Bill Gross: "We Have Fake Markets Because Of The Fed"

Repeating an argument he has made increasingly more forcefully over the past few years, former bond king, Bill Gross, now at Janus Henderson where he oversees the $2.1 billion Unconstrained Bond Fund, said late on Monday that financial markets are artificially compressed, in the process distorting capitalism because of the U.S. Federal Reserve's loose monetary policy.

"I think we have fake markets," Gross said at a Janus Henderson event quoted by Reuters.

He added that investors should brace for higher bond yields as the Fed begins to unwind its quantitative easing program but yields will edge up "only gradually." 

Repeating observations made here, and elsewhere countless times, Gross said the Fed's loose monetary policy had resulted in investors chasing yield and thus producing tight corporate spreads everywhere around the globe (but especially in Europe where junk bonds now yield less than matched maturity US treasurys due to the monetization distortions of the ECB).

"Even China and South Korea - perfect examples of the risk trade - are at very narrow (corporate spread) levels. There is no real advantage in the global marketplace. Everything is so tight, it is hard to pick a winner from a group that is fake."

Gross also reiterated his previous warning that Fed Chair Janet Yellen and other global policy makers should not rely on historical models such as the Taylor Rule and the Phillips curve "in an era of extraordinary monetary policy." 

Of course, if Gross doe put his money where his mouth is - so to speak - and acts in a fiduciary duty in line with his convictions, he should return capital to investors immediately and wait until such time as market are no longer "fake" and where investors such as Gross have an edge. Somehow we doubt this will happen, however, prompting the question whether one needs fake traders to navigate these fake markets...


Zepper Tue, 10/10/2017 - 13:53 Permalink

I just thought of the code name for all the OWNED central banks working in unison to keep this charade of a fake economy going...  ATLAS (Greek Titan who holds up the sky, made up of mostly gas and water vapor)

Pollygotacracker Tue, 10/10/2017 - 13:57 Permalink

You shall do no wrong in judgement, in measurement of weight, or capacity.You shall have just balances, just weights, a just ephah, and a just hin: I am the Lord your God, who brought you out of the land of Egypt.You shall thus observe all My statutes, and all My ordinances,and do them: I am the Lord.Leviticus 19:35-37God does not approve of 'fake' markets.Just sayin'.    

shizzledizzle Tue, 10/10/2017 - 14:05 Permalink

A corrrect statemnt but he needs to go a step further and give folks the steak and taters. The markets are fake becuase the FED is actively buying and selling assets and manipulating commodity prices. Cmon, Bill.

small axe Tue, 10/10/2017 - 14:01 Permalink

Gross profits from the greatest rape and pillage of the middle class ever and then he wants us to know that it was all fake.Not to the people you and your ilk screwed, you arrogant son of a bitch. To us the screwing was very very real.Go to hell 

buzzsaw99 Tue, 10/10/2017 - 14:03 Permalink

Of course, if Gross doe put his money where his mouth is - so to speak - and acts in a fiduciary duty in line with his convictions, he should return capital to investors immediately and wait until such time as market are no longer "fake" and where investors such as Gross have an edge. Somehow we doubt this will happen, however...also, if gross believes spreads are artificially tight (which they are) AND that usa treasury rates will rise, albeit slowly (imo they won't move up for long, but he obviously believes they will), then wouldn't gross' "unconstrained" bond fund, by his own logic, be possibly the worst investment in the farging world going forward?

To Hell In A H… Tue, 10/10/2017 - 14:10 Permalink

Bill Gross is a pussy. If a non-insider like myself knew it in the mid fucking 90's, Gross must have known, but kept quiet in order to game the system himself. At the very minimum, Gross should have known the obvious when LIBOR and FOREX rigging became public news. Fuck fakes like Gross.

hola dos cola Tue, 10/10/2017 - 14:21 Permalink

Start with taxing the algos in the fake market for the benefit of the taxpayer.Start (a) new market(s), algo free, where price discovery is real and investors can benefit. P.S. Feed the FED to the algo's, AFTER they've been cut of from tax money. 

