A US deficit solution unlikely, soon putting the US dollar at Risk, Pimco's Bill Gross says.
Real action on the US deficit problem is unlikely until the 2012 presidential election, a standoff that is helping to make the stock market a better bet for investors than Treasury's, Bill Gross told CNBC.
Since negotiations between Republicans and Democrats about bringing the budget into balance are at a standstill, there have been suggestions that the US could temporarily default on its debt payments while negotiations continue.
Gross said that would send a disastrous signal to the world credit markets but would impact the dollar more than bonds, with investors turning to the euro and Chinese Yuan instead.
The dollar's the world's reserve currency. It's what we transact in, he said. If the dollar is defaulted on for any period of time, what type of signal does that send to the rest of the world?
As a result of this uncertainty, Gross said Pimco is investing in debt from emerging markets such as Brazil and is in Canada, Germany and Mexico bonds as well.
See below for the entire interview of Bill Gross on CNBC, he mentions the US dollar at the 4 minute mark: