Bond guru Bill Gross says that, once the global flood of quantitative easing ends, we could be in for another liquidity crisis.
In the aftermath of the 2008 financial crisis, bond guru Bill Gross spoke of a “New Normal” for US economic growth. Now he’s talking about the “New Neutral” for interest rates, and the impact it will have on investors.
A number of the world’s top investment strategists recently gathered for Barron’s annual roundtable to offer their thoughts on where the economy and markets are heading. David Herro, Abby Joseph Cohen, Bill Gross, and Marc Faber were among those who participated, and overall the mood was subdued. “On the whole, they expect interest rates to stay unnaturally low, and the U.S. to lead the world in economic growth,” writes Barron’s Lauren R. Rublin. “Yet, they doubt that will translate into robust gains for the stock market. Scott Black’s expectation that the Standard & Poor’s 500 will return 10% this year — an 8% price advance and a 2% dividend yield — was as rosy as it got. Marc Faber, we feel compelled to warn you, thinks the market already has made its high for 2015.”
Barron’s also included one-on-one interviews with many of the strategists. In the clip below, Gross talks about his outlook for how the current global debt overload will play out, and discusses where investors should be looking right now.
Bond guru Bill Gross says that the good times are over for investors, and is indicating that he believes the bull market will end sometime this year.
Bond guru Bill Gross says he thinks economic growth will fall to 2% for the US, thanks to tumbling oil prices.
PIMCO bond guru Bill Gross says the Federal Reserve is confronted with a big challenge in trying to determine a “neutral” interest rate that will accomplish all its goals — and he says PIMCO and the market have very different estimates of what that neutral rate will be.
PIMCO “bond king” Bill Gross says that the bull market in bonds is ending. Gross tells Bloomberg that, without additional quantitative easing, he thinks treasury bonds will decline in yield as the economy slows, which will push credit spreads higher. He sees a 12-month period ahead where combined treasury, corporate, and high yield bonds “don’t move much”. Gross also says the stock market has been rising in part because of economic improvement, and in part because of the “Bernanke put” — the belief that Ben Bernanke and the Federal Reserve will continue to bolster stocks over the long haul. Gross says there’s “a lot of money chasing a lot of risk, and in some cases it may be justified.”