Bill Gross warns that stocks and bonds are in for trouble

The top dog at Newport Beach investment giant Pimco says in his monthly letter that once the Federal Reserve's quantitative easing program is completed in June, bond yields are likely to go "higher, maybe even much higher." That's to attract enough interest among investors. Higher yields, of course, mean falling prices for those already holding bonds. Gross also worries that a slackening of the economic recovery will impact stock prices. From Fortune:

"Bond yields and stock prices are resting on an artificial foundation of QE II credit that may or may not lead to a successful private market handoff and stability in currency and financial markets," he writes. Gross, who has been urging investors to steer clear of government bonds for most of the past year, reasons that yields will have to rise to keep attracting buyers who up till now have been willing to accept bond returns that are well below their historical average.

Weirdly, Gross begins his March letter than a not-too-flattering tale of how he stiffed a waitress when he was 21.

The Gross family legend is rather full of Paul Bunyan tall tales passed down over the years but none perhaps more self- revealing than "The Day When I Gave the Waitress a Negative Tip." Admittedly I was young and full of testosterone but the service was terribly sloooww and I was in a big hurrrryyy! Finally presented with a $2.00 bill, I took two bucks and wrote the following on a nearby napkin: "Thanks for the sh...ty service, negative tip - you owe me 25 cents." I didn't stick around to see the reaction, but I'm sure it was a unique experience for the young lady. I was, of course, like any 21-year-old, in the business of establishing a repertoire of "unique" experiences and this was but one notch on my Paul Bunyan Axe.

Says the WSJ's Matt Phillips: "It's one thing act like a jerk when you're a 21-year-old kid. It's another thing to brag proudly decades later."