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Bill Gross Telling Bloomberg To "Avoid Dollar Denominated Government Debt" Probably Means Bond Rout Is Over

Tyler Durden's picture


When Nassim Taleb and Marc Faber say that US government debt is a suicide investment, one can be allowed some skepticism. After all, they are likely just talking their book. On the other hand, when the manager of the world's biggest bond fund, whose flagship fund Treasury holdings amount to almost $80 billion goes on Bloomberg and says to "avoid dollar-denominated government debt" better known as US Treasuries, and instead recommends viewers invest in "stable" currencies like the Peso, the BRL or the CAD, then you know the bottom in bonds is in. So in addition to dumping fixed rate bonds (which means Pimco will again be able to buy on the cheap ahead of QE3, which as Larry Meyer has by now likely advised Pimco is a sure thing), Gross also told Bloomberg that his other two strategies are to buy floating rate debt (over fixed), and lastly recommend credit spreads over interest rate duration risk. For those who find something troubling with a $1 trillion fixed income manager talking down his investments, and are still wondering whether or not QE3 is coming, we suggest putting one and one together. And while at it, they should also consider that Pimco now holds over $100 billion in MBS: a notional amount last held just as QE1 was announced.

full clip after the jump.


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Fri, 12/31/2010 - 18:03 | 840513 boeing747
boeing747's picture

Not there yet, Spain and US stockMarket gona have big problems, bonds will rally at least 1st half of 2011. Happy New Year.

Sat, 01/01/2011 - 14:24 | 841617 TruthInSunshine
TruthInSunshine's picture


Goldman Sachs Says Fed to End QE2 On Schedule in June, U.S. Yields to Rise in 2011

The Gigantic Vampire Squid speaketh on sacred matter.

Fri, 12/31/2010 - 18:04 | 840514 Sophist Economicus
Sophist Economicus's picture

Is it too late in the holiday season to ship this manipulating idiot and Buffet to the Land of Mis-fit Toys?

Fri, 12/31/2010 - 20:31 | 840790 Raymond K Hassel
Raymond K Hassel's picture

+1, at this point the only way to give the appearance of improvement is to make it go down quickly first.

Fri, 12/31/2010 - 18:07 | 840522 buzzsaw99
buzzsaw99's picture

His gratitude for the agency bailouts is underwhelming.

Fri, 12/31/2010 - 18:10 | 840524 TruthInSunshine
TruthInSunshine's picture

Scratch what I said before.

Does this mean the PIMP-CO is bearish on equities?



Fri, 12/31/2010 - 18:20 | 840543 gwar5
gwar5's picture

Bill Spooked?

Fri, 12/31/2010 - 18:21 | 840546 penisouraus erecti
penisouraus erecti's picture

Curious why he keeps shifting his eyes to his right and blinking like crazy.......

Sat, 01/01/2011 - 00:05 | 841077 Captain Kink
Captain Kink's picture


Mon, 01/03/2011 - 00:01 | 843518 Guy Fawkes Mulder
Guy Fawkes Mulder's picture

Is that a new species of David Icke Reptilian that I haven't heard of yet? Tell me more...


Fri, 12/31/2010 - 18:22 | 840550 Catullus
Catullus's picture

I'm slow. I really don't understand why he would say this. Is he sending a message to someone? "yeah, this fuckton of bonds we're sitting on is not a good investment." Tin foil hat or not, this is just bizarre.

Fri, 12/31/2010 - 18:26 | 840565 midtowng
midtowng's picture

It's not bizarre at all.

I remember a few years ago he told everyone that Treasuries were a terrible investment. About four months later we learn that Pimco is buying Treasuries by the truckload.

Fri, 12/31/2010 - 22:19 | 840920 gkm
gkm's picture

I remember the exact same thing.  It was back in 2007.  The quote was something like "I don't know why anyone would want to own treasuries."

Who knows what his game is this time but you can bet it's just that - a game.

Fri, 12/31/2010 - 18:23 | 840551 deagle44
deagle44's picture

He seems full of shit to me.  Wouldn't listen to him.

Fri, 12/31/2010 - 18:26 | 840555 CrashisOptimistic
CrashisOptimistic's picture

The problem with all this?

It requires signing onto the concept of mutually exclusive scenarios:

1) QE2 will be successful and generate economic growth via lower interest rates, held down via bond purchases, thereby improving unemployment.

2) QE2 will be unsuccessful in holding down interest rates via the bond purchases, and with higher interest rates economic growth slows and worsens unemployment.

The chicken and the egg question arrives.  Gross is opting to believe in economic growth derived from monetary stimulus, which growth increases interest rates, contrary to the stated purposes of Bernanke.  El Erian will speak up soon, and probably contradict both Gross and  Bernanke.

