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Bill Gross, who runs the world’s largest mutual fund at Pacific Investment Management Co., said the U.S. is approaching a recession as BlackRock Inc. expects the Federal Reserve to take more steps to support growth. Five-year Treasury yields slid to a record 0.577 percent Monday after an unexpected drop in U.S. retail sales rekindled speculation Fed Chairman Ben S. Bernanke will use testimony Tuesday to hint at further monetary easing. That followed data earlier this month showing American employers added fewer-than-estimated workers to payrolls. Goldman Sachs Group Inc. and Deutsche Bank AG cut forecasts for U.S. growth. The U.S. is...

El-Erian Explains Why Spain Desperately Needs To Avoid The 'Roach Motel' Of Outside Funding After months of resisting external aid, Spanish budget minister Cristobal Montoro said European institutions should help shore up the nation’s lenders. In fact reports suggest that there is a plan in place that would allow Spain to recapitalize its weakest banks with help from European partners. But in a Financial Times editorial, PIMCO's Mohamed El-Erian says there's a reason Spain had long avoided emergency European funding: "So far, emergency European funding has been impossible to exit, like a “roach motel”.

The debt crisis and central bank policy responses have degraded the quality and value of debt markets and signal a "potential breaking point" in the global economy, PIMCO's Bill Gross, manager of the world's largest bond fund, said in his monthly letter to investors. In his June outlook entitled "Wall Street Food Chain," Gross said stimulus policies by the Federal Reserve and the European Central Bank have led to riskier government bonds with lower value and paved the way for higher inflation.

The giant bond fund PIMCO said Europe has not yet tamed its debt crisis and will soon face a “second Greece” in Portugal as the country’s economy spirals downwards. Mohamed El-Erian, PIMCO’s chief executive, said Portugal will need a second rescue as the original package of €78bn falls short, setting off a political storm over EU rescue costs. “Unfortunately, that is how it will be. It will make the financial markets nervous because they are worried about a participation of the private sector,” he told Der Spiegel. German finance minister Wolfgang Schäuble insists that there will be no further haircuts...

BILL GROSS: 'We Are Witnessing The Death Of Abundance' Joe Weisenthal Febuary 1, 2012 In his latest monthly letter, PIMCO's Bill Gross has a long philosophical-sounding discussion about credit, delevering, and the difficult task facing Bernanke. The money line is this paragraph at the end: Where does credit go when it dies? It goes back to where it came from. It delevers, it slows and inhibits economic growth, and it turns economic theory upside down, ultimately challenging the wisdom of policymakers. We’ll all be making this up as we go along for what may seem like an eternity. A 30-50...

European governments must rapidly commit to fiscal union or a partial break-up of the euro to prevent a "fundamental erosion" in demand for the region's debt, Pimco, the world's biggest bond investor, has warned. "They can't continue to muddle through," said Andrew Balls, who runs Pimco's European investments. "They'll either have to signal their position or you'll get a continued disengagement by investors from the eurozone." The stark assessment comes ahead of a gathering of European leaders in Brussels that has been billed as a summit that cannot afford to fail. A crisis that began in Greece almost two years...

Bill Gross Sends Out Big Apology To Investors, And Then Declares That The Economy Is Doomed Joe Weisenthal Oct. 15, 2011, 6:38 AM | Funny, just yesterday afternoon we pointed out the irony of nobody caring about the fact that Bill Gross had loaded up the boat on the long end of the yield curve, a gamble that obviously meant one thing: He sees no growth or inflation ahead -- essentially an economy that's doomed.Well.... Now he might get more attention, because he just put that in writing. Dealbreaker (via ZeroHedge) put up a special letter from Gross to his...

Bill Gross Just Made A Huge Bet On Economic Doom, And Nobody Seems To Care Joe Weisenthal Oct. 14, 2011, 2:01 PM This week, bond god Bill Gross just made a super-long bet on the long end of the yield curve, coming right after a historic rally in fixed income. It was a gigantic shift from his stance earlier this year, when he bet against Treasuries -- a bet that famously worked out badly for him. The interesting thing about this is that his short bet got TONS of attention (including a big story in The Atlantic), whereas his new...

The U.S. economy has officially been out of recession for two years, but fear of falling back into the abyss has dogged the recovery every step of the way. Now, the prospect of recession no longer is a fringe view. "Recession is not inevitable, but I think there's better than a 50-50 chance now," said Bill Gross, the respected investment chief at bond fund giant Pimco in Newport Beach. Stock markets worldwide have been ringing warning bells since late July, as share prices have plunged in the steepest pullback since the 2008 financial-system crash. The Dow Jones index sank nearly...

