Gross sees a global marketplace and economy marked by slow growth. This will persist “for a long, long time. Certainly in the U.S. we saw some bad numbers over the past few days and we wonder whether or not that 3 percent growth rate in 2014 is for real,” he said.
Pimco popularized the term “new normal” in 2009, which describes an era of lower returns, heightened government regulation, diminishing U.S. clout in the world economy and a bigger role for developing nations.
American factory output expanded in January at the weakest pace in eight months and China’s official Purchasing Managers’ Index decreased to a six-month low as production and orders slowed. The U.S. Institute for Supply Management’s factory index decreased to 51.3 from 56.5 in the prior month, the Tempe, Arizona-based group’s report showed. Readings above 50 indicate expansion.
The MSCI Emerging Markets Index fell yesterday to a five- month low. Central-bank rate increases in Turkey, India and South Africa last week failed to contain January’s 3 percent selloff in emerging-market currencies.
“We have highly levered global financial positions with hedged positions that are moving back and forth based on emerging market countries -- based on their growth rates or their expected growth rates,” Gross said in the interview. “To the extent that that growth rate comes down, then risk assets become more at risk and more volatile.”
Pimco, a unit of the Munich-based insurer Allianz SE, manages over $1.9 trillion in assets.