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Expert: Slow Growth, Housing Lull Signal Dismal Returns MoneyNews(Headlines - scroll down for complete stories) 1. Expert: Slow Growth, Housing Lull Signal Dismal Returns 2. Famed Economist Rukeyser Honored by NYSE 3. Ford Plans Deeper Cuts as Sales Slip 
1. Expert: Slow Growth, Housing Lull Signal Dismal Returns Pimco bond fund king Bill Gross is once again warning investors to expect mediocre returns on stocks, bonds and housing for the foreseeable future. The cause? Story Continues Below
Low inflation – which he feels has peaked. He now expects inflation to fall back to 1%, making it hard for companies to generate profits. This prediction stems from his observation that the tug of war between inflationary and disinflationary forces (for example: real estate and ultra-low interest rates versus cheap foreign labor and an aging U.S. population) is finely balanced. He feels that the housing boom – which has been fueled by low interest rates – has run its course and that the consequence will be low inflation, increasing the bias toward potential recession. Pimco funds have started to lighten up on Treasury Inflation Protected Securities or TIPS, which protect investors in times of rising inflationary pressures. He also forecast that commissions on investments would nosedive as investors have to make the most of less volatile markets and returns. The Wall Street Journal says: "[Gross's] comments were raised by other money managers. Citing Mr. Gross's thesis, Sarah Arkle, a foreign-fund manager at Threadneedle Asset Management in London, said that finding companies that could build their profits in a low-growth environment was of "increasing importance" for all investors in the U.S. and abroad." Pimco still believes that the Federal Reserve will raise the all-important Fed Funds rate at least twice more this year before sitting back and watching events unfold. Gross believes that, as a result of the benign inflation affecting the economy right now, we will feel the impact of rising rates and that growth will slow. That being the case, Pimco expects the Fed to reverse course in 2006, anticipating that the Fed will cut rates as growth falls and inflation slows.
2. Famed Economist Rukeyser Honored by NYSE The New York Stock Exchange plans to recognize popular economic commentator, journalist and teacher Louis Rukeyser at the exchange's closing bell. Among other things, Rukeyser is being honored for his work as an "advocate and champion of the ‘little guy.'" As a token of his lifetime of achievements, he will receive a number of gifts, including a plaque to be displayed at the exchange. For more than thrity years, Rukeyser worked to inform the average investor about market developments with his trademark "wit, wisdom, honesty and fairness." "Thanks to his work as a pioneering investment educator, today's individual investor is savvier, smarter and more self-reliant," said Rukeyser's friends Kim and Charles Githler. "Choices are more informed, freedom has been expanded. The entire investment climate has changed." Ever the optimist, Rukeyser used the airwaves, the print media, live conferences and other investment forums to pass along his insights in a way that made the even most difficult concepts easy to understand. Even President Ronald Reagan once noted Rukeyser's "skill in passing along his insights to an About Rukeyser, John Bogle, founder of the Vanguard Group, says: "He played a major role in bringing Wall Street to Main Street, and that's a legacy that is really enduring."
3. Ford Plans Deeper Cuts as Sales Slip In 2002, second-largest U.S. automaker Ford announced its target of $7 billion in pre-tax profits by 2006. But this past April, the company announced 1,000 North American job cuts. And more recently, Ford declared an additional 5% job slash to be swiftly concluded by October 1, 2005. Recently, oil has traded at record highs, and that fact is playing no small part in killing demand for Ford's most profitable SUVs. Dealers have been forced to pass on the higher raw materials costs to customers, which has further damaged domestic sales. In addition, GM incentives are creating a drag on sales. CFO Don Leclair said: "Challenges continue to mount, especially in our North American automotive operations." As Ford has fallen behind in terms of market shares, bonuses for managers worldwide have been axed. And drastic developments have hit Ford sales. In the first quarter of 2004, Ford sold one out of every five cars in North America. Now that is far from being the case. Prior to April's forecast, the company projected profits of about $3.4 billion. But now they only expect to earn between $1.8 and $2.3 billion. This stark reality has made 2002's $7 billion target for 2006 seem an effectively impossible goal.
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