Sharing is caring might be one of Bill Gross’ mottos because right on the back of tweeting “the short of the lifetime” and fingering Chinese stocks as his next target, the former Pimco boss was on CNBC once again to share his new “best idea” – Mexican government debt.
In an interview with CNBC’s “Power Lunch,” Gross mentioned that Mexico currently has 7% nominal interest rates and 3% real interest rates, while 10-year U.S. Treasury Inflation Protected Securities (TIPS) currently yield 0.5%:
“That means, even though Mexican inflation is higher, 3 percent or so relative to the United States, that’s all adjusted for in terms of a ‘linker’ or a TIP… (and there’s a) 2.5 percent spread between those two. Believe me, the quality difference doesn’t justify it.”
He did acknowledge that the trade hasn’t been working yet, but was quick to point out that “it’s only been underway for about a week or two.”
Seeing that Gross’ Janus Global Unconstrained Bond Fund has been down 2% since he took over, I hope he does better here than he did with the “short of the lifetime,” a trade he timed pretty well but ultimately lacked exposure on.
Photo credit: ryancr via Flickr