Ides of Gross

Oh, a storm is threatnin'
My very life today
If I don't get some shelter
Oh yeah I'm gonna fade away
--Rolling Stones

One of Bill Gross's better market letters in some time. He argues that the debt supercycle, coddled by easy central bank policies over the last 30 years, is nearing its end. "

"Central banks with their historical models do not yet comprehend the impotence of credit creation on the real economy at the zero bound."

Stated differently, ZIRP and NIRP don't work.

Gross goes on to observe that "as yields move closer and closer to zero, credit increasingly behaves like cash and loses its multiplicative power of monetary expansion for which the fractional reserve system was designed."

True enough, but credit with cash characteristics is still a liability and source of leverage, and ZIRP/NIRP sourced funds invested in projects are still funds on margin.

As such, Gross's recommendations for high quality bonds and dividend-paying stocks seems off target in lieu of a pending selling cascade that takes all risk classes with it.

position in SPX