PIMCO’s Bill Gross says several deteriorating international relationships are having a big impact on the investment landscape.

In his latest investment commentary, Gross looks at three areas with on-the-rocks “love affairs”: the Eurozone, where some nations are having to pick up the slack for others that are languishing; the U.S., where tensions are increasing between haves and have-nots; and the U.S. and China, whose relationship has also been filled with increasing tension. “What to do when a love affair goes bad?” he says. “How should you invest when Euroland is at each other’s throat, when a thinly disguised battle between labor and capital freezes policy action in the United States, when a mercantilistic partnership between developed and developing nations produces more questions than answers, more losers than winners? Increase the odds for a divorce, we’d suggest, which in investment markets means focusing on the return of your capital as opposed to the return on your capital.”

Gross says PIMCO prefers investing in the “’cleaner’ dirty shirt countries of Canada, Australia, Mexico and Brazil, where higher yields and more pristine balance sheets prevail,” as opposed to the U.S. He also says to consider investing in “non-dollar currencies that have strong trade ties with the Asian continent.” As for equities, he says, “They’re cheap — dividend yields are higher than bonds in many cases — yet if growth falters there may be more downside to come.”