Bill Gross: Cash is garbage, but so are long-term bond funds

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Bill Gross still has a lot to say, and he’s not holding back. In the former fixed income manager’s latest market commentary, he shared his thoughts on offense, the rise of non-fungible tokens (NFTs) and his disgust with the current market dynamics.

In the letter entitled ‘What is your opinion?’, Gross, who was sent to court over the summer following an ongoing dispute with a neighbor, took the reputational risk lightly and described being critical in the world modern as a lost art.

In this vein, Gross questioned the buzz around NFT, citing Salvatore Garau’s “Invisible Sculpture” which is an empty box. The artwork sold for $ 15,000, which baffled Gross.

“The fact that I even have an opinion, that there really is something in my empty box (brain) is probably prone to arousal, so better to say that I agree with it first.” your opinion, or someone else’s on critical race theory, abortion, or whether Simone Biles was brave or just a coward. And then drift towards compliance. Safe until the next witch hunt (Oops, I did it again). ‘

Moving on to more familiar ground, Gross said the 10-year US Treasury can only rise from its current level of 1.25%, but the crux is how quickly it will.

With quantitative stimulus being phased out over the coming years, the Pimco founder believes a 10-year Treasury of 2% is likely over the next 12 months, which could also reverse a market crisis in response to too rapid a rise in rates.

“Thanks to the benefit of my aging mathematical gymnastics, this equates to a 4-5% price loss and a negative 2.5-3% total return,” Gross said.

“Money has been a trash for a long time, but now there are new contenders in the investment trash. Intermediate to long bond funds are certainly in that trash, but will stocks follow suit? Profit growth had better be double digits or else they could join the garbage truck, ”he added.

He also briefly commented on the situation in Afghanistan and growing climate concerns before signaling once again his stubborn positions.

“And then there’s the now recent fallout from Afghanistan and the relentless push for global warming that few investors seem to care about unless there’s a new solar IPO to run on day one. There are other issues but I better keep it simple. Only an Honus Wagner baseball card and of course Salvatore Garau’s NFT can be sure. Oops, I expressed another opinion. ‘

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