Bill Gross Says Rate Hike Possible This June
Bill Gross, lead portfolio manager at Janus Capital, said investors should expect the Federal Reserve to raise rates at its next meeting in June, and said investors should borrow money now with rates so low.
While the Federal Reserve on Wednesday did not send out a strong signal on when it intends to raise interest rates, legendary investor Bill Gross believes there will be a rate hike in June.
“I think they will [raise rates] in June if global market conditions continue to stabilize,” Gross told Liz Claman during FOX Business Network’s Countdown to the Closing Bell. “And that’s the key. The Fed is the global central banker and they are dependent on relatively stable markets. Over the last month or two we’ve seen that and if we continue to see it, I think in June.”
The ‘bond king’ suggested investors borrow money in the current market conditions, and shared an example of how the average investor can do that.
“You could buy a company such as Annaly Capital (NYSE:NLY),” Gross said. “There’re sort of like the bank without the bank’s infrastructure and it yields 11.5%... So borrow money or invest in a company that borrows instead of investing at low interest rates.”
Gross also commented on reports that the firm he founded—Pacific Investment Management Company (PIMCO)—is looking for a new CEO.
“I haven’t heard that,” he said. “That’s a surprise to me. They’re just down the street but I don’t really have lunch with any of them. But that would be a surprise to me.”
Gross departed PIMCO abruptly in September 2014 after he learned top executives were mulling a leadership change.