Richard Clarida, William H. Gross

The reality is that now, five years after the global financial crisis, average growth in the global economy is modest and the level of global GDP remains below potential. The global economy has not as of today found a growth model that can generate and distribute global aggregate demand sufficient to absorb bountiful global aggregate supply. Unless and until it does, we will be operating in a multi-speed world with countries converging to historically modest trend rates of potential growth with low inflation. 0% neutral real policy rates for many developed and some developing countries will likely be the investment outcome.
If the future resembles those neutral policy rates, then the investment implications are striking: low returns yet less downside risk than investors currently expect; an end to bull markets as we’ve known them, but no perceptible growling from the bears. The reason is that New Neutral global policy rates lower than currently priced into asset markets allow for a margin of safety that reduces downside risk and minimize bubbles.

5 thoughts on “Richard Clarida, William H. Gross

  1. shinichi Post author

    The New Neutral​​​​​​

    by Richard Clarida, William H. Gross


    “May you live in interesting times,” said Robert Kennedy in 1966, and PIMCO’s just-completed 2014 Secular Forum certainly took place in interesting times. Maybe too interesting! Drawing on superb presentations from six outstanding invited speakers and from our class of new MBAs and PhDs, as well as the robust/focused internal discussion that followed these presentations, PIMCO investment professionals reviewed the landscape of the global economy, financial markets, central banking, and geopolitical hotspots with three goals in mind: to develop a concept, a construct and a compass that the firm can use to navigate global markets over our secular horizon of three to five years. That concept, that construct, and that compass all led us to what we call PIMCO’s New Neutral, a phrase that suggests exceedingly low real policy rates for our secular timeframe. Much about that later.

    We arrived early Monday morning on 5 May realizing that we needed to answer several big questions to get our secular call right:

    • Will the post-crisis headwinds of deleveraging, deglobalization and reregulation abate? How will extant debt overhangs impinge on growth and constrain policy?

    • When and where will monetary policy normalization commence and will it proceed smoothly? What are the benefits, costs and risks? What are the constraints on policy placed by an evident overhang of leverage?

    • Is a multi-speed world sustainable over our secular horizon? If so, to what trend growth rates are the major economies converging?

    To answer these questions, we began by identifying a set of initial conditions upon which to base our secular outlook and our answers to these crucial questions. The key initial conditions we focused on include:

    • An absence to date of aggregate deleveraging in the global economy, in the face of…

    • A sharp increase in leverage in China funneled through a vast, complex and fragile shadow banking system

    • A global economy whose growth model has thus far been unable to generate global aggregate demand in line with global potential output even with the fix of hyperactive post-crisis policies (the 2009–2014 model)

    • A pronounced slowdown in not only the growth but the growth prospects of the key emerging economies

    • A pronounced slowdown in the contribution of international trade to global growth and the imposition of capital controls by many emerging economies in the name of macroprudential policy

    • A reregulation of the international financial system

  2. shinichi Post author

    Key Takeaways

    From our Outlook…
    • We are operating in a multi-speed world, but over a secular horizon this state is likely to converge to a New Neutral of historically modest trend growth.

    • Total global debt outstanding remains at peak levels around the globe, and this combined with subpar growth will constrain central bankers and future policy rates.

    • The prospects for U.S. growth over the next three to five years encompass a wider range of optimistic outcomes than do prospects for other major economies, though growth at pre-crisis trends is unlikely for years to come.

    From our Investment Implications…
    • Most asset prices now reflect the convergence to slower yet increasingly stable growth rates.

    • But in the U.S., the bond market is pricing in real policy rates of 1-2% and nominal rates of 3-4% before the end of the decade. We view the neutral rate as likely to be much closer to 0% real and 2% nominal in the years ahead. Similar conditions exist in major global economies.

    • At first glance there appears to be more risk than reward on the horizon. However, if The New Neutral plays out, the bubble risk may be lower than expected, while asset returns are likely to be subdued, in the 3-5% range.

    • We plan to continue to utilize our frequently awarded bottom-up credit and equity analysis to pick winners and avoid losers in asset markets.

    • We believe The New Neutral allows for the assumption of higher than normal carry portfolios to potentially realize returns. Our Unconstrained Bond, hedge and alternative asset strategies can allow for the potential to exceed low returns as can Total Return portfolios in more moderate measures.

  3. shinichi Post author


    by 石原順









  4. shinichi Post author


    一方で Thomas Piketty が21世紀の資本論を書いて貧富の差に警鐘を鳴らし、反対側で PIMCO がニュー・ニュートラルを唱えて大きな発展のない新しいゲームを説明する。





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