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00:00UP .2%. YOY'S THREE-POINT SENT RELATIVE TO 2.5%. THERE IS NO PRESSURE FROM THE STANDPOINT OF WAGES. I THINK THE FED WILL GO BECAUSE OF CONCERNS ON THE REAL ECONOMY. IT IS GOING TO BE AN INTERESTING EXPERIMENT OVER THE NEXT THREE MONTHS AS THEY SHIFT TO A NEW POLICY IN TERMS OF DETERMINING THE FED'S FUNDS RATE. USING THE EXCESS RESERVES IN TERMS OF INTEREST RATE IS A TOP -- AS A TOP AND USING REVERSE REPOS AS A BOTTOM, THEY WILL HAVE TO WORK WITH THAT. THEY WILL MEET AT LEAST THREE MONTHS TO MAKE SURE IT IS SMOOTH. TOM: YOU WROTE ABOUT W ILEY COYOTE. I DON'T THINK THAT TRANSLATES IN FRANCE WELL. ADDRESS FOR THE INTERNATIONAL AUDIENCE HOW JANET WALLIN -- JANET YELLEN CAN AVOID THE CHALLENGES MARIO DRAGHI HAS. BILL GROSS: THE FED HAS DROPPED OFF THEIR QE ALMOST 12 MONTHS AGO. DRAGHI CONTINUES. JACKIE'S ELLIS --MARIO DRAGHI'S POLICY STATEMENT YESTERDAY WAS INTERESTING BECAUSE HE GAVE THE MARKET MOST OF WHAT THEY WANTED. HE IS STILL IN "WHATEVER IT TAKES" MODE. HE DID GIVE THEM QUANTITATIVE EASING FOR SIX MORE MONTHS AND INCLUDED ADDITIONAL ASSETS. IT SEEMED LIKE A STIMULATIVE FORWARD STATEMENT. BUT THE MARKET HAD THE SINCE THE AMOUNT WAS NOT INCREASED -- SENSE THE AMOUNT WAS NOT INCREASED. PERHAPS THE E.C.B. IS THE LAST BASTION OF EASY MONETARY POLICY AND ADD ITS LIMITS. TOM: THIS IS AN IMPORTANT QUESTION. BILL GROSS, HOW MANY BILLIONS TO JULIE'S YESTERDAY? BILL GROSS: OH, NO. MADE MONEY YESTERDAY. HAD LOTS OF CALLS, SOLD LOTS OF CALLS ON FIVE AND 10 YEAR GERMAN BUNDS. MADE A LOT OF MONEY. MAKING A LOT OF MONEY TODAY ON THE STREETS. I THINK THE U.S. IS IN A BETTER POSITION IN TERMS OF THEIR YIELDS RELATIVE TO GERMANY AND THE E.U. ALTHOUGH TO BE FAIR, IF $6 BILLION A MONTH HAS BEEN EXTENDED BY SIX MONTHS WITH 18 MONTHS TO GO, THAT IS ONE TRILLION EUROS TO GO AND PUTS THEIR BALANCE SHEET CLOSE TO 4 TRILLION RELATIVE TO THE FED'S SHEET OF 4 TRILLION WITH A LARGER ECONOMY. THERE IS A LOT OF FIREPOWER LEFT. IT PAYS TO BE CAREFUL WHEN A CENTRAL BANK EMPLOYEES MARTIN GET STRATEGY -- MARTINGALE STRATEGY, WHICH IS TO DOUBLE UP TO CATCH UP. MICHAEL: WE THOUGHT UNTIL THE MARIO DRAGHI PRESS CONFERENCE YESTERDAY WE HAD A NARRATIVE. THEY WERE STIMULATING. WE WERE GOING TO START RAISING RATES. YOU WOULD SEE THE DIVERGENT TRADES IN PLACE. IT COULD BE PREDICTED. NOW IT SEEMS HE HAS BROUGHT BACK A LOT OF VOLATILITY. WE CANNOT SAY WE WILL SEE A BIG AND SELLOFF IN THE UNITED STATES -- BOND SELLOFF IN THE UNITED STATES AND THE OPPOSITE OVERSEAS AS THE DOLLAR GET STRONGER AND THE EURO GETS WEAKER. WE ARE NOT SURE WHAT WILL HAPPEN. BILL GROSS: THE UNITED STATES HAS BEEN TALKING ABOUT THE NEW, NEUTRAL INTEREST RATE. FORWARD FUNDS IS FORECASTING 85 BASIS POINTS HIGHER A YEAR FROM NOW AND ANOTHER 60 OR SO TWO YEARS FROM NOW. ANOTHER 40 OR SO THREE YEARS FROM NOW. THE EXPECTED PACE IS 7 THAT TAKES US CLOSE TO 2%, WHICH I THINK IS THE NEUTRAL LEVEL GIVEN NORMAL ECONOMIC CONDITIONS. TOM KEENE: ONE MORE QUESTION AND WANT TO GET TO ALAN KRUEGER. BILL GROSS, I'M SITTING IN THE CITY HALL OF PARIS. THE BASIC IDEA IS THIS OF THE LAND OF OPPORTUNITY -- PERPETUITY BONDS. IS THE THING AMERICAN MISSING THAT WE NEED LONGER DURATION BONDS? DO THEY MAKE SENSE FOR INVESTORS? BILL GROSS: NOT REALLY AT THESE LEVELS. LET'S TALK ABOUT PENSION FUNDS. I KNOW YOU MEAN INDIVIDUAL INVESTORS. BUT THEY ARE BASICALLY THE SAME THING. DO THEY WANT TO LOCK IN FUTURE LIABILITIES AT A 3% LEVEL FOR A 30-YEAR TREASURY OR 2.69% FOR A 30-YEAR SWAP TO GET ESOTERIC? DOES THAT PAY THE BILLS GOING FORWARD? I DON'T THINK SO. YOU KNOW FOR SURE BY LOOKING AT THE PENSION ESTIMATES, THEY EXPECT 7.5% IN TERMS OF A 50/ 50 STOCK AND BOND MIX. DO INDIVIDUAL INVESTORS GET THAT FROM A 3% LONG BOND? I DON'T THINK SO. I THINK IT PAYS THE TREASURIES OF THESE COUNTRIES TO ISSUE LONG DEBT AS OPPOSED TO INDIVIDUALS AND CORPORATIONS TO BUY THEM. MICHAEL MCKEE: BILL, WE HAVE ALAN KRUEGER HERE. WE HAVE TIME FOR A QUICK QUESTION FOR BILL IF YOU HAVE ONE. ALAN: I WAS CONFUSED AMONG BONDS. IF YOU DON'T THINK THERE WILL BE DEMAND, WOULDN'T INTEREST RATES