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Exclusive: Bill Gross Is Now Short US Debt, Hikes Cash To $73 Billion, An All Time Record

Tyler Durden's picture





 

A month ago, Zero Hedge first reported that Bill Gross had taken the stunning decision to bring his Treasury exposure from 12% to 0%: a move which many interpreted as just business, and not personal: after all Pimco had previously telegraphed its disgust with US paper, and was merely mitigating its exposure. This time, in another Zero Hedge first, we discover that it is no longer business for Bill - it has now become personal (and with an attendant cost of carry). In March, Pimco's flagship Total Return Fund (TRF) has now taken an active short position in US government debt: -3% on a Market Value basis (or $7.1 billion), and a whopping -18% on a Duration Weighted Exposure basis. And confirming just what PIMCO thinks of US-related paper is the fact that the world's largest "bond" fund now has cash, at a stunning $73 billion, or 31% of all assets, as its largest asset class on both a relative and absolute basis. We repeat: cash is more than PIMCO's holdings of Treasurys and Mortgage securities ($66 billion) combined. To paraphrase: in March PIMCO was dumping everything related to US rates (see chart below). This is the first net short position that PIMCO has had in Government-related debt since the Great Financial Crisis of 2008, and going positive in February of 2009 only after it became clear that the Fed would commence monetizing US debt one month later. This is the closest that Gross has come to making a political statement and is now without doubt putting his money where his mouth is. The only event that could possibly derail Gross' thinking is a huge market crash forcing a rush to Treasury safety. Alas, as has been made all too clear recently, US debt is no longer the safe haven it once was. Which begs the question: when will the TRF break out a "gold" asset holdings line item.

And another side effect of the firm's scramble away from debt and into cash is that the effective duration of TRF is now down to 3.6: only the second lowest since the 3.38 posted in December of 2008... when the world was on the verge of ending.

That Bill Gross is willing to risk a surge in redemptions (after all who would be wiling to pay PIMCO to manage a third of their assets in the form of supposedly devaluating cash) in order to make a statement about the credibility of the US government, and specifically the viability of its IOUs, is easily the only thing that the US government has to consider when evaluating the prospects for funding trillions and trillions of US deficits at "acceptable" rates in the absence of further quantitative easing by the Chairman.

If Gross is indeed right, something very wicked this way comes.

 

 


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Sun, 04/10/2011 - 14:42 | Link to Comment Glasgow Gary
Glasgow Gary's picture

Hatha yoga on the beach at dawn. In the afternoon, shorting more of the 30 year bond.

Bring it on!

GG

Sun, 04/10/2011 - 15:52 | Link to Comment A L I E N
A L I E N's picture

Correct me if I'm wrong but aren't they basically predicting more of the same? That Benny must keep rates low and continue some form of QE.  Since QE2 commenced last fall treasuries have sold off and equities/commodities have soared anticipating surging inflation.  If they continued current policy treasuries would continue to sell off.  I would have to assume if there is no QE3 planned(yet) and rates were raised that money would leave commodities/equities and go into treasuries(opposite of now) with the FED put gone. 

Sun, 04/10/2011 - 20:43 | Link to Comment LowProfile
LowProfile's picture

That would be correct, but I think the headline "Gross is short treasurys" is missing the bigger story:  Gross is taking a huge long bet on the USD.

And considering

The only event that could possibly derail Gross' thinking is a huge market crash forcing a rush to Treasury safety.

You could argue he's hedging that bet with a treasury short?  Hmm...

Mon, 04/11/2011 - 04:46 | Link to Comment ZeroPower
ZeroPower's picture

Gross is taking a huge long bet on the USD.

Exactly, key point.

The author clearly did not miss this fact, but i propose its better to report about the 'apocalyptic' short UST fact as opposed to long USD.


Sun, 04/10/2011 - 23:23 | Link to Comment macholatte
macholatte's picture

Unless entitlements are substantially reformed, the U.S. will likely default on its debt; not in conventional ways, but via inflation, currency devaluation and low to negative real interest rates.

-- Bill Gross April 2011

 

http://www.pimco.com/EN/insights/pages/skunked.aspx

Sun, 04/10/2011 - 16:08 | Link to Comment IQ 145
IQ 145's picture

 Exactly; the "US Treasury Bond" as the CME calls the long bond contract, made an absolutely beautiful double top in Sept. and Oct. 2010; and paid enormous profits to anyone who sold off the Oct. Top. This was a multi-year top, and this market is now a multi-year bear market; I couldn't agree with you more; sell the rallies, roll over your positions and allow plenty of time; these things are going back below 100; this contract can be a very significant money maker.

Sun, 04/10/2011 - 16:45 | Link to Comment Djirk
Djirk's picture

rates going up.....still solid holdings in munis

Sun, 04/10/2011 - 18:06 | Link to Comment New_Meat
New_Meat's picture

pick your muni poisons carefully D. - Ned

Sun, 04/10/2011 - 19:55 | Link to Comment yipcarl
yipcarl's picture

You brag about holding Muni's?  Soon you'll be broke.  If you don't think they will default that debt in a heartbeat you're delusional. 

Sun, 04/10/2011 - 20:56 | Link to Comment Johnny Lawrence
Johnny Lawrence's picture

You obviously don't understand the muni market.  Yes, you shouldn't buy them blindly in this environment.  But, there are some issuers who are extremely solid.  You just have to know what you're looking for.

Sun, 04/10/2011 - 21:27 | Link to Comment Rwbrown72
Rwbrown72's picture

Everything in your spreadsheet assumes that everything in your spreadsheet is not a lie or a "partial" truth. Long hard assets and Tiger Blood!

Mon, 04/11/2011 - 04:48 | Link to Comment ZeroPower
ZeroPower's picture

+1

Gross holds a fair amount of munis as well, obvs not the shit ones as im sure his DD is second to none.

Wed, 05/18/2011 - 19:08 | Link to Comment yipcarl
yipcarl's picture

Wow Johnny, thanks for the insight. You must 'sell' the shit.  

