Bill Gross Talks "Sex", Answers "Honestly" What Happens When The Financial System Breaks Down

When the two biggest bond investors are shunning equities and bond markets, and putting their money into tangible assets like gold, it's time to take notice.  Fixed-income markets dwarf equities, and bond investors are better predictors of the economy--even if they don't make the financial headlines like stock pickers do.

Bond investors are often labeled the smart money because they have a better track record of foretelling economic downturns, as equities analysts are understandably polyannish.

Jeff Gundlach and Bill Gross have recently turned bearish on traditional financial assets and bullish on gold.  A contrarian may hesitate in following these iconic money managers.  But sometimes investors can out-think themselves.  While these two bond kings have influence on Wall Street (despite being headquartered in southern California), the average Joe wouldn't recognize these two star fund managers from Bernie Madoff.  And that's a good thing if one is a contrarian.

http://www.zerohedge.com/news/2016-08-03/bill-gross-talks-sex-answers-honestly-what-happens-when-financial-system-breaks-down

Breaking News!

https://www.janus.com/bill-gross-investment-outlook

Bill Gross: "This Is All Ending"

The bond king speaks.  And it ain't pretty.

http://www.zerohedge.com/news/2015-05-04/bill-gross-all-ending

Bill Gross Tweet Shorting German 10-Year Bunds

A week later, Janus' Gross' trade shorting German Bunds has already paid off big.

Gross: German 10yr Bunds = The short of a lifetime. Better than the pound in 1993. Only question is Timing / ECB QE

— Janus Capital (@JanusCapital) April 21, 2015

How Could They?

When the bond king (i.e. world's biggest debt investor) questions the level of debt sloshing around, you know the end game is near.

https://www.janus.com/bill-gross-investment-outlook

“Can a debt crisis be cured with more debt?” it is difficult to envision a return to normalcy within my lifetime (shorter than it is for most of you). I suspect future generations will be asking current policymakers the same thing that many of us now ask about public smoking, or discrimination against gays, or any other wrong turn in the process of being righted. 

How could they? How could policymakers have allowed so much debt to be created in the first place, and then failed to regulate their own system accordingly? How could they have thought that money printing and debt creation could create wealth instead of just more and more debt? How could fiscal authorities have stood by and attempted to balance budgets as opposed to borrowing cheaply and investing the proceeds in infrastructure and innovation? It has been a nursery rhyme experience for sure, but more than likely without a fairytale ending.

Who does Bill Gross read?

This tweet will be meaningless to 99.9% of the population.  Here is my breakdown, which will hopefully reduce the gap.

Bill Gross is a genius, who happens to run the largest bond investor in the world, PIMCO--with over $2 trillion of assets under management.

"Durden" is the pseudonym of zero hedge's founder.  It refers to "Tyler Durden", the character played by Brad Pitt in the feature film "Fight Club."  Zero hedge is a blog known for its insightful, if irreverent tone towards government, the banking class, mainstream media, and zombified masses. 

Previously, their critics would label them fringe conspiracy theorists.  The only problem is they also happened to be prescient in predicting financial crises and exposing financial corruption.

The irony is you have one entity which represents the ruling financial elite, and one which includes alternative financial viewpoints--a blog which is admittedly anti-establishment.  That they share the same ideology should concern the dumbed-down and brain-washed investing public.

Gross: Strategists/writers I follow? Dalio, Durden, Bianco, Arnott, Aitken, Santelli, Grant, Grantham, Inker, Marks, Quaintenance & Brodsky
— PIMCO (@PIMCO) August 9, 2013

Bill Gross on the Battle of the Somme in 1916

In the first decade of the 20th century, British war colleges and their generals were philosophically trapped by the successful strategies of a prior era – an era before the invention of a functional machine gun. They felt that machine guns might dampen the spirit of their fighting forces. What counted was the horse and the sword. Britain’s cavalry training manual of 1907 in fact stated that “the rifle or machine gun, effective as it is, cannot replace the devastation produced by the speed of the horse, the magnetism of the charge, and the terror of cold steel.”

