Bill Gross is still bearish

He may no longer be the Bond King, but Bill Gross is no less bearish than before.


Fund managerBill Gross shedhis title of the"Bond King" twoyears ago, afterdeparting Pimco,the US-basedfirm that he cofoundedand builtinto one of theworld's largestasset managers. But while Gross nowpersonally manages around $1.5bn atJanus Capital, compared to overseeinga total of almost $2trn at Pimco, hisviews are no less sweeping and noless bearish than before.

The global economy has become asystem that simply "recycles financefor the benefit of financiers", ratherthan one that aims for prosperityand progress, he writes in his latestmonthly update. Growth has beenpowered by a vast credit boom: thereis $58trn in official debt outstanding inthe US today, compared to just $1trnin 1970.

Subscribe to MoneyWeek

Become a smarter, better informed investor with MoneyWeek.

Now this expansion "appearsto be reaching an ending of sorts" hence the spread of quantitativeeasing and negative interest ratesas central banks struggle to keep itgoing. If they fail, expect yet moreradical measures, such as a ban oncash note the "somewhat suspiciousuniform attack on high denominationbills of global currencies", which standaccused of aiding money laundering and even "helicopter money"(handouts from the central bank to thepublic to encourage them to spend).

"Can any/all of these policyalternatives save the system'?" Theevidence of the past few years is notencouraging: "Summer for our credit-basedfinancial system is past and ashorter winter-like solstice is in ourfuture". Avoid junk bonds and financialstocks; stick to short-term, high-qualitybonds that should be less affectedwhen rates finally begin to rise.




How long can the good times roll?

Despite all the doom and gloom that has dominated our headlines for most of 2019, Britain and most of the rest of the developing world is currently en…
19 Dec 2019
Investment gurus

Bill Ackman: get ready for the bargains of a lifetime

Hedge fund manager Bill Ackerman is turning bullish and putting his money into bargain stocks.
4 Apr 2020
UK Economy

Coronavirus: Big Brother widens his embrace

The coronavirus crisis has led to a massive expansion of the state into all areas of daily life. Should we be worried?
4 Apr 2020
Global Economy

The charts that matter: recession is here – how deep it will get?

After a week in which US unemployment claims topped six million, John Stepek looks at how the charts that matter most to the global economy are lookin…
4 Apr 2020

Most Popular


Three things matter for the UK housing market now – and “location” isn’t one of them

The UK housing market is frozen. And when it does eventually thaw out, the traditional factors that drive prices will no longer apply. The day of reck…
1 Apr 2020

What does the coronavirus crisis mean for UK house prices?

With the whole country in lockdown, the UK property market is closed for business. John Stepek looks at what that means for UK house prices, housebuil…
27 Mar 2020

Oil shoots higher – have we seen the bottom for the big oil companies?

Just a few days ago everyone was worried about negative oil prices. Now, the market has turned upwards. John Stepek explains what’s behind the rise an…
3 Apr 2020
UK Economy

How the coronavirus pandemic is killing cash

Covid-19 is making a huge difference to the way we live, work and do business. One of its less obvious effects, says Merryn Somerset Webb, is to accel…
31 Mar 2020