by John Gittelsohn
Bloomberg.com
Central bankers must figure out a way to generate better economic growth by next year or markets will “go south” as investors lose faith, according to Bill Gross, manager of the $1.3 billion Janus Global Unconstrained Bond Fund.
“Capital gains and the expectations for future gains will become giant pandas — very rare and sort of inefficient at reproduction,” Gross wrote in his monthly outlook for Janus Capital Group Inc. “Developed and emerging economies are flying at stall speed and they’ve got to bump up nominal GDP growth rates or else.”
Central bank efforts to stimulate economies with low or negative interest rates have failed to generate sustained growth while depriving investors and savers of returns on their money, according to Gross. Federal Reserve Chair Janet Yellen signaled on Tuesday that U.S. policy makers will raise rates at a cautious pace while monitoring indicators such as foreign economies and core inflation, which strips out food and energy costs. Stocks rallied following her comments, lifting the Standard & Poor’s 500 Index to a 2016 high.