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Pimco Offloads $40 Billion In Treasurys, As Frontrunning Fed Creates Billions Of Profits; Gross Does Not Expect QE 2 On Sept. 21; Pimco's "Fed Frontrunning" Tell Exposed

Tyler Durden's picture


As we pointed out last month, in June and July Pimco raised its allocation to government bonds to the highest ever, or 63% and 54% of its then-$239.3 billion Total Return Fund. As a reminder this is when the 10 year was well above 3%, and which proceeded to plunge in yield (soar in value) in August, as the sheer panic of QE Lite (and what it means for QE 2) enveloped the market, and when the Hindenburg Omen correctly predicted a 5% drop in stocks beginning in August 12. Stocks have now risen by over 7% in September, which was to be perfectly expected considering the market has seen $10 billion in redemptions (don't ask... bizarro), yet bonds have only gradually sold off, and as rumors of QE persist, the 10 Year continues to be just off its all time tights. This may change now that it has been made clear that Pimco sold over $40 billion in UST bonds in the month of August, just as bonds reached all time highs. Yet to get the sense of urgency behind Gross' earlier actions, consider that the bulk of the purchases were done on margin (pink line in chart below) as the fund borrowed $35 billion in June (and $29 billion June), using all the borrowed cash to fund Treasury purchases. And since the cash repo rate would have effectively wiped out the carry profits on the bonds, it is now blatantly obvious that Gross was very well aware there would be a massive capital appreciation in Treasuries beginning some time in July or August (cough QE Lite cough), and was actively buying all he could on margin in advance of the move. That's right, ladies and gents - we have just discovered Bill Gross' frontrunning "tell" - 1-2 months before every Fed intervention, he loads up the securuity that will benefit the most from any particular round of QE using borrowed cash. As the effective duration of the fund increased substantially in June and July it is obvious that Gross was buying up the long end of the curve, expecting a major flattening of the curve. Which, once QE Lite was announced, is precisely what happened. Incidentally, this purchasing on mega margin was repeated by Gross just once before: when Pimco's holdings of MBS surged from $80 billion to $113 billion in January 2009... just before Ben Bernanke announced QE1. What a series of lucky coincidences!!!

One wonders just how much insight into Ben Bernanke's actions the Newport Beach man had to take such a major gamble on the 30 Year at a time when it was already approaching record lows. Hopefully, one day when someone is combing through the ruins of Fashion Island's world's once largest credit fund and uncovers the phone logs, they will be kind enough to inquire how many calls to and from the Liberty 33 trading desk were made by the man with the 7 Bloomberg monitors.

Anyway, Gross' fund is now back to its boring old self: its TSY exposure is just 36% of total, as MBS has increased to the highest since September 2009, just before QE1 ended.

This time we have decided to frontrun Bill Gross, who is now frontrunning the Fed - Pimco has once again begun loading up on the security class that benefited the most from a "Big Bang" type of QE announcement - MBS. We expect the September announcement to show this class allocation to have grown to at least 25 (and much more if Gross is once again buying on margin).

And the fact that Gross did not use margin cash to bid up MBS means that the Fed will most certainly not announce QE2 next Tuesday. MS was correct in recanting. Whether this will be the case next month, as Gross looks at the November Fed meeting is unclear. If he does though, we will "guess" that his track record of predicting major Fed moves will move to 3 out of 3.

Pimco holdings by product type:

Pimco holdings by maturity and average fund duration:


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Wed, 09/15/2010 - 21:31 | 584409 traderjoe
traderjoe's picture

The streets in DC use letters? - m'fer's!

Wed, 09/15/2010 - 21:47 | 584434 nope-1004
nope-1004's picture

They're all a bunch of white collar criminal whores.

Most people make an honest liviing, and the money in their bank didn't arrive from insider knowledge or front-running.  But Bill Gross now shows us he's another ponzi whore.

What a loser.  Wonder what this sociopath could actually do in the real world if separated from the corrupt Obama team?

I'm simply calling them as they are.  Geithner, the little pric, needs a good ass-wuppin'.  The constant two-faced lies coming from these psycho freaks "running" our country is truly sickening.

I for one hope the whole fucking thing implodes.  I know I can take care of my family no problem.  And I look forward to pissing on these jerks as they beg in the streets, MF'ers.



Wed, 09/15/2010 - 21:57 | 584461 LeBalance
LeBalance's picture

Please aim somewhat higher in the chain of command in order to have any challenge from the game you will be tracking.  The exposed fools are puppets to the power and as such have developed zero ability to fight back.  They will be thrown as sacrifices at the first need and their backstory as bad actors is being written now.

As if this story would have come to light for any other reason.

Wed, 09/15/2010 - 23:57 | 584639 Bluntly Put
Bluntly Put's picture

You're scary, that's just what I was thinking.

