Pimco's Gross sees inflation on horizon

What if there is a paper jam at the Treasury?

Bill Gross of PIMCO published his “Investment Outlook” for May. Once again, he weighs the possible outcomes from a global banking system that has an estimated $200 trillion in credit with developed economies’ central banks holding only $15 trillion in reserves. Gross believes, “The current acceleration of credit via central bank policies will likely produce a positive rate of real economic growth this year for most developed countries, but the structural distortions brought about by zero bound interest rates will limit that growth and induce serious risks in future years.”

He went on to say, “Not suddenly, but over time, gradually higher rates of inflation should be the result of QE policies and zero bound  yields that will likely continue for years to come.” Finally, regarding investment choices Gross says  to “focus on securities with shorter durations – bonds with maturities in the five-year range and stocks paying dividends that offer 3-4% yields. In addition, real assets/commodities should occupy an increasing percentage of portfolios.”

About the Author

Canaccord Genuity Inc. is a global investment banking and institutional brokerage firm. Their website is www.canaccordgenuity.com.

For disclosures of any equities mentioned here please see: http://www.canaccordgenuity.com/en/ODD/pages/disclosures.aspx.

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