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in the middle of an ugly Bond bear Market in the middle of an ugly Bond bear Market I believe that's where prices go down and yields go higher you and the rest of the world wait and wait and wait for a bond bear Market when will we see that well um that's the question of the day in the year and the last several years actually um we'll see it I think when central banks uh start to ease up in terms of their current policies not only qu easing by the ECB and by the um Bank of Japan but um you know more tightening by the fed and and less reinvestment of uh treasuries that's the key question Yan hoty is at Goldman Sachs is now linked tightly those two as does Robert Kaplan at the Dallas fed how do you link yield changes by the Federal Open Market Committee with the balance sheet adjustments to come how do you put those two disparate flows together it it's very hard to do that and of course for the FED as well I I know that uh fed research since they instigated quantitative easing uh suggested that 75 basis points on the tenure was the ultimate result now the the exit or the potential exit which I've always been um you know disparaging of and the possibility that they really reduce their balance sheet but if they begin to exit later in the year um they'll do it slowly and so we're talking about 5 10 15 basis points on the curve in the tenure perhaps perhaps over the next year or two you know the important central banks I consider are the again the bank of Japan and uh the ECB and to the extent that they're pumping in a trillion dollars plus a year into the global economy and Global liquidity that's been critical in terms of Treasury rates and been critical in terms of stock prices and critical in terms of all assets because uh liquidity seeks a Haven and and prices move higher as it does we uh have Bloomberg news reporting this morning the ECB is going to cut its inflation Outlook at the meeting this week we're talking about what unwinding the balance sheet is going to going to look like what's your timetable for that happening uh do you think when do you think we're going to get to a more normal uh role for central banks well I hope later in the year for the ECB and it's true that the ecb's primary focus as opposed to a dual or Tri focus on the part of the FED is inflation and inflation is not really picked up in the last few months certainly uh in euroland and so you can imagine the is uh simply not concerned and wants to air on the side of caution um you know perhaps later this year I know or I don't know but I think as you know uh I've been quite negative in terms of the effects of Central Bank policies not simply because they've raised asset prices in some cases to Bubble territory but also because it degrades uh business models such as insurance companies and Pension funds and the like because they can't earn uh what they're supposed to earn in terms of the liabilities and we begin to see that with Puerto Rico and Illinois and Detroit and uh ongoing problems with Pension funds but it's the same situation with insurance companies it's sort of masked uh as we move on the future get the Sens that 3% growth is this administration's white whale and they talk about it so much maybe they're willing it willing it to happen here when you look at the tools at their disposal and what they're doing are they using the right ones are they are they going down the right path to get to that level of growth do you think well not yet I me the proposals I suppose on fiscal policy which is uh something that I've been asking for and others uh for several years even with Obama um or certainly in the works um I'm suspicious of tax policy but the trillion doll uh infrastructure uh policy may help but I think ultimately the growth is a function of productivity and productivity is a function of investment and we simply haven't had that you know my thesis this month in terms of the investment Outlook is that um you know money uh is making money with money but money doesn't lead to investment in the real economy and I think that's the problem that Trump and the US economy will face over the next several years Bill G with Janice Henderson he's with us now at our Bloomberg invest conference on Bloomberg Radio of course brought to you by SEI Bill I just looked up if you really book now $235 Greyhound LA to New York you can get it back if you delay a little bit with Bloomberg television it may cost you $271 when you came here you went out North Plat through de Mo and then youve got up to I80 and you take it over East when you when you do this build you get a sense of the nation and you've been deadright about the nation's Financial repression don't talk to the fancy people in Newport don't talk to the fancy People Like Us in New York talk to the rest of America about financial repression well you're right and and De Moine has been my favorite metaphorical why do you use location well because it's in uh Iowa and because it's Midwest and because there's corn there and and because um too because because people depend on savings ultimately not not just under the one but rest of the country and why do people depend on savings well for education for retirement for health and when you can't earn more than uh 50 basis points on your savings in a bank account or with a six-month CD then there are problems of Plenty in terms of the ability of De Mo and other um you know middle class Americans to reach their goals I mean I I look at this bill and what you and I have been talking about since that meeting at the Walder Historia and certainly since August of 07 is it's not in fosi it's not in the books that you and I studied on bond Dynamics how do you do Janice Henderson day after day after day realizing none of where we are now has a theory or a foundation well you know it's sort of a it's sort of a braille like uh type of process where um you feel you we along and central banks are trying to do do that too but uh you're right when you talk about demographics and debt and uh leveraging up and when you talk about the displacement of workers by robots and robotization these are um nonmeasurable factors historically and so you you sort of have to touch and feel and know that over time these factors will work their way into a slower economy in the US and even globally you were talking about infrastructure just a moment ago president wants to get more private investment in infrastructure ructure what are the challenges to to doing that how does he make that successful getting more public private Partnerships getting more private investors to invest in American infrastructure well there's a political problem that's not my area of expertise but uh you're right um Trump's emphasis has been on public private and uh I think there are a lot of willing private Partners a lot of private Equity firms have uh geared up to take advantage to make money from infrastructure problems and so uh you know if you combine that with congressional action then I think you have something to go with but the the trillion dollars is over a long period of time it takes time to put these into effect and so it may take a while very quickly Bill does the drama of Washington diminish GDP and dampen the animal spirit of