Thu, 09/16/2010 - 04:05 | 584783 Hdawg
Hdawg's picture



Wed, 09/15/2010 - 21:45 | 584442 Ricky Bobby
Ricky Bobby's picture

Front Running? That's fucking outright collusion.

Wed, 09/15/2010 - 22:33 | 584524 Bringin It
Bringin It's picture

+100 Points.  Perp walk starts when?

Wed, 09/15/2010 - 23:34 | 584609 MarketTruth
MarketTruth's picture

Perp walks???  ROFL!!!!  Never will happen. Greed is not only good, it is fully legalized and NO ONE ever goes to jail. NEVER.

Of course they should be sent to China for 'proper' laws mean they literally get executed. Maybe this is why the USA hates China, as they are no longer buying dollars, instead hoarding/buying gold and banksters get death penalty. Of course th USA can;t allow that in "The Land Of Freedom". More like freeDUMB.

Thu, 09/16/2010 - 09:22 | 585022 kathy.chamberli...'s picture

freeDUMB. that is really good.

the last chart is really pretty, chart art. look at it a second time, nice wonderful colors used graphically.

Thu, 09/16/2010 - 01:00 | 584708 andyupnorth
andyupnorth's picture

Collusion? Insider trading? That's the whole purpose of the Federal Reserve!

Wed, 09/15/2010 - 21:33 | 584417 Mactheknife
Mactheknife's picture

"Psychic" Wild Bill bitchez!

Wed, 09/15/2010 - 21:34 | 584419 Buckaroo Banzai
Buckaroo Banzai's picture

but but but... Bill Gross can't be a crook!

Wed, 09/15/2010 - 21:35 | 584421 putbuyer
putbuyer's picture

I was wondering what was driving TBT.  And now Bill Gates reveals why he is such a fuck'n ahole.

Wed, 09/15/2010 - 21:55 | 584457 Chemba
Chemba's picture

Bill Gates is speaking truth.  If you can't understand his point of resource allocation then you're one of the masses of asses that can't handle truth.

Wed, 09/15/2010 - 22:16 | 584491 LeBalance
LeBalance's picture

When someone can pay for a service that service provider merely expands the availability of the service to provide it.  It is *predetermined* in this case sited that the elderly somehow have a lesser right to a service they can pay for because they have lesser years left to live.  Total horsecrap.  What will they deliver to humanity during that time?  Miracles!  Every person deserves to receive what they can pay for or receive via charity and the goodwill of their progeny and community.

In addition, to create a structure of Administrators that decides for *wards of the State* that they can be summarily cut off from service *even when service is available as charity* is a sick testimony to our fascination with the bottom line.  Charity is available from every single physician that walks the Earth.  They are required to work a certain number of hours in that capacity.

They are walking you to Soylent Green acceptance.

Mr. Gates is one of the movers and shakers behind GAVI the world wide vaccination organization.  (1) Vaccines do not function as advertised, it is a smokescreen hoax. (2) What they do function as is as euthanizers of the world's population.  Everything from thimerasol to recent GM sterilizers are in those happy little injectible slow death vials.

Mr. Gates does have a valid point of view.  From his perspective and the perspective of his masters (yes, he is a made man and probably a clueless puppet as well) NSSM 200 is what they are marching toward realizing.  That would be the eradication of the vast majority of the useless (in their eyes) eaters on this planet.

Mr. Gates is certainly speaking his truth.  *His,* and maybe yours.

Not mine.

Wed, 09/15/2010 - 22:18 | 584500 fiftybagger
fiftybagger's picture

"From his perspective and the perspective of his master"




+ 1 trillion



Wed, 09/15/2010 - 22:41 | 584531 Bringin It
Bringin It's picture

This is a kind of false dichotomy.  We don't have to get so dramatic.  Yet.

Why don't we start by cutting the useless insuraunce companies out of their turn at the trough?

Isn't that a lot easier?  But off topic?


I'm really enjoying the topic.  Is this what you call the smoking gun?


Thu, 09/16/2010 - 00:27 | 584645 zaknick
zaknick's picture

Gates is a scumbag and yes, they are carrying out ethnic cleansing and genocide; him , CFR, Rockefeller, the usual suspects.

Wed, 09/15/2010 - 22:54 | 584551 New_Meat
New_Meat's picture

LeB-as a young lad, I got scared of the Malthus argument; read his book, read Erlich, read a bunch more.  Learned to do experiments.  Read Popper.  Saw that the "population collapse" thesis was continually invalidated.  Then Clancy did a great book (at so many levels) e.g. and

somewhere in there, saw Chrichton's statements.

"They are walking you to Soylent Green acceptance."

I was in a meeting with a number of Canadians today, talking about a mutual friend who had a heart attack.  "He had to leave the meeting last week to see the Cardiologist." and the answer was "He has enough tax-delivery left in his working life to pay for the visit."

