When Bill Gross, The ‘Bond King’, Speaks I will Listen!

Bill Gross On The Impact That Low Interest Rates And A Heavy Debt Burden Will Have On Pension Fund Returns!

Bill Gross, former head of the PIMCO Total Return fund who oversaw over $2 trillion in assets and is now with Janus, is worth listening to when he speaks!

And speak he did in a recent Bloomberg interview with Trish Regan that provided the following quotes representing some of the key takeaways from the man known as the ‘Bond King’!

From Mish’s Global Economic Trend Analysis:

  • “Not even thin gruel is being offered to our modern-day Oliver Twist investors. You have to pay to come to the dinner table and then sit there staring at an empty plate.”
  • “The interest rate can’t be raised substantially even over the next two to three years.”
  • “The US has escaped the liquidity trap that euroland and Japan are in. But, not necessarily for all time.”
  • “[Low interest rates] keeps zombie corporations alive because they can borrow at 3 and 4 percent, as opposed to the 8 or 9 percent. It destroys business models. It’s destroying the pension industry and in the insurance industry.”
  • “ultimately, [low interest rates] destroy the capitalistic model at the margin. Instead of investing in the real economy, [corporations] can now simply borrow at close to 0 percent and buy their own stocks, which yield 2 or 3 percent on a dividend basis and provide a return of 6 or 7 percent on an earnings to price ratio basis.”

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Written by Michael Haltman, President of Hallmark Abstract Service, New York.

HAS is a provider of title insurance in New York State for residential and commercial real estate transactions.

And, for anyone either buying a property or refinancing, remember that although your attorney will likely recommend a title insurance provider you always have the right to choose your own (click here to learn more)!

If you have any questions you can reach Michael by email at mhaltman@hallmarkabstractllc.com.

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