Pimco's [profile] Bill Gross is playing fortuneteller again, telling Bloomberg Television's Erik Schatzer and Sara Eisen that there is an 80 percent probability that the Fed will start tapering in September. Gross also noted that forward guidance as opposed to asset purchases will be more important to Fed decision making than in the past. It looks like someone has a bug in Ben Bernanke's office.

Gross has also said the Fed tapering could begin in 2016. On the direction of the bond market, Gross is quoted as saying to Eisen and Schatzer, "If the Fed stays where they are, at 25 basis points for a long time, perhaps 2016 and beyond, what does it mean in terms of strategy? It means that the five year and ten year don't represent value relative to inflation but represent value relative to where we were three or four months at 150 to 160."

Gross continued to use references to war and bloodshed, as he has done in his monthly missive to investors, with Bloomberg quoting him as saying, "Our returns relative to the market were not only positive in terms of their real returns. What the strategy is, is to emphasize durational, longer maturities less."

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Edited by: Casey Quinlan


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