CNBC Exclusive: Billionaire Bill Gross Sits Down with CNBC's Brian Sullivan in His First TV Interview Since Leaving PIMCO

WHEN: TODAY, MONDAY, DECEMBER 15 AT 2PM ET

WHERE: CNBC'S "STREET SIGNS"

Following is the unofficial transcript of a CNBC EXCLUSIVE interview with billionaire Bill Gross, his first TV interview since leaving PIMCO, the firm he co-founded in 1971. The exclusive interview conducted by CNBC's Brian Sullivan today, Monday, December 15th aired on CNBC's "Street Signs" at 2PM ET. Clips of the interview are available on CNBC.com.

All references must be sourced to CNBC.

BRIAN SULLIVAN: WELCOME BACK TO "STREET SIGNS." I AM BRIAN SULLIVAN LIVE IN DENVER, COLORADO AT JANUS CAPITAL GROUP HERE FOR THE FIRST TELEVISION EXCLUSIVE WITH BILL GROSS. HE IS NOW OF JANUS FORMERLY OF PIMCO IN HIS FIRST TV INTERVIEW SINCE LEAVING THAT FIRM RATHER ABRUPTLY ON SEPTEMBER 26. BILL WE DO APPRECIATE YOU COMING OUT TO DENVER FROM LOS ANGELES TODAY. THANK YOU FOR LITERALLY ALMOST MEETING US HALF WAY.

BILL GROSS: WELL IT IS ALMOST HALF WAY AND A WONDERFUL PLACE TO BE WITH THE SNOW AND THE BRISK AIR. IT IS A LITTLE DIFFERENT THAN CALIFORNIA.

SULLIVAN: MIGHT GET A LITTLE BRISK IN HERE.

GROSS: LET'S HAVE AT IT.

SULLIVAN: WHAT WE WILL DO IS TWO INTERVIEWS. FIRST PART ABOUT YOU AND PIMCO AND THEN TOSS TO BREAK AND THEN TALK ABOUT THE FED THAT WAY OUR AUDIENCE KNOWS WHAT TO EXPECT. LET'S GO. OBVIOUSLY, A LOT HAS BEEN WRITTEN ABOUT YOU HARSHLY. HOW DOES THAT MAKE YOU FEEL? CAN YOU TAKE US INTO YOUR LAST FEW DAYS AT PIMCO. HAS REPORTING BEEN ACCURATE?

GROSS: I DON'T THINK SO. IT HAS BEEN A LITTLE HARSH CATEGORIZING ME AS ARROGANT AND VERY FORCEFUL IN TERMS OF MY MANAGEMENT STYLE. TO MY WAY OF THINKING UNTIL I LEFT MY MANAGEMENT STYLE WAS TOO LAX AND TOO LOOSE AND THAT'S WHY WE HAD CEOS AND CO-CIOs LIKE MOHAMED EL-ERIAN. I THINK IT IS A LITTLE UNFAIR. I THINK IF YOU ASK THE AVERAGE PIMCO PERSON THEY WOULD PROBABLY AGREE WITH THAT.

SULLIVAN: IT SOUNDS LIKE YOU ARE HAPPY HERE BUT DO YOU FELL LIKE YOU WERE STILL GIVEN A RAW DEAL AT PIMCO?

GROSS: I AM VERY HAPPY HERE. I WANT TO LOOK FORWARD. THE TRANSITION THAT HAS TAKEN PLACE IS ONE THAT I VIEW AS A RATHER NATURAL ONE IN ANYONE'S LIFE AND CAREER. ACTUALLY MOST PEOPLEDON'T GET A CHANCE TO START OVER AGAIN AT 70 YEARS OLD. YOU DON'T GET THAT IN THE MEDICAL PROFESSION OR AS A PROFESSOR OR THE MILITARY OR AS AN ATHLETE, FOR SURE. SO TO BE ABLE TO HAVE A SECOND CHANCE AT 70 HOW GRATEFUL CAN I BE IN TERMS OF THE OPPORTUNITY SO I LOOK AT THIS AS SOMETHING THAT HAPPENS TO ALL OF US. YOU MOVE ON AND TRANSITION AND JANUS GAVE ME THAT OPPORTUNITY AND I'M GOING TO MAKE THE MOST OF IT.

