Canaccord Genuity Morning Coffee on Bill Gross’ Monthly Outlook: Three Certainties in Life
Canaccord Genuity Morning Coffee on Bill Gross’ Monthly Outlook: Three certainties in life: Death, taxes and a whimsical monthly update from Bill Gross.
PIMCO head Bill Gross released his February Investment Outlook titled “Life – and Death Proposition”, discussing the potential fall out from a de-levering economy and the impact of near zero interest rates. Highlights from the report include: 1) Gross believes “the transition from a levering, asset-inflating secular economy to a post-bubble de-levering era may be as difficult for one to imagine as our departure into the hereafter;” 2) He stated, “Zero-bound interest rates do not always and necessarily force investors to take more risk by purchasing stocks or real estate;” 3) As rates approach zero, “money can become less liquid and frozen by price”, limiting any potential appreciation on fixed income securities as rates cannot go lower, convincing investors to hold cash as opposed to extending credit, a requirement for economic growth; and 4) In Gross’ conclusion, he says, “Where does credit go when it dies? It goes back to where it came from. It delevers, it slows and inhibits economic growth and it turns economic theory upside down, ultimately challenging the wisdom of policymakers. We’ll all be making this thing up as we go along for what may seem like an eternity…We are witnessing the death f abundance and the borning of austerity, for what may be a long, long time.”
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PIMCO head Bill Gross released his February Investment Outlook titled “Life – and Death Proposition”, discussing the potential fall out from a de-levering economy and the impact of near zero interest rates. Highlights from the report include: 1) Gross believes “the transition from a levering, asset-inflating secular economy to a post-bubble de-levering era may be as difficult for one to imagine as our departure into the hereafter;” 2) He stated, “Zero-bound interest rates do not always and necessarily force investors to take more risk by purchasing stocks or real estate;” 3) As rates approach zero, “money can become less liquid and frozen by price”, limiting any potential appreciation on fixed income securities as rates cannot go lower, convincing investors to hold cash as opposed to extending credit, a requirement for economic growth; and 4) In Gross’ conclusion, he says, “Where does credit go when it dies? It goes back to where it came from. It delevers, it slows and inhibits economic growth and it turns economic theory upside down, ultimately challenging the wisdom of policymakers. We’ll all be making this thing up as we go along for what may seem like an eternity…We are witnessing the death f abundance and the borning of austerity, for what may be a long, long time.”
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William H. Gross, Pacific Investment Management Company, LLC (PIMCO), Genuity Capital Markets, Life, Style and Real EstateSign up for StreetInsider Free!
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