Overall, they are not on the same page, while pretending that they are and while ignoring oil, largely because there is nothing they can do about it.  They have reached a level of self delusion where they persuade themselves that because there is nothing they can do about it, it can't affect them.

Fri, 12/31/2010 - 18:23 | 840559 midtowng
midtowng's picture

Gross has been talking his book for years. He's the perfect contrary indicator - assuming he's wrong.

Fri, 12/31/2010 - 18:26 | 840567 ATG
ATG's picture

USB still targeting 178

no matter what CNBC, Gross, MHFT et al say


Fri, 12/31/2010 - 18:30 | 840577 Edna R. Rider
Edna R. Rider's picture

I disagree with the thesis of the article.  I think Bill Gross talks his book.  He's saying he doesn't think US Treasuries are a good bet going forward.  He's probably right.  I'm not talking my book because I just bought TLT recently for a couple of dollar gain.  But I might dump it if it shows any real weakness.

Sat, 01/01/2011 - 00:49 | 841086 Captain Kink
Captain Kink's picture

Me too! 

and I bot H 125 calls on the TBond futures.  This morning.

Fri, 12/31/2010 - 18:41 | 840595 velobabe
velobabe's picture

gross is just G R O S S , he probably has a last name complex in addition to his small penis complex. Those people suffering from an e-penis complex display symptoms such as obsession over trivial technological matters.

gross |gr?s|
1 unattractively large or bloated : I feel fat, gross—even my legs feel flabby.
• large-scale; not fine or detailed : at the gross anatomical level.
• complete; blatant : a gross exaggeration.
• vulgar; unrefined : the duties we felt called upon to perform toward our inferiors were only gross, material ones.
• informal very unpleasant; repulsive : it's disgusting and gross, but it's a

Fri, 12/31/2010 - 19:15 | 840618 virgilcaine
virgilcaine's picture

Bonds are a BUY then.

Virgil's reasonong.. Debt is being destroyed faster than the Fed can Print.. and It's not getting into the Economy anyway. The Real Economy not the Spec mkts.

57 Trillion in Outstanding total debt..Feds bal Sheet. 2 -3 Tril. (ben's reason to quiver)

BDI and Interest Rates declining..Housing also.

Sat, 01/01/2011 - 16:20 | 841730 akak
akak's picture


Another deflationary flat-earther.

OK, for the 1001st time, just because our "money" (really, currency) is issued as debt, this does NOT mean that all debt is money!  If that were actually true, then the world would have seen multiple historical examples of hyperdeflationary collapses, when in fact not ONE such event has ever occured!

You fail.  Back to (Austrian) Econ 101.

Mon, 01/03/2011 - 00:19 | 843531 Guy Fawkes Mulder
Guy Fawkes Mulder's picture


"What you've just said... is one of the most insanely idiotic things I have ever heard. At no point in your rambling, incoherent response were you even close to anything that could be considered a rational thought.

"Everyone in this room is now dumber for having listened to it.

"I award you no points, and may God have mercy on your soul."

Mon, 01/03/2011 - 03:36 | 843703 akak
akak's picture

Your contentless reposte (such as it was) is one of the most insanely idiotic things I have every heard.

Junked in turn (for whatever that is worth).

Mon, 01/03/2011 - 05:58 | 843807 Guy Fawkes Mulder
Guy Fawkes Mulder's picture

Glad I got your attention, for what that's worth.


  • You say "our currency is issued as debt". What the hell, mate? Currency is what people circulate as money. If someone says that the FX markets are currency markets, then they are being imprecise or just plain liberal with the word currency, quite as if one were referring to the tip of the iceberg as being the entire iceberg. Liquid capital reserves are mostly on the ledgers and they are not currency.
  • You make a big deal about people thinking that "all debt is money". That's an outlandish concept, and pure folly. No reasonable person would ever think that all debt is money. I giggle when typing the words "all debt is money". I've never seen anyone confuse debt for money. Debt is the fucking infinite money vacuum that sucks money towards it, and it is always greater in magnitude than money. No one on this whole fucking site could possibly think that all debt is money. So why do you make a big point that "not all debt is money"? All money comes from debt, this is true. But no one thinks that all debt is money.
  • "Hyper-deflationary collapse, not seen once in history". You idiot. What do you think a bank run is? Bank runs always happen after they lend out more than they have. All the "panics" and "bank runs" that they gloss over in your history books are in fact little hyper-deflationary collapses that are a natural occurence in the banking of booms and busts. Just because you and your parents are from a generation that has experienced the beneficence of the Fed's "stability" does not mean that we are living under a banking system that is immune to hyper-deflationary collapse. Do you think the Fed is more afraid of deflationary collapse or inflationary collapse? They are afraid of deflationary collapse, and that is why they are playing chicken with inflationary collapse.
  • Then you are like "Austrian School 101 FOR THE WIN" and I just facepalm myself.