SULLIVAN: BUT IT WASN'T JUST PROFESSIONALLY THAT YOU WERE KNOCKED AS YOU KNOW. THE SUNGLASSES IN CHICAGO. PEOPLE SAID IS BILL GROSS, IS HE A LITTLE BIT CRAZY?

GROSS: YOU KNOW, MY INVESTMENT --

SULLIVAN: ARE YOU?

GROSS: NO MY INVESTMENT OUTLOOKS, AND YOU CAN GO BACK TO 1981 THEY HAVE BEEN FULL OF RATHER HUMAN STORIES ABOUT MY FAMILY AND INDIVIDUALS BUT ALSO ABOUT LIFE ITSELF. WHAT I TRIED TO DO WITH THOSE AND WHAT I TRY TO DO IN MY PERSONAL LIFE IS BRING A LITTLE LIFE TO THE BOND MARKET. BOND PEOPLE ARE REALLY PRETTY DULL SOMETIMES. SO WHAT I WRITE, WHAT I SPEAK AND WHEN I SPEAK SOMETIMES I'M A LITTLE EMPHATIC FOR THE AVERAGE BOND PERSON. I THINK THAT'S GOOD. THAT'S THE WAY I WANTED TO DO IT.

SULLIVAN: SO THE HEADLINE FOR THIS INTERVIEW SO FAR COULD BE BILL GROSS FEELS MISUNDERSTOOD. IS THAT FAIR?

GROSS: I DON'T THINK -- NO. I THINK THE VAST MAJORITY OF THE PUBLIC UNDERSTANDS EXACTLY WHO I AM. LIKE I SUGGESTED FOR THE PAST 25 YEARS MY INVESTMENT OUTLOOKS THEY KNOW WHAT IS INSIDE OF BILL GROSS. I THINK THEY HAVE A SENSE THAT THEY KNOW THAT THAT WILL CONTINUE, AS WELL.

SULLIVAN: WHY DID YOU COME BACK? YOU BROUGHT THIS UP, 70 YEARS OLD, A BILLIONAIRE, SET FINANCIALLY FOR LIFE. WHY NOT JUST FISH RIGHT OFF IN THE SUNSET? WHY START AGAIN?

GROSS: WELL YOU KNOW IT IS A COMPETITION BRIAN. IT'S SORT OF LIKE PLAYING, SHOOTING HOOPS AND PLAYING BASKETBALL WITH YOURSELF AFTER A WHILE YOU WANT A GAME OF HORSE WITH SOMEBODY. LET'S HAVE AN H AND O AND R. IT WAS THE COMPETITIVE ELEMENT THAT SAID YES I CAN MANAGE MY OWN MONEY BUT I WANT TO COMPETE AGAINST THE UNIVERSE OF MANAGERS THAT CONTINUE WHAT I HAVE DONE AT PIMCO. IN ADDITION I THINK THIS IS IMPORTANT, I WANTED TO BRING VALUE TO CLIENTS. I THINK AT JANUS I CAN DO THAT. RELATIVELY LOW FEES, VALUE RELATIVE TO THE RISK. I THINK THE SMALL INDIVIDUAL, EVEN LARGE INSTITUTION NEEDS TO HAVE MORE VALUE BROUGHT TO THEIR PLATE. SO THAT'S A MISSION FOR ME.

SULLIVAN: IS IT FAIR TO SAY THEN THAT YOU'VE GOT A LITTLE -- I DON'T KNOW IF YOU SAW THE MOVIE "THERE WILL BE BLOOD" DANIEL DAY LOUIS' CHARACTER SAYS I'VE GOT A COMPETITION IN ME IS THAT HOW YOU FEEL? DID YOU FEEL EXTRA MOJO BECAUSE OF THE WAY THINGS WERE HANDLED?