Obama considers Republican for one of two seats on FedBy Neil Irwin, Published: August 12 President Obama is considering nominating two economists with backgrounds in finance — one of them a Republican — as Federal Reserve governors, according to a source familiar with the decision making. The White House is looking at Jeremy Stein, a Harvard economist, and Richard Clarida, of Columbia University and the bond investment firm Pimco, to fill two vacant slots on the seven-member Fed Board of Governors. Clarida served in George W. Bush’s Treasury Department as an assistant secretary. Stein did a brief stint at Treasury...

The Federal Reserve is unlikely to change monetary policy for years as the economy remains mired in an extended period of slow growth, Pimco's Bill Gross told CNBC. As Fed Chairman Ben Bernanke prepares his much-awaited Humphrey Hawkins speech, the co-CEO of the world's largest bond manager said he sees no end in sight to the central bank's policy of sub-zero real interest rates. "What Bernanke should explain in terms of his language is it's really going to be a long, long time from which the Fed deserts its 25 basis points Fed funds target," Gross said. "That means perhaps...

Pimco, the world's top bond fund manager, is using the latest selloff in Italian government debt to increase its holdings, according to Andrew Bosomworth, the head of its fixed income portfolio management. "We're using the dislocations in the market to reduce underweights in Italy," Bosomworth told Reuters. "Italy is not in the same boat as the peripherals. They're not comparable. Italy has a debt stock problem but it's not comparable to Greece in terms of institutions and track records." Bosomworth said he was not talking up his portfolio. He said Pimco was starting from an underweight position. German daily Die...

Bill Gross Just Said The Magic Phrase, And The Market Just Jumped Joe Weisenthal Jun. 22, 2011, 10:59 AM In a tweet, Bill Gross of PIMCO just predicted that QE3 would be revealed in August at Jackson Hole. That tweet hit at 10:23. On that prediction, stocks just jumped. No wonder they call him God.

The founder of one of the largest bond fund management companies in the world thinks the US is in worse financial shape than Greece.CNBC: When adding in all of the money owed to cover future liabilities in entitlement programs the US is actually in worse financial shape than Greece and other debt-laden European countries, Pimco's Bill Gross told CNBC Monday.Much of the public focus is on the nation's public debt, which is $14.3 trillion. But that doesn't include money guaranteed for Medicare, Medicaid and Social Security, which comes to close to $50 trillion, according to government figures.The government also...

The yield on the 10-year Treasury note is now at 3.06%, its lowest of the year, well below its 200-day moving average and starting to worry the psychologically important 3% level, which it hasn’t broken since last December. It will not break that level any time soon, however, Pimco chieftain Bill Gross declared to Bloomberg TV today. He once again stood by his call that bond yields will rise once the Fed stops buying bonds under its QE2 program in June, a call he has been making since early March, while watching bond yields march steadily lower. Just two days...

Financial repression is making a comeback. Bill Gross dedicated his May investment letter to financial repression, and an article by the FT's Gillian Tett described both policymakers and investors refamiliarizing themselves with its tenets.What is "financial repression"? Below is an abridged definition from Reinhart & Rogoff's This Time is Different: Governments force residents to save in banks by giving them few, if any, other options. They then stuff [their] debt into the banks via reserve requirements and other devices. This allows the government to finance a part of its debt at a very low interest rate; financial repression thus constitutes...

I’ve been getting questions about what happens when the Fed wraps up QE2 — related especially to Bill Gross’s public view that interest rates will shoot up. This is related to the question of the extent to which QE2 has kept interest rates low. So a quick exposition of my theoretical position, which also happens to be more or less standard economics.So: I basically think of asset prices in a Tobin-type stock equilibrium framework (pdf). People make portfolio choices, allocating their wealth among bonds, stocks, etc.. Asset prices – including the famous “q” – rise and fall to match...

Bill Gross, founder and co-chief investment officer of Pimco, the world’s largest mutual fund, made news last month when he dumped all U.S. Treasurys from the $1 trillion fund he operates. I spoke with him by phone yesterday afternoon. He had a solemn warning: The United States has a year or two to change course or face a debt crisis akin to what Greece, Portugal and Ireland have experienced. He describes bond traders as “vigilant but not vigilantees,” meaning they are cautious and on the outlook for signs that inflation (“the enemy of bonds”) will rear its head. He explained...

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Gross runs Pimco, the $1.2 trillion investment manager that has spent recent months selling Treasury bonds, citing their low yields and poor prospects. He explains in his monthly investment outlook posted Wednesday evening that U.S. government bonds "have little value" in a world of bloated budgets. While outstanding federal debt totals $9.1 trillion, he estimates the government's actual liability at $75 trillion, counting promises made under Medicare, Medicaid and Social Security. "The incredible reality is that the $9.1 trillion federal debt that constitutes the next-to-tiniest ball in our chart is nothing compared to unfunded Medicaid and Medicare. It is like...