Mon, 04/11/2011 - 04:18 | Link to Comment Djirk
Djirk's picture

I wasn't bragging about my positions just making an observation on the PIMCO holdings...pick you insults carefully

Sun, 04/10/2011 - 14:43 | Link to Comment duncecap rack
duncecap rack's picture

Rate hike April 27

Sun, 04/10/2011 - 14:48 | Link to Comment CPL
CPL's picture

Yup, double digits...any one want to call it.

 

I'm looking at 23.4%

Sun, 04/10/2011 - 15:04 | Link to Comment duncecap rack
duncecap rack's picture

I know everybody thinks this is full of shit. I have made these sort of comments before and nobody thinks it has any possibility but I have read a lot of hawkish fed official comments recently. I just want ZH'rs to consider a possible shift. Maybe make a hedge against the possibility of a reversal of the dominant trend since Jackson hole. I know they are up to something and that is my best guess.

Sun, 04/10/2011 - 15:12 | Link to Comment davepowers
davepowers's picture

it could happen.

after all, the ECB raised rates at practically the same moment Portugal was in que for a bailout.

 

Sun, 04/10/2011 - 15:19 | Link to Comment Spigot
Spigot's picture

DC Rack,

When I first read the ZH article my first thought was "Where duh money GO..?" And I posited that they had to do something with duh cash, ya know? Not sure if, but may have suggested they were going short too...and here's ya go, dudes!

ECB rate hike may have been calculated to be a lagging push on inflation such as what the US Fed did in the 1970's to make the debt problems disolve. They lagged it all the way till they brought Volker in to tbe the 'bad cop'.

If so, then US Fed may also play that gambit. If they think they have sparked enough inflation, then they can chase inflation higher by being free with lending but also slowlty inching up rates as inflation starts to run. (IE - negative interest rates ramping inflation).

IMO they have to get the nominal debt to GDP's corrected. They do not want to let debt imploded (well maybe a little). What they want is to wash away the debt with "controlled inflation".

Whatever! Go POG, POS and POO!

Sun, 04/10/2011 - 18:11 | Link to Comment New_Meat
New_Meat's picture

Go POO!

Christopher Robin also approves ;-)

- Ned

Sun, 04/10/2011 - 19:48 | Link to Comment Bicycle Repairman
Bicycle Repairman's picture

The 1970s game.  When do we get our "Whip Inflation Now" buttons?

Sun, 04/10/2011 - 15:22 | Link to Comment 43 Steelie
43 Steelie's picture

I don't think ZH is dimissing a rate hike as a possibility. If there is one, it will be de minimis, superficial and won't do anything to quell the long-term issues with the US and the dollar.

 

Benny B is no Tall Paul Volcker...nor can he afford to be without massive deflation and default.

Sun, 04/10/2011 - 21:27 | Link to Comment Bendromeda Strain
Bendromeda Strain's picture

JPMorgan swap book says "I don't think so, Ben"

Sun, 04/10/2011 - 15:25 | Link to Comment tmosley
tmosley's picture

Problem is, there is ALWAYS a lot of hawkish talk.  It's just that there is never any hawkish action.

Sun, 04/10/2011 - 18:12 | Link to Comment New_Meat
New_Meat's picture

don't cha' know

Sun, 04/10/2011 - 17:06 | Link to Comment mdwagner
mdwagner's picture

Every quarter point adds how much to the federal budget (let alone state and local)?  How can the banks who all borrow short to lend long survive rate hikes?  I don't know how it's possible to hike rates without massive defaults.  I think they'd much rather allow massive inflation than defaults.  Inflation hurts the serfs a lot more than the feudal lords.  Defaults hurt the feudal lords a lot more than the serfs.

I really think it's one or the other.

Sun, 04/10/2011 - 17:34 | Link to Comment CPL
CPL's picture

I wouldn't discount it.  So far the idea of shorting ANYTHING is a bad idea where the fed is concerned.

 

Fuckers are as slippery as a bar of prison soap.

Sun, 04/10/2011 - 21:35 | Link to Comment FeralSerf
FeralSerf's picture

Unless/until Bill's cash hoard is in something like Swiss Francs, he's still not really short.  He's only betting that the yield curve will steepen.

It's difficult to short using USDs as the reference when the stock of USDs is increasing as fast as it is.  You might be right that the pig you've shorted is worth less in REAL money, but that doesn't mean it's worth less in USDs.  Too bad we can't use gold as the reference currency instead.

Sun, 04/10/2011 - 18:06 | Link to Comment chubbar
chubbar's picture

They could absolutely raise the rates. Here we go, drumroll ....... 1/4 percent raise in rates! WOW! Whoop de fucking doo!

Inflation is 6+%, so the real rate of return is now what?  -5.5%??? That's a fucking good deal?? Who gives a rats ass? We are still sinking into the abyss. Those cocksuckers at the Federal Reserve think we should jump on that insult? Fuck them!

Let them raise rates up to 8%+ or so and I'll think about it. Give us a real rate of return and I'll leave the gold trade and go into bonds. Otherwise, shut the fuck up!

Since that would reveal the bankruptcy of the U.S. gov't in less than a day, I think I'll stay in gold. Let them play their meaningless fucking games with small incremental rate increases. Get back to me when it gets 'real'.

Bernanke, you suck cock!

Sun, 04/10/2011 - 22:09 | Link to Comment cosmictrainwreck
cosmictrainwreck's picture

I like the drum-roll...nice touch

Mon, 04/11/2011 - 00:35 | Link to Comment narnia
narnia's picture

At what fed funds rate does the $300 trillion interest rate swap market implode?

Sun, 04/10/2011 - 17:22 | Link to Comment malek
malek's picture

Marc Faber put it succinctly: As long as rates remain negative by far in real terms (i.e. below inflation rate), any rate hike is meaningless.

