Legendary investor sees recession by year end

Bill Gross, the co-founder of Pacific Investment Management Co. (PIMCO), predicted that the United States will be in a recession by the fourth quarter.

Gross said that he will buy futures that are connected to the Secured Overnight Financing Rate (SOFR). The Federal Reserve of New York defines the SOFR as “a broad measure of the cost of borrowing cash overnight collateralized by Treasury securities.”

“Regional bank carnage and recent rise in auto delinquencies to long-term historical highs indicate U.S. economy slowing significantly. Recession in 4th quarter,” he wrote on X, the platform formerly known as Twitter.

He also said that the “best investments” right now are equity arbitrages.

Inflation held steady in September as the Federal Reserve considers whether to hike up interest rates again. Consumer prices rose 0.4 percent in September and 3.7 percent annually, according to data released earlier this month by the Labor Department.

The Fed announced last month that it will keep the bank’s baseline borrowing costs at a range of 5.25 percent to 5.5 percent. The Fed hiked those rates in July — a 22-year high — after a brief pause in June.

Fed Chairman Jerome Powell warned in prepared remarks last week that “the path is likely to be bumpy and take some time.”

“Inflation is still too high, and a few months of good data are only the beginning of what it will take to build confidence that inflation is moving down sustainably toward our goal,” Powell said in prepared remarks last week.