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Bill Gross

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    Wall Street

    As I mentioned over the weekend, the month of September ended with two dramatically different exits: The Hollywood ending of Yankee Captain Derek Jeter's Hall of Fame 20-year career, and the acrimonious departure of Bill Gross from PIMCO, the firm he founded 43 years ago.

    The departure of the two could not have been in starker contrast.

    More importantly, as investors, we can learn a great deal by taking a moment to explore why Gross took the extraordinary step of leaving the institution with which he is synonymous... Full Story

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U.S. Stock Markets Moving on AAPL, GM, and DWA News Today

U.S. stock market

Stock market news today, Sept. 30, 2014: U.S. stock market futures were on the rise this morning, ahead of data updates on consumer confidence and home prices, and a speech by Federal Reserve Gov. Jerome Powell.

On Monday, U.S. markets slipped again as investors renewed concerns about civil unrest in Hong Kong, where the Chinese government fired tear gas at pro-democracy protesters in one of the largest political crackdowns in China since the Tiananmen Square protests 25 years ago.

Here’s what else you should know to make your Tuesday profitable:

The Top Five Stories Moving the Stock Market Today

stock market today

Stock market today, Sept. 29, 2014: U.S. markets rebounded Friday, with biotech companies leading the charge. The markets got a strong shot in the arm after the U.S. Commerce Department revised GDP growth upward for the second quarter. The U.S. economy accelerated at its strongest pace in 30 months.

This morning, the U.S. dollar struck a six-year high against the yen and a 22-month high against the euro.

Here’s what else you should know to make your Monday profitable:

Is PIMCO's Bill Gross Wrong Again?

Bill Gross of PIMCO is one of the world’s most successful money managers with $2 trillion under management yet he’s been spectacularly wrong on three major market calls in the past three years.

What does that say about his latest prediction that there’s a 60% chance of a global recession 3-5 years from now?

Perhaps every problem looks like a nail if all you’re working with is a hammer…...

Keith Fitz-Gerald: Anybody Listening to Bill Gross Is "Probably Headed to the Poorhouse"

Bill Gross' Pimco, which manages the world's largest bond fund, predicted earlier this week there's a more than 60% chance of a recession in three to five years.

"Given that the last global recession was four years ago, and also given that the global economy is significantly more indebted today than it was four years ago, we believe there is now a greater than 60 percent probability that we will experience another global recession in the next three to five years," Saumil H. Parikh, a managing director and generalist portfolio manager at Pimco, said in a note Tuesday.

But Money Morning Chief Investment Strategist Keith Fitz-Gerald took issue with the prediction from Gross' firm during an appearance on Fox Business' "Varney & Co."

Keith also said stocks haven't peaked - and won't as long as the Fed keeps printing money.

Check out the accompanying video to see why Keith doesn't exactly see eye-to-eye with the Bond King.

Watch the latest video at

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If You're Investing in Bonds, Bill Gross Has a Message For You

If you're investing in bonds, Bill Gross just delivered you a serious warning.

Gross wrote in his February newsletter that the factors that contributed to last month's 1% loss for U.S. Treasuries - the biggest since March 2012 - aren't going away any time soon.

Total debt, which includes corporate, government and household, has expanded from $3 trillion in the 1970s to about $56 trillion today, explained Gross. He said that's left bond yields in the 1% - 2% range, instead of the historic level of 3% - 4%.

Gross said the staggering amount of debt in the United States has created a "credit supernova" that could crush the bond market as the global credit bubble "is running out of energy and time."

"Our credit-based financial markets and the economy it supports are levered, fragile and increasingly entropic," Gross wrote.

Gross warned that anyone investing in U.S. government bonds should evaluate their exposure.

And he isn't alone. Jim Rogers and Goldman Sachs have both been bearish on bonds.

"I'm short long-term government bonds," Rogers said Feb. 6 on Bloomberg Radio. "I plan to short more. That bull market, that's a bubble."

So what should bond investors who want yield do with their money?

To continue reading, please click here...

