Analysts wary of bond guru Bill Gross´ position -
Wednesday, September 29, 2004 7:22:16 PM
afxpress.com
Analysts wary of bond guru Bill Gross' position - UPDATE 1 CHICAGO (AFX) - "When Bill Gross speaks, people listen!" So writes Kevin Giddis, a fixed-income analyst at Morgan Keegan & Co., at least partially in jest. Giddis, for one, downplayed the impact of Gross' words, saying overbought conditions were the underlying factors behind the current market losses, as opposed to the advice to sell from Gross, who has, joked Giddis, "replaced E.F. Hutton as the spokesperson for speaking and listening." Gross, managing director at Pacific Investment Management Co., told investors if they purchased government bonds on a "benign outlook for inflation, they had better cash some of them in, especially at today's 4 percent yield for 10-year Treasurys." In an investment outlook released after the market closed Tuesday, Gross contended that real inflation is likely 1 percent higher than the government calculates, while economic growth is probably 1 percent below the official tabulations
The comments came in the midst of losses that began Tuesday and spilled into Wednesday's trading, with the actual impact of his advice difficult to determine. Gross deserves recognition for having a good track record as well as the power to sway the market, analysts said. But they add his comments should be taken with a grain of salt, given his self-interest. "Why people don't understand he might be speaking his book befuddles me," said Kim Rupert, an analyst with Action Economics
"He's not a disinterested analyst, he's a trader," said Maryann Hurley, an analyst at D.A. Davidson
"He controls a lot of money, so he can push the market around if and when he feels like it," said Rupert
"Gross has an impact on the market, but more importantly than what he says is what his funds do," offered Hurley. "I view him more as a contrary indicator... it really wouldn't behoove him to indicate what his positions are per say," Rupert said. "I suspect he already took his profits and could be looking to buy some back." "I'm just skeptical about anything he says, just because he talks position, whether it is correct or not," said Hurley |
