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Gross Says Central-Bank Policies Impose ’Haircuts’ on Investors




Pacific Investment Management Co.’s Bill Gross , manager of the world’s biggest bond fund , said global central bank debt purchase programs and almost-zero interest rates are bolstering economic growth and asset prices at a cost to savers and investors. “It has been the objective of the Fed over the past few years to make even more innovative forms of money by supporting stock and bond prices at a cost at an ever ascending scale,” Gross wrote in his monthly investment outlook posted on Newport Beach, California-based Pimco’s website today. “



Current policies come with cost, even as they magically float asset prices higher. Negative real interest rates, inflation, currency devaluation, capital controls and outright default” are among the costs, or ”haircuts” from global central banks’ unprecedented monetary stimulus. The Fed’s efforts to keep long-term interest rates low and holding its target rate at almost zero for more than four years has caused savers to suffer in what Gross has dubbed in the past “financial repression,” given low returns on bank deposits and fixed-income securities. Central-bank efforts to reflate their economies after the financial crisis have devalued the purchasing power of currencies and investment portfolios, Gross said. Market Participation Gross advised investors to continue to participate in markets that the Fed and other global central banks are supporting, while gradually reducing risk this year. He added that Treasuries, for now, “are a better alternative than cash.” “Give your own portfolio a trim as the year goes on,” Gross wrote. “You will give up some higher returns upfront in order to avoid the swift hand” that may result from these ”haircuts.” Gross boosted the proportion of U.S. government securities in the Total Return Fund to 33 percent in March from 28 percent in February, according to the latest available data on […]



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  • EUR/USD Gold CorrelationGross Says Central-Bank Policies Impose ’Haircuts’ on Investors
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  • Gross Says Central-Bank Policies Impose ’Haircuts’ on Investors
  • Gross Says Central-Bank Policies Impose ’Haircuts’ on Investors
  • Gross Says Central-Bank Policies Impose ’Haircuts’ on Investors
  • Gross Says Central-Bank Policies Impose ’Haircuts’ on Investors
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