Gross and Rosenberg: QE3 will see interest rate caps

Yesterday, I indicated that the FOMC has already considered offering unlimited quantitative easing to target specific interest rates during the second round of quantitative easing. I believe the Fed will do this in QE3, and apparently Bill Gross and David Rosenberg do as well. While a QE3 is still a way’s off – probably not until 2012 – it makes sense to think about how it will be conducted

Gross: Savers to Be Disadvantaged for Years

The Federal Reserve will be on easy street for a long time to come. Real interest rates will remain low, meaning debtors will be favoured over savers. Investors in fixed–income will take it on the chin

Bill Gross: ‘Low policy rates represent an immediate threat to investment portfolios’

Bill Gross: Low policy rates and the increasing negative real yields that they engender as inflation accelerates represent an immediate threat to investment portfolios. Bond prices don’t necessarily have to go down for savers to get skunked during a process of “debt liquidation.” PIMCO advocates a renewed vigilance, stressing bond market “safe spread” alternatives available globally, including developing/emerging market debt at higher yields denominated in non-dollar currencies.

More on the currency wars and negative real rates

Now that the Fed has confirmed it won’t raise rates and the dollar is dropping, for me it means that negative real rates will continue and that the currency wars are back on. I have comments on what negative real rates mean for investors. I also talk about my suspicion that this time around in the currency wars, China will get the stick instead of the US because of the Dollar peg

Bill Gross on fiscal profligacy and dumping the negative real yields of treasuries

There are four ways to reduce real debt burdens: by paying down debts via accumulated savings. by inflating away the value of money. by reneging in part or full on the promise to repay by defaulting by reneging in part on the promise to repay through debt forgiveness Right now, everyone is fixated on the

Cotton Hoarding in China Shows There is Serious Commodities Speculation

You have to watch this video to believe it. The speculation in the commodities market is well out of hand. Cotton futures are at a record high on speculation that demand in China will continue to increase, as China is the world’s largest importer of cotton. Add in the flooding in Australia and you have the makings of a rally driven by fundamentals but bolstered and amplified by speculation.

Bloomberg explains in the video below.

Gross: Central Banks are Robbing Bond Holders and Fuelling Inflation

In this segment on Bloomberg with Tom Keene just after the jobs report was released yesterday morning, Bill Gross continues hammering away at the central banks’ easy money monetary policies, the main point of his last newsletter. His contention is that government has four ways to rob bondholders of return:

1. Outright default, something he says unlikely in the U.S.
2. Currency depreciation: Gross contends this is a problem for the U.S. currency
3. Unanticipated inflation: Gross believes the core vs. headline inflation numbers highlight this issue
4. Negative real interest rates: His newsletter was very much about this point.
Published by Edward Harrison on 5 February 2011 12:30

Bill Gross: Devil’s Bargain

Bill Gross is at it again. The bond king who has taken a populist turn is out with another monthly investment commentary that features a negative view of Wall Street (God’s work) and Federal Reserve monetary policy. I want to hone in on the Fed piece

Bill Gross, Felix Zulauf, Fred Hickey, Archie MacAllaster and Scott Black from Barron’s 2011 Roundtable

Here are a bunch of the participants from this year’s Barron’s Investor Roundtable discussion talking to Michael Santoli about the ideas they expressed

Comments by Faber, Gross, Roach, and Grantham on the Political Economy

Over the past several days, I have caught some very good commentary by a number of well-known financial industry experts. I wanted to share my own thoughts with you on their commentary, especially in light of my last posts on Eisenhower’s Farewell Address and The New Monetary Consensus. I have featured two of the commentaries

Bill Gross: Deficit Hawk, Bond Vigilante

By Edward Harrison American politicians and citizens alike have no clear vision of the costs of a seemingly perpetual trillion-dollar annual deficit. Policy stimulus is focused on maintaining current consumption as opposed to making the United States more competitive in the global marketplace. Dollar depreciation will sap the purchasing power of U.S. consumers, as well

Gross: ‘The global economy is suffering from a lack of aggregate demand’

The debt overhang in the developed world has lowered aggregate demand globally. As developed economies compete over a dwinding pie by moving toward a policy of economic nationalism, investment opportunities will dwindle. Bill Gross advises looking to the emerging economies instead