Federalist Papers (not verified) Tue, 10/10/2017 - 14:18 Permalink

Gross is a flipflopper.  Any real investor on the Hedge knows it.  Zero hedge continues to bring a realistic view of the markets and as long as SHEPWAVE continues to call current moves for traders it is all GOOD!

ejbonk Tue, 10/10/2017 - 14:49 Permalink

This Is Insanity, Yet The Central Banks Of The World Continue Down This Path With No Exit Plan And No Real Soluble Solutions To Avoid Or Prevent The Coming Collapse of Everything From Economic Markets and Fiat Currencies. They Do Not Even Have A Plan For A Currency Revaluation to any Precious Metals to Restore Stability and Confidence in the Markets and The Public's Mind. 

Anonymous (not verified) Tue, 10/10/2017 - 16:26 Permalink

Pretty soon the SEC will probably just start recording what ever prices for their narrative on the NYSE, or just suspend trading indefinitely when markets decline more than 20%, keep the dream alive. can replace federal reserrve notes with monopoly money.At this point, what difference does it really make?!

Radical Marijuana Tue, 10/10/2017 - 16:28 Permalink

Bill Gross grossly understates that "We Have Fake Markets." The ONLY "real markets" necessarily run on the methods of organized crime, because the murder systems necessarily control all other systems, including that money is necessarily measurement backed by murder.Those with relatively privileged positions within well-established systems of more or less organized lies operating robberies adopt the language of "markets" etc., and so, complain when their positions of relative privilege turn out to not be as privileged as they used to think was case, i.e., when they thought that they were somehow operating inside sociopolitical systems which were not due to the history of warfare making and maintaining civilization.Bill Gross presents the typical kind of superficially correct analysis on Zero Hedge, which continues to take for granted that somehow governments were not necessarily the biggest forms of organized crime, dominated by the best organized gangsters, which currently happen to be the banksters. While the first stages of any deeper analysis recognizes the history of the Federal Reserve Board was due to the vicious feedback spirals of the funding of the political processes, subsequent stages of any deeper analysis are much more rarely presented. The reasons for that almost universal failure of significant public presentations of any deeper analysis of the accumulating apparent anomalies manifesting as increasingly "fake markets" are that almost everyone continues to take for granted thinking about those issues using the DUALITIES of false fundamental dichotomies, and the related impossible ideals.Genuine "markets" necessarily include "murder markets." Indeed, it is impossible to comprehend the actual existence of the Federal Reserve Board without considering the FORCES which backed up the FRAUDS. Those especially included the history of the occasional assassinations of politicians who could not otherwise be bribed or intimidated to go along with the development of those systems whereby the powers of public governments were used to enforce frauds by private banks.People like Bill Gross are noticing the degree to which about exponentially advancing technologies are enabling those enforced frauds to become about exponentially more fraudulent, and therefore, noticing how much more blatantly there are "fake markets," BUT, doing so in ways which continue to take for granted that there ever actually was anything else than the manifestation of the principles and methods of organized crime on larger and larger scales, i.e., that there somehow used to be "real markets," which did not include murder, and which were not based on the history of murders manifesting on larger and larger scales.Some of the necessarily paradoxical corollaries of the ways that civilization necessarily operates according to the methods of organized crime are the ways that those who did that on the biggest scales, in the best organized ways, ended up dominating society, such that their bullshit social stories are publicly repeated as if those were "the truth," and so, what should be done is to go back to "the truth," such as go back to allegedly "real markets," despite that such idealized "real markets" NEVER REALLY EXISTED.Indeed, the Federal Reserve Board is the single most significant institution based on being able to enforce frauds. However, everything else throughout civilization has become based on similar sets of integrated legalized lies, backed by legalized violence. Since pretty well every sociopolitical activity is based on being able to enforce frauds, pretty well everyone doing so is living according to their level of abilities to operate as professional hypocrites.The language of DUALITIES, false fundamental dichotomies, and the related impossible ideals, enables professional hypocrites to present their views regarding "fake markets" versus "real markets." However, there was never any point in history where the political processes which legalized lies and legalized the violence which backed up those lies stopped those lies from still be being false, since being able to enforce frauds does not stop those from being fraudulent. Rather, the about exponentially increasing enforcement abilities have enabled the vicious feedback spirals of