So, yeah.

You earn my Billy Madison Award for that post.

Mon, 01/03/2011 - 06:25 | 843829 akak
akak's picture

Shit, I had a long and detailed response to your horribly muddle-headed post all typed out, and then lost it at the very end!

Suffice it to say that I am astonished to see you mock me for mocking all those who equate all debt within an economy with money ---- only to then go on to make the exact same argument yourself!  In case you missed where you did so, here it is:

You make a big deal about people thinking that "all debt is money". That's an outlandish concept, and pure folly. No reasonable person would ever think that all debt is money. I giggle when typing the words "all debt is money". I've never seen anyone confuse debt for money.


"Hyper-deflationary collapse, not seen once in history". You idiot. What do you think a bank run is? Bank runs always happen after they lend out more than they have. All the "panics" and "bank runs" that they gloss over in your history books are in fact little hyper-deflationary collapses that are a natural occurence in the banking of booms and busts.

So here you are, calling the destruction of debt in a bank failure a "hyperdeflationary event".  But what was destroyed?  Not money --- and the real, and ONLY, proper definition of deflation is a decrease in the supply of money!  So you are implicitly equating debt with money by calling its destruction "deflation", when by all classical definitions it is NOT.  But that is what 80+ years of academic economic snake oil does to the field: corrupt and taint the very definitions upon which sound thinking depends.

It is still an indisputable fact that there is not one example of deflation, much less your chimera of "hyperdeflation", that has occurred under a fiat currency regime.  But keep looking for those unicorns --- maybe one day you'll be lucky.

Mon, 01/03/2011 - 16:21 | 844861 Guy Fawkes Mulder
Guy Fawkes Mulder's picture

If your deposits were lost in a bank failure you would not say it was debt that was lost so much as you would say it was the supply of your money was lost. And in fact, M2 would have decreased. Just because the bank's debt to you was lost does not mean that money wasn't lost. 

Let me say this again and please do repeat it out loud three times, so that you won't forget what I'm saying: All (paper) money comes from debt, but not all debt is money, and no one here thinks that the debt level is the money supply.

You come off as a rabid intellectual who tries to put everyone else's words into a box that he can explain to himself and then shelve neatly in the library of his own mind.

By the way, I don't think that the real, only, or proper definition of deflation is a "decrease in the supply of money" (I'd call that contraction of the money supply, or monetary contraction). Deflation is a decrease in the general price level. It's a stat that isn't precisely and unambiguously definable (because definition of "general price level" is open to debate), but it is still a useful concept and people tend to know inflation or deflation when they see it.

Finally, what is really at stake is a collapse of the biggest Ponzi of all time. Pensions, 401(k)s, all this imaginary paper wealth that could evaporate when the music stops and the biggest bank run in history starts. I only used the term "hyperdeflationary" because you used it first, and it seemed appropriate. Sure it's something of a chimera or even a strawman but I was playing along with the term you used in the first place. All in all, I like the term, and I'd never heard anyone use it before you did. It's funny and even apt, even if it is a little imprecise.

But call it the collapse of a Ponzi or call it hyperdeflation, what it is will be cascading collapses of financial institutions and governments who all have more debt than money and poor prospects of ever getting the money to pay down the debts. Bank panics are replete through history. The Panic of 1907 is one the biggest examples of this, and only the "stability" of the Federal Reserve System and Act of 1913 has stopped similar panics from evaporating paper wealth during busts. The only unicorn around here is the Federal Reserve's infinite power to stop a dollar panic. And that's a unicorn that not you, not I, nor anyone here actually believes in.

Bennie and his 'Jets are walking the line between hyperinflation and cascading bankruptcies. The economy is that broken. I'm getting on too far here. I'll let you have the last word, in which you can blather on and babble about how you are right and I am wrong. After that, we may meet again on another day on another post.


Fri, 12/31/2010 - 18:55 | 840623 Caviar Emptor
Caviar Emptor's picture

The Morning Line odds on QE are 2:3.

In a replay, the market will move up on every piece of bad economic news and sell off on newws perceived as 'too good'. 

And gold will be off to the races. 

However the cumulative risk of inflation (amidst domestic economic deflation) can reach critical mass and go nuclear: grocery bills nearing 3 digits on an ordinary day

Sat, 01/01/2011 - 13:04 | 841527 gmrpeabody
gmrpeabody's picture

"grocery bills nearing 3 digits on an ordinary day"

So freaking true!

