Tuesday, March 30, 2010
After a poor night's sleep, Macro Man was in a foul mood this morning as he stared bleary-eyed at his screens. That is, until he read this little pearl of investment wisdom, which induced a hearty burst of laughter:
Bill Gross May Be Predicting Bull Run in Stocks
March 30 (Bloomberg) -- This may be the best news for stocks in a long time: Bill Gross, who manages the world’s biggest bond fund, says the 30-year bull market in fixed-income securities is ending.
Though Gross, who runs Pacific Investment Management Co.’s $214 billion Pimco Total Return Fund, would never tell you to buy stocks, isn’t that what he means?........
Full disclosure compels me to say that in even saying the words “bull market,” I’m talking my own book. My investments are in stock mutual funds. Smart people have a balance of stocks and bonds.
The column was laughable on a number of levels. Let us count the ways:
a) The very notion that for an equity market buoyed largely on a tide of over-abundant liquidity, that a period of consistently higher market interest rates could possibly be construed as bullish
b) That Mr. Gross's bearish comments on bonds directly translate into a view on stocks (it seems as if the author is wishcasting, not forecasting)
c) That Mr. Gross, Mr. "Dow 5000" himself, should in any way be construed as any sort of authority on equities.
At least the author concedes towards the end of the piece that he is talking his own book, something that Mr. Gross notably fails to do in his many media appearances. To be sure, any listener with a modicum of nous should assume that this is exactly what he is doing: Mr. Gross does run a business, after all, rather than a charity. (ed. note: Didn't he once offer to run the TARP for free, though?)
Still, Macro Man always has to chuckle when the media mindlessly parrots whatever view Mr. Gross is espousing at a particular time, as if he were some sort of impartial public utility.
It is a handy rule of thumb that everyone, including your intrepid author, has some vested interest in what they say; otherwise, why say it? And if you don't know where that interest lies, your chances of being played for a sucker are magnified greatly.
(Naturally, Macro Man is providing this advice as a public service, out of the kindness of his heart. Really!)
In any event, now that the Greek 7 year is away (if not up, up), perhaps we can focus on more prosaic issues: like the tidy upside surprise in yesterday's German CPI figures. To be sure, the absolute level is still quite low, but the trend is quite clear.
If (and yes, it's a big if) Greece manages to avoid sinking like the Titanic, at some point the ECB will have to dust off those policy normalization plans that they hinted at in December and swiftly shelved in January. Perhaps it's time to look at bearish ERZ0 structures again?