Bill Gross speaks about the markets and his “new new normal”

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Bill Gross is backing away from Pacific Investment Management Co.’s outlook for a “new normal” after lagging behind the majority of his peers during the biggest bond-market rally in nine years.

The period of muted growth in developed economies, high unemployment and “relatively orderly delevering” that Mohamed El-Erian, who shares the title of chief investment officer with Gross, coined in the aftermath of the 2008 financial crisis appears to be morphing into a world of credit and zero-bound interest-rate risk, said Gross, the founder of Pimco and manager of the world’s biggest bond fund.

“It’s as if the earth now has two moons instead of one and both are growing in size like a cancerous tumor that may threaten the financial tides, oceans and economic life as we have known it for the past half century,” Gross wrote in a monthly investment outlook posted on the Newport Beach, California-based company’s website today. “Welcome to 2012.”

Most developed economies have not, in fact, de-levered since 2008 and credit remains resilient because of the multitude of monetary stimulus packages being made available through central banks in the U.S. and Europe, Gross wrote. This risks leading to unraveling of financial markets if policy makers are unable to foster growth and inflation accelerates, he said.