Fri, 12/31/2010 - 18:57 | 840628 pitz
pitz's picture

Maybe the cocksucker will be sent to the gallows next year? 

Fri, 12/31/2010 - 19:02 | 840642 bob_dabolina
bob_dabolina's picture

He looks like Skeletor and sounds like my Aunt Agatha that smoked for 40 years.

His wife must have one helluva imagination.

Sat, 01/01/2011 - 01:31 | 841172 jomama
jomama's picture

i'm sure all that money takes the edge off

Sat, 01/01/2011 - 22:41 | 842136 bob_dabolina
bob_dabolina's picture

Thank you Mrs. Gross.

Fri, 12/31/2010 - 19:28 | 840681 Thorny Xi
Thorny Xi's picture

The BRL, Peso and CAD are all oil exporting countries.  If there's anything between the lines in Gross's call, that's it. 

Fri, 12/31/2010 - 20:08 | 840752 CrashisOptimistic
CrashisOptimistic's picture

Yeah, good call.

It is the nature of mankind to want to believe that good results happen from our ideas and philosophies.  Good economies for Reagan and Thatcher just coincidentally, we feel, arrived with Alaskan and North Sea oil revenues. 

And now bad things are going to happen as far as the eye can see, for both Bush and Obama, as oil production falters.  Just a coincidence, you see.

Fri, 12/31/2010 - 19:40 | 840702 Hitmannie
Hitmannie's picture

You Americans Are To Busy With Him, Just Keep Some Money On The Bank And Wait For Everything To Collapse.

Fri, 12/31/2010 - 19:51 | 840724 Hannibal
Hannibal's picture

Like the rest of Wall Street scum, Gross is not to be trusted!

Fri, 12/31/2010 - 19:57 | 840737 poydras
poydras's picture

The Faber and Gross comments are curious.  The probable reality is that funny money (QE and zero reserver reqs) is the source for sovereign debt purchases.  One year Gilts are selling for less than -200 bps.  The lunacy has to end sometime.

Fri, 12/31/2010 - 20:00 | 840740 Glasgow Gary
Glasgow Gary's picture

Gross wants bonds to sell off, so that he can accumulate them all over again before the typical Spring/Summer smackdown in risk. He is talking his book. He's either light on USD denominated bonds or wants to get short. He wants to cover and go long starting in June. Until then, he will probably ride the commodity trend.


Fri, 12/31/2010 - 20:14 | 840768 Hitmannie
Hitmannie's picture

I Think The Bankster Only Look At The Average Weight Of A Population Just To Know How Much More There Can Be Squeesed Into!! The Americans Are Too Fat and Nothing Is Left. So Asia and India Are The Countries To Go For!!

Fri, 12/31/2010 - 20:22 | 840779 XPolemic
XPolemic's picture

Translation: I was making out like a bandit front trading the Bernanke but got my ass handed to me by the market, so now I'm going to go on TeeVee and whine like a girl about fiscal policy.


Fri, 12/31/2010 - 20:32 | 840793 GetReal
GetReal's picture

On the precious metals front, it's useful to recognize how important falling Treasury bond yields and negative short-term interest rates have been in the recent commodities run. Historically, the Philadelphia gold stock index (XAU) has advanced at a 23.0% annual rate when the 10-year Treasury bond yield has been below its level of 6 months earlier, but has declined at a -5.9% annual rate when Treasury yields have been rising. With respect to short-term real interest rates, the XAU has advanced at a 16.1% annual rate when 3-month Treasury bill yields have been below the year-over-year CPI inflation rate, and just 4.1% otherwise. Put falling Treasury yields together with negative short-term real rates, as we've seen during much of the recent commodity price run, and you'll find that the XAU has historically advanced at a 33.9% annual rate. Notably, Treasury yields have recently reversed course, and are now above their levels of 6 months ago. While real short rates are still negative, this has historically not been enough to overcome rising bond yields and produce positive returns in the XAU, on average, except when the Gold/XAU ratio has been well above 7.

In short, my impression is that investors chasing commodities have not paused to recognize that one of the major supports for this run - falling Treasury bond yields - has been knocked away from them. There may be some pure momentum remaining for commodities, but this is now purely speculative. A much better environment for gold stock holdings would include falling Treasury yields, negative real rates at the short-end of the maturity curve, reasonable valuations of gold stocks to the bullion (which is presently still the case), and some amount of downward economic pressure, such as a Purchasing Managers Index below 50. The present Market Climate for precious metals shares isn't terrible by any means - it's just not positive anymore.

