Gross: Low Rates May Be Obstructing Recovery

Could central banks’ near-zero interest rate policies actually be hampering growth rather than stimulating it? PIMCO’s Bill Gross says that may well be the case. In an op-ed piece for the Financial Times, Gross says that “Historically, central banks have comfortably relied on a model which dictates that lower and lower yields will stimulate aggregate demand and, in the case of financial markets, drive asset purchases outward on the risk spectrum as investors seek to… Read More

Siegel: Market Still Cheap — Very Cheap

Wharton Professor and author Jeremy Siegel says stocks are more attractively priced than they’ve ever been during ultra-low interest rate periods, and says investors looking for yield should turn to high-dividend-paying stocks. Price-to-earnings ratios around the world are reasonable and the quality of earnings is extraordinarily high, Siegel said at a Canadian Imperial Bank of Commerce event, according to Canada’s Financial Post. During low-interest-rate periods, the average P/E ratio has been 19% to 47% above… Read More

Sonders Sounding Bullish, Sees Possible Return of Animal Spirits

Charles Schwab Chief Investment Strategist Liz Ann Sonders says that while a number of concerns about the global economy remain, several positive signs — including falling correlations, improving employment conditions, and even a possible return of animal spirits — make her think the U.S. market will push higher. “We believe job growth will pick up speed throughout the year as confidence improves and businesses look to keep up with stronger demand,” Sonders writes in her… Read More

El-Erian Talks Deficit Reduction, Interest Rates

PIMCO’s Mohamed El-Erian says he’s more optimistic than he was a few months ago about U.S. deficit reduction, though he says it’s a complex issue that won’t be easy to tackle. El-Erian also talks with Bloomberg’s Tom Keene and Ken Prewitt about why interest rates are remaining low despite concerns about U.S. credit quality. [youtube=]

Siegel: Fed Needs to Start Thinking about Rate Hikes

Wharton professor and Stocks for the Long Run author Jeremy Siegel says recent inflation numbers are “a bit troubling”, and thinks the Federal Reserve by this coming autumn should begin looking at raising interest rates. He tells Bloomberg that history shows that, while raising rates can cause short-term tremors in the market, rate hikes early in a bull market don’t stop a long-term bull. He thinks the stock market still looks very attractive. [youtube=]

Siegel on the Euro Debt Crisis’ Bullish Impacts

Author and Wharton Professor Jeremy Siegel says the European debt crisis has had several ramifications that are actually bullish for stocks. Siegel tells Bloomberg that the crisis has caused oil prices to fall, made bond yields drop, and may make the Federal Reserve wait longer than previously planned to raise interest rates. [youtube=]

Gross Fund Has Lowest-Ever Treasury Allocation

Bond guru Bill Gross has been sounding bearish on U.S. debt in recent interviews, and The New York Times reports that in addition to talking the talk, he’s also been walking the walk. Gross’ flagship PIMCO Total Return Fund now has only about 30% of its assets in U.S. government debt, the lowest level in its 23-year history, according to the Times. That’s down from about 50% just nine months ago. Gross is wary of… Read More

Sonders on Interest Rates, and Why Not to Fear Inflation

Add Charles Schwab’s Liz Ann Sonders to the list of top strategists who say that the Federal Reserve’s recent increase of the Discount Rate isn’t a sign that other key interest rates will be upped any time soon. In her latest commentary on Schwab’s site, Sonders says that while the Fed has started winding down some of the short-term, emergency measures it implemented to prevent a systemic collapse, the “paring back [of] broader-based support for… Read More

Siegel Sees More Discount Rate Hikes Before a Fed Funds Rate Increase

Like Bill Gross, Wharton professor and author Jeremy Siegel doesn’t see a hike in the Federal Funds rate as imminent, despite the Federal Reserve’s recent decision to up the Discount Rate. Siegel tells Bloomberg he thinks the Fed will raise the Discount Rate “two more notches up” before it begins to increase the Federal Funds rate. [youtube=]