Bill Gross: It's Conflicting To Answer What The Fed Really Wants

The December jobs report came in better than expected, however, the markets opened lower on assumption that this will influence the Fed to raise rates sooner.

Renowned bond investor and a fund manager at Janus Capital Group Inc JNS, Bill Gross, was on Bloomberg to discuss the report and whether it changes his view on anything as an investor.

"Yeah, we're creating a lot of jobs, part of it maybe part-time, I haven't seen that particular number, but you know the payroll survey includes part-time jobs, the household survey which is the one that figures out the unemployment rates…but the creation of jobs is one thing; the creation of wage is another," Gross said.

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What Does The Fed Really Want?

When asked whether the December jobs report changes his view of anything as an investor, Gross replied, "It doesn't. It does mean that GDP will probably be in the 3 percent zone for the first quarter, but I guess my question is – does it change the view of the Fed going forward, in terms of their starting point and the trajectory that they expect to have after their initial starting point? And I guess I am a little confused as are most investors by what the Fed really wants."

"The Fed would want a lot of jobs, the Fed would want a lot of growth, they just would not want a lot of inflation," Gross continued, "and certainly with the hourly wage number being what it is at 1.7 percent, if they're to reach their 2 percent inflation target, that basically means they are going to need 3 to 3.5 percent hourly wage increases going forward because of the productivity and the unit labor cost that falls out from that. So, it's a conflicting type of question as to what the Fed really wants."