Phil Trupp

PIMCO's Bill Gross Sees a Bleak Future

Bill Gross is a conventional corporate thinker. As such, he is hardly a reliable prognosticator. Still, there are bits and pieces of wisdom in what he says, truisms we all know. He takes into account the obvious indicators upon which other writers have elaborated, but he has failed to see that action at the surface of the financial world almost never reflects what is happening in the deeper, more opaque reality of the ever-shifting world economy. The superficial (read immediate) problems of the dollar will eventually be resolved out of sheer necessity. Rates of global growth, nation by nation, are cyclical and are at the mercy of unpredictable shifts in power and the often shocking events of realpolitik. There's an old saying: "Bulls slowly climb the stairs, bears jump out the window." Mr. Gross has done the latter. Paul Krugman is right behind him, falling through space into a world he has predicted will be a sunless abyss. Not long ago, he said if we knew what was really going on in the economy, we'd buy up all the canned goods and head for the bunkers. Forgive me for having lived too long and having seen too much to wear the sandwich board that cries, "REPENT OR PERISH!" We will work our way out of the current crisis as we have worked through others, and we will do so by the efforts of pragmatists, not hysterical "prophets."

Rising Treasury Yields Could Mean It's Time to Short Them

The retail investor is in no position to short Treasuries. I think we can all agree on this. As to the possibility of stagflation: The Washington Post reports today that recession spending habits (or lack thereof ) has pushed down the CPI. Retailers especially are on a cost-cutting spree that may morph into a period of lower retail pricing in virtually all markets. This has the appearance of a profound economy-driven cultural shift, perhaps a new through temporary paradigm. In any case, we are still a long way from stagflation. Inflation is certainly on the horizon but it is more manageable, and less corrosive, than endless recession and the free fall of depression.