You, SIR, are spot-on.

- Ned


Wed, 09/15/2010 - 23:24 | 584595 Arkadaba
Arkadaba's picture

Sorry what exactly are you saying? Sounds like BS to me. 

I have experienced both U.S. HMO and PPOs and Canadian health care and I will take Canadian health care over both.  Not really sure what you are getting at ....


Thu, 09/16/2010 - 03:11 | 584770 Mad Mad Woman
Mad Mad Woman's picture

Well said. I don't trust anything Bill Gates sez anymore. Can't stand the man. He has a multi-billion dollar corporation, with lots of computer genius's, and they can't put out a decent product that works like it is supposed to. I am sick & tired of security breaches and the dozens of "patches" to fix said breaches in their programs. WTF?

Thu, 09/16/2010 - 15:08 | 585973 tamboo
Thu, 09/16/2010 - 10:02 | 585120 spekulatn
spekulatn's picture

Well done LeBalance.

Wed, 09/15/2010 - 22:39 | 584534 Spalding_Smailes
Spalding_Smailes's picture

No, I'm sure he could find other ways to cut cost ...

Its like when a township builds everything under the fucking sun, parks, new firehouse, police station, everyone gang raping the city on the back of the credit monster.

Now that the township is broke, it tries to pass tax hikes (in the name of save the teachers jobs), but only 20% of that tax hike will go toward teachers(if passed) but the other 80% is going to plug other holes so they can save their fucking jobs after 10 years of mismanagement ...

With the waste that goes on in the heath care industry and he tries to correlate between a person on his/her death bed and teachers?

Wow, what a total tool corporatist fuck.


Wed, 09/15/2010 - 22:34 | 584525 Hephasteus
Hephasteus's picture

He's just simply willing to talk about why doctors will continually day after day, month after month, year after year, decade after decade continue to employ strategies and tactics that have 0 percent efficacy, or continue to employ tactics that have 3 percent efficacy and have no fucking clue why it works in the 3 percent.

These are not real choices or real resources. It's a mind game. You don't have to lay off teachers and firefighters to give a million dollars to 10 doctors who fuck around for 3 months as they are independant creative spirits which have nothing to do with each other. Besides the fact they are shoved into the same economic system and given an artificial connection and boundry. The doctor assholes are just going to divert the money from the teachers and educators to yacht builders and dudes who call them up on the phone and ask them to invest 100k in something stupid which they ask 2 questions about and then write a check. And yes Dr. Brister sat me down once and pulled 2 tiny tiny pieces of rust out of my eye and it took 10 minutes and used about 5k worth of equipment. Then proceeded to charge me $250 bucks and then said god bless me. And if he ever needs me for anything in any lifetime. I'm going to drill his asshole like gay convict.

Thu, 09/16/2010 - 15:25 | 585979 tamboo
tamboo's picture

dr wu will see you now, he's pretty entertaining even when

he goes off topic, which is often.

"The major causes of disease in the West are Jews and Jewish physicians."
                                                                       -- Dr. Wu Tao-Wei

Wed, 09/15/2010 - 21:35 | 584422 bugs_
bugs_'s picture

Don't need to time the market, just need to time the Fed.

(or be on Deep Shah's speed dial)

Wed, 09/15/2010 - 21:35 | 584423 SpeakerFTD
SpeakerFTD's picture

Bill Gross.  Blankfein.  Paulson.  The list goes on.

These guys make the Russian oligarchs look like rank amateurs.

Wed, 09/15/2010 - 21:36 | 584424 espirit
espirit's picture

Gives new meaning to "trickle down effect."

Thu, 09/16/2010 - 03:13 | 584771 Mad Mad Woman
Mad Mad Woman's picture

LOL!!    Great comment.

Wed, 09/15/2010 - 21:39 | 584430 Nolsgrad
Nolsgrad's picture

QE2 is real.

Wed, 09/15/2010 - 22:47 | 584543 Battleaxe
Battleaxe's picture

So is the Easter Benny.

Wed, 09/15/2010 - 22:55 | 584553 Bringin It
Bringin It's picture


[Except the caveat regarding the observervation and the outcome acording to Heisenberg.]

Wed, 09/15/2010 - 21:44 | 584436 breezer1
breezer1's picture

no shame, no conscience. nice work if you can get it.

Wed, 09/15/2010 - 21:44 | 584437 sweet ebony diamond
sweet ebony diamond's picture

My question of the day for Ben:

if Goldman Sachs has been identified as big-time negligent in their dealings with customers (see recent SEC settlement for background), why do you continue to use them as a supplier?

or to put it another way - what is the fucking fantasy world you live in?

