Posts Tagged ‘Abenomics’

Captain Rick: PIMCO’s Bill Gross says that ultra low interest rate policies and ongoing bond buying programs like ‘Quantitative Easing’ around the world aren’t working. Bill refers to it as a global financial system that is "beginning to resemble a leukemia patient with New Age chemotherapy, desperately attempting to cure an economy that requires structural as opposed monetary solutions." He is challenging the Federal Reserve and other central banks to become part of the solution rather than part of the problem.

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Bill Gross, founder and co-chief investment officer of bond giant PIMCO. He is often called the world’s ‘bond king’.

I recognize Bill as one of the worlds most intelligent minds concerning everything related to bonds. Bonds help make our world grow. Bonds are the life blood of our cities, states and countries of our world. 

Bill writes a monthly ‘Investment Outlook’ news letter. His June report is entitled “Wounded Heart”, a nod to Bonnie Raitt’s 2002 tune. It is one of his finest. I will do my best to sum up his eloquent words of wisdom for the U.S. and other countries including Japan, England and Europe who are practicing ‘Quantitative Easing’ fiscal programs that are not working.

Excerpts from Bills “Wounded Heart” report:

“While the global central banks’ policies have stabilized economies, they haven’t succeeded in returning them to old normal growth rates”

"There comes a point when no matter how much blood is being pumped through the system as it is now, with zero-based policy rates and global quantitative easing programs, that the blood itself may become anemic, oxygen-starved, or even leukemic, with white blood cells destroying more productive red cell counterparts"

And to Fed chief Ben Bernanke’s claims that once economic growth has been restored to normal levels, financial markets can also return to normal interest rates and returns, Gross has a few stern words:
"Well it’s been five years Mr. Chairman and the real economy has not once over a 12-month period of time grown faster than 2.5%"
"Perhaps, in addition to a fiscally confused Washington, it’s your policies that may be now part of the problem rather than the solution."

To investors, Gross advises to reduce risk as the Fed continues to try to mend a wounded heart with blood that lacks the necessary oxygen. "Investors should look for a pacemaker to follow a less risky, lower returning, but more life sustaining path."

Read the entire Investment Outlook: “Wounded Heart”  by William H. Gross:  http://www.pimco.com/EN/Insights/Pages/Wounded-Heart.aspx

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Associated ATRIDIM NEWS JOURNAL Report Categories:

Fed Financial Policy: https://atridim.wordpress.com/category/fed-financial-policy/

Investment 101: https://atridim.wordpress.com/category/investment-101/

Stock and Bond Market: https://atridim.wordpress.com/category/stock-bond-market/

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Captain Rick: A global rally in stocks came to an abrupt halt Thursday with a 7% plunge on Japan’s Nikkei index … the biggest one-day drop since the 2011 earthquake and nuclear disaster.
European markets fell by 2% with Germany’s DAX down 2.4% and France’s CAC 40 down 2.1%. This was preceded yesterday by U.S. markets dropping about 0.8%.

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What caused this? Investors were rattled for three big reasons:

Japan: The Japanese rally had gone too far too fast. The Nikkei has surged by more than 70% over the last 12 months, far outpacing other markets.
‘Abenomics’, Japan’s version of ‘Quantitative Easing,’ has pumped massive amounts of money printed with red ink into the economy to create an image that the economy is doing good, when it is not.
The Bank of Japan’s policies can’t sustain the rally indefinitely, and Japanese companies will have to start reporting better earnings to bolster investment confidence.

U.S.: The Federal Reserve released minutes from its latest policy meeting revealing that some members of the monetary policy committee were looking to taper off the ‘Quantitative Easing’ bond-buying program as early as June. That is bad news for investors who have been energized by the Fed’s $85 billion of phony red money being pumped into the American economy each month to make it look like the economy is healthy, when it really is not.

China: Weak economic data. The latest numbers from China showed the country’s manufacturing sector contracted in May, contrary to expectations for expansion, reinforcing concerns about slowing growth in the world’s second biggest economy. This is a reality that is beginning to come to light because America, Europe and most of the world have economies that are actually in decline once we strip away the façade of programs like ‘Abenomics’ and ‘Quantitative Easing’.

World Stock Market gains in past 12 months
Japan: 69% (after todays huge loss)
Eurozone: 33%
England: 27%
Australia: 23%
Hong Kong: 21%
U.S.: 18%
Canada: 10%.
Mexico: 8%
Brazil: 3%
China: – 4%

Captain Ricks Analysis: Which markets are likely to go up … or down?
The stock markets in the countries at the bottom of the list (less than 15% gain) are on the strongest footing and are more likely to go up than down.
The stock markets in the countries at the top of the list (more than 40% gain) are significantly over invested with highly inflated values and face significant potential for decline.
The stock markets in the countries in the middle (15% – 40% gain) are in uncertain territory with over investment and inflated values, especially those in the upper half of this range. These markets are more likely to decline than rise, especially those in the upper half of this range.

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Associated ATRIDIM NEWS JOURNAL Report Categories:

Japan: https://atridim.wordpress.com/category/japan/

China: https://atridim.wordpress.com/category/china/

Stock & Bond Market: https://atridim.wordpress.com/category/stock-bond-market/

Fiscal Cliff 101: https://atridim.wordpress.com/category/fiscal-cliff-course-101/

U.S Debt Crisis: https://atridim.wordpress.com/category/u-s-debt-crisis/

European Debt Crisis: https://atridim.wordpress.com/category/european-debt-crisis/

All Reports: https://atridim.wordpress.com/