Pimco’s Bill Gross says he expects stocks and bonds to return less than 5 per cent in 2013, with the U.S. unemployment rate remaining at 7.5 per cent or higher.
“1) Stocks & bonds return less than 5 per cent. 2) Unemployment stays at 7.5 per cent or higher 3) Gold goes up” Mr. Gross, the co-founder of Pacific Investment Management Co. and manager of the world’s largest bond fund, wrote in a twitter post on Sunday.
As of Friday the total return on the Standard & Poor’s 500 index, including dividends, was 12.33 per cent for the year, while spot gold was up 5.8 per cent at $1,654.90 per ounce. The U.S. unemployment rate stood at 7.7 per cent in November.
In an investment letter published on Dec. 4, Mr. Gross said “there may be no miracle policy drugs” for structural impediments to a recovery in the U.S. and global economies and the diminished economic growth outlook would mean reduced returns from stocks and bonds.
In recent outlooks, Mr. Gross has said that the Fed’s bond-buying programs have failed to revive the U.S. economy and that looming inflation could weaken returns on both stocks and bonds.
Pimco had $1.92-trillion in assets as of Sept. 30. The firm’s flagship Pimco Total Return Fund has over $281-billion in assets.