Janus Capital Fund Manager Bill Gross spoke with FOX Business Network (FBN) about his concerns on the market. When asked whether the Federal Reserve will lower interest rates, Gross said, “I think at some point and it’s going to be difficult for them to do that because they’ve been walking up expectations for several years in terms of raising interest rates.” Gross went on to talk about whether we will be entering a recession saying, “I think it is fair to say we might have nominal growth recession over the next six to twelve months.”
Bill Gross on whether the Federal Reserve will have to lower interest rates and take back the quarter of a point:
“Yeah, I think at some point and it’s going to be difficult for them to do that because they’ve been walking up expectations for several years in terms of raising interest rates, but it’s obvious on a global basis, and the United States and the Fed is the global banker for the world. It’s obvious that the increase in interest rates has dramatic repercussions in terms of risk assets and equity prices and global bond prices, and so I think at some point they are going to have to rethink, what they’ve thought in the past several years.”
Bill Gross on whether we are going to go into recession:
“I think in the United States we can stay above the line on a real growth basis in this particularly quarter and maybe next quarter. What’s important to me and what I think should be important to central bankers is nominal growth. They want only not real growth plus inflation. It’s important in the United States to grow by at least four percent nominally and that’s real growth plus inflation and we’ve only been growing by 2.9 percent, so I think it is fair to say we might have nominal growth recession over the next six to twelve months.”
Bill Gross on what worries him:
“I think it’s China…what is the growth rate in China. They claim it is six-seven percent. I’m suggesting that perhaps it is much less than that…China is the engine for the global economy at the moment and if China can’t have significant positive growth than the rest of the world has problems.”
