BILL GROSS: 'THE FED KNOWS NOTHING', GET READY FOR A 'NEW ERA'
accelerating inflation in emerging market economies, point to the conclusion that today’s 2022 global economy in no way resembles Volcker’s in 1979."Bill Gross revolutionized the investment world by creating the first investable market for fixed-income securities and made a fortune by beating the market for decades in a row by trading bonds. However, late last year, he turned on the very asset that made him “bond king,” calling U.S. Treasuries “garbage.
In an exclusive interview for Investing.com early this week, the legendary investor was blunt to say cash is the best investment at the moment, as the Fed has “already gone too far.” In his direct style, Mr. Gross also noted that investors must recognize the new era for the global economy may be brewing and invest accordingly.
Investing.com: You recently stated that the U.S. economy could withstand a 4.5% interest rate with only a ‘mild recession'; however, 5% would be the breaking point. Why do you draw the line at that particular point?Real federal funds markets are at an approximate 2% rate, a level that, in prior economic cycles, has induced future recessions.
IC: We are already very near your cited breaking point—especially if the Fed raises rates by the expected 50bps at its December meeting. Do you think Powell doesn’t share the same thoughts as you do?: The Fed, as Jim Cramer once said, “knows nothing.” Can anyone doubt that based upon the past few years’ experience of 0% yields, incessant quantitate easing , and the expansion of its balance sheet from $1 trillion to $8.7 trillion?IC: Does the Fed think the U.S.
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