Thu, 09/16/2010 - 01:05 | 584713 RockyRacoon
RockyRacoon's picture

Oh, but Goldman is experienced and has all the machinery in place to perform the theft -- I mean sales expertise -- to get the job done.  Thieves run with thieves.  The honor among thieves is not reserved for the lower classes.

Wed, 09/15/2010 - 21:45 | 584441 Catullus
Catullus's picture

I'd like to see if bill gross shows up on cnbc for the next fed announcement.

Thu, 09/16/2010 - 01:07 | 584716 RockyRacoon
RockyRacoon's picture

Hubris will take him down.  I've seen him be a bit smug about some of the business done by him and his associates.  He will not be able to resist showing his inside knowledge at some time and that will be used against him when the gallows is warmed up.

Thu, 09/16/2010 - 09:38 | 585062 kathy.chamberli...'s picture

from a females perspective. you all, are talking about warren buffett, bill gross, bill gates and i will throw in john chambers. these men seem so effeminate to me. plus they talk with a high pitch unmanly voice. not that it matters, just notice these things about men.

Wed, 09/15/2010 - 22:05 | 584470 Monkey Craig
Monkey Craig's picture

the fix is in....the treasures go to the insiders as usual

on another note, I would definitely check out the documentary "Hacking Democracy" - same theme, different players

Wed, 09/15/2010 - 22:10 | 584471 Hall 9000
Hall 9000's picture


Elizabeth Warren to lead Consumer Financial Protection Bureau, unofficially

9/15/2010 09:22:00 PM – CalculatedRisk 

From the NY Times: Warren to Unofficially Lead Consumer Agency

“Elizabeth Warren, who conceived of the Consumer Financial Protection Bureau, will oversee its establishment as an assistant to President Obama, an official briefed on the decision said Wednesday evening.

The decision, which Mr. Obama is to announce this week, would allow Ms. Warren, a Harvard law professor, to effectively run the new agency without having to go through a potentially contentious confirmation battle in the Senate.”

“I think Ms. Warren is an excellent choice.”


"Time to stand up for what you believe in.”

 Tyler Durden 





Thu, 09/16/2010 - 00:09 | 584648 Bolweevil
Bolweevil's picture

She's got a job until 11/06/2012 (or whenever the Mayan calendar ends?).

Thu, 09/16/2010 - 07:41 | 584871 Xedus129
Xedus129's picture

December 21st, 2012 or 23rd (Some people claim)

Wed, 09/15/2010 - 22:05 | 584474 Village Idiot
Village Idiot's picture

a glutinous and Gross Buffet.

Wed, 09/15/2010 - 22:06 | 584475 silvertrain
silvertrain's picture

  There all using there status to self deal...

Wed, 09/15/2010 - 22:13 | 584489 Village Idiot
Village Idiot's picture

"There all using there status to self deal..."


Crooked dealers get shot--in the movies anyway.

Thu, 09/16/2010 - 07:25 | 584859 Al Gorerhythm
Al Gorerhythm's picture

There, there.

Wed, 09/15/2010 - 22:11 | 584483 scratch_and_sniff
scratch_and_sniff's picture

64bln, ha. The sickness of it, the sickness.

Wed, 09/15/2010 - 22:11 | 584484 Jake Lamotta
Jake Lamotta's picture

Hey Tyler- good article.  I wanted to take a moment to say THANK YOU  cause i can tell by your posts that you are relentless in keeping them coming for us to read!  I know this is no easy task and you must work 25/7 to get them to us.  THANKS DUDE!

Wed, 09/15/2010 - 22:17 | 584497 Village Idiot
Village Idiot's picture

Good stuff, Tyler. How does this crew throw a party when the time is right? 

Wed, 09/15/2010 - 22:48 | 584545 Turd Ferguson
Turd Ferguson's picture


We all have a lot of fun in this site but, at the end of the day, we're here because the news and analysis that TD provides are the best available.

"Top notch, top notch"!!

Thu, 09/16/2010 - 09:47 | 585085 kathy.chamberli...'s picture

i was saying this exact same thing to myself, last night. how do you do all this? relentless pursuit of informing, us, uninformed. the commenters posts of high quality enrichment of the truth, as well. i am speechless this morning, except to say WOW. i just keep getting my eyes/mind opened bigger and wider. right now i can't hardly resolve this whole picture that has been painted by ZH and it's contributors. still really confused about that, but clear with what a farce being an american is. ok with myself, but sure as hell not ok with being an american. want can one do?

Wed, 09/15/2010 - 22:12 | 584486 FoodTiger
FoodTiger's picture

So the next time this occurs we can make the same sure bet?

Wed, 09/15/2010 - 22:12 | 584488 Robert J Moran
Robert J Moran's picture

Life on "the inside" is very different to life on the outside!  Much more profitable, to say the least!