Fri, 12/31/2010 - 21:09 | 840838 akak
akak's picture

So what happened during 2004 to 2006, when the Fed funds rate rose from 1% to 5.25%, and gold continued to rise during the whole interval?  Just to take one example that negates the simplistic "interest rates up, gold down" thesis.

Additionally, you are only focusing on nominal interest rates, while REAL interest rates remain negative, and are likely to do so for the foreseeable future.  Any rise in REAL interest rates will rapidly drive the US federal government into undeniable bankruptcy, and would finally crash (yey!) the fiat pseudo-dollar once and for all.

Really, that is just CNBC-level "analysis".

Fri, 12/31/2010 - 22:12 | 840914 GetReal
GetReal's picture

No single explanation is perfect; but exceptions often prove the rule.

Regarding "any rise in REAL interest rates will rapidly drive the US federal government into undeniable bankruptcy...", please elaborate.

Regarding gold, do you think it likely that it could test its 100 or 200-DMA support within the next six months?

Fri, 12/31/2010 - 22:26 | 840928 akak
akak's picture

Regarding "any rise in REAL interest rates will rapidly drive the US federal government into undeniable bankruptcy...", please elaborate.

Given the enormous (and ever increasing) federal debt, would not interest payments on that debt rapidly eat up most of the US federal government's budget, forcing it into ever more extreme and more obvious monetization of that debt?  Of course, this could happen even with real interest rates being negative, but if they turned positive it would only clinch the deal.


Regarding gold, do you think it likely that it could test its 100 or 200-DMA support within the next six months?

Given the ability of our corrupt and kleptocratic elite to routinely test and break the 200 DMA on the chart of their insanity and sociopathy, yes, I think almost anything is possible regarding the price of gold.


Fri, 12/31/2010 - 23:01 | 840983 GetReal
GetReal's picture

When will the economy turn around? In my view, Congress needs to address REAL entitlement reform -- starting with standing up to public unions like the teachers' union in NJ. Check out this exchange between Gov. Christie and a disgruntled teacher.

When the banks stop the looting and the Goverment starts prosecuting, then, and only then, will I believe the much-needed challenge of restructuring the debt of the too-big-to-fail zombie banks has begun.

Fri, 12/31/2010 - 23:22 | 841019 akak
akak's picture

I agree, and yet I can't help but wonder just when --- or whether --- the megabanks will ever stop looting us as a society and finally have their parasitical grip around our collective necks at least loosened.

It is hard for me, though, to even single out the megabanks as the real villains here; it is an entrenched and intermingled confluence of government, finance, "business" and military forces that seem determined to strangle our prosperity, our privacy and our freedoms, all of which are being lost (no, allowed to be taken) at a rate unprecedented in my 40+ year lifetime.

Fri, 12/31/2010 - 23:46 | 841053 GetReal
GetReal's picture

Check out this brief video clip (despite its military overtones). Start watching around 2:35...

Sat, 01/01/2011 - 00:46 | 841067 GetReal
GetReal's picture

Happy New Year friend! For what it may be worth, I'm looking forward to reading this book when it becomes available in a few more days:

Fri, 12/31/2010 - 22:40 | 840948 Kayman
Kayman's picture

Bernanke is on the horns of a dilemna of his own making. He is pumping up asset values and not the economy.

Gold will only go down with a revival of the economy and rising interest rates. Do the math; 2 trillion of deficits and money printing annually for a net gain of $350 billion in GDP growth. This pump don't prime.

Even the recent bump up in rates must have the Bernank crapping his pants (naturally with upper lip quivering). And I am 100% certain of that.

Sat, 01/01/2011 - 03:41 | 841270 trav7777
trav7777's picture

what happened?  Gold production continued to decline.

if/when the production trend changes, the price trend will follow.  Certainly there is a monetarist component to commodities prices, but do not discount supply and demand and fundamental drivers

Sat, 01/01/2011 - 20:15 | 841983 deagle44
deagle44's picture

GLD was introduced.

Fri, 12/31/2010 - 23:32 | 841035 barkingbill
barkingbill's picture


Sat, 01/01/2011 - 01:28 | 841169 Zero Debt
Zero Debt's picture

Compare the correlation between global money supply and the gold price, and then compare the correlation between interest rates and the gold price.

You may find it interesting that rates have very little to do with it.

The question comes down to "what is the value of an asset with no cash flow".


Sat, 01/01/2011 - 21:01 | 842043 deagle44
deagle44's picture

Except when rates went up to 20% and gold/silver plummeted.

Sat, 01/01/2011 - 23:39 | 842178 akak
akak's picture

Halting an incipient hyperinflation will do that.

