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Bill Gross: Are Equity Markets Overpriced?

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Bill Gross on equity market

Bill Gross discussed his views on both the equity and bond markets in his January 2017 investment outlook. He also discussed the ten-year Treasury yield.

According to Bill Gross, the risk markets have been affected by various factors. He stated, “Happiness has dominated risk markets since early November and despair has characterized global bond markets.” Donald Trump’s win in the US election in November 2016 has been creating optimism for investors.

The equity market has shown an impressive performance while the global bond market has shown a poor performance. The Vanguard Total International Bond ETF (BNDX), which tracks the performance of various bonds (BND) (TLT) (SHY) around the world, fell nearly 2.4% between November 8, 2016, and January 27, 2017. During the same period, the S&P 500 Index returned nearly 7.1%. Gross says this movement raised a critical question for 2017: are risk markets overpriced or have Treasuries over yielded?

However, Gross believes there are various factors in the economy (QQQ) that drove the market movement and also the yield movement. In the next part of this series, we’ll analyze the factors that Gross believes are driving market movement.

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