Bill Gross, the Ring of Fire, and Gold Prices

Thank Bill Gross for adding some muscle this week to the already strong rally for gold prices.

That's because Gross, the Pacific Investment Management Co. (PIMCO) founder and co-chief investment officer, released his October 2012 investment outlook Tuesday that came with a warning for the U.S. and investors.

Gross said that U.S. fiscal problems have put the country in a "Ring of Fire" that'll burn investors if they aren't protected by gold and real assets.

Gross warned that recent studies have concluded that "[T]he U.S. balance sheet, its deficit and its "fiscal gap' is in flames and that its fire department is apparently asleep at the station house."

To continue reading, please click here...

Q&A with Keith: Why Bill Gross is Wrong About Stocks

I've gotten quite a few great questions from readers lately so I thought we'd take a quick peek into the mail bag today.

As always, I love answering questions from the Money Morning family so please feel free to keep the conversation going by sending your questions to:

Let's get started with a great question about what Bill Gross said a few weeks ago regarding stocks....

Q - What do you think of Bill Gross's recent comment that equities are dead? - Martin R.

A - I think he's as wrong about this as he was about his well-publicized February 2009 call to avoid bonds - a mistake, by the way, that cost investors $5.7 trillion according to Forbes contributor Peter Cohen - and his February 2012 call to do the same thing.

Sure it sounds great considering who he is in his capacity as a bond manager with $1.4 trillion under management, but avoiding equities is a sure path to ruin. They've always involved risk and risk produces returns. Therefore, if you want the returns, you have to take the risk.

It's how you control risk that matters when it comes to big, consistent profits. Most people, though, fail to make the connection and pay a terrible price as a result.

The other thing to think about is that the markets don't price on growth. That's something Wall Street analysts have cooked up to keep you distracted. They price for risk and always have, which is yet another reason to turn conventional thinking on its ear.

Q - I can't believe our leaders. A year after the last debt debate our spending is up another $2.1 trillion. And? - Dan B.

A - Me neither. The actual fiscal gap - that's the present value difference between projected spending and income - is a staggering $222 trillion. That's $11 trillion more than it was last year and represents the true federal deficit according to Boston University Professor, Laurence Kotlikoff, who reviewed the latest CBO data.

To continue reading, please click here....

PIMCO Total Return ETF (TRXT): Is Bill Gross a Game Changer for Actively Managed ETFs?

Today Bill Gross launched his PIMCO Total Return ETF (NYSE Arca: TRXT), hoping his move into actively managed ETFs will be a "game changer" for a market that's failed to flourish.

Gross manages the world's largest mutual fund at $250 billion. His Total Return Bond Fund has averaged a 6.3% annualized return over the past 10 years. Now he wants to expose more investors to his fund through an actively managed ETF version.

Gross also hopes his TRXT launch will jumpstart actively managed ETFs, which so far have been a largely ignored market.

ETFs typically hold baskets of stocks while trading throughout the day. Active versions combine the skill of selecting securities with the lower fees, market trading and tax advantages of ETFs.

"Small investors don't always have access to active management with a higher yield and a higher total return," said Gross, who is co-chief investment officer at PIMCO. "We are hoping "mom and pop' can do a little bit better than the bond market at a time of historically low yields."

Can Gross and TRXT deliver on the hype?

The PIMCO Total Return ETF (TRXT)

Bill Gross' ETF will have the same investment goals as the mutual fund, but aims to attract smaller investors through some key differences.

First, it's cheaper.

PIMCO will charge 0.55 basis points for the ETF, compared to the 0.9 basis points fee for the mutual fund. That's $5.50 a year for every $1,000 invested.

Not only will it give investors a break in fees, it'll allow them to be exposed to all-star investment performance they normally couldn't afford.

To continue reading, please click here...

Fed Plan to End Mortgage-Backed Securities Purchase Program Brings Market Anxiety

Anxiety surrounds Tuesday's Federal Open Market Committee (FOMC) meeting as the central bank's year-long mortgage-backed securities (MBS) purchase program nears its scheduled March 31 close, opening the door for mortgage rate increases and surprising market fluctuations.