GROSS: NOT EXTRA MOJO BECAUSE AT PIMCO AND NOW AT JANUS AND WHEN I GO HOME AND AT THE OFFICE YOU KNOW WHEN THOSE NUMBERS COME OUT THE DAILY RETURN NUMBERS COME OUT AT 3:15 WEST COAST TIME I'M ON IT. I'M THERE. I WAS THERE FOR 30 YEARS AT PIMCO IN TERMS OF TOTAL RETURN FUND. WITH JANUS I'M CONSTRAIN FUNDS I'M THERE. NOTHING HAS CHANGED. I'M STILL OBSESSIVELY COMPETITIVE.

SULLIVAN: WE TALKED BEFORE AND I SUGGESTED THAT YOUR RETURNS MAYBE HAD BEEN SUBPAR THE LAST COUPLE OF YEARS AND YOU GOT A LITTLE NOT UPSET WITH ME BUT YOU SAID NO I HAVE BEEN COMPARED AGAINST THE WRONG PEER GROUP. WHAT DO YOU MEAN BY THAT? PEOPLE WERE KNOCKING YOUR INVESTMENT RECORD FOR THE LAST COUPLE OF YEARS?

GROSS: MOST OF THE NUMBERS COME FROM MORNING STAR AND OTHER SERVICES THAT UTILIZE HIGH YIELD FUNDS AND RISK TAKING FUNDS WITHIN THEIR UNIVERSE. THE TOTAL RETURN FUND WAS A BOND FUND WITH VERY LITTLE RISK. SO THE MEASURE OF THE TOTAL RETURN FUND WAS ALWAYS HOW IT DID RELATIVE TO THE MARKET. THE DAY I LEFT FOR THE PAST THREE MONTHS, THE PAST NINE MONTHS, PAST 18, 24, ALL THE WAY OUT I HAVE BEEN OUTPERFORMING THE MARKET AND PIMCO HAD BEEN OUTPERFORMING THE MARKET. IT IS A LITTLE BIT UNFAIR. THE BOGIE WAS ALWAYS TO BEAT THE MARKET AND I ASSUME IT STILL IS.

SULLIVAN: WE ARE GOING TO GO TO BREAK BUT BEFORE WE DO ONE WORD ANSWER PLEASE. DOES THE FED RAISE RATES NEXT YEAR? YES OR NO?

GROSS: CLOSE.

SULLIVAN: THAT'S NOT YES OR NO. CLOSE OK WE WILL DISSECT WHY YOU SAY CLOSE MAYBE HE MEANS NOVEMBER. DECEMBER. WE WILL CONTINUE OUR EXCLUSIVE INTERVIEW WITH BILL GROSS AND GET HIS INVESTING IDEAS AND TALK ABOUT THE FED AND WHAT HE WILL DO, WHERE DOES HE SEE OPPORTUNITY. A LOT MORE TO DO. DON'T GO ANYWHERE. WE WILL BE BACK LIVE FROM DENVER, JANUS CAPITAL RIGHT AFTER THIS.

SULLIVAN: WELCOME BACK TO CNBC AND "STREET SIGNS." WE ARE LIVE AT JANUS CAPITAL HERE IN DENVER, COLORADO WITH OUR EXCLUSIVE TV INTERVIEW WITH BILL GROSS. YOU FOILED ME A BIT.

GROSS: I DID.

SULLIVAN: BECAUSE I ASKED YOU BEFORE THE BREAK WILL THE FED RAISE RATES NEXT YEAR, YES OR NO. YOUR ANSWER WAS CLOSE. WHAT DOES THAT MEAN?