However, the FedRes only held one such card in their hand --- and Volker played it.  Bernanke doesn't even have one pair (literally and figuratively), and at this point is merely bluffing, with all of OUR chips on the table.  Oh, and he's playing against Doc Holliday.

Fri, 12/31/2010 - 20:34 | 840799 Dollar Bill Hiccup
Dollar Bill Hiccup's picture

"This is all a giant Ponzi scheme" -- Bill Gross

Wait a second, this really is a giant Ponzi scheme. And I'm Charles Ponzi ... I AM the Ponzi scheme -- Bill Gross's alter Ego.

For those of you unfamiliar with the biblical reference, well, when you are who you are, there's not much point in pretending otherwise.

Fri, 12/31/2010 - 20:34 | 840800 BigDuke6
BigDuke6's picture

with his doublespeak, he's a natural to head off to goldman sucks for his next job.

Fri, 12/31/2010 - 21:01 | 840832 lolmaster
lolmaster's picture

QE^n^n bitchez

Fri, 12/31/2010 - 21:43 | 840846 akak
akak's picture

I have a very hard time taking ANYTHING seriously from this Fed Quisling with his thready and whiny, frightened little girl voice.  The fact that more often than not he is merely spouting some implicitly or explicitly pro-Fed, pro-financial establishment bullshit only adds insult to injury.

Fri, 12/31/2010 - 21:39 | 840876 VeloSpade
VeloSpade's picture

I bet Bill Gross blows El Muhamad El Erian in between their bond trading activities.

Sat, 01/01/2011 - 10:08 | 841419 velobabe
velobabe's picture

maybe just sucks it, babe†

Sun, 01/02/2011 - 12:59 | 842560 doolittlegeorge
doolittlegeorge's picture

what are you now?

Fri, 12/31/2010 - 21:42 | 840879 eatandtravel
eatandtravel's picture

When China's economy goes into the shitter, Brazil and Canada economies are going to tank.  Bond yields are coming down, folks.

Fri, 12/31/2010 - 22:35 | 840940 Something Wonderful
Something Wonderful's picture

Open up for an ear-popping bite of the QE6-induced hyperinflation shit sandwich coming 2012!

Fri, 12/31/2010 - 23:15 | 841011 Wheatman
Wheatman's picture

Tyler, have you been smoking dope? For goodness sake, you bond bull crap is grating. The collapse of the entire curve into oblivion is imminent. The USA cannot grow its way our of hell, and both parties will NOT increase taxes. Get a life.

Fri, 12/31/2010 - 23:33 | 841039 barkingbill
barkingbill's picture

yeah im with faber and rogers. when those two guys both agree, how can you oppose them? 

so bonds going down. commodities up. end of story. 

Sat, 01/01/2011 - 00:15 | 841090 Captain Kink
Captain Kink's picture

Consider TD the senior editor of the site. He is allowed to editorialize.  to educate. 

Fri, 12/31/2010 - 23:43 | 841049 Everyman
Everyman's picture

If Gross is producing misleading information AND it turns out that he is lying to promote his investments, that is an SEC VIOLATION and the Son of a bitch needs to be either shot in the fucking head or put in jail.


Sat, 01/01/2011 - 00:11 | 841082 dcb
dcb's picture

I get the feeling a medium term top is in order, but I also feel a correction is in ordedr as well. if you draw tbt as a trend, it has hit that point that it is always a down trend. so I'd like to see this jump past the border. they did just do end of quarter window dressing which can clearly be seen in tbt, the qe eliminates the effect it has on the market. I would like to know if they do stop qe a couple days before end of quarter to sucker people into the shorts to short squeeze them. you can clearly see that two weeks to end of quarter is always a good time to buy treasuries



Sat, 01/01/2011 - 00:47 | 841124 Captain Kink
Captain Kink's picture

sounds to me like he's scared. afraid for the dollar.  if you have to say the dollar will remain the reserve currency (which PIMCO did the other day), then it will not remain the reserve currency.

Sat, 01/01/2011 - 01:37 | 841178 Buck Johnson
Buck Johnson's picture

For the head of PIMCO to be saying what he said and other things during this financial crisis, is telling.  It's telling because he can't be naive enough to think that he's being clever by getting them (other bond buyers and such) to sell and then he'll buy.  No, I don't think he's talking his book I think he's doing another alibi like he did earlier this summer.  He's trying to get on record that he's concerened about this or that, while at the same time trying to make money off the deal.  He knows that this game won't last for too long and when it ends people and govt. will need people to blame.

Sat, 01/01/2011 - 13:20 | 841547 gmrpeabody
gmrpeabody's picture

Agreed..., I think.

Sat, 01/01/2011 - 02:29 | 841223 Harbourcity
Harbourcity's picture

Why the hell is he saying CAD is a safe currency.  70% of export income is to US and if it goes tits up what's happing in Canada... yeah!

