U.S. Markets closed

Global economies increasingly at risk -Pimco's Gross


By Sam Forgione

NEW YORK, Dec 3 (Reuters) - Bill Gross, co-founder and co-chief investment officer of bond giant Pimco, said Tuesday that easy-money policies worldwide have put global economies and their capital markets increasingly at risk.

Gross, writing in his monthly letter to investors, said easy-money policies from central banks such as the U.S. Federal Reserve and the Bank of Japan have resulted in artificially priced assets and that markets could face peril once investors recognize the growing risk and sell traditional assets.

"Global economies and their artificially priced markets are increasingly at risk," Gross said, adding that investors "are all playing the same dangerous game that depends on a near perpetual policy of cheap financing and artificially low interest rates in a desperate gamble to promote growth."

Gross referred to the monetary stimulus policies of global central banks including the Fed, Bank of Japan, European Central Bank, and Bank of England in the December outlook entitled "On the Wings of an Eagle" posted on Pimco's website.

He said that stocks, investment-grade and high-yield junk bonds, alternative assets, hedge funds, and unconstrained products all reflected artificially priced markets and that investors will "gradually vacate" historical asset classes once they recognize that they are receiving too little reward for too much risk.

Gross's comments are important because Pimco manages roughly $1.97 trillion and is one of the world's largest bond managers. The views of Gross and co-chief investment officer and chief executive Mohamed El-Erian on global credit also influence other investors.

The Newport Beach, California-based Pacific Investment Management Co is a unit of European financial services company Allianz SE.

The Fed is buying $85 billion in Treasuries and agency mortgages monthly in an effort to spur hiring and keep borrowing costs low. The Fed's bond-buying has helped fuel record highs and a 26 percent rally in the Standard & Poor's 500 stock index this year.

Gross has warned of "bubbles" or overpriced financial markets in past television appearances and posts on social media platform Twitter.

On Nov. 29 or "Black Friday," the biggest U.S. shopping day of the year, Gross wrote the following on Pimco's Twitter account, "Gross: We should call this 'Green Friday' - Be careful, though, of red numbers in 2014. All markets are bubbly."

In the letter, Gross reiterated that investors should anticipate stable policy rates until at least 2016 and focus on short-duration assets.

Gross said: "Look for constant policy rates until at least 2016. Front-end load portfolios. Don't fight central banks, but be afraid."

The U.S. central bank has kept the federal funds rate near zero since late 2008 to help the economy recover from recession and has promised to keep it there for a while longer, probably until 2015.

Pimco has not been immune to the volatility in the bond market this year.

Gross's flagship Pimco Total Return Fund had outflows of $3.7 billion in November, marking the seventh straight month of outflows from the fund and reducing the fund's assets to $244 billion, data from Morningstar showed on Tuesday.

Pimco had outflows of $7.1 billion across all of its U.S. mutual funds in November, marking the sixth straight month of outflows from the funds, according to Morningstar data.

Outflows in October stripped the Pimco Total Return Fund of its status of the world's largest mutual fund, a title which The Vanguard Total Stock Market Index now holds, according to Morningstar data reported last month by Reuters.

The fund has had outflows of about $36.9 billion this year, according to Morningstar. Gross's fund delivered a flat performance in November according to preliminary Morningstar figures, averting losses even as fears surrounding the Federal Reserve's next policy move hurt bond prices.

The fund is still down 1.24 percent this year, however, beating 57 percent of peers, according to Morningstar data.

  • Should I sell my $565,000 duplex and invest the money — or continue to collect rent?
    Business
    MarketWatch

    Should I sell my $565,000 duplex and invest the money — or continue to collect rent?

    Dear Moneyist, I purchased a duplex 20 years ago and am considering selling it. I paid $150,000 for the duplex, and spent about $55,000 on updates and renovations. A real estate agent has suggested selling it for $565,000, as a duplex, or converting it to condominiums and selling each for $300,000. Each unit currently rents for $1,900 per month. There is no mortgage and the largest annual expenses are taxes and insurance which total about $6,000 per year. The property is in good condition and I do not anticipate any major expenses in the near future. There are minor repairs and maintenance throughout the year which typically cost no more than $1,000. Don’t miss: Advisers say most investors can

  • Nathan Chen Just Stunned Every Figure Skater You've Ever Heard Of
    Sports
    Time