GROSS: WELL IT MEANS THAT IT IS DEPENDENT AS THE FED WOULD ADMIT, IT IS DEPENDENT UPON A NUMBER OF CONDITIONS. ONE, ECONOMIC GROWTH, TWO, AND IMPORTANTLY, INFLATION AND THREE, FINANCIAL CONDITIONS. AND TO THE EXTENT THAT WE HAVE MARKETS AND VOLATILITY MOVING LIKE THEY ARE NOW WITH OIL PRICES AND SO ON THEN FINANCIAL CONDITIONS ARE A PROBLEM.

SULLIVAN: WHY? WE HAVE THE UNEMPLOYMENT RATE TARGET THAT THEY WANTED, RIGHT?

GROSS: WELL THAT IS ONE.

SULLIVAN: I UNDERSTAND THE INFLATION IS NOT THERE, BUT EVERYBODY SEEMS TO AGREE THE ECONOMY IS GETTING BETTER.

GROSS: WELL, WHY WOULD THE FEDERAL RESERVE RAISE INTEREST RATES IN ORDER TO SLOW ECONOMIC GROWTH IF INFLATION, IN FACT, WAS MOVING LOWER? THEY HAVE A DUAL MANDATE FROM THAT STANDPOINT. AND I THINK THE MARKET BASICALLY DOESN'T RESPECT THE SECOND PART OF THAT MANDATE. THEY SPEAK TO IT CONSTANTLY. JANET YELLEN SPEAKS TO 2% PLUS-TYPE OF INFLATION AS AN OBJECTIVE. AND SO TO THE EXTENT THAT IT IS 1.5 AND MAYBE MOVING LOWER NOW BECAUSE OF HIGHER DOLLAR AND LOWER OIL PRICES, THEN THEY HAVE A PROBLEM.

SULLIVAN: SO IF I'M HEARING YOU RIGHT, THEN THEY WOULD NOT – THEY ARE NOT GOING TO ANTICIPATE. THEY ARE GOING TO WAIT TO SEE. IT'S KIND OF LIKE LET'S SAY WE ARE IN THE ROCKY MOUNTAINS. THEY ARE GOING TO WAIT TIL THE AVALANCHE BEGINS, THEN TRY TO STOP IT RATHER THAN STARTING IT, SO TO SPEAK. IF THAT MAKES ANY SENSE.

GROSS: I THINK SO. THERE ARE TWO CONSIDERATIONS IN ADDITION TO ECONOMIC GROWTH. I MENTIONED INFLATION. YES, THEY ARE GOING TO WAIT UNTIL IT APPROACHES 2% AND MAYBE AT SOME POINT EVEN EXCEEDS 2%. SECONDLY THOUGH, FINANCIAL CONDITIONS. JEREMY STEIN, EX-GOVERNOR, YOU KNOW, SPOKE SEVERAL YEARS AGO ABOUT THE IMPORTANCE OF THE CREDIT MARKETS. AND AT THE MOMENT WITH OIL PRICES AND WITH HIGH YIELD BONDS DOING WHAT THEY ARE DOING, YOU KNOW, THERE IS INSTABILITY THAT THE FED HAS TO TAKE INTO CONSIDERATION GOING FORWARD.

SULLIVAN: HOW MUCH ARE YOU WATCHING OIL RIGHT NOW?

GROSS: OH, QUITE A BIT. OIL DETERMINES CURRENCY MOVEMENTS. CURRENCY MOVEMENTS DETERMINE SPREAD MARKETS, RISK MARKETS, HIGH YIELD MARKETS, THE POTENTIAL FOR BANKRUPTCY OR SOLVENCY NOT ONLY WITH COMPANIES BUT COUNTRIES. AND SO ONCE YOU HAVE A MAJOR COMMODITY LIKE OIL THAT EFFECTS NOT JUST THE REAL ECONOMY BUT FINANCIAL ECONOMY IN MOTION, LIKE IT HAS BEEN, ,MOVING DOWN RAPIDLY, THEN FINANCIAL MARKETS, YOU KNOW, TRY AND READJUST. HEDGE FUNDS REDUCE LEVERAGE AND SELL OTHER POSITIONS AND SO THAT'S WHAT YOU ARE SEEING NOW IN THE STOCK MARKET. THAT IS WHAT YOU ARE SEEING IN OTHER COMMODITY MARKETS. THAT IS WHAT YOU ARE SEEING IN THE HIGH YIELD MARKET AS SPREADS WIDEN. IT'S LEVERED PLAYERS REPOSITIONING AND TRYING TO GET EVEN AND STAY.