Sun, 04/10/2011 - 14:43 | Link to Comment props2009
props2009's picture

So has gross bought gold? 

Sun, 04/10/2011 - 15:02 | Link to Comment Yield2Greatness
Yield2Greatness's picture

I'd bet on it.  And HUGE like!!!

Sun, 04/10/2011 - 15:03 | Link to Comment Renfield
Renfield's picture

Of course. By now, who hasn't?

Sun, 04/10/2011 - 17:08 | Link to Comment Al Gorerhythm
Al Gorerhythm's picture

All of those not on the "Who's Whom" list.

Sun, 04/10/2011 - 15:47 | Link to Comment SWRichmond
SWRichmond's picture

I don't know about gold, but I'd bet the farm he'd already gotten his T short position before he released his op-ed slamming T's. 

Sun, 04/10/2011 - 21:11 | Link to Comment Amish Hacker
Amish Hacker's picture

Consider what would happen if Mr. Gross did decide to make a move into gold. Let's say he took the $73 billion (and remember, this is just his cash---one-third of total assets) and decided to play in the Comex sandbox. Total open interest at the moment is just over 500,000 contracts. Call it half a million contracts of 100 ounces each, or 50 million ounces. At $1,475 gold, that works out to $73,750,000,000. In other words, if the Total Return Fund tried to put its cash holdings into the Comex, it would own the entire open interest.

 

 

Sun, 04/10/2011 - 21:36 | Link to Comment FeralSerf
FeralSerf's picture

Gross and HSBC+JPM, the two counter-parties.  I like it.  Where's the popcorn?

Sun, 04/10/2011 - 14:50 | Link to Comment ohbythebay
ohbythebay's picture

Why do you think the US will be here in a 1000 years ? Rome isn't. None of the EMPIRES exist that should have lasted "1000" years. The US will be lucky to be here as it is now in 10 years...The only way it will survive is through drastic change and WE DONT CHANGE.

 

We are seeing the fall of the US empire in its LATE stages...The barbarians are already PAST the gate and dining in the White House with the false promise keeper...

Find out who your local banking billionaire is and fall into line early as part of the new class of SERF...All hail King Chase ...

BTW..do they still get to bed our women before marriage ?

 

 

Sun, 04/10/2011 - 15:24 | Link to Comment Ruffcut
Ruffcut's picture

You have to hand it too gross and his fed cronies, they are always a step ahead of us sheeple. There has to be an endgame plan for all these bankers that are so far up each one's ass.

How about this one. Continue pounding the T's causing a GS "controlled" panic and ole billy boy jumps in to save the day with a 20-30 discount to boot. Make a little coin on the shorts, be out before everyone else and make a good ole fashion killing, on the squeeze.

Sun, 04/10/2011 - 22:43 | Link to Comment RockyRacoon
RockyRacoon's picture

You are saying he want to pull a Soros?  Not bad.

Sun, 04/10/2011 - 16:10 | Link to Comment Dejean Splicer
Dejean Splicer's picture

I think he meant that israel will be here in 1000 yrs. Her puppet will be dust in the wind, the reference did not go unnoticed.

Sometime you must read between the lines.

Sun, 04/10/2011 - 18:15 | Link to Comment chubbar
chubbar's picture

Any chance they'll want to bed our women AFTER marriage? I'm getting pretty frickin tired of the demands and would love a break!

Tue, 04/12/2011 - 09:31 | Link to Comment House of Medici
House of Medici's picture

Bravo!

Tue, 04/12/2011 - 09:31 | Link to Comment House of Medici
House of Medici's picture

delete dupe

Sun, 04/10/2011 - 21:43 | Link to Comment Sofa King
Sofa King's picture

Dude, What the hell are you talking about "Rome isn't"?  I visited there a few months ago, sure the Colussium was closed due to a general strike...but that shit's still there.

Mon, 04/11/2011 - 09:56 | Link to Comment Smu the Wonderhorse
Smu the Wonderhorse's picture

The Byzantine Empire lasted more than a thousand years. I once attended a lecture by a Byzantine scholar who said that the standard issue Byzantine coin was worth the same in the twelfth century as in the fourth. Now that's sound money.

Sun, 04/10/2011 - 14:50 | Link to Comment Missing_Link
Missing_Link's picture

Bill Gross will get his ass handed over in a plate. 

 

The United States of America will still exist in a thousand years, and all debt maturities will be honoured.

Yes, the USA will still exist in a thousand years.  What on earth does that have to do with your other two ridiculous statements?

Sorry  ...  I'm only feeding a troll, aren't I  ...

Sun, 04/10/2011 - 14:58 | Link to Comment Renfield
Renfield's picture

You are. But you will be forgiven if you just stroll back up there and hit the 'junk' button.

Best reply to a troll is a junk and move on with the real discussion...

Sun, 04/10/2011 - 15:46 | Link to Comment Ruffcut
Ruffcut's picture

"Yes, the USA will still exist in a thousand years."

Maybe so, but hankywanker won't be. It's all good.

Sun, 04/10/2011 - 15:56 | Link to Comment narapoiddyslexia
narapoiddyslexia's picture

Iceland will still be here in a thousand years. All debt maturities will not be honored.

Sun, 04/10/2011 - 19:38 | Link to Comment cranky-old-geezer
cranky-old-geezer's picture

USA as we've known it is already gone.  USA exists in name only now.

Sun, 04/10/2011 - 23:50 | Link to Comment hangemhigh
hangemhigh's picture
TO:  cranky-old-geezer
on Sun, 04/10/2011 - 19:38
#1155951

 

"USA as we've known it is already gone.  USA exists in name only now."

cog...let me fix that for you.....

USA as we've known it is already gone.  USA exists only as a virtual hologram now.

Sun, 04/10/2011 - 15:02 | Link to Comment duncecap rack
duncecap rack's picture

Yes Hamy is a parody of Harry. He doesn't believe any of what he says. I think he believes just the opposite of what he says but does these things to wind people up.

