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2016-02-03

Bill Gross: Central bank statistical models for policy making are ignoring common sense

Central bank statistical models for policy making are ignoring common sense and creating conditions reminiscent of the last decade’s housing bubble, Gross wrote. But instead of housing this time, Gross cited the risks for corporate debt.
“Shades of 2007,” he wrote. “The household sector has delevered, but the corporate sector never did, and with investment grade and high-yield yields 200-1000 basis points higher now, what does that say about future rollover, corporate profits and solvency in many commodity-sensitive areas?”
Gross was among those warning that central bank policies were causing a housing bubble before it eventually burst

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