Salient to Investors:

Bill Gross at Pimco said:

  • Investment is not being incentivized by QE. Lower interest rates are being used to consume as opposed to invest, and the money created and freed up is elevating asset prices, but corporations are not investing in future production.
  • Asset and currency prices ultimately rest on economic growth, so if real growth is stunted in the US and globally, investors should expect only “bite-sized” future investment returns.
  • The growing risks of misguided monetary and fiscal policy may disrupt financial markets at some point. The fiscal cliff may only be the first of a series of disruptions.
  • Expect a compromise on the fiscal cliff.
  • Treasury yields should stay low in this type of environment
  • The cult of equity or even total return is over.

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