Bloomberg Television's “Surveillance Midday” program was host to Bill Gross on December 31st and what this bond fund manager had to say about bond investment is sure to perk up some ears. Gross,who manages the world's largest bond fund,stated that Mexico tops his list of smart bond investment strategy.
“It's a critical strategy going forward to get out of the dollar and into some currency that holds it's value,” said Gross in an interview taped on December 21st and broadcast this week,“I'd suggest Mexico,Brazil or Canada as three examples of countries with good fiscal balance sheets.”
Gross stated that the strength of the economies in these three countries makes them an ideal location for bond investment,while the struggles of the U.S. economy continue to grow.
As manager of Pacific Investment Management Company (PIMCO),Gross is responsible for over $1.3 billion dollars of assets as of September 2010. The major contributing factor of the recommendation is likely the growing U.S. Deficit and the instability of the dollar. The U.S. Deficit totaled $15.04 billion last month,which rose far above what economists had previously expected. As a point of comparison,the deficit was $120.3 billion in November of 2009. The extended tax cuts signed into law recently will expand the deficit to $1.34 trillion for 2011.
The news comes hot on the heels of yet another good trading week for the Mexican stock market in a month that has brought other substantial news that Mexico's economy is growing strong. Gross also noted that the assets recently purchased by the U.S. Federal reserve will point to the end of the 30 year bull market in bonds.
The message is clear – investing in U.S. bonds is not going to be reliable for long. Take the advice of the experts and focus investments in Mexico where the fiscal picture is growing more positive day after day.