Thu, 09/16/2010 - 10:25 | 585193 John McCloy
John McCloy's picture

Sure is. They literally make the market. Obviously the Sherman Anti-Trust act was voided with the repeal of Glass-Steagall.

Wed, 09/15/2010 - 22:19 | 584503 Cursive
Cursive's picture

Bill Gross can have all the money in the world, but it won't buy him a man's voice.  Money isn't everything, and soon, it may be nothing.

Wed, 09/15/2010 - 22:29 | 584515 AccreditedEYE
AccreditedEYE's picture

+1  (Good to see you out tonight Cursive)

Wed, 09/15/2010 - 23:12 | 584580 Village Idiot
Village Idiot's picture

Welcome back, Cursive.  Business concluded?

Wed, 09/15/2010 - 22:29 | 584505 Hall 9000
Hall 9000's picture

U.S. Home Prices Face 3-Year Drop as Inventory Surge Looms

Sep 15, 2010 12:14 PM ET

“The slide in U.S. home prices may have another three years to go as sellers add as many as 12 million more properties to the market.

Shadow inventory -- the supply of homes in default or foreclosure that may be offered for sale -- is preventing prices from bottoming after a 28 percent plunge from 2006, according to analysts from Moody’s Analytics Inc., Fannie Mae, Morgan Stanley and Barclays Plc. Those properties are in addition to houses that are vacant or that may soon be put on the the market by owners."

"Warren would report directly to the president and the Treasury Secretary, a senior administration official and a Democratic official told CNN."

Wed, 09/15/2010 - 22:22 | 584507 Village Idiot
Village Idiot's picture

Bill Gross was my hero - Captain Honesty.  Buffet was a hero too. 


"Capitalism attacks and destroys all the finer sentiments of the human heart; it ruthlessly sweeps away old traditions and ideas opposed to its progress, and it exploits and corrupts those things once held sacred."
Daniel De Leon

Wed, 09/15/2010 - 22:36 | 584528 tip e. canoe
tip e. canoe's picture

“Think in this way of all this fleeting world: As a star at dawn, a bubble in a stream; a drop of dew, a flash of lightning in a summer cloud, a flickering lamp, a phantom, and a dream.”

-Diamond Sutra

Wed, 09/15/2010 - 22:23 | 584511 RobotTrader
RobotTrader's picture



Wed, 09/15/2010 - 22:46 | 584538 tip e. canoe
Wed, 09/15/2010 - 23:00 | 584556 Careless Whisper
Careless Whisper's picture

he buys a mansion to tear down and build a bigger one. bought in the name "Monte Carlo Trust".   ...that will be $300 billion, all-in ! (don't worry ben got his back)


Thu, 09/16/2010 - 03:36 | 584775 Id fight Gandhi
Id fight Gandhi's picture

Lets go shit in his pools

Thu, 09/16/2010 - 06:32 | 584828 scatterbrains
scatterbrains's picture

ew he has a look like he is anticipating BB's tea bag

Wed, 09/15/2010 - 23:02 | 584567 Arkadaba
Arkadaba's picture

For some reason the first photo reminded me of witchiepoo:


Wed, 09/15/2010 - 22:28 | 584516 Bringin It
Bringin It's picture

This time we have decided to frontrun Bill Gross, who is now frontrunning the Fed ...

At this point I had to stop reading and say Great, great stuff TD!!!

Back to reading ...

Wed, 09/15/2010 - 22:30 | 584518 mark mchugh
mark mchugh's picture

You do great work Tyler, no one can deny that.

But I think "front-running" is being too kind.  This is more likely collusion.

I know this is a half-baked theory, but....

Pimco leverages up to buy Treasuries and right when they dump them, the biggest arms deal in history is announced with Saudi Arabia.

Which begs the question, "Who might have bought those Treasuries?"

One of the reasons I think it's so important to know who exactly is buying Treasuries is because of the potential for shady deals with "customers" who want something more than a 3% return (like Apache helicopters & F-15's).

You can't trust junkies, and debt junkies are the worst kind.  I can't believe I'm saying this, but I hope front-running the Fed is all that's going on here.


Wed, 09/15/2010 - 22:46 | 584539 1100-TACTICAL-12
1100-TACTICAL-12's picture

Great observation, kinda like "shootin yourself in the foot" "to much rope you hang your self". Seems like we are selling out to any MF'er who will buy...

Wed, 09/15/2010 - 23:10 | 584578 New_Meat
New_Meat's picture

I always liked how we sold the F-14s to the Iranians in the late '70's.  The Shah had to have the best, and we were willing to sell them the best (at, I'd bet, the best prices on a loaded factory).  Come the late 1990's, well, spares are a bitch and the up-time/mission reliability was ... er ... iffy.

Helicopters == 10,000 parts flying in loose formation, each one made by the lowest bidder (Translational Lift: 5 of my 50 mates at the exclusive boys school in VA are no longer due to those infernal machines).