The Fed spent billions of dollars on MBS guaranteed by Fannie Mae (NYSE: FNM), Freddie Mac (NYSE: FRE) and Ginnie Mae weekly for the past year, topping out its portfolio at $1.25 trillion.

As the program ends, investors and analysts are speculating that mortgage rates could rise - and rise fast.

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Fed's Discount-Rate Increase Illustrates Exit-Strategy Challenges That Await the U.S. Central Bank

Is the U.S. Federal Reserve finally launching its "exit strategy?"

When the nation's central bank boosted the discount rate last week, it assured investors that this wasn't a monetary tightening. The assurance didn't seem to matter. The move late Thursday touched off a furious global-market reaction and U.S. dollar increase on Friday. This demonstrates the challenge the central bank will face as it crawls toward an ultimate increase in interest rates.

In a move that surprised the markets, the Fed announced Thursday that it was increasing the rate it charges banks for emergency loans to 0.75% from 0.50%. The also reduced the central bank also slashed the maximum-loan-maturity length from 28 days (it was once as high as 90 days) to overnight.

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Never "Short" a Country That Has $2 Trillion in Cash

The first rule of successful global investing - to paraphrase the words of New York Times columnist Thomas Friedman - is a simple one.

Never short a country with $2.3 trillion in currency reserves.

I'm well aware that bond king Bill Gross has been sounding the alarm about a China bubble, and that Forbes magazine is predicting a major meltdown by the Asian giant. I've also heard all about noted short-seller James S. Chanos - who made his name by correctly calling the Enron Corp. demise - who recently described China as "Dubai times 1,000 - or worse."

Just yesterday (Wednesday), in fact, U.S. stocks suffered their worst beating of the New Year on fears that new bank lending curbs in China might blunt the worldwide economic rebound. Asian markets also were down yesterday.

So what's really going on here? China is making its banks tighten credit. Some of the biggest banks, I've heard, have actually suspended loans for the rest of January!   Many analysts and media pundits believe this is the beginning of the end of the Great China Growth Story.

Don't believe it.

To find out why you shouldn't short China, read on...

How to Profit in Any Kind of Market

When it comes to the global financial crisis, many so-called "experts" think the worst is behind us. But I don't buy it.

And I'm not alone.

Just look at what some other big-name investors - each also known for their independent thinking - are saying or doing right now:

  • Bond king Bill Gross is nervous and raising cash.
  • Author, commentator and global-markets guru Jim Rogers has repeatedly said that he's not investing in stocks anywhere in the world right now.
  • Hedge-fund heavyweight John Paulson is moving aggressively into gold.
  • And investing icon Warren Buffett - never one known for tipping his hand - is candidly stating that the U.S. financial-crisis cleanup is far from complete. The fact that he's reportedly buying more shares of Korean steel dynamo Posco (NYSE ADR: PKX) would punctuate this point.
Indeed, entire nations - I'm thinking specifically of China, India, Brazil, Chile and one or two others - are adopting similar stances. And they're doing so for the same risk-fearing reasons. They want to grow their money but they don't want to place it at risk any more than we do.

This kind of uncertainty can be paralyzing, making it tough to decide where - or even if - we should deploy our investments.

Fortunately, we've been here before. And what we learned will allow us to profit no matter what the financial future holds for the U.S. marketplace.

To learn the four secrets to investing success, please read on...

The Five Things You Need to Know About China

Legendary investor, Bill "The Bond King" Gross made headlines recently when he said that China will one day have to contend with a bubble of its own making. Gross runs the world's biggest bond fund at Pacific Investment Management Co. LLC (PIMCO). Millions of investors reacted just as you would expect when someone of his prominence makes such a pronouncement - they panicked.

While I can see how Gross would arrive at such a conclusion, his comment about China is akin to the economist who tells us that "the U.S. economy will recover."

In either case, just when and how isn't clear.

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