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Last month, Pimco deputy chief investment officer Scott Mather announced that the “new normal,” a phrase created by Pimco founder Bill Gross and former CEO Mohamed El-Erian, was no longer. “Our view is that what you’ll see in next the few years is we’re going to head back to a new destination,” Maher said in an interview with Bloomberg Surveillance. It was assumed that Maher made the proclamation with the full backing of Gross, and, what’s more, that it came about as a result of Gross’s feelings for his collaborator El-Erian, who quit in February and who Gross, after a series of outbursts regarding the departure, was ready to declare dead to him, along with the phrase. Apparently, though, Maher spoke too soon.
Pimco’s latest thesis maintains the expectations for subpar returns outlined in the “new normal,” although the outlook is more stable compared with what Pimco forecast five years ago. Gross said the “new neutral” focuses more on the outlook for low benchmark interest rates. “We’re the owner of new normal; we’re not giving it up,” Gross said today in a telephone interview. “The new normal lives, so to speak.”
Does Gross hate El-Erian with every fiber of his being? Yes. Did El-Erian rip Gross’s heart out? Indeed. But deep down inside, did Secretariat ever stop loving Mo? The answer is clearly no. Even if hearing the phrase is a painful reminder of what once was, banishing it from the halls of Pimco would be to officially say good-bye. To let go. To find a new Mo. And someone’s not ready to do that. After all, his iPhone still autofills ‘New Normal’ after he taps the letter ‘n’. If it hasn’t moved on, why should he?