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Bill Gross says investors should expect a dovish Fed under Trump

Bond expert Bill Gross shared his views on the economy, President Donald Trump and the Federal Reserve in an interview Thursday on CNBC's "Power Lunch."

"In terms of Yellen, I think it's interesting that he's reversed there as well. He likes Yellen now. He thinks that maybe he'll reappoint her. He's got three to five appointments going forward in terms of the Fed," Gross said about Trump's Federal Reserve policy. "You know, I would expect him to appoint dovish types of governors and presidents so expect a dovish Fed going forward and easy money policy as well."

On the Treasury bond yield dip: "Perhaps the markets are beginning to anticipate lower growth as well. But today's global bond market yields represent severe policy distortions that present an obvious risk/reward imbalance."

On how to invest: "You simply de-risk in terms of bonds instead of extending duration. You hunker down and you take low duration, short duration vehicles that basically don't return as much. In terms of high yield bonds yeah, you reduce some of them." He added: "In terms of stocks, you know, if they're really based on a 3 percent growth assumption which leads to 5 to 10 percent corporate profit growth, then you reduce your equity holdings."

The investor warned in his monthly investment outlook that "high rates of growth and the productivity that drives it are likely distant memories from a bygone era."

Gross is the portfolio manager of Janus Global Unconstrained Bond and Total Return strategies. Previously, he co-founded and was chief investment officer of Pimco.

He also discussed:

  • Trump's plan for the economy
  • Active fund management

To watch the broadcast interview in its entirety, you must be a CNBC PRO subscriber.