So, sell them the gear, without the support systems, well, can we all sing "hangar queen"?

now, shall we consider a nuclear power reactor?

- Ned

Thu, 09/16/2010 - 07:32 | 584865 Al Gorerhythm
Al Gorerhythm's picture

Who's buying? Peru, Japan, SNB, Columbia and soon each and every other country in the race to zero

Wed, 09/15/2010 - 22:32 | 584520 Virginian
Virginian's picture

I'll grant you, this does look a little suspicious.  But it might simply be a coincidence that Mr. Gross accurately timed multiple leveraged trades in and out of these securities.  Plus, it would be illegal to trade based on non-public information - not to mention a violation of the most basic principles of fairness and transparency that underpin our market's integrity.  It would be the kind of thing that - if it were true - might erode the public's trust in our system. 

The more likely explanation for this incredibly prescient trading, in my opinion, is that Mr. Gross has access to a wormhole (designed by extra-terrestrials working secretly at PIMCO's New Mexico office) through which he travels forward in time, thus giving him giving him a "leg up" on less sophisticated traders.  But this is only speculation.... 

Wed, 09/15/2010 - 22:34 | 584522 Village Idiot
Village Idiot's picture

23 million?  makes sense - the guy doesn't want to stand out in a sleepy little fishing town like Newport.

Wed, 09/15/2010 - 22:36 | 584529 itsallgood
itsallgood's picture

Anybody hear El-Erian on Bloomberg radio this morning?  He actually had the nerve to say "PIMCO doesn't play interventions."   

Wed, 09/15/2010 - 23:13 | 584582 New_Meat
New_Meat's picture

yep, and the podcast is floating around.  Pay for the "service" (and I do) and you get the whole archive.  Mo was on twice this week (so far).

Talking the book? Yep.  But Levitt is much, much worse.

- Ned

Wed, 09/15/2010 - 22:41 | 584535 bobert
bobert's picture

When you control $1 Trillion in bonds people listen, including the federal reserve.

Wed, 09/15/2010 - 22:48 | 584544 carbonmutant
carbonmutant's picture

Are the $Dollars the BOJ is buying being recycled back into Treasuries?

In other words are the Japanese buying Obama a QE2?

Thu, 09/16/2010 - 00:49 | 584695 Spalding_Smailes
Spalding_Smailes's picture

If they are not buying our tresuries, ...they are taking on our debt because China is buying the Yen.

Wed, 09/15/2010 - 22:49 | 584546 buzzsaw99
buzzsaw99's picture

Bennie B. gives all the rich guyz BJs.

Wed, 09/15/2010 - 22:50 | 584547 web bot
web bot's picture

I don't often make sensible comments on here... but I'll try to this time.

About 10 years ago, I was working at a publicly traded company, which I left, and which subsequently went bankrupt (not due to me leaving). I saw the writing on the wall and knew we only had months left.

I remember the President/CEO at the time... a high flyer in the press, a real wizard of thought. When the company went belly up and people lost their investments, this guy needed body guards 24/7... people were even sending him pictures of his kids walking into their school yard. It was #uckin scary to be him.

I am saying this because if this #uckin thing blows up... we are going to see massive social unrest. There is not #uckin way something like this can blow up and there not be consequences... think food prices, pensions, health, safety and security issues. Once the middle class realizes that these things are gone or severely diminished, watch out.

It is important to realize that what has made America great has been its people believing in the mythology that any one can land on its shore... and can make it. Well, with what it appears Gross and his ilk have done is completely undermined what the everyday person thinks of business and government... and when you get the average person on the street losing faith in their government and the system at large, the very beliefs they have held dear... watch out.. France in the 1780s went through this. They fixed their sun king and all of his rays of light.

If you think I'm an extremist, remember that the right to bear arms, militias and the "fear" of government comes out of a revolutionary mindset on which the US was built... a mindset which still permeates today.

This is not going to end well.

Wed, 09/15/2010 - 22:57 | 584560 scratch_and_sniff
scratch_and_sniff's picture

I prefer you as an idiot.

Wed, 09/15/2010 - 23:01 | 584565 web bot
web bot's picture

Me 2 azzhole.

Thu, 09/16/2010 - 00:24 | 584661 Bolweevil
Bolweevil's picture

Au contraire, I find him exceptionally articulate for a sock monkey.

Fri, 09/17/2010 - 11:49 | 587951 scratch_and_sniff
scratch_and_sniff's picture

light entertainment, fuck sake!

Wed, 09/15/2010 - 23:07 | 584573 tip e. canoe
tip e. canoe's picture

OT, wb:  clif did an interesting interview recently in case you haven't caught it yet --

Wed, 09/15/2010 - 23:09 | 584575 web bot
web bot's picture

Thanks Tippy.