SULLIVAN: SO WHAT'S GOING TO HAPPEN NOW? YOU SORT OF MENTIONED COUNTRY BANKRUPTCIES SOFTLY. I MEAN, THAT'S A BIG THING TO SAY.

GROSS: WELL, THERE ARE OIL PRODUCERS IN SOUTH AMERICA, SUCH AS VENEZUELA, THAT CERTAINLY HAVE THAT POTENTIAL. YOU KNOW, WHETHER OR NOT RUSSIA IS ON THE LIST NOT IN MY OPINION. I THINK RUSSIA IS TOO MAJOR OF A PLAYER ON THE GLOBAL FINANCIAL SCENE FOR THE COUNTRY AND THE LEADERSHIP TO DO IT AGAIN LIKE THEY DID IN 1998.

SULLIVAN: 1998. I WAS GOING TO SAY, WE HAVE BEEN HERE BEFORE, BILL.

GROSS: WE HAVE BEEN HERE BEFORE.

SULLIVAN: THIS HAS HAPPENED.

GROSS: YOU BET.

SULLIVAN: THE UNTHINKABLE HAPPENED BEFORE.

GROSS: RIGHT. AND IT COULD HAPPEN AGAIN, BUT I DON'T THINK NEXT YEAR IS THE YEAR FOR RUSSIA. AND HOPEFULLY FOR THEM, YOU KNOW, OIL STABILIZES AND THEY CAN BEAR DOWN IN TERMS OF STRUCTURAL REFORMS TO THE EXTENT THAT A COUNTRY LIKE RUSSIA CAN DO THAT.

SULLIVAN: DO YOU MAKE AN OIL CALL? WOULD BILL GROSS SAY THAT OIL WILL STABILIZE OR IS THAT NOT IN YOUR WHEELHOUSE NECESSARILY?

GROSS: YEAH, I THINK THAT IS VERY DIFFICULT, YOU KNOW, ESPECIALLY NOW WITH SHALE AND FRACKING AND THE SITUATION OF THE UNITED STATES AS A GLOBAL SUPPLIER AS OPPOSED TO A GLOBAL DEMANDER. AND SO I DON'T THINK EVEN BOONE PICKENS KNOWS WHERE THE OIL PRICE WILL REST, WHEN AND IF.

SULLIVAN: YOU DID WRITE AND I AM GOING TO TRY TO PARAPHRASE YOU FROM MEMORY HERE, SOMETHING TO THE EFFECT OF, IF IT WASN'T FOR FRACKING THE UNITED STATES ECONOMY WOULD LOOK LIKE THE OLD MAN WHO LIVED IN A SHOE AND DIDN'T KNOW WHAT TO DO. SOMETHING LIKE THAT.

GROSS: I DID.

SULLIVAN: YOU WERE USING THE NURSERY RHYME. SO EFFECTIVELY, WE MAY SEE A DRAMATIC SLOW DOWN IN FRACKING BECAUSE A LOT OF WELLS ARE NOW NON-ECONOMIC.

GROSS: RIGHT.

SULLIVAN: SO IT SOUNDS LIKE YOU BELIEVE THERE IS GOING TO BE A SECOND OR THIRD DERIVATIVE NEGATIVE IMPACT ON THE ECONOMY.

