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Bill Gross, Founder and CIO, PIMCO

cnbc.com staff
Tuesday, 5 Dec 2006 | 1:26 PM ET

Hit or stay? William H. Gross began his career as a blackjack counter in Las Vegas. But his numbers savvy led him to create PIMCO (Pacific Investment Management Company), building it into one of the world’s biggest specialty fixed income managers. He serves as chief investment officer for the firm, which boasts more than $641 billion in assets under management. Gross was once quoted as saying “Gambling and money management are pretty much the same. …Spread the risk and avoid becoming emotional while staying focused on the odds."

In cnbc.com’s exclusive OUTLOOK '07 series, Gross spoke with CNBC’s Steve Liesman about what investors should expect in 2007.

PIMCO's William Gross, Pt. 1
A bond market and interest rate outlook for 2007, with William Gross, PIMCO Founder & Chief Investment Ofcr., and CNBC's Steve Liesman.
PIMCO's William Gross, Pt. 2
A discussion about interest rates, the yield curve, corporate debt and international bonds, with William Gross, PIMCO Founder & Chief Investment Ofcr., and CNBC's Steve Liesman.
PIMCO's William Gross, Pt. 3
A discussion about corporate and high-yield bonds, with William Gross, PIMCO Founder & Chief Investment Ofcr., and CNBC's Steve Liesman.

Gross advises that in the current environment, pension funds and pension-fund investors “should have a substantial amount of assets outside the U.S.” to account for the U.S. dollar’s weakness versus other major currencies. He believes that shorter-term Treasuries are a better bet than longer-term ones, as “the closer to the front end of the curve, the more punch you have.”

The PIMCO investment chief muses that the U.S. economy is now finance-based – which means America’s continued prosperity may “require a continuously lower pattern of interest rates,” or “higher and higher leverage,” or a steady stream of “technological breakthroughs.”

He foresees 1% to 2% economic growth in the first quarter of 2007, “dependent upon what happens in housing -- specifically, housing labor.” He declares that “no one piece of data” tells the whole economic story, and draws a line between housing starts and completions – which have different ramifications for employment conditions.