Wed, 09/15/2010 - 23:23 | 584593 New_Meat
New_Meat's picture


"I am saying this because if this #uckin thing blows up... we are going to see massive social unrest."


It is important to realize that what has made America great has been its people believing in the mythology that any one can land on its shore... and can make it.

You blame Gross? ?? ??? (dang, hog, stop that, almost like K A T H Y).  Part of the myth is that ANYONE can become president.  Got an X on that one.

You have outlined one of the Mad Max outcomes.  Depends on food supply, water, micro-organization, city, current weather, tactical situation, MOOSEMUS, etc.  Gotta add luck.

- Ned

OT, we need to accumulate the WWII acronyms that describe this situation: FUBAR, SNAFU, ... there are a ton more.  Gotta catalog them, then  we all write them down along with "can kraut".

Thu, 09/16/2010 - 10:23 | 585187 kathy.chamberli...'s picture

(dang, hog, stop that, almost like K A T H Y).

what do i have to do with all this? nothing, your making me more depressed.

Thu, 09/16/2010 - 00:47 | 584692 Johnny Dangereaux
Johnny Dangereaux's picture

"This is not going to end well."  Actually this is going to END'll just be a bumpy road--til the Bad Guys are Billy Boy a Bad Guy?

Wed, 09/15/2010 - 22:53 | 584549 tip e. canoe
tip e. canoe's picture

stupid question perhaps: but who is PIMpCO borrowing the money from?   and more importantly, what form of money are they borrowing?

Wed, 09/15/2010 - 23:05 | 584570 Bruce Krasting
Bruce Krasting's picture

The Fed will oblige you for all that you could want. $40b is chump change in this casino. A 40b repo happens every few seconds.

Wed, 09/15/2010 - 23:02 | 584557 Bruce Krasting
Bruce Krasting's picture

Important information here. Pimco is just a hedge fund. They buy and sell bonds on spec. They use 99% leverage for this. In this case they flipped $40b in bonds and made some very nice coin.

Speculators have always been perceived as necessary evils as they bear the risk and reward of manging liquidity. They help facilitate the capital markets.

But these are very big numbers to be sloshing back and forth in the time frame of a few months. This time there was no apparent consequence. Next time or the time after that it will not be the case. When too many of these monster specs get lined up the wrong way and something unexpected happens there will be a blow up. These are the things that will bring us a failed auction one day.

In this case the speculator takes on a different role. A provider of instability rather than stability.

I congratulate Gross. He made a bundle, again. He has a book that makes him the price maker. He is wired to the Fed and Treasury. He knows what supply and demand is. The PDs slaver for his business and report to PIMCO what the rest of the street is doing to curry favor and trades.He does not guess what happens next. He knows. Not a very level playing field. What else is new?

Nice piece TD.


Wed, 09/15/2010 - 23:07 | 584569 tip e. canoe
tip e. canoe's picture

thanks for the answer above bruce

Wed, 09/15/2010 - 23:29 | 584601 Spalding_Smailes
Spalding_Smailes's picture

I have learned a ton from you Bruce.., thanks again.

Wed, 09/15/2010 - 23:32 | 584607 Bringin It
Bringin It's picture

I disagree.  I think it's outrageous. 

Wed, 09/15/2010 - 23:45 | 584620 AccreditedEYE
AccreditedEYE's picture

He has a book that makes him the price maker. He is wired to the Fed and Treasury.

Great point. And being the globalist elites that he and El-Erian are, you will see them play their part to shape the world as they want... developing nations rising up against developed nations, one world currency. I know it's conspiracy theorist stuff, but if you read what they put out on a regular basis you begin to get frightened. (anyone read When Markets Collide?...I know, it's old news but still. LOL) I keep hoping that like everyone else who has played a winning hand for too long and been correct, (think LTCM), they will overplay and get killed. F, who knows, perhaps one day the death of Pimco will finally start the long, long bond bear off on the right foot. 

Wed, 09/15/2010 - 23:44 | 584627 Prof Gulliver
Prof Gulliver's picture

"When too many of these monster specs get lined up the wrong way and something unexpected happens there will be a blow up."
Bruce, I think this is like professional wrestling. There are no "unexpected" results. Pimco knows the winner in advance. It's their pound of flesh from the Fed (and taxpayers) to prevent Gross from holding a tantrum. He's simply got too much leverage and must be appeased.

Thu, 09/16/2010 - 00:35 | 584677 Bolweevil
Bolweevil's picture

Who's the lucky gambler that gets to be the next Lehman? Guesses?

Thu, 09/16/2010 - 02:02 | 584746 Bringin It
Bringin It's picture

Professional wrestling. 

Wed, 09/15/2010 - 23:56 | 584637 I am a Man I am...
I am a Man I am Forty's picture

Good stuff Bruce, Pimco controls the market, they dump a bunch of t's and it moves the market.  Pimco needs to be broken up even worse than the banks.


