Gross, the co-chief investment officer at Pacific Investment Management Co., which oversees $1.2 trillion, also told Reuters Insider television the U.S. is running out of monetary and fiscal policy options.

“It is increasingly apparent to us that policy options are limited and that economic growth is slowing down,” said Gross said.

Thursday, Morgan Stanley warned in a research report the United States and euro zone are “dangerously close to recession,” joining a number of firms that have slashed forecasts for global growth in the second half of the year. Not only are economists and investors bracing for a slowdown in the U.S., they are concerned about a deceleration in China’s growth rate to persistent sovereign-debt turmoil in Europe.

Morgan Stanley cut its global GDP forecast to 3.9 percent growth from 4.2 percent for 2011, and to 3.8 percent from 4.5 percent for 2012.

“There’s no doubt that (U.S.) growth from the standpoint of employment or unemployment and growth from the standpoint of corporate profits is definitely a risk — whether or not we see a positive 1 percent real GDP number I think is besides the point.”

Gross said low Treasury yields are flashing recessionary conditions.

“They certainly reflect, in terms of their yields, not only a potential for a recession but the almost high probability of recession and the result of lowering of inflation — that is key.”

On Thursday, the yield on the benchmark 10-year U.S. Treasury note dropped below 2 percent to 1.98 percent. Friday, the 10-year yield stood around 2.08 percent.

In May, Gross told Reuters the only way he would purchase Treasuries again is if the United States heads into another recession.

Gross, who manages the $245 billion Total Return Fund, reiterated that sentiment on Friday: “I don’t think there is any value there unless you see a recession.”

For more from the Interview, please click on insider.thomsonreuters.com/

(Reporting by Daniel Burns, Burton Frierson and Jennifer Ablan; Editing by Neil Stempleman)

Gross, the co-chief investment officer at Pacific Investment Management Co., which oversees $1.2 trillion, also told Reuters Insider television the U.S. is running out of monetary and fiscal policy options.

“It is increasingly apparent to us that policy options are limited and that economic growth is slowing down,” said Gross said.

Thursday, Morgan Stanley warned in a research report the United States and euro zone are “dangerously close to recession,” joining a number of firms that have slashed forecasts for global growth in the second half of the year. Not only are economists and investors bracing for a slowdown in the U.S., they are concerned about a deceleration in China’s growth rate to persistent sovereign-debt turmoil in Europe.

Morgan Stanley cut its global GDP forecast to 3.9 percent growth from 4.2 percent for 2011, and to 3.8 percent from 4.5 percent for 2012.

“There’s no doubt that (U.S.) growth from the standpoint of employment or unemployment and growth from the standpoint of corporate profits is definitely a risk — whether or not we see a positive 1 percent real GDP number I think is besides the point.”

Gross said low Treasury yields are flashing recessionary conditions.

“They certainly reflect, in terms of their yields, not only a potential for a recession but the almost high probability of recession and the result of lowering of inflation — that is key.”

On Thursday, the yield on the benchmark 10-year U.S. Treasury note dropped below 2 percent to 1.98 percent. Friday, the 10-year yield stood around 2.08 percent.

In May, Gross told Reuters the only way he would purchase Treasuries again is if the United States heads into another recession.

Gross, who manages the $245 billion Total Return Fund, reiterated that sentiment on Friday: “I don’t think there is any value there unless you see a recession.”

For more from the Interview, please click on insider.thomsonreuters.com/

(Reporting by Daniel Burns, Burton Frierson and Jennifer Ablan; Editing by Neil Stempleman)

“The banking system still needs to earn its way out of a
hole,” Soros said at a panel discussion at the Hamptons
Institute in East Hampton, New York.
For Reuters Insider video: link.reuters.com/nyz87m

In that sense the bill has come “too early.” While Soros
said of the bill it “is good to have it done,” he said the new
legislation “doesn’t address the problems in the system.”

Turning to financial markets, Soros said the Treasury bond
market suggests “no inflation” and indicates “no growth.” The
benchmark 10-year U.S. Treasury note US10YT=RR has been a
huge beneficiary in the flight to quality, with its yield
falling to 2.93 percent from 3.00 percent on Thursday.

Soros said “cutting the stimulus and cutting the
unemployment benefits, cutting the aids to states, which are
losing tax revenues and therefore have to cut services and
employment” come at a time when the U.S. economy is fragile.

“When the demand comes back, you will see it with bank
lending and interest rates beginning to move up. That’s the
time to cut back — not now,” he said, referring to fiscal
stimulus.

Soros joined Elizabeth Warren, professor of law at Harvard
University, at the panel discussion on “Restoring the Integrity
of the U.S. Financial Markets.”

On the Greek debt crisis, Soros said Greece’s debt has to
be restructured “in an orderly way.

“It’s already in the price” of the bonds, he said.

But the imposition of a “haircut” cannot happen until
Greece has addressed its “primary” deficit and restored a
“primary surplus.”
(Reporting by Daniel Burns; Additional reporting by Jennifer
Ablan; Editing by Kenneth Barry)

“I don’t think it’s the beginning, really, of a tightening
from the standpoint of monetary policy,” Bill Gross told
Reuters Insider television soon after the Fed’s decision. “I
don’t think it is the beginning of an increase in the fed funds
rate or in terms of interest on reserves that has been
discussed as well.”

Late on Thursday, the Fed cast its decision to raise the
discount rate to 0.75 percent from 0.5 percent as a response to
improved financial market conditions that warrant less of a
helping hand from emergency programs introduced by the central
bank during the 2008 global financial crisis.

The U.S. central bank took pains to draw the distinction
between the discount rate and its target for the overnight
interbank rate, its main monetary policy tool. That rate
remains unchanged near zero percent as a fragile U.S. economic
recovery struggles to gain traction.

“Like the closure of a number of extraordinary credit
programs earlier this month, these changes are intended as a
further normalization of the Federal Reserve’s lending
facilities,” the Fed said in a statement.

“The modifications are not expected to lead to tighter
financial conditions for households and businesses and do not
signal any change in the outlook for the economy or for
monetary policy,” it said.

Gross, who as co-chief investment officer at Pimco helps
oversee over $1 trillion in assets, said it is unlikely the Fed
will begin a tightening phase during a period of elevated
unemployment.

“Let’s face it, the Fed is looking at a number of
fundamental factors … the output gap, the unemployment rate
at 10 percent — plus or minus — and the substantial amount of
operating capacity excess,” Gross said. “I don’t think the Fed
dares increase the fed funds or policy rate in the face of
unemployment at double-digit type of levels. This is more of a
technical maneuver.”
(Reporting by Jennifer Ablan; Editing by Dan Grebler)