    Nathan Chen Just Stunned Every Figure Skater You've Ever Heard Of

    U.S. figure skater Nathan Chen set an Olympic record with six quad jumps in the men’s figure skating long program on Friday. Chen bounced back after a disappointing turn during the short program that left the skater in 17th place in the 2018 Winter

  • Lisa Marie Presley Says She's Over $16 Million in Debt, Divorce Documents Claim
    Business
    People

    Lisa Marie Presley Says She's Over $16 Million in Debt, Divorce Documents Claim

    According to the documents, which were filed on Wednesday and obtained by PEOPLE Friday, Justin Stiegemeyer, Presley’s current business manager who is responsible for “day-to-day finances and paying all of her bills,” disclosed that the 50-year-old had first learned of her debt while her old business manager Provident Financial Management was handling her finances. In the court documents, Stiegemeyer went on to claim that Presley owes almost $50K in credit card debt, although he added that she has been actively paying down the sum and has managed to pay off the debt on certain cards in full.

  • Delta Air Lines Wants the Boeing "797" ASAP: Here's Why
    Business
    Motley Fool

    Delta Air Lines Wants the Boeing "797" ASAP: Here's Why

    Last year, Boeing (NYSE: BA) strained its relationship with U.S. airline giant Delta Air Lines (NYSE: DAL) by attempting to have big tariffs imposed on Delta's purchase of CSeries jets from Bombardier. Many pundits saw Boeing's trade complaint as a risky move that could alienate a key customer -- especially after Delta ordered the Airbus (NASDAQOTH: EADSY) A321neo last December instead of Boeing's 737 MAX 10. Delta isn't going to make bad business decisions just to punish Boeing.

  • What to Do With Your 401(k) When the Market Crashes
    Business
    Motley Fool

    What to Do With Your 401(k) When the Market Crashes

    Market crashes are scary. After a long bull market in which the S&P repeatedly hit new record highs, it's hard to see the retirement savings that you've worked for years to save in a 401(k) take a severe hit when the good times come to an end. The key to handling volatility is to be smart about risk management, anticipating worst-case scenarios and adjusting your strategy to allow for them.

  • Wells Fargo auditors could soon deliver another blow to the bank
    Business
    MarketWatch

    Wells Fargo auditors could soon deliver another blow to the bank

    Wells Fargo investors have learned a lot about the bank’s worsening issues recently, but they should be watching carefully over the next couple of weeks for possibly more bad news — from the bank’s auditors, KPMG. KPMG must opine on Wells Fargo’s WFC, -0.12% internal controls by around March 1, and investors might not like the answer: the very real possibility of an adverse opinion from the auditors identifying material weaknesses in the bank’s controls. On Feb. 2, the Federal Reserve Board released a consent cease-and-desist order that requires the bank to improve its governance and risk-management processes, including strengthening the effectiveness of oversight by its board of directors. The

  • California law could allow illegal immigrants to vote
    U.S.
    Fox Business Videos

    California law could allow illegal immigrants to vote

    California Lt. Governor candidate Lydia Ortega (R) reacts to the state’s push to give illegal immigrants the right to vote once they get a driver’s license.

  • Bitcoin Cash, Litecoin and Ripple Daily Analysis – 18/02/18
    Business
    FX Empire

    Bitcoin Cash, Litecoin and Ripple Daily Analysis – 18/02/18

    Bitcoin Cash had a good start to the weekend, gaining 6.66% on Saturday to end the day at $1,629.5, outshining the likes of Litecoin that is considered to be one of Bitcoin Cash’s main competitors. The gains cement Bitcoin Cash in 4th place in the crypto rankings, with a market cap of $26.95bn, as Litecoin continues to sit a distant 5th with $12.64bn, much depending upon the success of LitePay that’s due for release in a week’s time. Perhaps of significance will be how Bitcoin, Bitcoin Cash, Ethereum and Litecoin fare on Coinbase’s commerce platform, with both businesses and consumers likely to favour one of the four cryptos that Coinbase has included for transactions.

  • Why General Motors Could Be Leaving Korea for Good
    Business
    Motley Fool

    Why General Motors Could Be Leaving Korea for Good

    In recent years, General Motors (NYSE: GM) has posted consistently strong profits in its two largest markets: North America and China. It's seeming increasingly likely that GM will ultimately have to end its manufacturing operations there to achieve this goal. Management first publicly raised the need for restructuring at GM Korea during General Motors' fourth-quarter earnings call earlier this month.

