PIMCO CEO Cautions on the Fallout from Trump's Tariffs

Emmanuel Roman, CEO of PIMCO, has voiced concerns regarding the potential impact of former US President Donald Trump's tariff policies on the US stock market. He suggested that the full effect of these tariffs remains to be seen and could weigh on American businesses.

In an interview with Bloomberg TV, Roman stated that while there are bright spots in the US economy, such as the boom in AI data centers, "US industry outside of the mega-cap tech companies is not doing great." He added, "We haven't seen revenue growth, and there's still an open question about what the impact of tariffs is going to be and how American companies are going to deal with it, whether it's passing on costs or accepting margin compression."

PIMCO anticipates the US stock market to deliver returns of approximately 6% over the next three years. Roman also cautioned about the risks inherent in private markets, citing historical instances where "seemingly tranquil periods suddenly erupted into turmoil," such as the Savings and Loan crisis in the 1980s and 1990s and the collapse of Long Term Capital Management in 1998.

Promising Opportunities in Data Center Financing

Despite these concerns, PIMCO sees attractive investment opportunities in asset-backed financing, particularly in the data center sector. The firm recently led a $26 billion debt deal for Meta Platforms (META) to finance the construction of data centers in Louisiana.

Roman explained that the "data center space has tremendous needs for capital and equity," adding that "this market is very, very large, and there will be a lot of financing deals and construction projects going forward. And it's not just the US; it's other regions in the world as well."

The Meta Platforms deal represents a significant win for PIMCO, which is seeking to diversify its business beyond traditional public market bond operations. Asset management firms are also actively seeking different avenues to capitalize on the trillions of dollars in data center financing opportunities, thereby increasing revenue and fee sources.

Positive Outlook for Natural Gas Prices

Roman also expressed PIMCO's positive outlook on natural gas prices, given that data center operations require substantial amounts of energy. He also noted that investment opportunities in fixed-income markets are "very, very large, and the space for alpha generation is quite significant."

PIMCO is one of the world's largest bond management companies, with total assets under management exceeding $2 trillion.