Bill Gross of Pimco – March Podcast

Bill Gross of Pimco, March newsletter

In this mp3 Bill Gross of Pimco goes through some of his thoughts by way of a make believe congressional hearing, an interesting take on the matter, his comments are simple and yet complex, pragmatic and thought provoking.

The questions (and answers) centre around these topics.

1. Is this a recession or depression? 2. How did it happen so fast? 3. How bad might it get? 4. What can we do? 5. Nationalising banks, good or bad idea? 6. Consequences Well worth tuning into, click on the link above or on the pic to hear it.

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Balance Sheet Expansion

Tom Keene of Bloomberg talks about the Fed and the results we may see of the solutions being put in place by Ben Bernanke. He makes the interesting and valid point about Ben Bernanke being one of the best living historians of the Great Depression and why it puts him in the unique position of being able to navigate the situation the US economy is in. 50 beeps in the 10 year treasury equates to nine big figures on Euro Dollar, so going from $1.30 to $1.39. Tom also talks about savings rates. Great viewing.

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It's gonna hurt…. because it has to.

I have found something that nobody disagrees upon, which is the need to save the economy, but that’s where the agreement ends, because once you mention solutions the disagreements begin.

Should we fix the problem by raising taxes? Cutting public spending? A levy on the Public Sector? Bring the lower paid into the tax base? And for every person who agrees with one aspect of this there will be another who says it is the wrong answer.

I would differ, I think they all must be done, we need to solve this mess fast, and it is going to hurt, not because that’s what the government want, and not for fun, but because it has to. I like analogies so here is a fitting one: An overweight person realises one day they will die if they don’t lose weight, they can start to argue with the doctor that they want to eat the odd doughnut, but they won’t eat ice cream, they will do moderate exercise but don’t want to change …

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It’s gonna hurt…. because it has to.

I have found something that nobody disagrees upon, which is the need to save the economy, but that’s where the agreement ends, because once you mention solutions the disagreements begin.

Should we fix the problem by raising taxes? Cutting public spending? A levy on the Public Sector? Bring the lower paid into the tax base? And for every person who agrees with one aspect of this there will be another who says it is the wrong answer.

I would differ, I think they all must be done, we need to solve this mess fast, and it is going to hurt, not because that’s what the government want, and not for fun, but because it has to. I like analogies so here is a fitting one: An overweight person realises one day they will die if they don’t lose weight, they can start to argue with the doctor that they want to eat the odd doughnut, but they won’t eat ice cream, they will do moderate exercise but don’t want to change …

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Some past market performance figures

Naturally past economic cycles don’t tell us exactly what will happen in the future, but as Mark Twain once said ‘history doesn’t repeat itself but it does rhyme’. And for that reason it is worth looking at some key figures from the past, showing that often the gains in bull markets are all found at the cusp of a bear market.

The stock market generally reacts before consumers and the real economy do and equally it will generally see recovery before them as well. Taking a view of the 20th century markets we can see the following:

In the recession of 1926 to 1927 the market increased by 41%. The years of 1933 to 1937 saw some of the most impressive gains ever in the S&P 500. The eight month recession of 1945 saw markets rise 19.5%, the eleven month recession of 1948-49 saw the markets go up 15.2%. Again in 1953-1954 the ten month recession ended with a market that rose 24.2%.

Any reader will note that much of these ‘gains’ did …

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Bill Gross of Pimco talks about the deficit in the USA

Bill Gross, known as ‘Mr. Bond’ runs the largest bond fund in the world, in this video he talks about many of the issues facing the economy under the new Obama presidency. Bill Gross is a fascinating character who started his careers as a professional gambler I always enjoy listening to his views on the market which he does with an intersting mix of macro/micro/common sense views.

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The tipping point?

Today I am taking out the crystal ball, and asking it if these final weeks of December 2008 and the start of January 09′ are the tipping point of the greatest bear market since the 1930’s. The recession is huge, there has been billions in wealth wiped out, we passed the one trillion mark last month, the total is expected to be over 1.5 trillion USD in total.

The question is, how low will the path of this bear market go? [note: this is about the stock market and not the Irish property market] Central banks around the world are chopping rates, forming bailout packages and doing all possible to get the economy back on track. Today we will consider some of the reasons that we may be actually seeing the start of a tipping point.

I believe the trend will be that we saw what amounted to the greatest financial crash in modern history in nominal terms. The fallout in Q4 only escaped the ‘crash’ moniker (but ‘worldwide financial crisis’ doesn’t exactly have a …

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