GROSS: WELL YES, BUT WE ARE STARTING FROM A 3% REAL ECONOMIC GROWTH ECONOMY THAT WILL PROBABLY PERSIST FOR ANOTHER QUARTER OR SO. BUT TO THE EXTENT THAT FRACKING HAS BEEN AN IMPORTANT INVESTMENT AND NO ONE KNOWS WHETHER IT IS A HALF A PERCENT OR 1% IN TERMS OF THE TOTAL, BUT IT HAS CERTAINLY BEEN IMPORTANT. TO THE EXTENT THAT THAT MOVES DOWN, WE GET BACK TO A RELATIVELY NEW STRUCTURAL GROWTH RATE IN THE UNITED STATES WHICH IS NOT 3, BUT PROBABLY 2 OR EVEN LESS. YOU KNOW, THERE ARE HEAD WINDS IN NOT ONLY U.S. ECONOMY BUT THE GLOBAL ECONOMY THAT SPEAK TO LOWER GROWTH RATES EVERYWHERE.

SULLIVAN: SO WOULD YOU HAVE SAID YES TO MY FED RAISES RATES NEXT YEAR QUESTION IF OIL WAS STILL $100? DO YOU THINK OIL DOES IMPACT FED RATE DECISIONS?

GROSS: I THINK IT CERTAINLY DOES. THEY WON'T SPEAK TO THAT AND THEY WON'T ADMIT IT, BUT THEY DO SO FOR THE MOST PART WHEN THEY TALK ABOUT FINANCIAL CONDITIONS AND TO THE EXTENT THAT OIL PRICES ARE MOVING CURRENCIES AND MOVING REAL ECONOMIES. THEN THAT'S CERTAINLY THE FED HAS GOT TO TAKE THAT INTO CONSIDERATION EVEN FROM THE STANDPOINT OF INFLATION. INSTEAD OF 2% INFLATION, WE ARE LOOKING AT 1.5 AND LOWER NOW.

SULLIVAN: I WILL GIVE YOU A CHANCE TO DO A BIT OF A VICTORY LAP. BECAUSE SOME OF THE INVESTMENTS YOU MADE LAST YEAR DIDN'T DO THAT WELL. BUT NOW THEY ARE REALLY MONEY GOOD. IN FACT, I THINK IT WAS A WEEK AND A HALF AGO "THE WALL STREET JOURNAL" WROTE ABOUT HOW THOSE POSITIONS WERE KEPT AT PIMCO AND NOW THEY ARE HIGHLY PROFITABLE. SO PEOPLE ARE SAYING, SEE, GROSS HAS LOST HIS TOUCH. NOW, OH WAIT A MINUTE, THEY JUST TOOK A LITTLE LONGER TO BECOME MONEY GOOD THAN MAYBE WE HAD THOUGHT. WHAT ARE SOME OF YOUR BETTER INVESTMENT IDEAS RIGHT NOW? AND HOW DOES WORKING WITH A SMALLER FUND AT JANUS ENABLE YOU TO CHANGE THE WAY YOU INVEST IF AT ALL?

GROSS: WELL FIRST OF ALL TO YOUR SECOND QUESTION, YOU KNOW, FLEXIBILITY IS BETTER THAN LESS FLEXIBILITY. THAT IS NOT TO SAY THAT AT PIMCO THERE WASN'T THE ABILITY TO MOVE IN MARKETS. BUT CERTAINLY AT JANUS, MANAGING ON MY OWN ACCOUNT $2 TO $2.5 BILLION, YOU KNOW, IT IS A MUCH EASIER PATH WHEN YOU CHANGE YOUR MIND OR WHEN THINGS CHANGE. IN TERMS OF THE VICTORY LAP, YOU KNOW, THEY HAVE BEEN MANAGING THE TOTAL RETURN FUND ON THEIR OWN FOR TWO MONTHS NOW AND ALL CREDIT GOES TO THEM. I WILL SAY THAT SOME OF THOSE POSITIONS ARE DOING RATHER WELL AND THE TOTAL RETURN FUND IS DOING RATHER WELL TOO. I HOPE THEY DO WELL. WHEN I LEFT THE COMPANY I WROTE 15 INDIVIDUAL NOTES TO SOME OF MY CLOSER FRIENDS AND ASSOCIATES AND SAID TAKE GOOD CARE OF HER. AND SO, TO THE EXTENT THAT PIMCO DOES WELL, THEN I THINK I HAVE DONE A GOOD JOB. AND NOW, OF COURSE, TO THE EXTENT THAT JANUS DOES WELL, THEN I HAVE DONE EVEN A BETTER JOB.

