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Pros And Cons Of Bill Gross Rate Hike

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65 Million Reasons Bill Gross Is Wrong About a Fed Rate Hike Bill Gross has spent the past several months beating the drum for a rate hike. His reasons for taking this position are fairly obvious. Mr. Gross is in the bond market. Many of those favoring the status quo also have ulterior motives, so please understand…this is no condemnation of Mr. Gross’ position on the subject of a rate hike. Excellent arguments can be made on both sides. Bill Gross’ Rate Hike Argument In Bill Gross’ recent Bloomberg Radio interview with Tom Keene and Michael McKee, Gross spells out his reasons for being 100% certain that the FOMC will vote to raise rates at the December meeting. Gross cites the following two points as the basis for his position: #1) October …show more content…

The FOMC is charged with holding inflation in check and ensuring labor market durability. The Bureau of Labor Statistics (BLS) report states unequivocally, the number of unemployed persons remains essentially unchanged in October and unemployment rates in major worker groups also remain static. One month’s results are not indicative of a trend and are not suggestive of any certainty with regard to labor market durability. By Mr. Gross’ logic, the FOMC would have implemented a rate increase in December 2014, when the BLS report revealed that November 2014 non-farm payroll increased by more than 400,000. Despite this robust job growth, no rate increase materialized. Similarly, Mr. Gross’ point regarding the leap in wage increases, fails to comprehend the 5% decline in wages that occurred in the aftermath of the financial crisis. The month-over-month increase amounts to 0.6 percent and, the average of September and October is a paltry 0.4 percent. This two month average is actually lower that the 0.5 percent increase wages saw in August 2015. In short, the BLS report provides no definitive evidence that wages are experiencing sharp upward

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