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Money Morning's Fitz-Gerald On PIMCO Bond Sell-Off and Stock Market Drop

Bill Gross, manager of the world's largest bond fund at Pacific Investment Management Company (PIMCO), rattled bond investors when he announced yesterday (Wednesday) the fund has eliminated its holdings in U.S. government debt.

PIMCO's $237 billion Total Return Fund said it is increasing its holdings in debt of corporations and of emerging markets like Brazil and Mexico. Gross said it would return to U.S. bond holdings when yields returned to attractive levels.

"It's not a question of dissing the United States or questioning the credit of the United States, but simply a maturity reflection," Gross said. Treasurys are "mispriced relative to the inflationary environment and the growth we see ahead and there are better alternatives in order to capture yield."

Investors got another scare today (Thursday) when the Dow Jones Industrial Average dipped below 12,000 in trading, falling over 200 points.

The PIMCO news and stock market drop sparked pressing questions from investors:

  • What does Gross' move mean for the bond market?
  • Should bond investors get out of U.S. debt, too?
  • Is the bull market over?
  • And is the world broke?

Money Morning's Chief Investment Strategist Keith Fitz-Gerald joined host Stuart Varney on FoxBusiness' "Varney & Co." this morning to answer those very questions.

To watch that video, please click here.

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  1. Atlanta Roofing | March 11, 2011

    I heard awhile back that he was changing the charter on his PIMCO Total Return Fund so that he could invest in preferred stocks. This might be an interesting area to look into.

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