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Bill Gross thinks everything sucks
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Bill Gross.
Everything sucks, according to Bill Gross.
In his latest investment outlook published on Wednesday, Gross outlines a world in which zero interest rates have suppressed real and potential investment returns in just about every asset class.
Gross writes:
Global fiscal (and monetary) policy is not now constructive nor growth enhancing, nor is it likely to be. If that be the case, then equity market capital gains and future returns are likely to be limited if not downward sloping. High quality global bond markets offer little reward relative to durational risk. Private equity and hedge related returns cannot long prosper if global growth remains anemic. 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."
The problem, however, is that merely getting your money back is not going to pay for retirement, or college, or meet healthcare costs.
And so basically, as Gross sees it, we're screwed.
Gross again:
That is the near global conundrum we are faced with as near zero percent interest rates limit capital gains in the future, and if raised too high, will lead to redzone losses. Not much else to say here. Finance based capitalism with its zero bound interest rates has now produced global imbalances that impair productive growth and with it the chances for "old normal" prosperity.
For regular Gross readers, not a ton of new themes in here as this is an idea Gross has been hammering home for some time.
But then again, Gross is still hammering this theme: the world is facing a "new normal" where everything — interest rates and investment returns — will remain lower for longer.
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