Here is some interesting commentary from Bill Gross’s latest letter. I also posted some recent interesting videos of Bill Gross. Enjoy!
On a similiar note, I conducted a fantastic interview with a top emerging markets portfolio manager, which should be posted up on Tuesday. The person has an incredible track record, works at a well known firm, manages a few hundred million, and has an interesting personal life. Make sure to check back this Tuesday (June 7th), you wont want to miss it.
By Bill Gross:
?Rather than outright default, many countries attempt rather successfully to keep nominal interest rates lower than would otherwise prevail.
Over the long term, this “financial repression” results in a transfer of wealth from savers to borrowers.
Investors shouldn’t give their money away, and at the moment, the duration component of a bond portfolio comes close to doing just that – because it doesn’t yield enough relative to inflation.
Because the QEs cover an extraordinary period of monetary policy with a limited time frame, there is not enough data to indicate whether the end of QEII will lead to higher or even lower rates, although higher is our strong preference. “Who will buy them?” remains a critical question to be answered. There is, however, overwhelming evidence – now provided by Carmen Reinhart among others – that existing Treasury yields fail to adequately compensate investors for the risk of holding them, when measured on a historical basis.
I’m going to one-up Mark Twain in the quantity department and spin two yarns about jumping frogs, one which has been frequently told, the other not so much. Neither of them have anything to do with Samuel Clemens’ heralded short story, but both, metaphorically at least, describe our current investment markets and how to think about the future. My first story is the one you’ve all heard about. Put a frog in a kettle of boiling water and he’ll jump out faster and further than any of those blue ribbon winners at the Calaveras County jumping frog contest. Put him in a pot at room temperature, however, slowly turn up the temperature to boiling, and you’ll have frog legs for dinner. This latter, more unfortunate toad temporarily adapted to his external environment, which seemed like a practical thing to do, until – well, until he reached 212° at which point he was cooked.
To read the full letter click http://www.pimco.com/EN/Insights/Pages/BuyCheapBondswithSafeSpread.aspx ,
Below are some good interviews that Gross did recently talking about a variety of topics.
Bill Gross, discusses the outlook for Federal Reserve monetary policy after yesterdays’s U.S. May jobs report showed very low job growth.
Bill Gross, manager of the world’s biggest bond fund at Pacific Investment Management Co., talks about the U.S. bond market and investment strategy.
PIMCO’s Bill Gross says he will stop buying mortgage debt if it doesn’t come with an explicit government guarantee and that a private housing agency would result in unaffordable mortgage rates.
Bill Gross discusses alternatives to treasury bonds.
Bill Gross on European Crisis
PIMCO Manager Bill Gross says it is unthinkable that the U.S. would default on its obligations but that right now debt from nations such as Canada, Brazil, and Germany offer better yields and less risk.