about exponentially increasing fraudulence.The ONLY connections between human laws and natural laws are those abilities to back up lies with violence, which do not change their essential character by becoming "legalized" in any ways, to any relative degrees. However, the long history of being able to back up lies with violence drove the development of the biggest bullies' bullshit, which became the banksters' bullshit, to dominate civilization. In that context, almost all public discussions of the Federal Reserve Board are based on bullshit, which includes the degree to which various controlled "opposition" groups stay within the same frame of reference when revealing the central facts about central banks: "Centralized Confiscation and Consolidation through Counterfeiting."Since the Federal Reserve Board is based on the ways that public governments enforce frauds by private banks, the Federal Reserve Board is engaged in "Legalized Counterfeiting:" ENFORCED FRAUD AS SYMBOLIC ROBBERY. However, the relatively few people who admit and address those social facts still continue to mostly take for granted their favourite impossible ideals, as the basis of bogus "solutions." Hence, generally speaking, there are never publicly presented anything but some wish lists of series of political miracles, that are supposed to implement various versions of the impossible ideals regarding "what money should be."That the Fed should stop driving the development of "fake markets," in ways which will enable a return to "real markets," is the kind of nostalgic nonsense that someone like Bill Gross presents. Indeed, many of the previous comments posted under this article have already stated similar points. However, in my view, those presentations tend to never systematize those points sufficiently.The facts are not merely that the Federal Reserve Board is the runaway manifestation of excessively triumphant organized crime, but also that civilization can not function without some death control systems. Human history has driven the development of sets of consistent contradictions, due to the most successful organized crime becoming the most dishonest about itself, while that kind of social successfulness also drove the dominate social stories to become as dishonest as possible, and thus, to actually become about exponentially more dishonest ...Those sets of consistent contradictions include the ways that the only publicly significant "opposition" to the central core of central banks, based on governments enforcing frauds by private banks, are controlled by staying within the same frame of reference, by taking for granted the basic bullshit of false fundamental dichotomies, and the related impossible ideals, such as that any political economy could operate without being INSIDE some human ecology. Overall, since the existing political economy is based upon enforcing frauds, but also based upon never publicly admitting or addressing that, because the social successfulness of being able to continue to enforce frauds requires that become as deliberately ignored and misunderstood as humanly possible.It is barely possible to exaggerate the degree to which the dominate political economy deliberately ignores and misunderstands its surrounding environmental context, because of the social imperatives that enforced frauds achieving symbolic robberies must not be generally perceived as actually doing that. Rather, the dominate natural languages and philosophy of science have developed ways to deliberately ignore the principle of the conservation of energy, as well as misunderstand the concept of entropy in the most absurdly backward ways. Although human beings and civilization are necessarily manifestations of general energy systems, that civilization has necessarily developed to be based on awesome levels of enforced frauds, whose symbolic robberies are runaway feedback loops, automatically driving "fake markets" to have the most bogus attitudes towards their surrounding environment and human ecology which are humanly possible to have made and maintained through thousands of years of being able to continue to enforce frauds.Since human beings actually live as nested toroidal vortices engaged in entropic pumping of environmental energy flows, they should understand their civilization through the use of UNITARY MECHANISMS regarding those flows of energy. However, it is painfully obvious that contemporary human beings are adapted to living inside a civilization almost totally based on the DUALITIES of false fundamental dichotomies, and the related impossible ideals, especially including the impossible ideals regarding "what money should be."Superficially correct analysis of the Federal Reserve Board may well present the ways in which runaway legalized counterfeiting is driving runaway "fake markets." However, usually, that kind of superficial analysis does not admit and address how and why money IS necessarily measurement backed by murder. Of course, that tends to also include those who present superficial notions that somehow killing banksters could resolve those problems any better. Of course, as a first approximation, the notions related to killing banksters at least begins to approach the real problems. However, in my view, such notions continue to still be nostalgic nonsense, which do not more rigorously think through the general issues of the death control systems, and the murder systems in particular, as the most extreme forms of those death controls."If history shows anything, it is that there’s no better way to justify relations founded on violence, to make such relations seem moral, than by reframing them in the language of debt — above all, because it immediately makes it seem that it’s the victim who’s doing something wrong."