Pimco's Gross: Market collapse will create a 'new normal' - Print Format

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The credit crises and recent market collapse have resulted in “long-term changes that will establish a ‘new normal,’” Bill Gross said yesterday.

The managing director and co-chief investment officer of Pacific Investment Management Co. of Newport Beach, Calif., made his comments during a keynote address at the Morningstar Investment Management Conference in Chicago, which was sponsored by Morningstar Inc. of Chicago.

That means economic growth of between 1% to 2% over the next several years, relatively high unemployment in the range of 7% to 8% and accelerating inflation, Mr. Gross said.

That will crimp asset-manager profits because they will have to contend with a low-return environment, he said.

Among other things, Mr. Gross recommended that investors look overseas, particularly in Brazil, India and China.

“The growth will be in economies where consumers are a small portion of the economy,” he said.

Domestically, Mr. Gross suggested investors “shake hands” with government.

Investors should look for what government is going to buy, and buy it first, he said