Bill Gross just used kittens, sex, and Victoria's Secret to explain his miserable outlook for the global economy

Bill Gross has some tough question for the global economy, though maybe not as tough as one he got from his son.

In his latest investment outlook, Gross poses five questions about the sustainability of the global economy which are just as difficult as the one posed by his youngest son.

Evidently his son Nick happened upon a Victoria's Secret catalog (full of, as Gross puts it, "plain and unattractive models") and asked him, "Dad, what is Victoria's Secret?"

Gross framed the examination of the global economy around a meandering explanation of his discovery of how babies are born and subsequent passing of that knowledge to his children. (For instance, his mom asked him when he was 14 years old if he knew where kittens came from. He responded, "the pet store," so she left it at that.)

This culminated in his son's awkward question.

"Well now, I quickly thought, does he mean what is Victoria's Secret or what is Victoria's Secret?" wrote Gross. "If it was the former, it could be just an innocent question about the mailer itself. If the latter, well, it was a path down which I wasn't willing to travel."

To divert attention Gross posed the same kitten question to his son that his mother once asked. Gross then received the same "pet store" response he had given to his own mom all those years ago, breathed a sigh of relief, and moved on.

Eventually, Gross did relate this to financial markets.

"There are equally important questions in today's economy and financial markets, so I thought I'd condense a few of them to hopefully explain our current situation, perhaps a little more honestly than my 'kittens in a pet store' ruse or what 'Victoria's Secret' really was," he said.

The questions were:

1. "When does our credit-based financial system sputter/break down?"
2. "Can capitalism function efficiently at the zero bound?"
3. "Can $180 billion of monthly quantitative easing by the ECB, BOJ, and the BOE keep on going? How might it end?"
4. "When will investors know if current global monetary policies will succeed?"
5. "What should an investor do?"

Essentially the answers to these five questions summed up the totality of Gross' recent ideas and letters: the credit-fueled economy is running out of steam and central banks can continue with their easing, but it will distort the markets. These two realities will eventually lead to disaster and terrible returns for investors unless there is serious GDP growth pick-up.

Given those facts, investors should be wary, according to Gross. This means people should stay away from normal financial assets.

"I don't like bonds; I don't like most stocks; I don't like private equity," wrote Gross.

"Real assets such as land, gold, and tangible plant and equipment at a discount are favored asset categories. But those are hard for an individual to buy because wealth has been 'financialized'."

And where, you might ask, does Gross suggest getting exposure to such assets? The Janus Global Unconstrained strategies, which conveniently are run by... Bill Gross.

Other than that, Gross advised that investors just relax.

"Have a great summer. Hit the beach. Don't worry, be happy. Visit a pet store," he concluded.

You can read Gross' full outlook here»