Sun, 04/10/2011 - 16:01 | Link to Comment Hulk
Hulk's picture

For which he has been rewarded a prominent place on a zh teeshirt!

Sun, 04/10/2011 - 16:20 | Link to Comment doggings
doggings's picture

yes but HamyWanger is only a joke troll, he's impersonating a real one who is sadly no longer with us, the great HarryWanger AAPL salesman and metals troll.

harry left in shame a while back after gold took out 1400 from 1200, when Harry thought it was going back to $800, so Hamy just says what Harry would have.

 

Sun, 04/10/2011 - 22:48 | Link to Comment BobPaulson
BobPaulson's picture

I miss him so, with is absurd posts and stars and stripes icon.

Sun, 04/10/2011 - 18:11 | Link to Comment River
River's picture

A thousand years from now there will be no debt, no money, no war.

A thousand years from now we will have evolved beyond the need for money as we understand it today.  All our needs will be met by replicators as boldy go where no one has gone before.  Haven't you seen Star Trek? Sheesh.

Sun, 04/10/2011 - 21:41 | Link to Comment FeralSerf
FeralSerf's picture

All our needs will be met by bottomless ATM cards and very attractive (not bottomless) robots.

Sun, 04/10/2011 - 15:09 | Link to Comment Pepe
Pepe's picture

1000 years is a long time......

Sun, 04/10/2011 - 15:28 | Link to Comment tmosley
tmosley's picture

For some.

Free societies last as long and longer, so long as they remain free.

Sun, 04/10/2011 - 16:46 | Link to Comment Rockfish
Rockfish's picture

A 1000 years, Please. In just just the last 200 years we've managed to contaminate our food suppy, burn through most of our fossil fuel, dumb down 90% of the population......... Lets see if how it goes for next 1000 days.

Sun, 04/10/2011 - 18:20 | Link to Comment New_Meat
New_Meat's picture

Rockfish:

"dumb down 90% of the population"

ya, I get kinda' excited about that.  Until I look at education levels of the "greatest generation" (average like ~8th grade).  And they played kinda' OK.

Burning through food for some stupid idea that consumes more oil than the result produces in energy, then subsidizing the corn production?  That is dumbing down of the top 1%.

1k days?  We b betting on the under.  'course, that is a winna' on the ovah.

- Ned

Sun, 04/10/2011 - 15:18 | Link to Comment Lilguy
Lilguy's picture

"...a thousand years"....Well, maybe as the 4th Reich, but not as we know it. 

Sun, 04/10/2011 - 15:37 | Link to Comment nkktwotwozero
nkktwotwozero's picture

>The United States of America will still exist in a thousand years, and all debt maturities will be honoured. 

Idiocracy

If it happens.

--

"You're floor...You're floor is now clean." (robot vaccum)

 

Sun, 04/10/2011 - 17:46 | Link to Comment CPL
CPL's picture

Well, it'll look like this though.

 

http://www.youtube.com/watch?v=PSROlfR7WTo

Sun, 04/10/2011 - 16:01 | Link to Comment Long-John-Silver
Long-John-Silver's picture

So far 10 States have or are in the process of making Gold and Silver legal tender for the citizens of their State. This is quite simply betting that the Government and it's Fiat Dollars will crash.

Sun, 04/10/2011 - 18:19 | Link to Comment New_Meat
New_Meat's picture

UT to my knowledge.  But I'm off for a date--what others?  Thanks, - Ned

Sun, 04/10/2011 - 17:25 | Link to Comment cbxer55
cbxer55's picture

One more junk and its off to post history! ;-)

Update: its outta here!

Sun, 04/10/2011 - 18:21 | Link to Comment New_Meat
New_Meat's picture

dang, I'm a junk virgin.  I'm saving myself for the right "opportunity".  Where the vanquished will vanish. - Ned

Sun, 04/10/2011 - 14:43 | Link to Comment Twindrives
Twindrives's picture

The credibility of the U.S government, like that of it's president, is shit.

Sun, 04/10/2011 - 14:47 | Link to Comment johngaltfla
johngaltfla's picture

Moody's and S&P have promised to start rating shit within the next 30 days. I'm sure of it.

Sun, 04/10/2011 - 15:10 | Link to Comment Pepe
Pepe's picture

<shit;=none

Sun, 04/10/2011 - 17:01 | Link to Comment Haole
Haole's picture

One CAN eat shit...

Sun, 04/10/2011 - 14:44 | Link to Comment Drag Racer
Drag Racer's picture

FED rate rise... (Made in China)

Sun, 04/10/2011 - 14:47 | Link to Comment johngaltfla
johngaltfla's picture

He would not have done this without the inside tip off from the Fed. TSHTF in June.....Time to start looking at the triple bear equity ETFs again....

Sun, 04/10/2011 - 14:53 | Link to Comment Glasgow Gary
Glasgow Gary's picture

You folks think this is a clue to a FED rate hike? That's funny. Besides, that would only get us closer to more inflation as more capital would flee the long end, and hide at the short end. At the short end, it would turn over more quickly--and also seek inflation protection.

No matter what the FED does now, they make it worse. Reason? Because it's going to get worse and no one can stop it. 

GG

 

Sun, 04/10/2011 - 22:10 | Link to Comment Bobbyrib
Bobbyrib's picture

+1. Raise rates=fucked, Keep rates same=fucked.

Mon, 04/11/2011 - 02:01 | Link to Comment Mentaliusanything
Mentaliusanything's picture

But, But ----- Ben said he had "tools" that he could use if the need arose.

Thing is he painted himself into a corner and the tools are way out of reach.

Getting to them is going to be very messy for old Benny Boy.

Someone smells blood in the water and the sharks are circling to take a big bite out of Ben's ASS

Sun, 04/10/2011 - 14:56 | Link to Comment Sudden Debt
Sudden Debt's picture

If the gov raises it's rates in the coming weeks/months which it will have to or the dollar is a gonner, Gold and Silver will start a real bull run.