SULLIVAN: WHAT LOOKS GREAT TO YOU RIGHT NOW?

GROSS: WELL, I THINK THAT TIPS LOOK GREAT.

SULLIVAN: TREASURY INFLATION PROTECTED SECURITIES? IS THIS WHERE THIS INTERVIEW IS GOING TO GO, BILL? TIPS?

GROSS: YES.

SULLIVAN: I HAVE A TIP, DON'T BRING UP TIPS IN TELEVISION INTERVIEWS. THEY ARE THE MOST BORING OF THE BORING.

GROSS: OH THEY ARE NOT BORING BECAUSE THEY MOVE VERY FAST AND THEY HAVE MOVED VIOLENTLY TO THE DOWN SIDE IN TERMS OF PRICE AND IN TERMS OF WHAT THEY CALL A BREAK EVEN INFLATION RATE. YOU CAN BUY A TEN YEAR TIP NOW WITH AN INFLATION EXPECTATION OF ABOUT 1.5%. THE FED'S TARGET IS 2%. AND YOU KNOW, TO NOT BUY A TIP AT 1.5% BREAK EVEN IS TO SUGGEST THAT THE FEDS SIMPLY CAN'T REACH THEIR OBJECTIVE. THAT THEY CAN'T PRINT ENOUGH MONEY. I THINK THEY CAN. AND TO THE EXTENT THAT INFLATION GOES TO 2, THEN A TIP IS GOING TO BENEFIT IF ONLY BECAUSE ITS DEFENSIVE AS OPPOSED TO OFFENSIVE.

SULLIVAN: SOME HAVE SUGGESTED THE OIL PRICE MIGHT SET OFF A WAVE OF DEFAULTS AND THE HIGH YIELD MARKET. AGREE OR DISAGREE?

GROSS: I THINK SO. I THINK THERE ARE SOME COMPANIES THAT HAVE BORROWED A LOT OF MONEY UNDER THE EXPECTATION OF $90, $100, $110 OIL. YOU KNOW, THAT IS WHAT HAS BEEN PRODUCED, BRIAN, BY THIS ERA OF CHEAP MONEY. BY THIS ARTIFICIAL PRICING OF INTEREST RATES TO THE EXTENT THAT SOME COMPANIES LIKE OIL DEVELOPMENT COMPANIES HAVE BENEFITTED BY BORROWING CHEAPLY AND BORROWING TOO MUCH. BASED UPON AN EXPECTATION OF $100 OIL, THEN YES, THERE IS POTENTIAL PROBLEMS. AND THAT IS ONE OF THE NEGATIVES OF LOW INTEREST RATES.

SULLIVAN: OVERALL IS THE HIGH YIELD BOND MARKET A GOOD BET OR A BAD BET?

GROSS: IT IS NOT A GREAT BET AT THE MOMENT. IT'S MOVING HIGHER IN TERMS OF YIELD SPREAD. AND AS THE ECONOMY SLOWS, WHICH I THINK IT WILL, NOW BASED UPON THE OIL PRICE, I THINK THERE ARE BETTER ALTERNATIVES IN TREASURIES AND THOSE GOOD OLD FASHIONED TIPS.

SULLIVAN: OK. FINAL COUPLE QUESTIONS. THE END OF NEXT YEAR, SO A LITTLE OVER 12 MONTHS FROM NOW, TEN-YEAR YIELD IN THE 1% RANGE, 2% RANGE OR BACK ABOVE 3%?

GROSS: I THINK 2%. YOU KNOW, NOW AT 2.1%. 2.2, 2.3 –

SULLIVAN: SO YOU DON'T SEE A MOVE HIGHER MUCH IN YIELD FOR 12 MONTHS?

