Bill Gross – Real Net Income growth or fake?

Great monthly commentary out by Bill Gross of Pimco, and he’s made a couple points that are definitely worth mentioning.

And here’s a rather incredible kicker to this theoretical comparison. The U.S. economy – thanks to the Fed – has been operating a 1 trillion dollar share buyback program nearly every year since late 2008, buying Treasuries but watching much of that money flow straight into risk assets and common stocks instead of productive plant and equipment

1) Growth depends on investment and investment in part depends on an equitable rebalancing of personal income taxes, capital gains and carried interest.

2) The era of taxing “capital” at lower rates than “labor” should end.

3) Investors in the U.S. and elsewhere must look for investment in the real economy, not share buy-back maneuvers that artificially elevate stock prices.

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Now this chart above does highlight the obvious, for Thailand, just off the top of my head, in 1H13 there were a lot of Thai companies that were expanding their equity bases via RO’s, PP’s, warrants, stock dividends etc etc, hence why perhaps the slower EPS growth for the Thai Equity market. Maybe we should do this same analysis hmmm…Anyways click the link below to see his full commentary.

Source: Pimco