A rather foreboding update from Pimco’s Bill Gross on Central Bank’s options in QE – watch out as the current rally is central bank funded and there will be haircuts!!
While this Outlook has indeed claimed that Treasuries are money good but not “good money,” they are better than the alternative cash as long as central banks and dollar reserve countries China, Japan continue to participate.The same conclusion applies to credit risk alternatives such as corporate bonds and stocks. Granted, this sounds a little like Chuck Prince and his dance floor metaphor does it not? His example proved that dancing, and full heads of hair are not forever. So give your own portfolio a trim as the year goes on. In doing so, you will give up some higher returns upfront in order to avoid the swift hand of Sweeney Todd. There will be haircuts. Make sure your head doesn’t go with it.