4 Markets To Flourish Due To These 4 Headwinds

Posted by Bill Gross - Pimco

Share on Facebook

Tweet on Twitter


“there are numerous other structural headwinds that may reduce real growth even below the New Normal 2% rate that Bernanke has just confirmed, not only in the U.S. but in developed economies everywhere”.

IO-Dec2012-Fig1….Bill Gross sees 4 Key Structural Headwinds going forward. They are:

1) Debt/Delevering
2) Globalization
3) Technology
4) Demographics
……read Gross’s description of those 4 structural headwinds above HERE


Gross’s Picks to Deal with those headwinds

  • Commodities like Oil and Gold
  • U.S. Inflation-Protected Bonds
  • High-Quality Municipal Bonds
  • Non-Dollar Emerging-Market Stocks

Gross’s Pans

  • Long-Dated Developed-Country Bonds in the U.S., U.K. and Germany
  • High-Yield Bonds
  • Financial Stocks of Banks and Insurance Companies


The list to a considerable extent reflects the view that emerging economy growth will continue to be higher than that of developed countries. Their debt on average will remain much lower, and their demographic age much younger. In addition, the inevitable policy response of developed economies to slower growth will be to reflate in order to minimize the impact of the aforementioned structural headwinds. If successful, reflationary policies will gradually move 10 to 30-year yields higher over the next several years. The 30-year Treasury hit its secular low of 2.50% in July and such a yield may seem ludicrous a decade hence. Investors should expect future annualized bond returns of 3–4% at best and equity returns only a few percentage points higher.
(don’t forget to read Gross’s description of the structural headwinds  HERE 1/2 way down the page)

William H. Gross
Managing Director