The World's Biggest Bond Fund Is Moving Aggressively Into Corporate Holdings, Away From Government-Insured Risk
As we pointed out two weeks ago, PIMCO has been preparing for 2010 by selling out its legacy "safe" MBS and Treasury holdings, and shifting largely to cash. Furthermore, the recent hirings of corporate and distressed asset managers indicates that the traditionally Treasury heavy asset manager is set to become the world's biggest fixed income hedge fund, focusing on IG, high yield and distressed investments. As PIMCO is a critical manager in numerous government bailout programs, we can only hope that the firms' Newport Beach Chinese Walls are better at keeping secrets than the characters in assorted O.C. legacy "reality" shows. The below presentation by PIMCO's Mark Kiesel indicates why PIMCO will soon be one of the primary actors in future official creditor committees in the upcoming wave of corporate bankruptcies (yes, shockingly assets do have to create cashflows for companies to avoid bankruptcy).
US_Credit_Kiesel_Picking_Winners_January -
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on Tue, 12/29/2009 - 06:54
#176600
government's 2 sets of books: The US government is an empire with vastly more wealth in "off balance sheet" transactions than anybody is aware of
http://www.brasschecktv.com/page/512.html
on Tue, 12/29/2009 - 09:35
#176649
Wow, what a read! This puts an entirely new perspective on California's situation.
on Tue, 12/29/2009 - 08:03
#176614
That 2 books thing is conspiracy stuff even though they do hide a lot of stuff - the only place their is real trillions laying around is in the Central Bankers minds.T The federal, state and local governments are on their last days now anmd we will be in a depression officially in the next couple of years.
on Tue, 12/29/2009 - 08:45
#176626
Smells like bullshit to me.
on Tue, 12/29/2009 - 09:00
#176632
I don't know who to believe. Bill or Mohamed!
Two days ago:
"Now Pimco is once again changing tack. El-Erian says people are fooling themselves if they think all the bullish data of late means a strong recovery is in the offing. So he's buying Treasurys and selling riskier stuff."
http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20091227/FREE/912279998
Steve K.
on Tue, 12/29/2009 - 13:09
#176878
The whole thing is just a whirling dervish now.
on Tue, 12/29/2009 - 15:20
#177061
Bingo. Gross says one thing in the press El-Erian
another while simultaneously Kiesel posts another view
(Kiesel piece was posted days ago on their site). So
either they are hedging their "press" bets or they
at the moment have some pretty contentious morning
meetings. If you really care do what they do and not
what they say!
on Tue, 12/29/2009 - 09:00
#176634
Interest rates have moved up significantly recently. See what TMV and TBT have done!
time123
http://invetrics.com
on Tue, 12/29/2009 - 09:05
#176635
Of course they are, at least with corps you have claims to the assets, with a sovereign default you get fuck all for claims (whoops, sorry about that full faith and credit everyone!) and a trip to the clap doctor (Benny Boy has been dipping his fed reserve stick in lots of unclean places in the last year and a half).
on Tue, 12/29/2009 - 09:24
#176647
Gross is following the bailouts. Perhaps he sniffs another GE bailout?
on Tue, 12/29/2009 - 09:44
#176655
Rare is the individual or company that can (and will) resist using insider information. In a market enviroment that normally rewards moving-the-line behavior, throw in the fact that PIMCO is "helping" the USA manage all those distressed assets and I only have one question.
Do you know how to spell "conflict of interest"?
The masters of the universe (of which Bill Gross and company count themselves as one) have no problem using any "advantage" they can find to improve their bottom line. Rules and the law are for suckers and fools.
There's a little voice booming in the minds of many a money manager right about now. If you strain real hard, you can just hear the echo. Listen to what that voice is saying.
"Get it while the getting's good or get got yourself."
on Tue, 12/29/2009 - 13:08
#176876
@CD
Resist the urge? Hell, in late 2008 he has on CNBS begging and threatening to be bailed out on the MBS. No, I don't think Gross is resisting any bad urges.
on Tue, 12/29/2009 - 10:43
#176702
Did you read Bloomberg today? Lots of push stories for stocks-even Faber.
