Tuesday, January 26, 2010

Bill Gross: Go For Brazil, India, China and Canada, Must Avoid U.K.

Bill Grs is recommending less-levered countries such as Brazil, China, India, his words are that these are countries 'less prone to bubbling'!

“Go where the growth is, where the consumer sector is still in its infancy, where national debt levels are low, where reserves are high, and where trade surpluses promise to generate additional reserves for years to come,” Gross wrote in a monthly investment outlook published on Newport Beach, California-based Pimco’s Web site. “The old established G-7 and their look-alikes as they de-lever have lost their position as drivers of the global economy.”

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Go for Brazil, India, China

He recommends that investors should look for “a savings-oriented economy, which would gradually evolve into a consumer-focused economy,” adding that miniature examples of China, India and Brazil would be excellent examples.

Avoid U.K.

The U.K. is “a must to avoid,” “Its gilts are resting on a bed of nitroglycerine. High debt with the potential to devalue its currency present high risks for bond investors.”

Canada, Germany

“Given enough liquidity and current yields, I would prefer to invest money in Canada,” he says, adding that “Its conservative banks never did participate in the housing crisis and it moved toward and stayed closer to fiscal balance than any other country.”

“Germany is the safest, most liquid sovereign alternative,” but warsn that “its leadership and the EU’s potential stance toward the bailouts of Greece and Ireland must be watched. Think AIG and GMAC and you have a similar comparative predicament.”

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