Investor Delusions To See “Fresh Air”

Investor Delusions To See “Fresh Air”

$DIA, $SPY, $QQQ, $VXX

Iconic bond manager Bill Gross, 71 anni, says estimates that China’s economy is growing at 6.5% a year are among the “investor delusions that one day will be exposed to fresh air.”

Mr. Gross made the comment after the International Monetary Fund (IMF) raised its outlook for growth in China to 6.5% this year and 6.2% in Y 2017, an increase of 0.2 percentage points, according to a report Tuesday.

Mr. Gross, whose $1.3-B Janus Global Unconstrained Bond Fund has returned 2.2% this year, also challenged the effectiveness of central bank models relying on negative-interest rates; the ability of companies to increase earnings without share buybacks and the impact of tax revisions on productivity growth, according to a series of Tweets posted Tuesday by Janus Capital Group Inc.

Another idea disputed by Mr. Gross

1. Demographics do not matter because they move too slowly
2. Central bank historical models are reliable, negative yields will work
3. Corporate EPS growth is internal as opposed to “buy-back” generated
4. Future corporate tax revisions will increase productivity instead of corporate profits

Wednesday the US major stock market indexes finished at: DJIA +187.03 at 17908.28, NAS Comp +75.33 at 4947.42, S&P 500 +20.70 at 2082.42

Volume: Trade was above average with 983-M/shares exchanged on the NYSE

• NAS Comp -1.2% YTD
• Russell 2000 -0.6% YTD
• S&P 500 +1.9% YTD
• DJIA +2.8% YTD

Stay tuned…

Paul Ebeling

HeffX-LTN

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