Thu, 09/16/2010 - 00:13 | 584651 DoctoRx
DoctoRx's picture

I DON'T congratulate Gross.  He hired the man who hired Ben.  Ben tells Pimco's hire, Sir Alan, what's happening before it actually happens; or Sir Alan tells Ben what should be happening; or something or other like that goes on and thus Bill Gross knows before anyone else what's going to happen.

I don't believe that he simply legally has better information than everyone else because the PD's love his business.  I believe it's Bubbles Greenspan who's the conduit.

Wed, 09/15/2010 - 23:02 | 584568 trav7777
trav7777's picture

wow...he sold MBS hard into QE and then sold USTs hard into the QE lite.  Not seeing any huge accumulation now; would like to know what this clown is going into.  If QE2 comes, obviously, MBS will be the place to be again.

Wed, 09/15/2010 - 23:20 | 584589 Miles Kendig
Miles Kendig's picture

Who is wagging who?

Wed, 09/15/2010 - 23:36 | 584616 defender
defender's picture

Question for the astute readers of ZH:

The statement for today's POMO shows purchases as being bought at par.  Which par do they use for that valuation (1) current market price or (2) final value of the bond?

The reason that I am asking is that I can't figure out why a POMO would have a 4.3x bid to cover.  What would give the banks a large enough incentive to crawl over each other to sell these bonds?  The only thing that I can think of is making 10 years worth of interest in 1 month.  Basically the buy treasuries program becomes nothing more than a free money program that is being made in weekly installments.  This would also explain the sudden increase in funds flowing to the markets.

Unfortunately I am not very knowlegeable about the places to look up this information to answer my own question.

Thu, 09/16/2010 - 00:15 | 584653 roymunnson
roymunnson's picture

Easter Benny....nice

Thu, 09/16/2010 - 00:26 | 584663 g3h
g3h's picture

Gross is a believer of government bailout.  In fact he publically advocated a strategy "kiss the hand", or should we say "kiss the ass" when he plunged into MBS.  It is a bet that the government would save the market when everyone was depserate and loath of government intervention.


He won big.  Now it is simply the same trick.  Remember he publically advocated the nationalization of the mortgage market a month ago?  He is smart but can't be trusted.


Thu, 09/16/2010 - 05:44 | 584812 anony
anony's picture

Won big?  No, I don't think so.  No one bets that big unless they already know or create the exact outcome they seek, especially Soros, Pimp, Buffet, Blankfein, Fuld and the other so-called "winners".

How he gets to know ahead of time is what really needs to be investigated and prosecuted.


Thu, 09/16/2010 - 00:38 | 584680 Terra-Firma
Terra-Firma's picture



Are the money flows trackable or traceable?

Thu, 09/16/2010 - 01:21 | 584728 sodbuster
sodbuster's picture

Thank you, Tyler. Great job! and you know what else- all along, I suspected it was really spelled- Pimpco- and I was right!!

Thu, 09/16/2010 - 01:46 | 584741 The Rock
The Rock's picture

So Bill offloads 40 billion huh? I would like to unload 40 bullets... Fuckin cocksuckers!

Thu, 09/16/2010 - 02:07 | 584750 Purely Anedoctal
Purely Anedoctal's picture

Duke isnt ivy league Pussy, all the money in world and he still cant beat Wake Forest

Thu, 09/16/2010 - 04:24 | 584790 dcb
dcb's picture

It bothers me that the regular economy can't get credit, but these guys get margin to buy assets. But honestly I don't understand he is playing the game well, and I bout treasuries as well figured with the curve at all time steep it had to decrease and short term wasn't going up very far as they had already done so well.

so why are people upset

Thu, 09/16/2010 - 04:37 | 584796 Eric Cartman
Eric Cartman's picture

Nice, I'm looking forward to this now. 

Thu, 09/16/2010 - 04:36 | 584797 Eric Cartman
Eric Cartman's picture

Nice, I'm looking forward to this now. 

Thu, 09/16/2010 - 06:09 | 584819 virgilcaine
virgilcaine's picture

Pimco is an arm of the Fed, at least a tentacle.  The problem for  the markets are these interventions, it creates distortions noone can invest or trade with except the insiders like Grose.


Not going to end well.  Another 10 Bil just left the stock market.

Continue to play your games Mr Grose and gain ZH writing admiration but  investors are voting with their feet.


Thu, 09/16/2010 - 09:35 | 585058 snowball777
snowball777's picture

He saw QE coming (didn't you?) and was in a position to lever up.

So many bitter people; drop the sour grapes just because Bill's got balls bigger than your heads.


Thu, 10/07/2010 - 06:02 | 631624 Herry12
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I found lots of interesting information here. I love zerohedge.
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