PIMCO's Gross: 'The Dollar Is Over-Owned"

The dollar is likely to continue depreciating and the “new normal” will see consumers shedding debt in an attempt to balance their books, Bill Gross, the influential manager who runs top bond fund PIMCO, told CNBC Wednesday.

“I think the dollar is an over-owned currency. The Chinese, the Asians have basically owned too many dollars for too long,” Gross told “Squawk Box”.

The government has increased borrowing and this will make the dollar “more and more owned and less and less desirable” but this is necessary for balancing the world economy, as it may result in higher production in the U.S. and lower production in China.

Source: CNBC, October 28, 2009.

Comments

[Dave Wrixon:]

Yep, so Government waste in the US is now going to Save the Planet.

Pull the other one, it has got bells on it!

Oct 29 11:54 AM

[chap08:]

This is one of those rare occasions where Gross forgets to talk his book. He's right of course, but if his customers actually listen to him then they will be selling their PIMCO funds fast.

Oct 29 12:10 PM

[User 344476:]

Won't it also mean higher oil prices? What does that do to the balance of trade? Also, as long as Chinese currency is tied to the dollar, doesn't that throw a money wrench into that theory? So, I'm not seeing how the world economy will balance.

Since the Chinese won't play fair, perhaps we should place tariffs on Chinese imports to balance the out-of-balance currency prices. Oops, I forgot, that might anger the Chinese who own a lot of our debt. Not a good solution.

I think we're in a pickle barrel and more debt simply makes that barrel bigger. Perhaps less debt would be better. When there are no treasuries for the Chinese to buy, maybe they'll begin spending their dollars on stuff the USA sells. Then, perhaps, we'll have a shot at balancing world trade.

Oct 29 09:00 PM

[HunterGVL:]

I'm a long PIMCO total return fund investor, and while I agree that there will be smaller returns in the future through PIMCO, where else am I going to go for smart BOND investing? Stocks are in a bubble -way too much downside. Emerging Markets are still quite "COUPLED" to the US stock market. I like energy, I like precious metals, and I like PIMCO. I'm willing to suffer smaller returns with Gross because I know I will get returns instead of losses. Fundamentals will matter again one day.

Oct 30 05:48 AM

[De Graaf:]

If Bill Gross tells you that the dollar is overowned. He's simply telling you to get out of his fund.

He's not going to tell you directly to drop your investments with his fund. But this is a clear warning message.

Get out while you still can. The bubble is bursting sooner or later. Forget smaller returns. Dollar is toast.

Oct 30 10:02 AM

[auto44:]

So, any good ideas about what to do with my dollars?

Oct 30 02:24 PM

[HunterGVL:]

Three ideas.....Phillip Morris PM -all sales outside US.
Transocean RIG, headquartered in switzerland now and not tied to dollar or US taxes.
Agnico-Eagle-AEM Canadian gold miner - risky, but in the hunt with good management and will take off is gold does.
Cigarettes, Oil, and gold......might try a commodity ETF, not one denominated in dollars.
I don't own any of these yet.......waiting until shorts pay me. I expect oil to decline, gold to decline, and PM to sell off when the market does in the near future. Then I should get good value. Gold might go up instead, so have to watch that one a bit closer.

Nov 02 08:14 AM