PIMCO’s Bill Gross’ latest Investment Outlook uses the famous phrase from Greenspan to explore which assets are overpriced. Some highlights:

  • On a scale of 1-10 measuring asset price “irrationality”, we are probably at a 6 and moving in an upward direction.
  • Corporate credit and high yield bonds are somewhat exuberantly and irrationally priced.
  • Where high yield prices go, stock markets follow, or vice versa
  • We have seen something similar to this before, and that previous outcomes seldom matched the exuberance