Global econ­omy close to de­fla­tion: Gross

The Pak Banker - - COMPANIES/BOSS -

Bill Gross, money man­ager at Janus Cap­i­tal Group Inc, said the global econ­omy is "dan­ger­ously close to de­fla­tion­ary growth." Once there is a "whiff of de­fla­tion, things tend to re­verse and go badly," Gross said Fri­day in an in­ter­view with Tom Keene. Gross pointed to how the CRB Com­mod­ity In­dex isn't just at a cycli­cal low, but lower than in 2008 when Lehman Broth­ers Hold­ings Inc. went bank­rupt. The com­mod­ity mar­kets tell a truer story of what is hap­pen­ing in the econ­omy be­cause they are sub­ject to real-time sup­ply and de­mand, Gross said. Oil, met­als and crops have plunged as China's econ­omy has de­cel­er­ated and gluts in mul­ti­ple mar­kets have fur­ther de­pressed prices.

Gross, who joined Janus in Septem­ber af­ter abruptly leav­ing Pa­cific In­vest­ment Man­age­ment Co., man­ages the $1.5 bil­lion Janus Global Un­con­strained Bond Fund.

He said the Fed­eral Re­serve will raise in­ter­est rates next month by 25 ba­sis points. "Septem­ber is the num­ber for sure," said Gross, who used to man­age the world's largest bond fund.

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