Bill Gross

Frontrunning: October 23

  • China's central bank cuts rates for sixth time since November (Reuters)
  • Global stocks hit two-month high on dovish Draghi message (Reuters)
  • $6.5 Billion in Energy Writedowns and We're Just Getting Started (BBG)
  • Alphabet, formerly Google, sets share buyback, shares jump (Reuters)
  • Hurricane Patricia, Stronger Than Katrina, Nears Mexico (BBG)
  • TVA Cleared to Start First New U.S. Nuclear Power Plant in Nearly 20 Years (WSJ)

Axel Merk: Got Gold?

We think the market may have gotten ahead of itself, accepting the narrative that the Fed will raise rates as many other countries ease. We believe the market is gradually realizing that the Fed is far less flexible than it hoped it would be, thus causing a re-pricing of expectations. We don't think this will necessarily change the Fed's "desire" to pursue an exit. This re-pricing of expectations may have profound implications for the U.S. dollar, and with it, the price of gold.

Don't Tell My Mother I'm In Finance (She Thinks I Work In A Brothel)

In medicine, they have something called the Hippocratic Oath. It requires physicians to swear to uphold certain ethical standards. In modern fund management, there is no Hippocratic Oath. Whereas doctors are expected to “First, do no harm”, in modern fund management, iatrogenic illnesses hold sway. An iatrogenic illness is one that is caused by the physician himself. Fund management doctors seem to be doing the best they can to kill their own patients. Science has a word for this, too. It’s called parasite. There is a solution to all this insanity.

Frontrunning: October 9

  • Global stocks eye biggest rally in four years on Fed relief (Reuters)
  • FOMC Minutes Sap Confidence in Fed's 2015 Rate Hike Resolve (BBG)
  • Glencore to cut annual zinc production by a third (FT)
  • Tea Party wave that lifted Republicans threatens to engulf them (Reuters)
  • Why Kevin McCarthy Came to Quit Speaker Race (WSJ)
  • A U.S. Recession Just Got a Little More Likely (BBG)

Weekend Reading: Fed Confusion

The current surge in dis-inflationary pressures is not just due to the recent fall in oil prices, but rather a global epidemic of slowing economic growth. While Janet Yellen addressed this "disinflationary" wave during her post-meeting press conference, the Fed still maintains the illusion of confidence that economic growth will return shortly. Unfortunately, this has been the Fed's "Unicorn" since 2011 as annual hopes of economic recovery have failed to materialize. However, it is these ongoing views of optimism that have collided with economic realities.

Bill Gross' Latest: "Mainstream America Is Being Slowly Cooked Alive"

"Mainstream America with their 401Ks are in a similar pickle. Expecting 8-10% to pay for education, healthcare, retirement or simply taking an accustomed vacation, they won’t be doing much of it as long as short term yields are at zero. They are not so much in a pickle barrel as they are on a revolving spit, being slowly cooked alive while central bankers focus on their Taylor models and fight non-existent inflation."

Bill Gross: "Go To Cash"

The global economy’s finance based spine is so out of whack that it is in need of a major readjustment. Cash or better yet “near cash” such as 1-2 year corporate bonds are my best idea of appropriate risks/reward investments. The reward is not much, but as Will Rogers once said during the Great Depression – “I’m not so much concerned about the return on my money as the return of my money.”

It's Official: China Confirms It Has Begun Liquidating Treasuries, Warns Washington

As Bloomberg reports, "China has cut its holdings of U.S. Treasuries this month to raise dollars needed to support the yuan in the wake of a shock devaluation two weeks ago, according to people familiar with the matter. Channels for such transactions include China selling directly, as well as through agents in Belgium and Switzerland, said one of the people, who declined to be identified as the information isn’t public. China has communicated with U.S. authorities about the sales."