  • Amerisource shares jump on Walgreens buyout report
    Finance
    Associated Press

    Amerisource shares jump on Walgreens buyout report

    Shares of AmerisourceBergen soared Tuesday on reports that Walgreens is pursuing a complete takeover of the huge drug distributor. The Wall Street Journal reported late Monday that Walgreens Boots Alliance Inc. reached out to AmerisourceBergen Corp. about a potential deal several weeks ago. Walgreens already owns about 26 percent of the company, according to data provider FactSet.

  • This Is Warren Buffett’s Top Equity Holding, Surpassing Wells Fargo
    Business
    Fortune

    This Is Warren Buffett’s Top Equity Holding, Surpassing Wells Fargo

    Warren Buffett's Inc. has taken a real shine to Inc. Berkshire boosted its holding of the iPhone maker to $28 billion at year-end, surpassing its stake in & Co., which was worth $27.8 billion on Dec. 31. Apple has continued to rally this year, increasing the value of Berkshire's stake to $28.6 billion based on Thursday's closing price.

  • Iran Fails To Comply With OPEC Deal
    Business
    Oilprice.com

    Iran Fails To Comply With OPEC Deal

    The OPEC Monthly Oil Market Report is out production data for January 2018. All data, unless otherwise noted, is through January 2018 and is in thousand barrels per day. OPEC crude only production has held steady for three months.

  • Washington, D.C., Has Given the Boring Company a Permit for a Possible Hyperloop Station
    Finance
    Fortune

    Washington, D.C., Has Given the Boring Company a Permit for a Possible Hyperloop Station

    Washington, D.C., has issued a permit allowing Elon Musk's Boring Company to do preparatory and excavation work in what is now a parking lot north of the National Mall. The permit, reported Friday by the Washington Post, was issued way back on November 29th of 2017. The permit is part of an exploratory push by the city's Department of Transportation, which according to a spokesperson is examining the feasibility of digging a Hyperloop network under the city.

  • Gilead wins reversal of $2.54 billion hepatitis C drug patent verdict
    Business
    Reuters

    Gilead wins reversal of $2.54 billion hepatitis C drug patent verdict

    A federal judge in Delaware has overturned a jury's verdict requiring Gilead Sciences Inc to pay a record $2.54 billion because its hepatitis C drugs Sovaldi and Harvoni infringed a patent held by rival Merck & Co Inc. The verdict had been the largest ever in a U.S. patent case but U.S. District Judge Leonard Stark in Wilmington, Delaware, on Friday ruled Merck's patent was invalid. Gilead in a statement on Saturday said it always believed the patent was invalid and was pleased the judge confirmed that opinion. The December 2016 verdict followed a trial in which jurors found that Merck's patent on hepatitis C treatments, which it acquired in 2014 when it bought Idenix Pharmaceuticals, was valid.

  • Mueller Deflates President Trump's Claim That Russia Meddling Was Hoax
    Politics
    Fortune

    Mueller Deflates President Trump's Claim That Russia Meddling Was Hoax

    Donald Trump has insisted for more than a year that Russians didn’t try to get him elected. Special Counsel Robert Mueller put an end to those claims on Friday, declaring definitively that they did. A federal grand jury indicted 13 Russian nationals and a so-called “troll farm” in St. Petersburg on Friday for a broad campaign to sway the 2016 election in Trump’s favor.

  • Stock market will sell off by 30%: MacroMavens president
    Business
    Fox Business Videos

    Stock market will sell off by 30%: MacroMavens president

    MacroMavens President Stephanie Pomboy discusses her concerns over current economic conditions and the Fed’s impact on the stock market.

  • Germany's Figure Skater Just Went Full Game of Thrones. The Internet Can't Even Deal
    Entertainment
    Time

    Germany's Figure Skater Just Went Full Game of Thrones. The Internet Can't Even Deal

    Winter has officially come for the 2018 Olympics in PyeongChang, and it is epic. Germany’s figure skater Paul Fentz came blazing onto the ice suited up for battle as thunderous music from Game of Thrones played, thrilling the internet to no end.