And that is also bad for the gov.

I think you guys call that: "being between the hammer and the rock"

Actions cause consequences.

 

Sun, 04/10/2011 - 15:15 | Link to Comment Muir
Muir's picture

"If the gov raises it's rates in the coming weeks/months which it will have to or the dollar is a gonner, Gold and Silver will start a real bull run."

-

Ehh..., you may want to rethink that one, angry munchkin.

-

Sun, 04/10/2011 - 15:30 | Link to Comment MsCreant
MsCreant's picture

The two of your avatars together somehow, well, Muir, all I gotta say is ouch!

Sun, 04/10/2011 - 15:45 | Link to Comment Muir
Muir's picture

You have a point.

-

(or two)

Sun, 04/10/2011 - 15:49 | Link to Comment taraxias
taraxias's picture

++++ what a visual

LMFAO

Sun, 04/10/2011 - 16:38 | Link to Comment slewie the pi-rat
slewie the pi-rat's picture

hi, MsC!  i saw a brief post last night wishing you and yours well and am unsure whether the "reason" was metaphorical, or not.  anyhow, whatever the "facts" +++++vibes from slewie to you and yours.

lol for the ouch, too. 

Sun, 04/10/2011 - 23:04 | Link to Comment RockyRacoon
RockyRacoon's picture

Hey, Missy.  What's all this about an oak tree?  Hope you are safe and sound.

Sun, 04/10/2011 - 17:51 | Link to Comment Teapot_Dome
Teapot_Dome's picture

higher rates lead to a larger deficit which lead to more QE.  right?  or will it increase bond demand so QE isn't necessary?

 

 

Sun, 04/10/2011 - 14:55 | Link to Comment Oh regional Indian
Oh regional Indian's picture

That is a huge signal. And clearly what all his "hot-under'the-collar" anti-fed open letter were all about.

But how do you play it? It's been known that governments engineer head-fakes. Even of this magnitude. Bill Gross is not bigger than US Gov and he has lived off an inside the beltway relationship for 30 years of multi-hundred-billion-dollar success.

I'll go contrarian and say massive red-herring. They are desperately signalling a move they simply cannot afford to make. But many aces, all fake, still up the government's sleeve. All still part of the plan.

I would not bet money based on any such signals anymore. The rigging is obvious, the game is now out in the open.

Stay with the hard asset game. Floating crap can sink in a heart-beat.

ORI

http://aadivaahan.wordpress.com/2011/04/09/crashing-stars-they-were-but-chimeras/

 

 

 

Sun, 04/10/2011 - 15:02 | Link to Comment cossack55
cossack55's picture

As a contrarian first, last and always, I concur. It is THE BIG GAME afterall, and TBG has only two rules: the rules always change and you always lose.

Sun, 04/10/2011 - 15:24 | Link to Comment Eally Ucked
Eally Ucked's picture

There are to faces to that problem, first - can they afford rising interest rate with that huge debt and constant issuance of new debt coming on line, second - can they afford to destroy dollar when the whole US economy depends on imports to supply so called "service economy" and military complex. Probably they can go up with interest rate 0.25% or even .5% but that's just fake shot. They're just slaves of their own policies.

Sun, 04/10/2011 - 15:34 | Link to Comment Oh regional Indian
Oh regional Indian's picture

Exactly Eally and coss above.

To fight the vicious cycle of compounding interest is a Sisyphus-ian task. And the geniuses at the hlm know it well.

Clearly crack up and boom is the known outcome. or war before it. A different kind of crak-up and boom that...but regardless.

End game signs for sure. The dollar is not intended to be saved.

ORI

Sun, 04/10/2011 - 15:46 | Link to Comment blunderdog
blunderdog's picture

Given the way the guys inside the Beltway think, I'm wondering if there might not be some real effort to bust everything wide open before the election.  Despite the fact that it's been all downhill on the big picture since Obama took office, plenty of citizens haven't noticed, and the other guys haven't mounted any candidates yet.

That asshole could win a second term.

Sun, 04/10/2011 - 20:31 | Link to Comment victor82
victor82's picture

Consider, though. You're the Fed Chair. You represent the banksters.

It's important to deflect the blame of the currency collapse onto the ambitious little ratfuck you propped up back in 2008. 

I think they want to find some Bushie Republican who will play ball for them once they junk Chicago Jesus.

Sun, 04/10/2011 - 20:46 | Link to Comment blunderdog
blunderdog's picture

Yes, that's exactly my thinking.  In one way, there's no reason to want to replace Obama, as he's done everything big finance could possibly want, but I think his patrons must realize if social unrest actually becomes a problem because people are too frustrated, they'll need a different shill.

If the masses are driven to desperation by this time next year, they could easily issue the Presidency to Dimon or Blankfein or Bernanke himself, just to get rid of the current guy.  I suppose the question is whether anyone thinks we'll last long enough to enable a second Obama term.

Sun, 04/10/2011 - 23:09 | Link to Comment RockyRacoon
RockyRacoon's picture

If things really get bad you think they're gonna put in a rich white guy?  One even remotely connected to the crooks who stirred up this mess?

Come on.  

The guy the restless masses would relate to is a sure thing for another term.

Mon, 04/11/2011 - 00:09 | Link to Comment blunderdog
blunderdog's picture

Aw, it doesn't make a lick of difference what he looks like.  The guy who has the most money wins.  Same as every other aspect of life in Emetica.

Mon, 04/11/2011 - 10:14 | Link to Comment RockyRacoon
RockyRacoon's picture

Seems like they keep pulling rabbits out of hats.  Next Prez to be a woman?

If we think the world was shocked to see Obama be elected, wait til we see the reaction to a lady POTUS.

Mon, 04/11/2011 - 10:47 | Link to Comment ZeroPower
ZeroPower's picture

Emetica? 