Sat, 01/01/2011 - 15:50 | 841703 Thorny Xi
Thorny Xi's picture

CAD safer than USD long term since their banks weren't operating a "legal" fraud and becasue they have oil to export.  Mexico's peso is safer than the USD because their banking system involved less fraud, or at least more recognizable, "priced-in" fraud over a longer timeline, and they have oil to export.  Perhaps Gross understands the role oil plays in long term economics and understands that a 10% cut in US supply, which is likely within 2 years (and remember, the 70's embargo was half that), will gut the status quo in the US. Perhaps he's right. Canada will find buyers for its oil, and they will be us, whether the system has tanked or not.  Same for Mexico.  If we can't afford oil from these guys, nobody else will sell us any, but the exporters will have plenty of would-be buyers elsewhere.

The game's pretty-much over for SOP trading and Gross seems to grasping this.  With the funds he's responsible for, what the hell is he going to do?  Buy physical gold?  Game's over, he knows it, and he's stuck in the second law .. can't win, but he can't quit the game either.

Sat, 01/01/2011 - 06:33 | 841314 FranSix
FranSix's picture

The propagandists, who are very probably the most cynical people on the planet, have happily provided the appropriate big screen viewing to be released just prior to the next flash crash, which is likely the next downleg.  Jan 7 release date.

Didn't see Winona Ryder playing the witch.  Must be some sort of stand-in.

Any title that might have performed during the flash crash will likely perform again.

Sat, 01/01/2011 - 06:23 | 841319 FranSix
FranSix's picture

One thing that stood out and has been standing out in CNBC reports are how ETFs are to be avoided.  They made an especial point one day of stipulating to avoid the VIX, yet this week they are saying that volatility is likely to rise:$SPX&p=D&yr=0&mn=6&dy=0&id=p48521628912&listNum=27&a=218893528



Sat, 01/01/2011 - 06:41 | 841325 LudwigVon
LudwigVon's picture

Suuuure I trust an Ellen Degeneres look a like, who comes all late to say bonds bottomed when whispers of a below expectation QE2 were promulgated by Fed presidents in early Oct.


Sat, 01/01/2011 - 10:06 | 841416 silver is money
silver is money's picture

When you really need to avoid USD denominated debts, I do not think safe to invest in emerging market debts.

Sat, 01/01/2011 - 10:47 | 841435 longontents
longontents's picture

I wonder if he really meant ANY of that?  Boy, that Neel Kashkari was a good hire eh Bill?  Scumbags, the lot of 'em.

Sat, 01/01/2011 - 10:59 | 841439 TooBearish
TooBearish's picture

Gross (as many of his criminal cohorts)has regularly used the press for years to either help him and his trillion $ battleship into a position or out of one.

I agree with the consensus here, he is accumulating at these levels.  My buddies on the floor have them short +30,000 TYH Feb 118-122 straddles.

Sat, 01/01/2011 - 11:05 | 841448 WTF2
WTF2's picture

Gross's hair gets thicker and blacker every time I see him.  Treasuries were a great buy last week into tax loss selling.  WTF is he talking about?

BP is a great buy too.

Sat, 01/01/2011 - 11:14 | 841455 TooBearish
TooBearish's picture

Funny You say that I think he's had some plastic surgery or botox treatment, since he lost the mustache his face looks a tad tighter, like Carol Channing....

Sat, 01/01/2011 - 12:17 | 841498 Babalooee
Babalooee's picture

Ask yourself: Have you ever seen them in the same room together?

Sat, 01/01/2011 - 15:57 | 841711 Thorny Xi
Thorny Xi's picture

:-)  +1

Sat, 01/01/2011 - 11:46 | 841473 no life
no life's picture

The bonds have to go back up...  it'll come from the same thing as it always does - flight to safety. Pimco knows this, they are just in it for a trade. What they do vs. what they say. It is perfectly set up so that we get hit with some putrid announcement out of of Europe again, then there's all the sudden a flight to safety and Pimco already loaded up beforehand.. on the other side, the already overvalued equities are ripe for a fall... but the Fed is there to backstop the equities from falling too hard. Then equities rally back before getting to the traditional summer 'risk off' trade.  It's all orchestrated ahead of time by our friends at the New York Fed, Pimco, and The Golden Sack.

Sat, 01/01/2011 - 12:02 | 841486 cclaeys
cclaeys's picture

Nothing like objective advice!

Sat, 01/01/2011 - 13:08 | 841534 miker
miker's picture

Simple answer to this.  Gross is a shill for Fed/Treasury (at least for now).  It doesn't matter what the fuck he is managing.