I don't know what/whom to believe.
on Tue, 12/29/2009 - 10:56
#176716
That some corporate bonds will do well seems wise especially since many firms have been deleveraging, but banks may not be the best sector. The argument here is that the yield curve will remain steep or get steeper with banks profiting as a result. Based on the fact that the Treasury has issued most of its debt at the short end unlike other central banks then this might not seem that unreasonable. The problem is that high yields at the long end of the curve mean higher mortgage rates unless there is further housing stimulus. Perhaps that is why there is a lot more money being provided to Fannie and Freddie so that mortgages can be kept low. You could soon get into a viscious circle where the treasury needs to pour more money into supporting housing and to do that they need to borrow more which affects mortgage rates. High lending rates with all the commerical real estate loans coming due will most likely devastate the banks despite making money from the high yield curve. Corporate bonds Yes, but banks I think not, well not unless you are very selective. At the end of the day this will just trash the consumer economy even further, causing another flight to safety flatening the yield curve. You end up with a yoyo economy,with money cycling from asset to asset while the consumer continues to get squeezed. Once oil reaches 150 dollars a barrel again, just maybe someone in congress and the investment community will begin to wake up.
on Tue, 12/29/2009 - 17:50
#177240
Who owns FNMA and Freddie Mac debt for the most part at
this point in time? Start there and you will understand
why we had to effectively nationalize these GSE's it
was fait accompli. Turning towards PIMCO remember they
are the administrator of the TARP funds. All in all
the mortgage and treasury market are in the
hands of a few- no depth, and rife with politics making
them not so fair game at this point. Better to seek
performance in more neutral waters if you are not in
the know besides I'm not sure you want to be there
anyway too much "noise".
on Tue, 12/29/2009 - 11:40
#176762
sent a comment 2 hours ago
(before getting user name & password)
can you post it?
on Tue, 12/29/2009 - 13:52
#176935
Sooo....how do all these "improving fundamentals" match with the slow "New Normal" that Gross and El-Erian have been blathering about for months?
on Tue, 12/29/2009 - 22:17
#177425
Talking their position most likely because in reality
what does "new normal" mean? How can normal be new?
They are mutually exclusive. I think they are just
trying to coax people into their way of thinking.Once
it becomes broadly accepted they can pare down into the
"new normal" rally of their core holdings. I'm not sure
people are buying into it though I don't hear alot of
people parroting their ideas.I think smart money is
playing in EM now and in 2010.
on Tue, 12/29/2009 - 16:11
#177142
How does Tyler claim to know how Bill Gross is positioning PIMCO Total Return (the world's largest bond fund) based on a commentary from Mark Keisel?
Here's the relevant portion of Mark Keisel's bio from PIMCO's website:
"In his role as global head of corporate bond portfolio management, he oversees the firm's investment grade credit, high yield and bank loan business. He also manages corporate and equity portfolios for the firm."
PIMCO, like most large asset managers, manages money under a variety of investment styles.
on Tue, 12/29/2009 - 19:06
#177289
He didn't claim anything he was drawing his own
conclusions on the basis of what they've said to the
press. Further to that, it seems "Tyler" talks to alot
of folks in the market maybe he has insight to their mindset. For the longest time PIMCO was always known to manipulate the press for their own benefit. Now they are bond ambassadors because of their size losing all of their mobility in the market which will ultimately impact their overall returns. I imagine daily PIMCO sees alot of trades that make sense but due to their size now they can't take advantage of them meaning it doesn't matter what they
are doing because they now have other investment constraints like, China. Now if Gross came out and said I sold all my holdings in a paticular asset class that's news! Nowadays he only telegraphs his meaningless tinkerings in the market. Bottomline who cares what they are doing anymore they may be perceived as "the smartest guys in the room" but you wouldn't know it from their returns.
on Tue, 12/29/2009 - 18:27
#177261
Chinese wall? Make me laugh. Read the article from the Times about Bill Gross if you want to see how he clearly has no clue how to spot a conflict. What do you think?
http://www.nytimes.com/2009/06/21/business/21gross.html?scp=2&sq=pimco&st=cse
on Tue, 12/29/2009 - 20:52
#177353
How high do you think the stall in the men's room is?
Surely if that can't make eye contact while doing their
personal business washing their hands in front of the mirror would suit the purpose I imagine. He knows full
well about conflicts but he would not even tell his
wife about that one. He takes his cue from Tiger on
this topic something about pillow talk will come
back to haunt you.....
on Tue, 12/29/2009 - 21:00
#177359
By the by just because I pointed out PIMCO does Not
mean to imply they are collectively the largest
voting block when it comes to FNMA and Freddie debt.
For that answer you would have to look elsewhere.
on Wed, 12/30/2009 - 02:19
#177521
wow that article says it all. Talk about a conflict of interest. raises some interesting issues too. referring to the above post link.
on Tue, 12/29/2009 - 21:32
#177392
I direct your attention to page 18 Household Sector lines 24 and 27 of the latest FFA report. If you don't have it handy try "Tyler"or his alter-ego "Marla". Strange goings on there...Tony Crescenzi Blog-Who Owns GSE and Agency Debt? I found very insightful slightly dated as it was written in '08 I would imagine the takeaway from this flurry of data is essentially the same today. Something to ponder over? As we try and read the proverbial tea leaves...
on Wed, 12/30/2009 - 06:55
#177577
As CNBC would say, it's never a mistake to take profits. They made their bet, won and have cashed in their chips. Who believes that PIMCO would publish any info that is useful to us minnows?