US deflation would spark further stimulus, says Research Affiliates

Jan 10, 2010

And deflation would reduce the value of inflation-linked assets, making them an attractive play, says the firm's chairman, Robert Arnott. But he's more concerned about record-high US debt levels.

Deflation may briefly take hold in the US in the next six to 12 months, which will spark additional stimulus, heighten the risk of inflation and reduce the value of inflation-linked assets, creating a "wonderful buying opportunity" for those products. So says Robert Arnott, founder and chairman of Research Affiliates, an investment manager based in Newport Beach, California.

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