Pimco’s Gross Slams Fed in Tweet Critique

‘Investing sometimes can be very simple,’ bond big quips

Sure, he’s no Kim Kardashian or Ashton Kutcher, but PIMCO’s Bill Gross is gaining traction with his Twitter feed. His latest tweet Monday night weighed in on the recent announcement from the Federal Reserve that it would initiate another round of bond buying to help stimulate economic growth.

Bill Gross, co-CIO, PIMCO (Photo: AP)"Central banks are where bad bonds go to die. Sell bad bonds, buy good ones. Investing sometimes can be very simple," Gross tweeted, in what we can only guess was far from paparazzi outside the Chateau Marmont.

Despite his penchant for flowery prose and, at times, odd metaphors in his popular monthly investment outlooks, Gross seems to have taken to the new media communication tool, posting a number of tweets in recent months that have even played into rap mogul-style feuds with well-known academics.

The Federal Reserve’s announcement on Thursday said that the central bank has launched a third round of quantitative easing, pledging to expand its balance sheet by nearly a half a trillion dollars a year beyond existing commitments.

The Fed concluded its two-day policy meeting with a commitment to purchase mortgage-backed securities at a rate of $40 billion per month. Together with earlier announced bond purchases, the Fed’s move will increase “holdings of longer-term securities by about $85 billion each month through the end of the year,” the Fed announced Thursday.

Citing persistent weak labor-market conditions and continued global financial turmoil, the Fed says its monetary easing “should put downward pressure on longer-term interest rates, support mortgage markets and help to make broader financial conditions more accommodative.”

Notably, the easing decision apparently contained no limit as to how much the Fed was willing to invest in securities. Rather, the Fed’s accommodation policy appeared to be open-ended:

“If the outlook for the labor market does not improve substantially, the committee will continue its purchases of agency mortgage-backed securities, undertake additional asset purchases, and employ its other policy tools as appropriate until such improvement is achieved in a context of price stability,” the Fed’s announcement stated. 

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