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Bill Gross published his first investment outlook since starting at Janus earlier today. As is customary with Gross, he shared a missive or two about his life experiences before getting down to business.
This time Gross made a cheeky reference to the Saturday Night Fever song Stayin’ Alive, in which he describes a recent dance with his wife, Sue, the first since their wedding day.
“We dipped, we twirled, I even did a bop or two,” he wrote. “[John] Travolta would have been proud.”
To see a list of high yielding CDs go here.
The reference is perhaps apt considering the turbulent few weeks Gross has had to endure. But you can’t keep a good man down. Gross says in typically optimistic style “It will be a better few months and years going forward.”
Despite the change of setting, Gross hasn’t changed his belief that bond markets, and by extension his own fund, cannot generate the same returns they managed during the 30 year bull market he rode at Pimco. His “tough love” advice to investors is to “retire later, save more [and] accept a revised standard of living”.
You can read the article in full here.
Todays Other Top Stories
Learn Bonds: – Merck – Counting on the pipeline to revive its fortunes. – Right now, Merck (NYSE: MRK), the nation’s second biggest pharmaceutical maker, is a curious animal: a value stock that’s priced like a growth stock. It’s almost enough to for me to put a “Sell” recommendation on it, but not quite. An explanation is in order.
Bond Case Briefs: – Insurers build market share as Detroit shows value. – Municipal bond insurers are capturing the most market share since 2009 as Detroit’s bankruptcy and Puerto Rico’s struggles underscore the value of the coverage to investors in the $3.7 trillion market.
Standish: – U.S. Municipals: A potential opportunity for global fixed income investors. – For both U.S. and foreign investors concerned about the prospect of rising interest rates, U.S. municipal bonds may be a good opportunity.
MarketWatch: – 73 toll road refinancing plan receives investment grade ratings from Standard & Poor’s and Fitch. – Refinancing plan will stabilize long-term debt structure for the 73 Toll Road.
ValueWalk: – The Liquidity Illusion: Pension funds should rethink fixed income. – Pension fund managers, like many investors, have historically paid a premium for liquidity. Lately they’ve started to realize that liquidity can be an illusion—but it can also be an opportunity.
Business Insider: – The bond market is being driven by one thing right now: Fear. – Investors are piling into government bonds, causing yields to fall to new lows as fears over the health of the global economy grow.
Bloomberg: – Dudley sees froth, IMF sees froth, bond investors don’t. – What’s an investor to do when everyone from the U.S. Federal Reserve to the International Monetary Fund say they see bubbles developing in markets? The answer, apparently, is to keep buying.
FT: – Foreign buyers hold key to debt prices. – (Subscription) Larger foreign participation in a government’s debt tends to be highly welcome during stable times, when the extra demand pushes up prices and pulls down yields – making it cheaper for the country to borrow money. But in times of trouble the shift can leave a country more vulnerable to global financial conditions.
FT: – ‘Lower for longer’ Fed boosts bonds. – (Subscription) Treasury bond yields are falling to multi-month lows as investors welcome evidence that the Federal Reserve remains in no hurry to raise borrowing costs.
Investment Grade Bonds
Market Realist: – Overview: A bird’s eye view of investment-grade bond markets. – U.S. investment-grade bonds include both Treasury securities, issued by the U.S. Department of the Treasury, and corporate bonds, issued by high-quality corporate borrowers such as Coca Cola Company (or KO) and Oracle Corporation (or ORCL). These companies are rated BBB or above, as per the ratings guidelines provided by credit ratings agency, Standard & Poor’s.
High Yield Bonds
Bloomberg: – Pimco says junk bonds attractive as turmoil boosts value. – The biggest losses in the junk-bond market in more than a year are drawing Pacific Investment Management Co. to the debt as it finds attractive opportunities unearthed by the sell off last month.
Bloomberg: – Investors may sell junk debt ahead of Chinese tier 1 deals. – Investors may sell Chinese junk-rated bonds to make room in their portfolios for additional Tier 1 bank capital securities from the world’s second-largest economy, according to a survey of money managers by Morgan Stanley.
Business Insurance: – About $2.5-$3 billion of cat bond, ILS deals likely in fourth quarter. – Paul Schultz, CEO of Aon Benfield Securities, said that the catastrophe bonds and insurance-linked securities market will surely see a surge in the fourth quarter of 2014, reports Artemis.bm citing A.M. Best Co. Inc.
Aleph Blog: – Managing money for retirement. – Investing is difficult. That said, we can make it harder still. We can encourage people with little to no training to try to do it for themselves. Sadly, many people get caught in the fear/greed cycle, and show up at the wrong time to buy and/or sell. But investing can be made even more difficult. Investing reaches its most challenging level when you are relying on your investing to meet an anticipated and repeated need for cash outflows.
ETF Trends: – Bond ETF considerations for a flattening yield curve. – Most investors are aware that bond exchange traded funds will likely underperform as interest rates rise. However, fixed-income investors will have to take a closer look at the yield curve to gauge their market exposure.
Globe and Mail: – Bonds are like vitamins – boring but very good for you. – Most investors neglect to look at bonds for various reasons. They, and sometimes their advisers, don’t understand them as an investment vehicle and how to use them in a portfolio.
Cliff Smith: – Simple high yield/municipal bond tactical strategy for a rising rate economy. – This strategy is a tactical bond strategy based on low duration moving averages. The strategy has the potential for moderate growth (~11-12%) with low maximum drawdown (~4%).
LA Times: – After Bill Gross’ departure, Pimco staffers stay put. – Bill Gross has drawn droves of investors for years to watch his appearances on financial TV shows, but so far he is no magnet for his former colleagues at Pimco. No one from Pacific Investment Management Co. has joined the deposed 70-year-old ‘bond king’ as he sets up shop at rival Janus Capital Group, at least so far as the fund-watchers at investment researcher Morningstar Inc. can tell.
Zacks: – 5 top-rated balanced funds to buy now. – Balanced funds provides investors with the convenience of buying into a single fund rather than holding both equity and bond funds. Here we share with you 5 top rated balanced mutual funds. Each has earned a Zacks #1 Rank (Strong Buy) as we expect the fund to outperform its peers in the future.
Reuters: – Fidelity’s launches three actively managed bond ETFs. – Fidelity Investments on Thursday launched three bond exchange-traded funds that are actively managed as the company seeks to capitalize on the army of analysts, traders and portfolio managers that support its more established mutual funds.
Market hated the bond at 3.75% but now loves it at 3.05%?
— Peter Tchir (@TFMkts) October 9, 2014
A “kiss your sister” bond auction. +0.2bps tail, lower BTC but higher indirect and direct bids.
— Mike Jackson (@bondscoop) October 9, 2014
What does the audience expect for 2015 muni volume? Half say $300-$350 million. Other votes split btn. higher and lower amounts. #BBCalPub
— Rich Saskal (@RichSaskal) October 9, 2014