This page has been archived and commenting is disabled.
Bill Gross Tweets "Bond Bull Market Dead" Even As PIMCO Loads Up On Most Government Bonds In Three Years
The blue line in the chart below? That's the total holdings of Government (cash and derivative) securities of PIMCO's flagship $293 billion Total Return Fund.
At a net exposure of 40% of total fund AUM, or roughly $117, PIMCO has not been more bullish on Treasury and Agency securities since July 2010, when Gross was selling into the QE2 Jackson Hole preannouncement panic. It is so bullish that it used some $23.4 billion of cash on margin to buy said bonds! It is also the first time since the summer of 2010 that the fund holds substantially more government-related securities than MBS.
Why is this notable? Because moments ago, Gross used his now favorite public service announcement medium, Twitter, to announced that...
Gross: The secular 30-yr bull market in bonds likely ended 4/29/2013. PIMCO can help you navigate a likely lower return 2 - 3% future.
— PIMCO (@PIMCO) May 10, 2013
Indeed it can: by buying even more Treasurys that those who sell into the most recent transitory "great rotation" out of bonds, now that the "bull market is over", sell.
Remember: always do what they do... not what they say.
And just in case the bull market in bonds did not end on April 29 (hint: it didn't - because the Fed is still monetizing some $45 billion in TSYs every month, and will have to buy increasingly more from the secondary market as primary issuance slows down if indeed the US deficit funding and primary bond issuance slows down), Bill will be happy to buy increasingly more, and likely bring the total allocation to TSYs to record highs in the next month or two.
At which point he can once again tweet about the death of the bond market... Just as PIMCO prepares to sell much more debt to a Federal Reserve which is unconstrained by such old-school concepts as cost basis.
»
- 16246 reads
- Printer-friendly version
- Send to friend
- advertisements -
Can't this guy just be happy being a billionaire?
His next morph is into a Batman archvillain - The Tweeter.
I wonder if El-Erian knows to just say "yes dear" and leave Bill alone when he starts PMSing on Twitter.
That's not PMS.
He knows exactly what he's saying.
OK, all fine and dandy Andy, but buying Treasuries doesn't mean the bull market is or is not over.
The clue is what duration is the portfolio. Has he shortened it?
If so then he's doing what he says.
If not, not so much.
The beta is the duration
The alpha the sector.
Fuck you Bill Gross. I hope they suspend your Tweet account for financial misinformation.
Even a fourth grader can figure out that the dollar has weakening inflationary cycles upcoming and interest rates will increase with bond yields pushing upwards.
Everyone knows dividends are risky as hell and all the other securitized floater rated debt isn't worth it's weight in shit.
seems that @PIMCO has sanatized some of their early twits circa summer 2010 -- the links now lead to purgaroty (I thought they weren't allowed to destroy old electronic communications -- good thing I save everything I see on the internets)
The following have all been stricken from PIMCO's Twitter Time Line it would be interesting to cross ref the twits with the data
Gross: The New Normal as we define it means we should expect low global aggregate growth for bonds and stocks. 07/01/2010 Retweet Favorite 7
Gross: One of the Fed’s remaining tools is to extend the extended period, reducing volatility by increasing the certainty of steady rates. 08/02/2010 Retweet Favorite 4
Gross: If 5%, 6%, & 7% mortgages are refi’ed to 4%, it provides stimulus of $50bn-$60bn in consumption, & potentially lifts housing prices. 08/18/2010 Retweet Favorite 14
Gross: Policymakers should quickly reengineer a refinancing opportunity for all mortgagees current on payments in GSE securitized mortgages. 08/18/2010 Retweet Favorite 4
Gross: The low 2-year Treasury yield signals that credit markets believe the Fed won’t begin to raise interest rates for at least 2 years. 08/16/2010 Retweet Favorite 13
Gross: Without positive fiscal stimulus in the next six months, unemployment could approach double digits and stay there. 08/17/2010 Retweet Favorite 28
Gross: Without gov’t guarantees, mortgage rates would be hundreds of basis points higher, resulting in a moribund housing market for years. 08/17/2010 Retweet Favorite 12
I follow the fund regularly. I think the duration is shortening a lot in just the last week, but I am not 100% sure.
If the entire short end is already a hair away from negative yield, wouldn't that cause a run to the 30 exclusively just for the yield chasers? In turn would cause a price spike for the price chasers? So then you have no holders except the fed of everything up to the 30 year?
