The market is telling a simple story, says bond manager Bill Gross: Instead of investing, borrow.
"It's like first-grade math," Gross told CNBC's "Power Lunch" on Wednesday. "Here's a non-wonkish statement: When money yields nothing, then it will return nothing. So, when bonds have a zero percent interest rate, or negative interest rate, then there's nothing to gain from owning them."
U.S. Treasury yields are higher than many bonds abroad, with 10-year notes yielding about 1.8 percent Wednesday. That creates the "illusion" of returns, said Gross, who runs the Janus Global Unconstrained Bond Fund, even though Treasurys' inflation rates are closely tied to the yen and German government bonds
"It's pretty easy, maybe second-grade math, to understand that perhaps all developed bond markets are kind of in the same pot," Gross said. "Yes, you can get 1.8 percent, but you do so with a lot of risk."
Gross' comments came after the release of his April investment outlook, where he warned against investing in negative-yielding securities.
"Capital gains and the expectations for future gains will become Giant Pandas — very rare and sort of inefficient at reproduction," Gross said in the outlook. "I'm saying that developed and emerging economies are flying at stall speed and they've got to bump up nominal GDP growth rates or else. Cross your fingers."
While capital gains have been "wonderful" over the past month, even emerging markets have been flat over the past year, he told CNBC.
"My solution to all of this is not to despair and give up, and leave the zoo because the pandas won't be mating any time soon," Gross said. "My solution is, basically, instead of investing in nothing, try and borrow at nothing."
Gross also recommended buying closed-end funds at a discount that can borrow institutionally. Gross recommended Duff & Phelps' utility stock fund DPG, and First Trust Intermediate Duration Preferred & Income Fund, FPF.
DPG was up 5.7 percent Wednesday after Gross' comments, while FPF rose 1.6 percent.
In his April investment outlook, Gross wrote that markets and the capitalistic business models based upon them and priced for them "will begin to go south" if global economies do not produce growth, according to Reuters, which first reported the story.
Given massive monetary stimulus, Gross said nominal gross domestic product growth rates for the U.S. should be between 4 and 5 percent by 2017 while that for the euro zone should be between 2 and 3 percent, respectively, Reuters reported.
On Monday, the Federal Reserve Bank of Atlanta's GDPNow model predicted U.S. growth at a 0.6 percent pace in the first quarter, marked down from an earlier estimate of 1.4 percent.
In Japan, nominal GDP should be between 1 and 2 percent while China should be between 5 and 6 percent by 2017, Gross added.
Gross said central banks are "running out of time" to reflate global economies as their aggressive policies including quantitative easing and low, even negative, interest rates are losing their effectiveness.
"Investors cannot make money when money yields nothing," Gross said, according to Reuters. "Unless ... nominal GDP can be raised to levels that allow central banks to normalize short-term interest rates, then south instead of north is the logical direction for markets."