PIMCO’s Gross tweets ‘Great Rotation’ skepticism

January 31, 2013, 10:55 AM

 http://blogs.marketwatch.com/thetell/2013/01/31/pimcos-gross-tweets-great-rotation-skepticism/

PIMCO’s Bill Gross is apparently doubtful that the so-called great rotation out of bonds and into stocks is actually happening.
Large money flows into equities this month that have driven the S&P 500  SPX -0.18% to its best January — through Wednesday — since 1997.
But Gross tweeted Thursday that flows at PIMCO “show few signs of bond/stock rotation.” Instead, Gross suggested “Cash/money markets may be the source.”
In a longer monthly note, Gross compared the declining impact of credit easing to boost the economy with an explosive supernova that runs out of heat and energy even as it continues to expand, noting:

“Each additional dollar of credit seems to create less and less heat. In the 1980s, it took four dollars of new credit to generate $1 of real GDP. Over the last decade, it has taken $10, and since 2006, $20 to produce the same result.”

He suggested three approaches for investors:
a) Seek inflation protection in credit market assets/ shorten durations.
b) Increase real assets/commodities/stable cash flow equities at the margin.
c) Accept lower future returns in portfolio planning.
– Tom Bemis
Follow The Tell blog on Twitter @thetellblog

El-Erian: Seeing Rotation Out of Money Market Funds

http://www.bloomberg.com/video/el-erian-seeing-rotation-out-of-money-market-funds-vcY0F2ZKSemtyS0fki~FDA.html