Bill Gross says a US recession is coming in Q4: 'Higher for longer' is yesterday’s mantra

<p>First Bill Ackman, now Bill Gross.</p><p>Here's what the retired bond king has to say about the economy now.</p><p>"Regional bank carnage and recent rise in auto delinquencies to long-term historical highs indicate U.S. economy slowing significantly.
Recession in 4th quarter.
Best investments are equity arbs (CPRI and SGEN. VMW a long shot). I’m seriously considering regional banks again."</p><p>and:</p><p>"Maybe next week. Will tweet.
On bonds. Invest in the curve. Various combinations 2/10, 2/5. Should go positive before year end. I’m buying SFR h5 (SOFR futures). 'Higher for longer' is yesterday’s mantra."</p><p>To dumb some of this down, the arbs he's talking about are merger arbitrage trades on Capri Holdings, Seagen and VM Ware.</p><p>Secondly, he would be buying regional banks on falling yields as their hold-to-maturity losses are pared by falling Treasury yields.</p><p>As for the curve, he's talking about steepeners via buying 2-year notes and selling 5s or 10s. While a bet on SOFR futures is a straight bet on a more-dovish Fed.</p>

This article was written by Adam Button at www.forexlive.com.