End of the 30-year bond bull market?

More trillion-dollar stimulus from the Fed is not good for bond holders in the long term, says Bill Gross.

Jason Reed/Reuters/File
Bill Gross, manager of the world's biggest bond fund at Pacific Investment Management Co. ( PIMCO), participates in the Obama administration's Conference on the Future of Housing Finance in Washington Aug. 17. This past week Mr. Gross warned bond holders that more easing by the Fed would not be in their interest long term.

Bill Gross is all over the media today, which is cool because I have him on my Fantasy Economist Team.

The President of the West Coast Fed (also known as Pimco) is out with some commentary today that's raised more than a few eyebrows on The Street.

He first tackles how little choice the coming election truly offers, explaining that Democrats or Republicans does not equate to chocolate or vanilla - both parties are offering us a Rocky Road (rimshot).

He then goes on to give us his take on Bernanke's QE2 plans. Short version: He's not huge a fan, although he understands the attempt and is prepared to adjust as a money manager regardless.

A taste (emphasis Bill's, not mine):


Still, while next Wednesday’s announcement will carry our qualified endorsement, I must admit it may be similar to a Turkey looking forward to a Thanksgiving Day celebration. Bondholders, while immediate beneficiaries, will likely eventually be delivered on a platter to more fortunate celebrants, be they financial asset classes more adaptable to inflation such as stocks or commodities, or perhaps the average American on Main Street who might benefit from a hoped-for rise in job growth or simply a boost in nominal wages, however deceptive the illusion. Check writing in the trillions is not a bondholder’s friend; it is in fact inflationary, and, if truth be told, somewhat of a Ponzi scheme. Public debt, actually, has always had a Ponzi-like characteristic.


Will QE2 accomplish anything jobs-wise? Or will it simply mean more capital chasing commodities and emerging markets? Gross is undecided but far from enthusiastic.


Run, Turkey, Run (Pimco)

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