Bill Gross investment outlook March 2, 2015
Bill Gross has released his latest Investment Outlook and this month he focuses on currencies.
"An undeclared currency war is what the world is experiencing," Gross writes. He looks at the recovery of the United States and ties it -- in part -- to aggressive monetary policy from the Fed in the early days of the crisis. He said that undercut the dollar and set the stage for the current round of growth.
The latest race to devalue and inflation includes negative rates and Gross notes that nearly $2 trillion in debt is now trading with a negative yield.
"Not even 'thin gruel' is being offered to our modern day Oliver Twist investors. You have to pay to come to the dinner table and then sit there staring at an empty plate," Gross writes.
Over time, low long-term yields will make it all-but-impossible to prosper for savers. It will also destroy financial business models like pension funds and insurance companies.
"Negative/zero bound interest rates may exacerbate, instead of stimulate low growth rates in all of these instances, by raising savings and deferring consumption," Gross writes.
He worries about a bubble and a reach for yield. As usual, he recommends high quality bonds and low P/E, high quality stocks.