— David GraerberBond holders tend to be the pyramidion people in the social pyramid systems. Those who have made money by owning bonds have been making money inside those systems since the development of such bonds several Centuries ago. Those who have been engaged in that trade would necessarily be professional hypocrites, serving the interests of other professional hypocrites, who would all generally ignore that the public "money" supplies were more and more being made out of nothing as debts, in order to "pay" for strip-mining the natural resources of a fresh planet.The systems of debt controls operated by the Federal Reserve Board are backed by the systems of death controls operated by the US government. Those integrated systems developed through the history of the vicious feedback spirals of the funding of all aspects of the political processes, including bribery, intimidation and assassinations. The United States of America was always an edifice of legalized lies, backed by legalized violence. There were never any genuine "free markets" outside of that overall historical context.Actually, the REAL markets are the same as the FAKE markets, because it is all the same energy flowing through. The deeper mistakes regarding the perceptions that there are increasingly "fake markets," driven by the Federal Reserve Board, are the presumptions that real markets are somehow not necessarily based on the manifestation of the principles and methods of organized crime, due to everything being necessarily controlled by the murder systems.To the same degree that the US economy is dominated by the US government enforcing frauds by the Federal Reserve Board, everyone participating inside that economy does so according to the degree that they are able to become the best professional hypocrites, such as when Bill Gross presents his superficially correct assessments. Since the US economy, as well as the global economy, is about totally based on enforcing frauds, those activities are also almost totally based on bullshit regarding that.Since that bullshit has been piled up deeper and deeper for generation after generation, and in the particular case of the Federal Reserve Board has been accumulating for more than a Century, what most people take for granted as the bedrock of social "reality" is fossilized bullshit. Someone like Bill Gross is standing on that foundation when he presents superficially correct analysis of the Federal Reserve Board driving about exponentially increasing fraudulence to make and maintain about exponentially deteriorating "fake markets."In the "good old days" the approximate ratios of physical realities to frauds were about 1 to 10. However, at the present time, those ratios have already exceeded about 1 to 100. While there was never a time when groups of human beings did not live as reproducing gangs of robbers, the main theme of European and then US history has become about exponentially advancing physical science and technology, which has enabled the Neolithic Civilization social pyramids based on increasingly sophisticated debt slavery to grow at about an exponential rate, and therefore, the currently entrenched debt slavery systems are inherently structured in ways which are attempting to have their frauds still be enforced to become ~1,000 times greater than their underlying physical basis. In that context, it is barely possible to exaggerate the degree to which there are runaway "fake markets." Of course, the laws of nature continue working, but have done so by driving the development of Globalized Neolithic Civilization, with the USA, and its Federal Reserve Board, becoming the single most important components of those systems of debt slavery, whose enforced frauds are working as symbolic robberies.As soon as human beings are perceived and defined as separated from their environment and each other, then they necessarily live a gangs of robbers, according to the principles and methods of organized crime, within which context their murder systems back up their money systems. The essential paradoxes with respect to the Federal Reserve Board exemplify the overall pattern of FINAL FAILURES FROM TOO MUCH SUCCESS.

Last of the Mi… Tue, 10/10/2017 - 17:27 Permalink

Please file this article in that "We made them trillionaires and now they're gonna blame the Fed" trash can over there by the Colin Kapernick 'niners trash can headed for the dumpster.

S Spade Tue, 10/10/2017 - 20:22 Permalink

We have fake markets due to institutions and funds who collude to move prices higher, the investment decisions formerly made by many thousands of individual investors are now made by a few hundred funds/institutions.  They collude to bump prices passing shares back and forth to sucker novices, and force demand at their manufactured prices from short interest in trouble.  It's all done with the help of crooked analysts and ratings services, disinformation/media outlets, and an SEC that's looks the other way.  It's a massive organized crime syndicate.