PIMCO’s Gross Warns to Flee Treasuries, Dollar Assets: Morningstar Confab

Brazil, Gross acknowledged, has currency risk and country risk reflecting a history that includes defaults on government debt. However, he noted that real interest rates in Brazil have lately been 6% and higher.

Gross denounced the high levels of U.S. government debt as a form of "financial repression" that damages the ability of investors to benefit from their assets. He contrasted this with policies in Canada, which he said "has a much cleaner balance sheet," and in Germany, noted for its fiscal conservatism.

"You don't have to go too far afield in terms of developing countries to find less repressive countries than the U.S.," he said.

He did, however, suggest that some U.S. companies remain attractive investments because they offer high dividends and extensive exposure to foreign markets. He cited Coca-Cola, Johnson & Johnson and Procter & Gamble as examples.

Gross likened the predicament of investors whose assets gradually erode because of negative real interest rates to that of the proverbial frog sitting in a pot that's gradually heated until it boils. He amplified on the amphibian theme by citing a frog that escapes from a pitcher of milk by energetically churning its legs to find an alternative situation. "Don't be a frog," said Gross. "And if you are a frog, be one in a pitcher of butter."