hania
Rating: 4/5
Our legal columnist
Name: Yousef Al Bahar
Advocate at Al Bahar & Associate Advocates and Legal Consultants, established in 1994
Education: Mr Al Bahar was born in 1979 and graduated in 2008 from the Judicial Institute. He took after his father, who was one of the first Emirati lawyers
Volvo ES90 Specs
Engine: Electric single motor (96kW), twin motor (106kW) and twin motor performance (106kW)
Power: 333hp, 449hp, 680hp
Torque: 480Nm, 670Nm, 870Nm
On sale: Later in 2025 or early 2026, depending on region
Price: Exact regional pricing TBA
What can you do?
Document everything immediately; including dates, times, locations and witnesses
Seek professional advice from a legal expert
You can report an incident to HR or an immediate supervisor
You can use the Ministry of Human Resources and Emiratisation’s dedicated hotline
In criminal cases, you can contact the police for additional support
