Nominal GDP reversion is a critical variable

May 27, 2015 09:52 AM
Bill Gross Monthly Newsletter

[Blue Rectangle] This “tour de farce” was titled “IKB” and consisted of “pigment and synthetic resin laid down on panel”, as Christie’s described it. All blue. It was 8x7 inches, which is important in the art world but which in this case might otherwise be described as a tad “puny”.

Nevertheless, it sold for $35,000 because I assume Mr. Klein’s blues were the bluest of all possible blues – creativity and right side brain nevertheless lacking.

As further proof of his brain’s black hole, I present for you another of Mr. Klein’s creations; the better known (17x14) piece entitled “IKB 121”, priced at $150,000 no less:

Well, if that’s not the clincher. This guy was truly a painter extraordinaire. Mr. Klein as it turns out, called himself “Yves le monochrome”, and I can surely see why. When you’ve got a niche, exploit it, Yves must have figured.

I can’t speak French very well, but I recently tried to reach my kindred half brain spirit in a séance-like half dream. I addressed him as Mr. Blue out of respect. “Mr. Bleu, Mon Ami”, I said “where, oh where in the art world is my niche?” The following was his suggestion that I now lay before you for critical acclaim:

[Red Rectangle] What I should have expected, I suppose. But as his ghostly voice faded out of my brain’s right side, I heard him say – “I got a monopoly on the blue, kid. Why don’t you try red.” Half brain. Some kindred spirit he was.

Well life imitates art or perhaps it’s vice versa, but let’s shift over to the left side of our brains for an analysis of current financial markets. On the bond side, my famous (infamous?) “Short of a lifetime” trade on the German Bund market was well timed but not necessarily well executed. 

Still, it was a prime example of opportunities hatched by the excess of global monetary policy – zero based policy rates and tag team match quantitative easing programs which continue to encourage malinvestment in financial assets as opposed to the real economy.Interestingly though, central banks and their respective economies seem to be on different time cycles.

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