Sun, 04/10/2011 - 20:01 | Link to Comment Founders Keeper
Founders Keeper's picture

[Clearly crack up and boom is the known outcome. or war before it. A different kind of...]---ORI

PIMCO's recent moves has the feel of a 2-part Plan A, with an added Plan B hedge (the hedge is convoluting Plan A). I haven't thought it through yet, but posts like yours helps me to flesh it out. Thanks ORI.

Two things for sure: One, there's a lot of money at stake; Two, money managers at this level work risk-free with rock-solid insider information.

 

Sun, 04/10/2011 - 23:44 | Link to Comment Oh regional Indian
Oh regional Indian's picture

It's what it's about here, eh, Founders? The healthy exchange of ideas considered out there by most. Always happy to play.

And yes, they always have nested plans, the very basis of scenario planning exercises.

In this case though, everyone might be looking at some severe trimming of the hedges. ;-)

ORI

Mon, 04/11/2011 - 00:43 | Link to Comment Founders Keeper
Founders Keeper's picture

[It's what it's about here, eh, Founders? The healthy exchange of ideas considered out there by most. Always happy to play.]---ORI

Gross is making big moves. Something big in the works.

 

Sun, 04/10/2011 - 15:22 | Link to Comment Lilguy
Lilguy's picture

Do you suppose he's looking at a massive fiasco over the debt ceiling debate?  He really is way out there right now.

Sun, 04/10/2011 - 16:36 | Link to Comment sschu
sschu's picture

the debt ceiling debate

This issue is now political, they passed an interim budget.  Next up is debt ceiling and big concessions will be extracted for votes.  I think this is where the statists make their stand. 

How it plays out is anyone's guess right now.

sschu

Sun, 04/10/2011 - 15:54 | Link to Comment BorisTheBlade
BorisTheBlade's picture

Biggest bond fund turns a bond vigilante, definitely something's up. However, with so much cash and given investment policy of his funds, that's essentially the only game that Gross can be playing, Pimco cannot all over sudden go and buy all the gold available as it's simply not permitted by the prescribed asset allocation.

So, what's the signal in essence? It signals that the entire thing is getting out of hands: only two possible outcomes: rising inflation or the default, or one followed by the other. Whether Pimco has chosen the right moment or not, remains to be seen, but hard asset game is likely to be safe in both outcomes.

Sun, 04/10/2011 - 17:13 | Link to Comment Old. No. 7
Sun, 04/10/2011 - 14:59 | Link to Comment ml8ml8
ml8ml8's picture

 

I should just go look this up but don't have the time.  However, I wonder the extent which the TRF bylaws authorize them to hold a spec short position in treasuries.  Otherwise, this is going to have people in the mutual fund world talking about the limits of mutual fund positioning and when something like this amounts to a breach of fiduciary duty.  Remember, PIMCO’s not running a hedge fund, so the fund parameters must specifically authorize them to be short treasuries, something that would be unique to the Total Return Fund, because I can’t imagine many mutual funds that authorize that, at least on a net basis (basically a speculative short position versus a true hedge position).  

And think about all the cash they’ve got.  It’s not easy to park that much cash in investments that don’t involve at least indirect exposure to Treasuries (for example, through money market funds).  Perhaps that’s how PIMCO justifies holding short derivatives—as a hedge against their cash positions--meaning in essence they don't believe on a net basis they are short, just fully hedged.

Sun, 04/10/2011 - 15:11 | Link to Comment ouchtouch
ouchtouch's picture

Fine print says anything of less than one year duration is cash equivalent, so he is holding T-bills most likely.

Sun, 04/10/2011 - 15:00 | Link to Comment Yield2Greatness
Yield2Greatness's picture

My opinion of Bill Gross, just pegged the meter.  Guys got conviction and the nuts to put them out there.

Sun, 04/10/2011 - 15:01 | Link to Comment DutchTreat
DutchTreat's picture

.

Sun, 04/10/2011 - 17:13 | Link to Comment slewie the pi-rat
slewie the pi-rat's picture

lol.  can't argue w/ that, D_T, even if i hafta pay for it!

gross is simply being himself, and how tf he and el-erian get thru this, together, may say as much as anything, if one were actually to think about it. 

i know pimco holds vast sums of public employees' retirement funds.  i also know this TRF is designed for retirement accounts of individuals + (?).  but, i don't know how much pimco's public employees' trust monies are "invested" in TRF, if any, actually.  just ignorant, basically, ok? 

still, that doesn't reflect on what i'm gonna say, next:  tyler is damned right about possible exposure to a flight for safety due to (another) deflationary "down-turn" or other "reason" which the MSM might apply to markets, as daily propaganda of "why" everything MSM is soooo rational.

$73 Bil. is a shit-load of green stamps to be holding in inflationville.  i will not ass-u-me PM's;  nor lack of them.  who fukin cares, unless one is personally invested in this freak-zoo?

if these brainiacs don't like T-paper at these prices/returns, who could possibly blame them, for pete's sake!  BUT: if my math is right, we're talking 284,000 separate $250,000 "insured" accounts, or:  wherever they have this stash, the counterparty risk is astronomical, even if they are using it to start their own banksterism, imv!

if they actually have $71 Bil. in $50's in a vault or as cash, directly under their control, well, good for them!!!  even if "they change the MPC" these guys will get paid.

again, slewie has no facts about what these brainiacs are actually doing w/ their green stamps and the pieces on their chessboard, except what tyler puts up, here, which i'm willing to pretend is true, and to let the zH ideas flow, here, ok?

other than that, i could care less about these douchebags.

 

Sun, 04/10/2011 - 15:04 | Link to Comment Dan The Man
Dan The Man's picture

just cuz I'm a nobody...but how do you 'short' debt?  isn't that like borrowing from a borrower?  And then returning the borrowed funds later at a reduced price?  where its...what...borrowed again?

 

sorry for my silly questions.  i just don't get the mechanics.

Sun, 04/10/2011 - 15:22 | Link to Comment Spigot
Spigot's picture

yeah, its borrowing, selling, rebuying, returning. Hoping you get a positive cash balance out of the deal. And in regards to shorting debt you are hoping interest rates go UP.

