Market Pulse

Bill Gross: We are not Worthy

Instead of reading my rants on this imbalanced economy, let me direct you to two recent interviews of Bill Gross, the Bond King.

--FT Interview
(if you don't have FT subscription, this article is published in June 16 on dead tree version)

--BusinessWeek Interview

A few highlights from Bond King Bill:

We have a 7% nominal gross domestic product growth rate. Normally, the short-term rate is close to the nominal growth rate...the Fed has to raise rates, you'll see a decline in housing prices and all asset categories, including bonds and stocks.

I thought it was remarkable that Greenspan would recommend adjustable-rate mortgages. I have been recommending them as well for the past few years. Over 5, 10, 15 years, those that borrow at short-term rates manage to pay less.

comment: ARMs is an excellent way to obtain cheaper money as long as you don't abuse it by using it as a leverage tool for a more expensive house that is over the budget.

More than any point in the past 20 or 30 years, there's potential for a reversal.

The US dollar is being supported by the kindness of strangers - Japan and China...It should be 20 per cent lower than it is...The dollar isn't overvalued against the euro but it is against Asian currencies.

posted by jason @ 4:45 AM