THEY want money POURING into stocks in 2011.  The sooner the better.  THEY have got to get a rip-roaring rally started to keep this whole thing from spiraling down.  THEY have about 2-3 quarters at best. 

THEY know that employment will not improve much although they will tout every modest improvement stat.  THEY know consumption will stay flat (probably drop off big time first quarter after this latest X-mas binge).  THEY know Europe is in the shitter. 

THE ONLY WAY to change the dynamic is to get the stock market ALOT HIGHER and get EVERYONE PLAYING. 

THE ONLY THING that can tank this plan is an EXOGENOUS EVENT out of left field.  THEY know this.  THEY also know the longer they dink around with this thing, the greater the chance of such an event.   ONE SUCH BIG RISK IS MR. RON PAUL.  It would take time, but he could inadvertantly SHUT THIS WHOLE THING DOWN.

Stocks will start to move; some in big ways.  ALL THE BIG PLAYERS have been counseled IN NO UNCERTAIN TERMS.

THERE is NO SHORTAGE of ELECTRONIC MONEY.  Yes it will inflate the currency, but the risk of deflation far exceeds this future risk, in THEIR MINDS.

Sat, 01/01/2011 - 16:02 | 841714 Thorny Xi
Thorny Xi's picture

"THE ONLY THING that can tank this plan is an EXOGENOUS EVENT out of left field."

Oil production has been flat since 2005.  Not exactly left field, but if you're expecting fixed returns to be paid when real growth, other than population, is impossible, you're not playing the game at the level of somebody who's holding a zillion in bonds.   Oil exporters will be able to pay the rent.  Importers won't.


Sat, 01/01/2011 - 13:25 | 841551 fiftybagger
fiftybagger's picture

Following the advice of Pimpco will leave you with a Gross Bill!

Sat, 01/01/2011 - 13:39 | 841558 ??
??'s picture

If one is of the view that the administration will, with the approval (or non-approval as the case may be) of congress to allow (at a very low tax rate e.g. 5% instead of 35%) the repatriation of the foreign profits of American corporations now estimated to mirror the current cash hoard that American corporations are sitting on ($1.9 trillion x 2) - where does one go to discover which companies will benefit the most?


(of course if this does indeed take place - and I think it will - the American tax payer will once again be screwed over, but that's okay because they are now used to it )


Also I note that some of the names associated with ZH no longer appear in the sidebar on the right

Mon, 01/03/2011 - 00:29 | 843555 Guy Fawkes Mulder
Guy Fawkes Mulder's picture

Mindblowing avatar and name.

Props for that alone.

I didn't read what you posted at all.


PS: Okay I did read it. No comment.

Sat, 01/01/2011 - 14:17 | 841607 Mark Beck
Mark Beck's picture

A few comments:

The $100B in MBS has an asymmetric risk profile with base asset class price. He would have been better off selling at par to FED scrubbed through Fannie.

Did he really say buy Peso? What? CAD is one thing but Peso.

No haircut mention on the USD when reserve move to basket.

He talked about divesting out of USD, but my feeling was more in a historical cyclic weakness bondism way and not an acknowledgment of sovereign risk. He downplayed USD currency risk while at the same time urging divestiture and talking about debt driven reduction in growth.

At times it is interesting how US sovereign debt risks are downplayed by the investment community and the government. Especially in Bill's case with calls for movement away from US Treasuries.

A one page analysis would show that any movement away from sovereign debt class will greatly expose the US to underfunding government. When primary dealer slack is exhausted and FED buying moves beyond 40% of total issuance, there will be no way to repair the market or tighten quickly enough to advert high rates or crisis.

The public face of the investment community will have you believe that you can push the level of debt issuance without consequence in growth or risks. It seems the ridiculus plan is to force bond participation through domestic consumption, which will only decrease real growth investment and further undermine job creation. From where will this consumption be generated in magnitudes large enough to offset issuance during this de-leveraging cycle with $1T or more yearly deficits?

How do we repair America when the system is broken? Where fiat debasement defines growth, and consuption is driven by those with first access to the FED.

Mark Beck

Sat, 01/01/2011 - 20:56 | 842035 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Bill Gross needs to change his diet.

Sun, 01/02/2011 - 12:59 | 842567 doolittlegeorge
doolittlegeorge's picture

Bill Gross made a fortune in AIG debt--Buffet's doin' great with Goldman, GE and railroads now.  the beat goes on....

Mon, 01/03/2011 - 03:07 | 843690 Temporalist
Temporalist's picture
Treasuries Poised to Extend December Decline Amid Goldman, Pimco Warnings


It's a good thing they think QE3 won't be necessary...

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