Bill Gross sees inflation ahead.
Bill Gross, founder of PIMCO walks alongside the fixed income investor giants with a massive 2.21 trillion US dollars under management. In his heyday, Bill Gross was known as the bond king before his retirement in 2019. The bond king throne has since been swiftly taken by Jeff Gundlach’s, Double Line.
Nevertheless, Bill Gross remains an important voice in the world of fixed income investing.
“Bill Gross, founder of PIMCO walks alongside the fixed income investor giants with a massive 2.21 trillion US dollars under management”
WEALTH TRAINING COMPANY
Bill Gross sees inflation ahead and he is short the 10 years and six-year treasuries
“ I anticipated the selling off of the treasury 10 years and it has done that by thirty to fifty basis points,” he said. “At this point, the Commodity Research Bureau (CRB) is up 40 percent over the past six to nine months,” he added. The CRB is an organization that produces an index that tracks the price movements of 17 commodities.
Moreover, the US dollar is down ten percent over the past 12 months, which is also why Bill Gross sees inflation ahead.
Bill Gross notes that with Fiscal stimulation at 2 trillion-plus and household income going gangbusters “there is no reason not to expect inflation screaming higher over the next several months” said Bill Gross, which is what investors are anticipating.
“US dollar is down ten percent over the past 12 months, which is also why Bill Gross sees inflation ahead”
WEALTH TRAINING COMPANY
Bill Gross thinks that a 40 percent rise in commodities doesn’t necessarily translate into a three or four percent rise in terms of CPI but a decline of 10% in the US dollar could be the factor leading to higher inflation.
Bill Gross believes that a significant demand is stored up due to 2 trillion of stimulus, which can be unleashed if consumers want to spend rather than save
To a certain extent they spend he said. “Inflation is not going to be below two percent in the next few months. I see a three or 4 percent number ahead of us,” said Bill Gross. “That is something that Jay Powell would deny,” he added. “But I think that 6 to 12 months, 3 or 4 percent plus inflation will give him pause in terms of his policy,” said Bill Gross.
“I have a hunch that what was known as operation twist after WWII, the Fed trying to keep rates down by buying 10s and longer bonds, that operation twist may be our future” – Bill Gross
So, the Fed might end up tightening sooner than it anticipates.
Bill Gross also thinks taper tantrum is real. But here comes the zinger.
“I have a hunch that what was known as operation twist after WWII, the Fed trying to keep rates down by buying 10s and longer bonds, that operation twist may be our future” said Bill Gross.
“The 10s are influence mortgage rates, which have an impact on housing. We might have had operation twist in the last two weeks,” he said.
Then comes the inconsistency.
“I am short the 10-year futures and 6-year paper I am short long bond to a certain extent” said Bill Gross. But why is Bill Gross shorting US paper, which the Fed is buying? In other words, why is the former bond king betting against the Fed? I am perplexed by that move. Bill Gross is also short GameStop and has been long natural gas pipeline, thereby catching the upward price ride in energy.