Courtesy of Mish.
In a Bloomberg TV interview Bill Gross of Janus Capital spoke with Bloomberg’s Tom Keene about the state of the global economy.
Here’s a Partial Transcript
TOM KEENE: Bill, good morning to you, thrilled to speak to you tomorrow on the jobs report. Let’s talk about the more urgent matters of this market. First of all, Bill, China is the topic. Is this about China and their stock market? Or is there more going on on this January afternoon?
BILL GROSS: Yes, it is about China specifically, Tom. But there’s a lot more going on and we’ve talked about it in past months.
The global economy is still highly levered and central banks are artificially elevating prices and keeping interest rates low.
It’s a highly levered world and when something gets out of whack like the Chinese currency or in terms of the oil price, then you see these movements everywhere.
KEENE: Within a highly levered world, do you see any sense of an immediate catharsis to clear markets? Or is the theme for early 2016 that we slog along with this rolling pain in search of an abrupt move to clear markets?
GROSS: Well, China announced this morning that they are going to let markets clear. They haven’t.
KEENE: What will we see tomorrow morning? Bill, what will we see out of Australia and into China tomorrow? They’re going to go longer than seven or 12 minutes. What would you predict we will observe?
GROSS: Well, based upon the ETF in the United States, China is predicted to be down 5 percent or 6 percent. It depends upon whether the Chinese are good to their word in terms of letting markets clear. They haven’t. And to the extent that it goes down more than 5 percent or 6 percent, who knows?
But China is an artificial market. All global markets are artificially based. And to the extent that we have a catharsis, I think, depends upon central banks basically giving up in terms of what they do. I don’t think they’re — that’s going to happen.
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