the nation yeah I think so to the extent that risk is a factor in terms of forward-looking investment hope is the really the essence of capitalism and to the extent that the you have turmoil in Washington and turmoil on a global basis I think that's a problem Bill gross thank you so much we got it in the middle of an ugly Bond bear Market in the middle of an ugly Bond bear Market I believe that's where prices go down and yields go higher you and the rest of the world wait and wait and wait for a bond bear Market when will we see that well um that's the question of the day and the year in the last several years actually um we'll see it I think when central banks uh start to ease up in terms of their current policies not only quantitative easing by the ECB and by the um Bank of Japan but um you know more tightening by the fed and and less reinvestment of uh treasuries that's a key question Yan hoty yes at Goldman Sachs is now linked tightly those two as does Robert Kaplan at the Dallas fed how do you link yield changes by the Federal Open Market Committee with the balance sheet adjustments to come how do you put those two disparate flows together it it's very hard to do that and of course for the FED as well I I know that uh fed research since they instigated quantitative easing uh suggested that 75 basis points on the tenure was the ultimate result now the the exit or the potential exit which I've always been um you know disparaging of and the possibility that they really reduce their balance sheet but if they begin to exit later in the year is it's not in fosi it's not in the books that you and I studied on bond Dynamics how do you do Janice Henderson day after day after day realizing none of where we are now has a theory or a foundation well you know it's sort of a it's sort of a braille like uh type of process where um you feel you we along and central banks are trying to do that too but uh you're right when you talk about demographics and debt and uh leveraging up and when you talk about the displacement of workers by robots and robotization these are um nonmeasurable factors historically and so you you sort of have to touch and feel and know that over time these factors will work their way into a slower economy in the US and uh even globally you were talking about infrastructure just a moment ago president wants to get more private investment in infrastructure what are the challenges to to doing that how does he make that successful getting more public private Partnerships getting more private investors to invest in American infrastructure well there's a political problem that's not my area of expertise but uh you're right um Trump's emphasis has been on public private and uh I think there are a lot of willing private Partners a lot of private Equity firms have uh geared up to take advantage to make money from infrastructure problems and so uh you know if you combine that with um they'll do it slowly and so we're talking about 5 10 15 basis points on the curve in the 10 year perhaps over the next year or two you know the important central banks uh I consider are the again the bank of Japan and uh the ECB and to the extent that they're pumping in a trillion dollars plus a year into the global economy and Global liquidity that's been critical in terms of treas y rates have been critical in terms of stock prices and critical in terms of all assets because uh liquidity seeks a Haven and and prices move higher as it does we uh have Bloomberg news reporting this morning the ECB is going to cut its inflation Outlook at the meeting this week we talking about what uning the balance sheet is going to going to look like what's your timetable for that happening uh do you think when do you think we're going to get to a more normal uh role for central banks well I hope later in the year for the ECB and it's true that the ecb's primary focus as opposed to a dual or tribe focus on the part of the FED is inflation and inflation is not really picked up in the last few months certainly uh in eurol land and so you can imagine that drug is simply not concerned and wants to air on the side of caution um you know perhaps later this year I know or I don't know but I think as you know uh I've been quite negative in terms of the effects of Central Bank policies not simply because they've raised asset prices in some cases to territory but also because it degrades uh business models such as insurance companies and Pension funds and the like because they can't earn uh what they're supposed to earn in terms of their liabilities and we begin to see that with Puerto Rico and Illinois and Detroit and uh ongoing problems with Pension funds but it's the same situation with insurance companies it's sort of masked uh as we move on the future get the sense of the 3% growth is this administration's white whale and they talk about it so much maybe they're willing it willing it to happen here when you look at the tools at their disposal and what they're doing are they using the right ones are they are they going down the right path to get to that level of growth do you think well not yet I me the proposals I suppose on fiscal policy which is uh something that I've been asking for and others uh for several years even with Obama um or certainly in the works um I'm suspicious of tax policy but the trillion dollar uh infrastructure uh policy may help but I think ultimately the growth is a function of producct ity and productivity is a function of investment and we simply haven't had that you know my thesis this month in terms of the investment Outlook is that um you know money uh is making money with money but money doesn't lead to investment in the real economy and I think that's the problem that Trump and the US economy will face over the next several years Bill gross with Janice Henderson he's with us now at our Bloomberg invest conference on Bloomberg Radio of course brought to you by SEI Bill I just looked up if you really book now $235 Grey LA to New York you can get it back if you delay a little bit with Bloomberg television it may cost you $271 when you came here you went out North Plat through De Moine and then you got up to I80 and you take it over East when you when you do this bill you get a sense of the nation and you've been dead right about the nation's Financial repression don't talk to the fancy people in Newport don't talk to the fancy People Like Us in New York talk to the rest of America about financial ression well you're right and and De Moine has been my favorite metaphorical location well because it's in uh Iowa and because it's Midwest and because there's corn there and and because um rest too because because people depend on savings ultimately not not just in the mo but the rest of the country and why do people depend on savings well for education for retirement for health and when you can't earn more than uh 50 basis points on your savings in a bank account or with a 6 month CD then there are problems of Plenty in terms of the ability of De Mo and other um you know middle class Americans to reach their goals I mean I I look at this bill in what you and I have been talking about since that meeting at the Walder Historia and certainly since August of 07
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