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Bill Gross, best known as the bond king of PIMCO and now of Janus Henderson Investors said on Monday “I think we have fake markets.” He points the blame squarely at the U.S. Federal Reserve’s loose monetary policy.

Bill GrossA sharp looking Bill Gross Back in His Heyday

Gross went even as far to say even China is an equal, China has long been a target for its erroneous fake economic reports and markets. Last week the World Bank warned on shadow banking- and chinese debt being way understated.

Gross said; “Even China and South Korea - perfect examples of the risk trade - are at very narrow (corporate spread) levels. There is no real advantage in the global marketplace. Everything is so tight, it is hard to pick a winner from a group that is fake.”

Reuters reported that Gross said at theevent investors should brace for higher Treasury bond yields as the Fed begins to unwind its quantitative easing program but yields will edge up “only gradually,” he said.

Gross currently oversees the $2.1 billion Janus Henderson Global Unconstrained Bond Fund.  

The comments from Gross are not out of place with what "My Take on Inflation" by Fed's Kashkari. Gross again reiterated his warning that Fed Chair Janet Yellen and other global policy makers (such as the ECB and BOJ) should not rely on historical models such as the Taylor Rule and the Phillips curve “in an era of extraordinary monetary policy.” These theories from Economists John Taylor and A.W. Phillips have been inadequate in the post 2008 GFC, if not before. 

Those models disregard the importance of private credit in the economy, according to Gross.

Source: Reuters

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