Gross made even more astonishing remarks in an exclusive interview with the Financial Times recently. He believed that the global economy is currently in its most chaotic period in more than two decades, with excessive debt, geopolitical risks and many other factors. The bubble has created a rather unstable state for the global economy, and the economic sentiment index may flip at any time
Gross is a person with bold ideas and not afraid of risks, and he has never been confident about his views. He is secretive, and his remarks often have a huge impact on the market.
Beginning in the autumn of 2001, shady incidents involving U.S. listed companies emerged one after another. Some once-famous companies were discredited overnight. Enron, Global Crossing, and Arthur Andersen all collapsed. Due to the linkage effect of the market, many once-famous companies were ruined. The near-perfect example has also been questioned by investors. Gross did not hide his nervousness about the Enron incident at this time. He predicted: "In the coming days, we will see more and more Enron incidents."
2002 On March 20, Gross made sharp criticism of GE in a report, targeting GE's information disclosure and its legendary business model. Gross pointed out that GE’s excellent reputation is earned by its physical business, including aircraft engines, lighting equipment, medical equipment, etc. However, as a financial company, GE’s performance is not outstanding and it also faces the same problems that other financial companies face. There are various risks, but these risks are covered up. It is this that beautifies GE's image. At the same time, Pacific Investment Management Company also accused GE of committing fraud and announced on the spot that it would stop purchasing GE's short-term bonds.
Gross's remarks quickly touched the sensitive nerves of the market. The day after Gross issued his criticism of GM, GM's stock price fell by more than 6%, closing at $37.45. At almost the same time, the trading price of the 30-year bonds with an Aaa rating that General Motors had just issued on March 13 also quickly fell to a level similar to the Aa rating. A few months later, he made stock fund managers anxious when he claimed that the Dow Jones Industrial Average's true value was around 5,000.
It is precisely because of the low interest rates, the sluggish macro economy and the declining stock market that investors regard bond funds as the best safe haven for funds. The market has prompted most bond funds to continuously Go strong. With the exception of the high-yield bond category, almost all bond funds posted gains in 2002.
But just as everyone's attention was more focused on the bond market, Gross began to warn investors that because bonds outperformed the stock market for the third consecutive year, the fixed income category is very likely to bid farewell to the best. time. Gross said U.S. interest rates will remain low for a long time and will only rise when the economy recovers.
He compared the current investment outlook with the global economy, like a piece of wet wood that cannot be ignited at all. Economic growth will be slow, inflation will be low, and returns will be small. Many bond managers were panicked after hearing Gross's evaluation of the future bond market. They had to make more cautious judgments in the market because of Gross's remarks. Bond prices fell quickly after Gross issued the warning.
In early April 2003, Gross once again recommended that investors not to buy U.S. bonds. He believed that any other investment tool was more attractive than bonds. This is because expectations for faster economic growth will push up bond interest rates, causing bond prices to fall. However, Gross later added that he believes that U.S. Treasury bonds have more investment value, which does not mean that the bear market in bonds is over, but that bond prices have reflected a gradual increase in the federal funds rate.
Gross was even more astonishing when he was interviewed by the Financial Times recently. He believed that the current global economy is the most chaotic period in the past two decades, with excessive debt, geopolitical risks and many The item bubble has created a rather unstable state for the global economy, and the economic prosperity index may flip at any time. Gross also said that there are already several bubbles in the global economy, including the commodity market, the British housing market, the US dollar, etc. Gross also said that another threat to economic stability comes from the "emergence of financial alchemy," especially the sharp increase in the use of hedge funds. "Even banks are using this to borrow short and lend long interest rates." "In carry trade, they are now using techniques they have never used before, and the risks inherent in the economy are no less than they were five years ago."
Gross's remarks once again surprised investors and worried peers in the financial community. Will Gross' prediction come true? Perhaps only time will tell.