I wonder what would be the reaction if a weatherman announced that there is a 60% chance it will rain in NYC within the next 3 weeks.
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“One of the world’s largest money managers is out this week with a report saying valuations are expensive in almost every asset class and there is a 60% chance the global economy dips into recession within the next five years.”
Yup. Sh-t nonsense. Broken clock is right twice a day sh—t. 60/40? 50/50? it’s like, g fck yourself…
I think what’s interesting here is that anyone finds 60% to be high. Remember pre-financial crisis when recessions happened every five years? Well, the last one happened five years ago and if we go another five years without one I’d find that remarkable.
Probability should be 95%.
Yeah, I was thinking that. If it was 60% in the next 12 months, that might be defensible, but in the next 3-5 years (I.e. won’t be wrong unless no recession before year 6)?
“Global Recession” is a very strong statement. Even throughout the credit crisis, the global economy kept growing. From the beginning of this year until now, China stocks have fallen 25%. However, their economy has grown at 7% annualized rate (!). Recession means negative GDP growth, which is different from a decline in global asset prices.
If PIMCO says that global stocks will enter a bear market, then sure. But in this case, I think they are talking out of their ass. They are a bond investment company. They have incentive to scare people away from risk assets.
No, it didn’t. But I get your point. I was thinking more in terms of a U.S. recession or even a recession among developed nations. It is pretty difficult to get negative growth when you throw in the emerging markets.
Ok. Point taken. I don’t know if one quarter of shrinkage constitutes a recession though.
I read that as -0.5% for 2009, but a global recession is defined differently anyway. According the the IMF it’s when global economic growth is under 3%. So, by their standards 2008-2009 qualify and it could easily happen again in the next five years. I’ll refine my earlier prediction of 95% to come in-line with PIMCO at 60%. That seems about right.
Yeah, global recession is different, I guess. But things are more synchronized now. If the US and China have simultaneous slowdowns, it’s hard to see the rest of the world doing anything different. So the real question is how closely coupled are US and Chinese growth prospects.
Equity markets may be different, but industrial production on a YoY basis for both countries appear to be following a similar trend (i.e., down).
whoa… you guys are talking about finance/markets in the water cooler!!!
what the h3ll is going on here?
I don’t pay attention to them, but when I do it seems like PIMCO is always talking their book. Bill Gross, CFA, in particular. El Turkey too.
If you had listened to them you would have been short treasuries a couple of years ago, like Gross, CFA.
It amazes me what PIMCO’s compliance lets Gross get away with. There’s no way one of our PMs would be able to Tweet his book, or really much of anything of substance. What Gross does is so obvious, “Just bought TIPS. Looks great!” Then everyone piles into them. Incredible.
Global recession is much more likely in today’s globalized world. Correlations are increasing during meltdowns.
Where is the accountability in that prediction? If a recession occurs, they are right. If it doesn’t occur, they are not wrong.
Enjoy it while it lasts
Do they need to be accountable? Only to their clients, who will make their own decisions as to whether to keep their money with PIMCO. If you decide their free publicity isn’t worth the money you didn’t pay them, then you can always ask for a refund.
Just like Uncle Warren!!!
In all seriousness though and somewhat ironic, I sold out my position in PIMCO Total Return fund this week. Took that and parked it in cash.
It’s not about accountability. PIMCO makes these calls so advisors have talking points to use with their clients. Since Gross is generally thought to be in the top 2 best bond managers around, when he makes calls people listen. Now, he’s been very publically wrong a few times in the last couple years and his star has fallen…just a bit.
For every bad prediction he makes, another $10B goes to Gundlach. That’s where the accountability comes in.
There is a 60% chance JDV posts on AF within the next five years.
Cool!