USA - the economy and the nation will face a "perfect storm" politically and economically:the 2020s will see 'real turmoil' as US debt woes come home to roost, says Gundlach - by Julia La Roche

Influential bond investor Jeffrey Gundlach, the CEO of $150 billion DoubleLine Capital, sees trouble brewing in the debt market, despite interest rates hovering near historic lows.

In a recent discussion with Yahoo Finance, Gundlach compared the current expansion to the boom that took place nearly 100 years ago. But the next decade will be the opposite of the roaring 1920s, he said, as the debt bomb the U.S. is sitting on becomes untenable in the next economic downturn.

"It's pretty interesting because the 20s in the 20th century, the 20s were super boom times. And weirdly, I think the 20s this time will be very much different than that, with real turmoil," the 60-year-old billionaire said in a recent wide-ranging interview with Yahoo Finance.

In Gundlach's view, the 2020s will see "the crescendo" of many unattractive trends that have been talked about for years, but finally come home to roost. 

"[We're] going to have to face Social Security, health care, all of these things, deficit-based spending — all of that is going to have to be resolved during the 2020s because the compounding curve is just so bad," the billionaire added.

According to the Congressional Budget Office, the federal deficit will top $1 trillion every year beginning in 2022. Yet Gundlach said the agency’s forecast may be too rosy, given that it assumes a "pretty benign future" with no recession and interest rates that are not very high. 

Interest costs to the government, as a percentage of gross domestic product are expected rise from 1.25% to at least 3% by 2027. “That's a big, big increase. And that's coming,” the investor told Yahoo Finance.

“And when you do that, it kind of says, ‘Hey, GDP is going to be knocked by 2%-2.5% because we have to pay interest,’” he added.

Note EU-Digest: these economic problems will be compounded by a totally inept Trump Administration, which has turned the Republican party of Lincoln, Eisenhower and Reagan into a Trump loyalist party which is now based on State Planning and Crony Capitalism

Read more at: Gundlach: The 2020s will see 'real turmoil' as US debt woes come home to roost

Turkey - Turkish lira hammered as political turmoil rattles investors

The Turkish lira remained under pressure Thursday as political uncertainty rattled investors after it emerged Prime Minister Ahmet Davutoglu is set to step down in a move giving President Recep Tayyip Erdogan even more power.

The lira lost almost 4 percent in value against the dollar on Wednesday -- its heaviest daily loss this year -- as news broke that crisis talks between Davutoglu and Erdogan had failed to resolve tensions between the two men.

After that hammering, the lira rallied slightly Thursday to trade at 2.91 to the dollar, a gain of 1.35 percent, but still still well off its 2.85 level against the dollar before the news broke.

"Politics has once again emerged as a major risk for the lira, which is likely to remain vulnerable in the coming days," analysts at Rabobank said in a note to clients.

The ruling Justice and Development Party (AKP) is now set to hold an extraordinary congress where Davutoglu is expected to surrender his twin jobs of party chairman and prime minister.

The equity also took the news badly, with participants fearing the development was a move by Erdogan to tighten his grip on all areas of policy, including the economy.

The Istanbul stock market's benchmark 100 Index lost 1.40 percent to trade at 78,274 points.

Rabobank said Davutoglu had been perceived by markets as being "far more moderate" than Erdogan. "If Davutoglu indeed resigns, it will be a major blow for the lira and Turkish assets," it added.

Erdogan's reputation as a safe pair of hands on the economy was harmed last year when he piled pressure on the nominally independent central bank to cut interest rates for the sake of growth at a time of high inflation.

Read more: Flash - Turkish lira hammered as political turmoil rattles investors - France 24