Monday, May 4, 2015

Bill Gross: The Bull Market 'Super-Cycle' Is Nearing Its End

High profile bond money manager, Bill Gross is out with a new outlook report on the economy.

"[T]he bull market 'supercycle' for stocks and bonds is approaching its end," writes Gross according to Bloomberg.

This dovetails somewhat with my view detailed in the EPJ Daily Alert, where I warn that interest rates bottomed at the start of 2012 and that we are in for years, if not decades of higher rates.


“Credit-based oxygen is running out,” Gross writes in the outlook, titled “A Sense of an Ending,”

Anyone who holds the view that the Fed will not soon raise interest rates,and soon, fails to understand the nature of the developing crisis. It will be led by a collapse of the bond market.

Market forces, somewhat misleadingly called bond-vigilantes, will lead the charge.

I am not as bearish in the short-term on the stock market. The equity markets will be volatile becasue of the climb in rates and look scary at times but the death spiral will be in the bond market.

-RW

5 comments:

  1. Hi Robert,

    What makes you think the Fed is going to raise rates sooner rather than later? Isn't it in their interest to keep this party going as long as possible? Fed funds futures are now predicting a 0% chance of a rate hike in June, which mean we probably won't get one until mid-September at the earliest.
    http://www.cmegroup.com/trading/interest-rates/fed-funds.html

    This experiment is coming to an end fairly soon but the Fed wants to draw it out as long as possible, and they do that by holding rates at zero, using less than stellar economic data as the excuse every time.

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  2. Don't listen to mainstream nonsense out there, read EPJ Daily Alert to find my detailed discussion. There are really only two numbers you have to watch between now and the June FOMC meeting to see if they will raise rates at that meeting.

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