GROSS: NO AND THAT GIVES YOU SOME PRINCIPLE PROTECTION. OBVIOUSLY, AT TEN YEAR AT 2.3, YOU KNOW, LOSES 20 BASIS POINTS TIMES ITERATION. IT LOSES 1.6% BUT YOU STILL START WITH 2.1. SO IT'S NOT A LOSER'S GAME IN THE BOND MARKET LIKE IT WAS IN TERMS OF CERTIFICATE OF CONFISCATION IN THE '70s AS INFLATION SKYROCKETED. SO I THINK HIGH QUALITY BONDS ARE A SAFE BET, JUST NOT A HIGH RETURNING BET.

SULLIVAN: OK LAST PART, I KIND OF LIED. LAST QUESTION IS ACTUALLY TWO IN ONE. I WANT TO GET A LITTLE INTO BILL GROSS THE MAN. SO, WHO DO YOU READ? WHAT DO YOU READ? IS THERE AN INVESTOR THAT YOU – CURRENTLY ALIVE – THAT YOU RESPECT OR EMULATE? AND THEN, YOU'VE GOT A CHANCE – NOW I'M SURE MOST OF YOUR FORMER COLLEAGUES AT PIMCO ARE WATCHING THIS. CNBC IS ALL OVER THE PIMCO OFFICE. SEND OUT A MESSAGE TO THEM.

GROSS: I READ IF I CAN. RAY DALIO AND HIS BRIDGEWATER ASSOCIATES DAILY RELEASE. I HAVEN'T HAD AN AVAILABILITY FOR A WHILE NOW THAT I TRANSITIONED TO JANUS. BUT TO ME, BRIDGEWATER AND DALIO ARE REALLY AT THE TOP OF THE LIST IN TERMS OF THEIR ECONOMIC TEMPLATE. I READ JEREMY GRANTHAM'S PIECES, THERE'S AN INVESTOR WITH A STORIED HISTORY THAT REALLY HAS A SENSE OF WHAT'S GOING ON. SO, THERE ARE INVESTORS OUT THERE THAT, YOU KNOW, PERHAPS NOT AS STORIED IN TERMS OF TODAY'S PRESENTATION BUT YOU –

SULLIVAN: AND A CHANCE TO SPEAK ALL OF YOUR FORMER COLLEAGUES?

GROSS: WELL, I WOULD SAY TO MY FORMER COLLEAGUES, YOU KNOW, DO WELL. AND, YOU KNOW, GO FORWARD LIKE, YOU KNOW, HOPEFULLY OUR FOUNDATION WHICH STRESSES CLIENTS FIRST WHICH STRESSES PERFORMANCE OVER A LONG-TERM BASIS AND WHICH CONTINUES THE SUCCESS THAT PIMCO'S HAD FOR THE LAST 40 YEARS.

SULLIVAN: AND NOW YOU ARE UNCONSTRAINED AT JANUS CAPITAL.

GROSS: UNCONSTRAINED WHICH BASICALLY PUTS LESS OF AN EMPHASIS ON DURATION AND MATURITY BUT MORE OF AN EMPHASIS ON OTHER SPREAD TYPES OF PRODUCTS SUCH AS CREDIT AND CURRENCY AND THAT.

SULLIVAN: BILL, THANK YOU VERY MUCH. WE APPRECIATE YOUR TIME TODAY. IT WAS A LONG INTERVIEW. A LOT OF SUBJECTS AND THANK YOU FOR ROLLING WITH IT.

GROSS: MY PLEASURE.

SULLIVAN: WE HOPE TO SEE YOU ON – NOW WE ARE GOING TO GET THE CAMERA UP AND RUNNING. YOU WILL BE ON "STREET SIGNS" AGAIN SOON I HOPE, RIGHT?

GROSS: OF COURSE.

SULLIVAN: SEE NOW YOU ARE ON RECORD. MANDY HE IS NOW ON THE RECORD AS SAYING HE IS GOING TO BE BACK ON THE SHOW.

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