Sun, 04/10/2011 - 16:19 | Link to Comment IQ 145
IQ 145's picture

 How you short debt; You take a short position on US Treasury Bond contract on the CME; The Chicago Mercantile Exchange.

Sun, 04/10/2011 - 15:05 | Link to Comment Lord Peter Pipsqueak
Lord Peter Pipsqueak's picture

I think Bill is taking QE3 as a given, and as ZH'ers know, the next crash, real or manipulated, is unikely to send scared money into treasuries.So the banksters can set up the next crash to panic congress into approving QEX if they like,but treasuries will only have one buyer - Brian Sack.Thus ensuring the further collapse of treauries and the dollar.

 

Sun, 04/10/2011 - 15:09 | Link to Comment Twindrives
Twindrives's picture

Or forcing the take over of 401K plans to buy said Treasury bonds.

Sun, 04/10/2011 - 16:06 | Link to Comment Long-John-Silver
Long-John-Silver's picture

The Argentina play. Our politicians will confiscate 401(k) and IRA accounts to "save" Social Security and the Sheeple will not only approve but will rejoice in the streets when it happens because the DOW will be below 5,000. 

Sun, 04/10/2011 - 15:13 | Link to Comment Muir
Muir's picture

"QE3 as a given

"as ZH'ers know, the next crash, real or manipulated, is unikely to send scared money into treasuries."

-

maybe and

maybe

-

Reasonable assumption, worth making a bet if one is so inclined, bet the farm on it? I wouldn't.

Sun, 04/10/2011 - 17:20 | Link to Comment slewie the pi-rat
slewie the pi-rat's picture

ok, muir, but check this out, ok? 

what of you & the pipsqueak are both failing to reckon for the poss. of the "crash" being caused by Treasuries?

many solid and cogent thinkers, mostly Austrian-econ, many of whom actually called the last "crash" are pointing to this "goobermint debt bubble" as one really big fukin mother of all bubbles!

please be advised.

Sun, 04/10/2011 - 18:04 | Link to Comment Zombie Investor
Zombie Investor's picture

"So the banksters can set up the next crash to panic congress into approving QEX"

I don't think congress has a say.  Ben can do whatever he wants.

Sun, 04/10/2011 - 15:10 | Link to Comment pops
pops's picture

Tin futures.

Folks are beginning to wake up and there's going to be a tinfoil shortage.

Sun, 04/10/2011 - 15:16 | Link to Comment Spitzer
Spitzer's picture

Shorting US debt is like shorting a hole. You can get fucked.

Shorting financials, even Canadian financials is allot safer way to profit from rising interest rates. I am going short Canadian banks if Gross is short treasuries. The only reason the CAD housing bubble has not popped is because it has not seen rising rates.

Sun, 04/10/2011 - 16:10 | Link to Comment narnia
narnia's picture

Long term analysis of this trade (if, in fact, they are shorting LT Treasuries):

Holding a short on a long term instrument is not where you want to be in a hyperinflationary environment.  It's an exercise in balancing comparative worthlessness.  For that reason, I would say PIMCO is betting the Fed & Treasury will choose tightening & default over printing into oblivion.  That will involve allowing banks to disintegrate, depositers to lose their money, pension fund custodians to cry foul, etc. This is a bad bet on the political will those respective institutions.

Short term analysis:

An aggressive rate fed funds rate hike could actually lower long term yields, since it may have an effect of countering pretty pervasive inflation expectations & positive economic indicators.  It would be bad news for the federal government, but any scenario is bad for this entity.

Sun, 04/10/2011 - 15:16 | Link to Comment lunaticfringe
lunaticfringe's picture

That master of precious metals investing, Burl Ives, nails it.

http://thecivillibertarian.blogspot.com/2011/04/this-ones-for-you-lisa.html

Sun, 04/10/2011 - 15:18 | Link to Comment Pepe
Pepe's picture

Toto, I don't think we are in Kansas anymore...............

Sun, 04/10/2011 - 15:23 | Link to Comment Pepe
Pepe's picture

Profits set to suffer as commodity prices bite: Analysts expect companies to report slower growth in profits .....really??

Sun, 04/10/2011 - 15:26 | Link to Comment RobotTrader
RobotTrader's picture

Flat out, this is the most bullish news I've ever heard for "Risk Assets".

No doubt, that huge cash horde is burning a hole in Gross' pocket.

The urge to "put that money to work" in something is going to be irresistable.

Just think of John Hussman, and how me must feel like a total jerk for being "fully hedged" during one of the greatest risk asset booms of our lifetime.

PIMCO's situation is going to be like Hussman's fund x1000.

No way Gross is going to risk embarrassment like Hussman or get ridiculed for underperformance.  Trust me, that guy is going to be buying something.

Maybe INTC or MRK, which now has a yield of 4%.

Maybe CSCO, which will probably be broken up and sold piecemeal.

Maybe WMT, which has been in the same trading range for over 10 years and is now 2x bigger and vastly more profitable than it was in 2000.

Maybe AAPL, which believe it or not, only has a PE ratio of 18, compared to a stock like BIDU, which has a PE of 94, or LULU with a PE of 53.

Maybe gold stocks, which are still horribly undervalued.

Maybe some bank stocks, like WFC, JPM and PNC.

Who knows?

I can guarantee you that if that guy starts to step into some of these names, the footprint will be obvious with huge volume up days.

Bill "Drawbridge" Gross didn't buy a $23 million mansion in Newport Beach and tear it down by being stupid and sitting on the sidelines with depreciating Fiatscos.

Sun, 04/10/2011 - 15:37 | Link to Comment Muir
Muir's picture

ROBO

BRILLIANT!!

Sun, 04/10/2011 - 16:03 | Link to Comment Infinite QE
Infinite QE's picture

The putz should have bought silver. I am certain he's loaded that mansion with au/ag bought down the road at Tulving!

