Salient to Investors:

Bill Gross at Pimco said:

  • Insufficient credit creation with 2% economic growth jeopardizes US growth because our credit-based financial economy depends on an ever-expanding outstanding level of credit for its survival.
  • If the credit growth is more than 4.5% a year, then private and public sectors must create $2.5 trillion of new debt per year to pay for outstanding interest.
  • Artificially low interest rates and artificially high stock prices offer historically unacceptable risk relative to return unless the policy rate is kept low, now and in the future, and the Fed does not overstep its interest rate line.
  • Longer term, economic growth depends on investment and a return of capitalistic animal spirits.

Fed funds futures indicate a 50+% chance the Fed will raise rates to at least 0.5% in July 2015.

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