  • Commentary: Trump’s Immigration Plan Took a Well-Deserved Tumble. What’s Next?
    Politics
    Fortune

    Commentary: Trump’s Immigration Plan Took a Well-Deserved Tumble. What’s Next?

    The Trump administration repeatedly insisted during the Senate’s immigration debate this week that it would not accept any plan that did not incorporate its pillars for reform. By the debate’s end on Thursday, a bipartisan plan that would have provided a long path to citizenship for the Dreamers, significant funding for border enforcement, and some limits on family-based immigration failed to garner enough votes to pass. The president’s preferred bill received far fewer votes, yet again stymying the Dreamers’ 17-year quest for full membership in their nation.

  • Why Americans Started Buying Military-Style Weapons Like the One Used in the Florida Shooting
    News
    Time

    Why Americans Started Buying Military-Style Weapons Like the One Used in the Florida Shooting

    The shooting at Marjory Stoneman Douglas High School in Parkland, Fla., bore many of the hallmarks of the other school shootings that have shocked the nation over the course of the last weeks, months and years. Among those similarities was the weapon used by accused shooter Nikolas Cruz: the AR-15. This semiautomatic version of the U.S. military’s M-16 infantry rifle and similar weapons have been used in most of the deadliest mass shootings in the last decade, including the one at Sandy Hook Elementary School. In some states like Florida, they’re easier to buy than a handgun.

  • We May Finally Be Turning the Corner on the Flu Epidemic
    Health
    Fortune

    We May Finally Be Turning the Corner on the Flu Epidemic

    The influenza outbreak that’s killed thousands of Americans and wreaked havoc on the lives of many more seems to have passed its peak and started a slow retreat. While it’s a good sign that flu activity is starting to level off, it’s a far cry from the precipitous drop in doctor visits typically seen when a busy season starts to come to a close. The CDC’s national map of influenza activity offers some hope.

  • Adults Offered 'Thoughts and Prayers' After the Florida School Shooting. But the Students Who Survived Want Action
    News
    Time

    Adults Offered 'Thoughts and Prayers' After the Florida School Shooting. But the Students Who Survived Want Action

    After a former student armed with an AR-15 assault rifle allegedly murdered 17 people at Marjory Stoneman Douglas High School in Parkland, Florida on Wednesday, adult politicians offered predicable responses. Sen. Marco Rubio, the 46-year old Florida Republican who has benefited from more than $3 million in NRA campaign spending, tweeted Bible passages. Florida Gov. Rick Scott, a 65-year old grandfather who has received an A+ rating from the NRA, offered his “thoughts and prayers” to the students and their families.

  • 3 Stocks I'm Buying After the Market Sell-Off
    Business
    Motley Fool

    3 Stocks I'm Buying After the Market Sell-Off

    Three stocks that I've identified are already prominent holdings in my portfolio: Alphabet Inc (NASDAQ: GOOGL)(NASDAQ: GOOG), Pattern Energy Group Inc (NASDAQ: PEGI), and Starbucks Corporation (NASDAQ: SBUX). In short, it has been a big winner in my portfolio.

  • 3 Hated Dividend Stocks to Buy Now
    Business
    Motley Fool

    3 Hated Dividend Stocks to Buy Now

    Investors seem to despise pipeline giants Kinder Morgan (NYSE: KMI), Enbridge (NYSE: ENB), and Plains All American Pipeline (NYSE: PAA) these days given that all three are down more than 20% over the past year. Enbridge's stock has lost about 20% of its value over the past year.

  • 1 High-Yield Dividend Stock You've Never Heard Of
    Business
    Motley Fool

    1 High-Yield Dividend Stock You've Never Heard Of

    Income investors are always on the lookout for high yield dividend stocks, preferably the kind supported by stable businesses with ample cash flow and a long history of distributing some portion of it to shareholders. Enter Compass Minerals International (NYSE: CMP). You may have never heard of the company, but its business is simple to understand.

  • 3 Tech Stocks With Fresh, Double-Digit Dividend Increases
    Business
    Motley Fool

    3 Tech Stocks With Fresh, Double-Digit Dividend Increases

    With earnings season well under way, lots of companies are announcing dividend increases. If you're looking for companies with strong dividend growth, here are three tech stocks to consider. Intel, Cisco, and Corning all announced double-digit increases