“Bill Gross and his colleagues at fund giant Pimco are mildly bullish on stocks.
“We aren’t a two-eared, one-tailed bull like in Spain, but perhaps one ear,” Gross, co-CIO of Pimco, tells CNBC. “We think the market can go up 5 to 6 percent. It’s done that already in January. That’s a decent return and a bullish statement going forward.”
The Standard & Poor’s 500 Index soared 5 percent last month.
The money going into stocks hasn’t come out of bonds, Gross says. Pimco itself saw a $20 billion inflow to bonds during January.
“We think it’s coming from money market funds, capital gains and accelerated dividend payments from last year.”
Gross famously said last summer that “the cult of equity is dying,” and he doesn’t back off that statement, though his logic sounds a bit tortured.
First, he says January is a “one-month type of thing” for stocks. Then he says, “The cult of equity isn’t a downer in terms of returns but a downer in terms of the willingness and ability of demographic influences to present a change to stocks.”
Gross goes on to say that aging baby boomers will be more attracted to bonds than stocks. It seems a bit odd that the dying cult shouldn’t be expected to push returns down.
In any case, Gross says investors will hesitate to buy stocks after being burned by several market plunges over the last 13 years.
As for bonds, Gross says stay away from the long end of the market. “Going back to last July, we saw the beginning of the bear market and long bonds.” The 30-year Treasury has dropped about 15 percent since then….”
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