Bill Gross’ latest investment outlook is out.
He thinks everything is terrible, basically, which is not new.
But as is Gross’ tact, the beginning of his outlook begins with a parable (or something similar) illustrating exactly why things have gotten to dystopic in the world of investing. Or, as Thursday’s outlook argues, the world itself.
Here’s Gross (at length, emphasis ours):
The Romans gave their Plebian citizens a day at the Coliseum, and the French royalty gave the Bourgeoisie a piece of figurative “cake,” so it may be true to form that in the still prosperous developed economies of 2016, we provide Fantasy Sports, mobile phone game apps, sexting, and fast food to appease the masses. Keep them occupied and distracted at all costs before they recognise that half of the U.S. population doesn’t go to work in the morning and that their real wages after conservatively calculated inflation have barely budged since the mid 1980’s. Confuse them with demagogic and religious oriented political candidates to believe that tomorrow will be a better day and hope that Ferguson, Missouri and its lookalikes will fade to the second page or whatever it’s called these days in new-age media.
Meanwhile, manipulate (sic) prices of interest rates and stocks to benefit corporations and the wealthy while they feast on exorbitantly priced gluten-free pasta and range-free chicken at Whole Foods, or if even more fortunate, pursue high rise New York condos and private jets at Teterboro. It’s a wonderful life for the 1% and a Xanax existence for the 99. But who’s looking — or counting — even at the ballot box. November 2016 will not change a thing — 8 years of Hillary or 8 years of a non-Hillary. Same difference. Central bankers, Superpacs, and K street lobbyists are in control. Instead of cake, the 49.5% (males) will just have to chomp on their Carl’s Jr. hamburger and dream of a night with 23-year-old Kate Upton lookalikes that show them how to eat it during Super Bowl commercials. And if that’s too sexist, then Carl’s is substituting six-pack hunks instead of full-breasted models to appease the other 49.5% (females). It’s a Xanax society. We love it.
The main target of Gross’ outlook, on a substance level, is the building wall of future liabilities facing the US government as a result of the ageing Baby Boomer population and the Social Security and healthcare obligations that are set to follow.
Essentially Gross sees the US facing a major demographic problem which will change the direction of financial markets in the not-too-distant future.
An increase in liabilities — both at the government and private-sector level — as the result of an increasingly dependent population long on elderly folks and short on young workers could see wages increase, inflation increase, and the long walk-down of interest rates finally reverse.
Of course, Gross has been waiting for yields to back up for a few years now.
It hasn’t happened, but all the same.
Here’s Gross’ kicker:
Demographics may not rule absolutely, but they likely will dominate investment markets and returns for the next few decades until the Boomer phenomena fades away. The 1% — in addition to the 99 — will need extra doses of Xanax, or additional slices of cake, to cope in the next few decades. Let the games begin.