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your call is for how many rate moves this year well the market only calls for a half over the next 12 months and the 12 months beyond that another half so 12 basis Points each uh that's that's the market I I I think they raise once or try to raise once and if they continue to get employment numbers like this and uh if they can get those wages up uh then you know perhaps they'll have their chance later in the year I think they they really do want to raise rates I think some of them like Bullard and Evans have a sense that they need higher interest rates in order to balance out the savings versus investment element in the uh economy and the markets come back right now we had stronger Yen and then we had weaker Yen off the shock of the report a good report with good revisions and then we've got the Yen coming back again Bill gross I without question in our lifetimes this is the most price to Perfection bond market market we've ever seen has your day-to-day life changed when you see yields I mean the yield goes from 139 to 141 these are shocking yields and shocking Bond valuations what are you doing daytoday within this milu yeah I agree with you I don't think it's priced to Perfection I'll change that a little bit if you will permit me Tom it's priced to absurdity and and so you know one knows that $12 trillion worth of Sovereign bonds are in negative yield space one knows that in in Germany that the ECB can't really buy 40% of German bonds because they're yielding less than 40 basis points one knows in Japan that almost everything including the 40-year jgb is at zero or less and so it's an absurd market and what do you do is the question well you obviously don't buy uh those bonds that that's something that uh German banks and insurance companies have have to buy because they got to put their money somewhere and so you look for substitutes and some some type of certainty that the trick in this business Tom is is is to buy the highest return relative to the risk I I would say every asset class is at risk the question is which one is at less risk and I think I think my dominant premise is that central banks will continue to do what they do uh despite the fact that I disagree with it and if that's the case then the the volatility of Central Bank uh positions the volatility of the policy rates around the the world in the developed world will stay relatively constant and so you want to uh take advantage of that by selling optionality around it that would include buying mortgages that would include selling outright options that would include you know basically uping your income from something like 1.4 on our 10year to something like five or 6% on an annual right and to do with Janice Capital jargon alert folks when Mr gross sells options those derivatives that brings in an income stream uh to his fund to keep them in chips Bill gross if I look at into the weekend and into July into the second half is Bill gross looking at Janet yellen's American World and for that matter a troubled Europe is in equilibrium or are the disequilibrium so great that you need to be vigilant for exogenous shocks well yeah I think one must uh be prepared and and how fat is that fat tail um it it's hard to say but it um you know it doesn't approach a Black Swan but maybe a a gray Swan there are problems everywhere I talked about the UK uh property situation we know the Italian banks are now asking for a a bailout as opposed to a bail in uh we're not quite sure what's going on with China but uh you know I observed that the Chinese stock markets you know basically uh stay level uh throughout the entire night each and every night and so one has to suspect that some Uh something's going on there I I I I simply think yeah that there's a a potential problems almost everywhere in a highly levered world and and that's the key Tom when you have a highly levered world then uh almost anything can set it all okay I know Mike mcke wants to get in here with a lot of questions let me ask one more question before we go to my colleague uh Bill Gro Ambrose Evans Pritchard wrote a brilliant article overnight in the telegraph about China exporting their deflation over to us is Janet Yellen running a non-orthodox policy because she's got to accept the disinflation from China and the rest of a troubled economic World well I think she does and certainly if she continues to talk about raising interest rates that would uh make it even worse yes China you know as they devalue by six or 7% over the last seven or eight months maybe 10% annualized is exporting deflation and some investors don't quite understand how that could be the case but it it basically means that uh you know we can buy uh Chinese Goods much cheaper that it basically erods our manufacturing base as it becomes uh less competitive etc etc and so China exports their deflation to the rest of the world Yellen how does she fight that well she certainly doesn't fight it with a stronger uh dollar and and with a interest rate hike and so yeah I I think that uh tempers her behavior uh certainly to some extent
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