The British were to experience the horror of their inability to adapt at the Battle of the Somme in 1916. German and British lines were separated by only 300–400 yards and millions of pounds of barbed wire. After several weeks of intense mortar barrage, which the British felt would leave German trenches in shambles, the Brits were ordered to advance on the German lines – each three feet apart, at a deliberate pace, wearing 65 pounds of gear. The soldiers heard their generals’ whistle at the break of an early July dawn, climbed over the top and advanced slowly. They were accompanied by officers on horseback flashing steel sabers, confident that the charge would psychologically and then physically overwhelm the mortar-battered Germans in a matter of minutes.

Instead, they were met by 1,000 German machine guns. The Germans, it seems, had burrowed themselves for weeks, 50–100 feet underground, surviving the mortars relatively intact. And their generals were well-versed in British tactics – always charging at the break of dawn, always blowing loud shrieking whistles, always advancing three feet apart with horses and bayonets of a bygone era. But the Germans believed in machine guns, not horses. Within the first few minutes there were 30,000 dead and wounded. By the end of the day there was not a single British soldier alive that had penetrated German barbed wire. Machine guns cut them down like scythes harvesting wheat. The few that reached German trenches were incinerated by German flamethrowers, another 20th century technological invention. The Somme was the biggest disaster in the history of British arms, and perhaps history’s bloodiest single slaughter. During the extended battle, one million British and German soldiers were killed or wounded, yet it was Britain’s not Germany’s temporary Waterloo, based on their failure to adapt to a new age.

Bill Gross On Obama On Bush

http://www.zerohedge.com/news/2013-06-09/bill-gross-obama-bush

Pimco’s Gross ponders if Bundesbank gold move means central banks don’t trust each other

http://blogs.marketwatch.com/thetell/2013/01/15/pimcos-gross-ponders-if-bundesbank-gold-move-means-central-banks-dont-trust-each-other/

Bill Gross: Fed Claims To Own Billions in Fort Knox Gold; “With Nothing In The Vault To Back It Up—Amazing!”

http://bullmarketthinking.com/bill-gross-fed-claims-to-own-a-few-billion-in-fort-knox-gold-with-nothing-in-the-vault-to-back-it-up-amazing/

Bill Gross: The US Is A Debt Meth Addict - Unless The Fiscal Gap Is Closed Soon "The Damage Will Be Beyond Repair"

Once again the bond king is warning that the US Treasury bond market may be damaged "beyond repair", and is bullish on gold.  Go figure.

http://www.zerohedge.com/news/2012-10-02/bill-gross-us-debt-meth-addict-unless-fiscal-gap-closed-soon-damage-will-be-beyond-r

Fed Easing Is a 'Done Deal': Bill Gross

http://finance.yahoo.com/news/fed-easing-done-deal-bill-204500896.html

A whale in the waters of negative yields

When the world's largest bond investor is forecasting a world where gold and silver will once again form the foundation of the global monetary system, one should sit up and take notice.  Bond investors are understandably anti-gold.

http://www.ft.com/intl/cms/s/0/6686b916-9381-11e1-8c6f-00144feab49a.html#axzz1uy6IGanE

The Great Escape: Delivering in a Delevering World

The world's biggest bond fund manager is telling investors to run towards commodities (or tangible assets).  Commodities are basically the antithesis of bonds, so readers may want to read up on Bill Gross' letter to shareholders before dismissing his investment thesis.

http://www.pimco.com/EN/Insights/Pages/The-Great-Escape-April-2012.aspx

Life – and Death Proposition

http://www.pimco.com/EN/Insights/Pages/Life-and-Death-Proposition.aspx 

Recent central bank behavior, including that of the U.S. Fed, provides assurances that short and intermediate yields will not change, and therefore bond prices are not likely threatened on the downside. Still, zero-bound money may kill as opposed to create credit. Developed economies where these low yields reside may suffer accordingly. It may as well, induce inflationary distortions that give a rise to commodities and gold as store of value alternatives when there is little value left in paper. 

