A Gross Bet on Deflation

By seadmin

He’s one of the most respected bond fund managers around, and he’s had a really good track record of making correct calls on the equity and credit markets over the past decade. I am speaking here about Bill Gross, the PIMCO chief.

Gross has gone from a Treasury bond skeptic to a Treasury Bond buyer. In a Sept. 29 Bloomberg News article, Gross said he’s been buying longer maturity Treasuries in recent weeks as protection against deflation.

Here’s the key quote from the Bloomberg piece: “There has been significant flattening on the long end of the curve… This reflects the re-emergence of deflationary fears. The U.S. is at the center of de-levering as opposed to accelerating growth.”

Bingo! Bill Gross and Doug Fabian now are on the same page.

As you likely know, I’ve been sounding the deflationary alarm for some time, as I think it’s a much bigger concern going forward than the specter of inflation. Unfortunately, I also agree with Bill Gross when it comes to his assessment of the “new normal” in the global economy.

According to the PIMCO chief, this new normal will include heightened government regulation, lower consumption and slower growth. Moreover, Gross estimates that the economy likely will expand at a 2% to 3% rate going forward. My friends, this is not an encouraging sign for the economy at large, nor is it good news for equity market bulls.

Jim Woods is a 30-plus-year veteran of the markets with varied experience as a broker, hedge fund trader, financial writer, author and newsletter editor.

His books include co-authoring, “Billion Dollar Green: Profit from the Eco Revolution,” and “The Wealth Shield: How to Invest and Protect Your Money from Another Stock Market Crash, Financial Crisis or Global Economic Collapse.” He’s also ghostwritten many books and articles, as well as edited content for some of the investment industry’s biggest luminaries. Read more about Jim Woods.

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A Gross Bet on Deflation