Sun, 04/10/2011 - 16:09 | Link to Comment blindman
blindman's picture

buy high, sell low

Sun, 04/10/2011 - 16:21 | Link to Comment FreedomGuy
FreedomGuy's picture

I agree. I don't know what he'll buy but I will buy his fund.

Sun, 04/10/2011 - 17:35 | Link to Comment slewie the pi-rat
slewie the pi-rat's picture

lol!  (i hope)! 

maybe he will "invest" in "something"  for "return" as robo, you, and most in-between seem to think.

i dunno, but it does seem to me that gross may be into cash here for a reason:  whatever ROI he and el-e look at, it just is NOT worth the risk they perceive, right now.

actually, as i have saying to the zH "investors & gamblerz" since my first day here, in jan. '11, i honestly believe that this analysis is correct, right now, (ergo, get outa all paper and into PM's via US Mint-produced coins) my 45-yr. record of being almost always completely wrong about this hooey, notwithstanding...

Sun, 04/10/2011 - 18:33 | Link to Comment blindman
blindman's picture

more accurate than even the most accurate atomic clock

is..... the broken clock.  twice a day.

i'm with you. 

Sun, 04/10/2011 - 19:50 | Link to Comment percolator
percolator's picture

Sorry, Robo, Gross is not going to be buying any equities with that cash because the prospectus of TRF doesn't allow him too.

http://investments.pimco.com/Products/pages/346.aspx

 

Sun, 04/10/2011 - 22:30 | Link to Comment Richard Head
Richard Head's picture

Robo is a moron.  Why would anyone think a bond fund could buy stocks?  TRF is not a hedge fund.

Sun, 04/10/2011 - 15:29 | Link to Comment Dan The Man
Sun, 04/10/2011 - 16:22 | Link to Comment Miss Expectations
Miss Expectations's picture

Dan, In case you missed it...Martin's first missive since being released "Hello World"

http://www.martinarmstrong.org/files/Hello%20World%2004-06-2011.pdf

Sun, 04/10/2011 - 20:24 | Link to Comment WaterWings
WaterWings's picture

Thanks, Miss! I forget some of the better sources of info at times. Wonderful.

Sun, 04/10/2011 - 15:29 | Link to Comment Bansters-in-my-...
Bansters-in-my- feces's picture

MMM...I thought "cash is trash" ? Does my Dollar, not get smaller ?

It's not to keep.

Thats for the sheep.

Why would he hold so much trash,I mean cash ?

Sun, 04/10/2011 - 17:33 | Link to Comment Cash_is_Trash
Cash_is_Trash's picture

Perhaps he'll long the metals!

Sun, 04/10/2011 - 15:36 | Link to Comment RobotTrader
RobotTrader's picture

By the way, Gross isn't alone.

Tons of guys are still sitting in cash on the sidelines, or even short the market after that sharp break in the SPX last month.

You have guys like Frank "I totally missed it" Barbera still hunkered into his bunker.

Tim "You have been warned" Wood and Richard Russell still crowing about the "mother of all tops".

Robert "Shampoo" McHuge who has been totally missing the last few months.

Quint Tatro who hasn't posted since his V-shaped reversal on March 27.

Permagloomers like Jim Willie CB who hasn't been heard from in months.

Even the usually bullish Puru Saxena is bearish on emerging markets.

Each and every one of these will be forced to buy something soon before we can have a market top.

 

Sun, 04/10/2011 - 15:41 | Link to Comment Muir
Muir's picture

again Kudos Mr. Robo!

 

(Then again, if the unthinkable happens and there is no more QE(x) the cash could be king again.

The ultimate fuck you from the market.)

-

Sun, 04/10/2011 - 17:59 | Link to Comment slewie the pi-rat
slewie the pi-rat's picture

if you and robo get a room for yer avatars, slewie would like to just watch, ok?  or, whatever yer little avatars desire, really!  lol.

all seriousness asnide, you morons don't actually think that the peeps  whom robo runs down for being "on the casino sidelines" don't have PM's do ya?  richard russell?  jim willie CB?  either one of these "loserz" could buy/sell this whole site in gold, and prob not even notice the change in the pile! 

you hot shot braniac "traders" who've learned to think you win by contolling risk and paying commissions and taxes on your compulsive churnings of,unhhh...cash, well, you're old enuf and wise anuf for me to respect your decisions.  i certainly make mine, so why tf not, ok?

how tf can robo actually read and follow richard r. & jim w., the two with whom i am most familiar, and run them down? 

hubris comes to mind...

the idea that these guys have "missed" something is insane!

so there!

Sun, 04/10/2011 - 16:13 | Link to Comment DoctoRx
DoctoRx's picture

Russell has just turned bullish.  He confesses he mistook the 2008-9 crash for a downturn in a structural bear.  Now he says sorry, it's all been a bull market straight along.  (Nothing to see hear . . .)  

Sun, 04/10/2011 - 16:24 | Link to Comment IQ 145
IQ 145's picture

 Puru Saxena is an extremely intelligent dude with a huge education; I wouldn't be in a hurry to second guess him if I was you. What if we already had a market top?

Sun, 04/10/2011 - 16:58 | Link to Comment DutchTreat
DutchTreat's picture

Saxena doesn't see a top yet: http://www.kitco.com/ind/Saxena/apr012011.html

 

Sun, 04/10/2011 - 19:10 | Link to Comment DosZap
DosZap's picture

RT,

Jim Willie had a long article on Kitco, and Dollar Collapse, just a week or two ago.

Sun, 04/10/2011 - 20:31 | Link to Comment WaterWings
WaterWings's picture

And if The Jackass is holding physical PMs, as we would imagine, he's doing aaaaaaalright!

I would send his stuff to Fs and Fy, "What was that?" --- Nothing but lulz when sheeple see the Matrix.

Jim Willie Apr 6th 2011

Do NOT follow this link or you will be banned from the site!