Where does credit go when it dies? It goes back to where it came from. It delevers, it slows and inhibits economic growth, and it turns economic theory upside down, ultimately challenging the wisdom of policymakers. We’ll all be making this up as we go along for what may seem like an eternity. A 30-50 year virtuous cycle of credit expansion which has produced outsize paranormal returns for financial assets – bonds, stocks, real estate and commodities alike – is now delevering because of excessive “risk” and the “price” of money at the zero-bound. We are witnessing the death of abundance and the borning of austerity, for what may be a long, long time.

To gold bears:  oops!  What do you think happens to the price of gold when PIMCO, the largest bond fund in the world with $1.3 trillion under management, decides to buy gold?  What about the other institutional investors, like investment banks, hedge funds, pension funds, mutual funds, corporate treasuries, sovereign wealth funds, and central banks?  Or the billions of peasants in Asia accustomed to corrupt governments and crooked bankers with a printing press?  It'll be like trying to fit a pig into a pin hole.  Or yelling "Fire!" in a theater of billions--when there is only one escape exit.

You've been warned--many times.  Good luck to us all.

Bill Gross Tells The Truth: "S&P Finally Got It Right. They Are Enforcing Some Discipline. My Hat Is Off To Them"

http://www.zerohedge.com/news/bill-gross-tells-truth-sp-finally-got-it-right-they-are-enforcing-some-discipline-my-hat-them

After Getting Smoked On Treasuries, Bill Gross Joins The Ranks Of Silver Market Conspiracy Theorists

Folks, you can label me a conspiracy theorist, but you can't dismiss the lawsuits against JPMorgan for the manipulation of silver prices <click here>.  Fine, you may say the plaintiffs are sore losers.  Not so fast.  In steps the largest bond investor in the world, PIMCO, led by Bill Gross.  Here is a recent tweet:

http://www.businessinsider.com/after-getting-smoked-on-treasuries-bill-gross-joins-the-ranks-of-silver-market-conspiracy-theorists-2011-6

US Is in Even Worse Shape Financially Than Greece: Gross

As stated many times, Greece will default, despite desperate denials from bankers in the Euro zone and worldwide.  The only question is how and when. 

http://finance.yahoo.com/news/Greece-falls-to-SPs-lowest-rb-4175011898.html?x=0

Here's the scariest part:  the world's biggest bond investor just declared US finances are in worse shape than Greece's. 

http://www.cnbc.com/id/43378973

When adding in all of the money owed to cover future liabilities in entitlement programs the US is actually in worse financial shape than Greece and other debt-laden European countries, Pimco's Bill Gross told CNBC Monday.

Getty Images

Much of the public focus is on the nation's public debt, which is $14.3 trillion. But that doesn't include money guaranteed for Medicare, Medicaid and Social Security, which comes to close to $50 trillion, according to government figures.

The government also is on the hook for other debts such as the programs related to the bailout of the financial system following the crisis of 2008 and 2009, government figures show.

Taken together, Gross puts the total at "nearly $100 trillion," that while perhaps a bit on the high side, places the country in a highly unenviable fiscal position that he said won't find a solution overnight.

Does this all sound familiar?  Who thinks I'm crazy now?

Gross Says ‘No Regrets’ Over Missing Short-Term Bond Rally

Bill Gross of PIMCO says he was early--and not wrong, with his short on US Treasuries.

http://www.businessweek.com/news/2011-06-09/gross-says-no-regrets-over-missing-short-term-bond-rally.html

With $1.2 trillion under management, I think I'll give him the benefit of the doubt.

Bill Gross: Treasury investors will 'get cooked'

Is Gross really short US Treasuries or is he talking his book?


http://money.cnn.com/2011/06/08/markets/bill_gross_pimco_morningstar/?section=money_latest