First Bill Ackman, now Bill Gross.
Here’s what the retired bond king has to say about the economy now.
“Regional bank carnage and recent rise in auto delinquencies to long-term historical highs indicate U.S. economy slowing significantly.
Recession in 4th quarter.
Best investments are equity arbs (CPRI and SGEN. VMW a long shot). I’m seriously considering regional banks again.”
and:
“Maybe next week. Will tweet.
On bonds. Invest in the curve. Various combinations 2/10, 2/5. Should go positive before year end. I’m buying SFR h5 (SOFR futures). ‘Higher for longer’ is yesterday’s mantra.”
To dumb some of this down, the arbs he’s talking about are merger arbitrage trades on Capri Holdings, Seagen and VM Ware.
Secondly, he would be buying regional banks on falling yields as their hold-to-maturity losses are pared by falling Treasury yields.
As for the curve, he’s talking about steepeners via buying 2-year notes and selling 5s or 10s. While a bet on SOFR futures is a straight bet on a more-dovish Fed.