Freshly gone with his neighbor, investment professional Bill Gross has some opinions about the stock market, and the bulls won’t like it.
The legendary bond fund manager, once admiringly named on Wall Street as the “King of Bonds”, has not focused on market rotations since retiring from Janus Henderson in 2019 – until recently.
But recent market movements have forced Gross to present his monthly market outlook, not to mention the conclusion of his legal dispute with his neighbor, which included his explosion on the theme song “Gilligan’s Island.”
“But away from Gilligan, Skipper and SS Minnow and more important issues like the ‘Wonder Woman 1984’ reviews (100% green red – don’t think about it) and maybe the Bubblicious stock market,” Gross writes.
“So why are stocks so high and IPOs like DoorDash DASH,
increased by 80% on the first day of broadcast and Airbnb ABNB,
… Robinhood and momentum are the norm “, he concludes.
“This market is driven – yes – by intense speculation, but also by corporate earnings received by central banks, pumped for tax, which, when updated to the current value with almost zero nominal rates and, in many cases, real negative interest rates, produce gross stock prices “Gross wrote, referring to rates that are around 0% and 0.25%, and real yields, bond yields that represent inflation, are traded in the territory below zero.
This means that investors earn very little from savings or are actually willing to lose money for the perceived security of holding inflation-adjusted government bonds.
In that world, investors are driven to riskier areas of the market, Gross notes.
“However, my idea is that the 200-point decrease in the real yield of the 10-year treasury starting in January 2019 was essential in raising the price by 50% in the S&P 500 over the same period,” Gross wrote, referring to the Treasury. for 10 years. TMUBMUSD10Y performance note,
which is below 1% compared to the aggregate yield for the S&P 500 SPX index,
at 1.6%, FactSet data show.
The 76-year-old investment indicates Federal Reserve asset purchase programs and other stimulus measures that provide a tremendous backstop to financial markets, as well as Washington’s tax-exemption packages, as part of the foundation for investor exaggeration. what he perceives as inflated values.
He also suggests that the market and the economy may become too accustomed to government injections.
He writes:
“And how many fiscal packages can the stock market withstand before it realizes that GDP is now opioid-like, depending on more and more dollars in Washington turning our supply capitalist Republican behemoth into a ‘gasp!’ “Sluggo similar to Europe?”
For now, Gross seems to attribute most of his recent earnings to DJIA Dow Jones Industrial Average,
the S&P 500 index and the growing companies in the Nasdaq Composite Index COMP,
including Tesla TSLA,
at the uberlow and negative interest rates in force.
However, it is not clear how long the pace will last for markets in 2021, Gross notes.
His January report comes after Gross and his partner, Amy Schwartz, were ordered by Superior Court Judge Kimberly Knill not to violate the Laguna Beach Municipal Code Noise Provisions or play music on their outdoor speakers and asked them to stay. at least 16 feet away from their coastal neighbor.
The verdict came from Gross’s neighbor, Mark Towfiq, accusing him of a “targeted harassment campaign” after he complained about a large glass statue that he said was erected without permission. Gross also played the theme for the sitcom Gilligan’s Island and other powerful music, repeated in retaliation for Towfiq’s complaint, court documents show.