Debt reduction over growth 'almost suicidal': Pimco's Gross

Debt reduction over growth 'almost suicidal': Pimco's Gross
Bond king says governments should look to prime economic pump first, then lower borrowing
AUG 31, 2011
By  John Goff
Bill Gross of Pacific Investment Management Co. said governments should be focusing on creating growth rather than reducing debt after a report showed employment in the U.S. stagnated in August. “To do it right now is almost suicidal,” Gross, manager of the world's biggest bond fund, said in a radio interview on “Bloomberg Surveillance” with Tom Keene and Ken Prewitt. Payrolls were unchanged last month, the weakest reading since September 2010, after an 85,000 gain in July that was less than initially estimated, Labor Department data showed today in Washington. The median forecast in a Bloomberg News survey called for a rise of 65,000. Hourly earnings and hours worked both declined. The August data included a 48,000 drop in information industry jobs, mostly reflecting striking Verizon Communications Inc. workers. The economy expanded at a 1 percent pace in the second quarter following a 0.4 percent gain in the first three months of the year, the Commerce Department reported last month. Consumer spending grew 0.4 percent, the smallest increase since the last three months of 2009. The $245 billion Total Return Fund managed by Gross has lost 0.4 percent in the past month, underperforming almost 90 percent of its peers, according to Bloomberg data. The fund's 4.07 percent return this year is worse than about two-thirds of competitors, the data show. Gross has outperformed 98 percent of his rival fund over the past five years. Treasuries have returned 7.5 percent since February, when Gross eliminated the Total Return Fund's holding of U.S. government securities. He boosted Treasuries to 10 percent of assets in July from 8 percent in June, the Newport Beach, California-based firm said on its website last month. Gross said in a Financial Times interview that was published this week that it was a “mistake to bet so heavily against the price of U.S. government debt.” U.S. government bonds have returned 2.8 percent in August, the most since December 2008, as investors bet on slower growth and sought a refuge from global financial market turmoil, according to a Bank of America Merrill Lynch index. --Bloomberg News--

Latest News

The fight over the CFPB is just beginning
The fight over the CFPB is just beginning

Locked out of their offices and told to stay home, employees at the Consumer Financial Protection Bureau have asked the courts to intervene as Elon Musk and Republican leaders move to shut down the agency that was established to protect people from predatory lending and financial scams.

Business-focused wealth tech RISR lands $8B Wealthcare Capital Management partnership
Business-focused wealth tech RISR lands $8B Wealthcare Capital Management partnership

Fintech platform interVal has also introduced a new feature to help advisors support entrepreneurial business owner clients better.

LPL boosts revenue potential with amped-up alts platform
LPL boosts revenue potential with amped-up alts platform

Along with greater revenue, alternative investments also carry risks, one industry lawyer noted.

How SageSpring Wealth Partners' next-gen strategy has fueled its success
How SageSpring Wealth Partners' next-gen strategy has fueled its success

President Jeff Dobyns unpacks the strategic power of mentorship, what makes an "ideal team player," and how the firm's 89 percent success rate has paid off for veteran advisors.

Powell heads for hot-seat hearings with ongoing pressure from Trump policies
Powell heads for hot-seat hearings with ongoing pressure from Trump policies

The Fed chair is in for some "hyper-charged" meetings, with legislators likely to raise questions on tariff threats and apparent steps to comply with anti-DEI orders.

SPONSORED Taylor Matthews on what's behind Farther's rapid growth

From 'no clients' to reshaping wealth management, Farther blends tech and trust to deliver family-office experience at scale.

SPONSORED Why wealth advisors should care about the future of federal tax policy

Blue Vault features expert strategies to harness for maximum client advantage.