Holy shit, i don't think anyone has realized what's going to happen if in fact there is a move of that magnitude.
Oh well Ben, just go ahead blow the bond market off the face of the planet, you have done an excellent job of FIUBAR..
Bingo stoploss
It's like where's waldo except there are a lot more similarly colored characters, it's yield-on-risk and the yield isn't wearing a loud peppermint colored shirt.
ZIRP-A-DERP
I see this sort of comment a lot, but Gross is acting as the agent of people like me, for example, not himself, when he manages PTTRX and it's equivalents. I think he is doing two things here- ratcheting down the expectations of this clients, while also positioning the funds to benefit from the lunacy of the central bankers.
He does tend to outperform the other bond funds. I looked at his top holding on Morningstar and can't say I know what all of it is for sure. Interest rate swaps, fannie mae, credit default swaps besides treasuries.
http://portfolios.morningstar.com/fund/holdings?t=PTTRX®ion=USA&cultu...
Yes, his definition of "bond fund" is a little broadly based... in fact so much so as to be misleading... but everybody does the same thing
To wit: Remember during the dotcom era when all the "public utility" stock funds (meaning traditionally widow and orphan investments for dividend income) piled into the telecom, etc stocks with no dividends for total return ends ... and wound up with horse-shot returns that nobody expected when the bubble burst?
That's the New Age (since the 80's) paradigm of money management (which turns my stomach) in that its all about asset gathering rather than sticking to What's Supposed to Be Done as per Sold and Rep and Warranted.
The curse of the sales and marketing of financial products
The portfolio on Morningstar is very outdated. Morningstar does not update them as frequently as PIMCO's own website or even CNN Money or Businessweek for that matter. This is from the morningstar site:
Portfolio Date: 12/31/2012
Best place is here on PIMCO's own site which provides portfolio details as on 31 March 2013. April end data may get published around mid May. http://investments.pimco.com/Products/pages/346.aspx
Is he being truthful or is he lying?
i'd do the same thing
You leave no clue as to whether you recognize the meaninglessness of your comment.
I did laugh tho.
PIMCO must buy treasuries to back their margin, futures, whatever etc.....no offense tyler(s) not terribly newsworthy
I think you mean "brillionaire."
Im not so sure with three different types of investors involved, any market can be declared dead, escpecially the bond market.
Oh Bill...
We know this means you are geeked up on the long-end.
Well, he needs to buy from someone in order to keep front-running the Fed. Muppets usually offer the best price.
Hint: #Winning!! investment advice is rarely found in "tweets".
1979: Business Week proclaims the 'Death of Equities.'
2013: Bill Gross proclaims the 'Death of Bonds.'
Proceed accordingly.
1974 Institutional Investor cover asks "Are bonds dead?" 30 year treasuries 15 3/8%, peak of yields.
Thank you for the perspective. I must wonder though if there isn't a big difference between calling the top at what looks like a top, vs. calling a top at what looks like a bottom.
He said the SAME thing in July 2007.
Oops.
Surprise, he is a hypocrite. Shocking.
Aren't Greek bonds on a tear right now? All aboard!
Bill wants to get in on some muppet carnage. Why should the squid have all the fun?
Enough with the fucking Tweeting already. This is High School crap. I can just image he's curling his hair like a Valley Girl and talking like one too.
Yep. High school stuff. Exactly why the craze is strating to sweep wall street.
Explain this, Tyler - if the Fed is "supporting" the Treasury market, how come yields don't go down during QEs and immediately as QE is lifted they drift significantly lower?
Like it or not, it's the safe haven of the game. Absent QE, 10 year yields would be lower as the stock market would be 20, 30% lower than were it is today, at the very least.
QE lifted?
NA google "power reverse dual currency note". This has nothing to do with QE.
You think the shift in the Yen are blowing these up?
I think the shift in the Yen is the cause of what is going on in the treasury market today via those notes and the massive quantity of them and how it is affecting hedging strategies.
As the yen weakens, the hedging on those notes need to be reduced, which is done by dealers selling the long end of the treasury curve. This has nothing to do with QE. I believe Tyler knows it. I would love for him to give an explanation of this in his own terms as it would be much better than I am able to do.
If you go to cnbc.com and hold in your vomit Santelli alludes to it.
or you could just trust your instincts and know not to trust bill gross. I took the long road and still ended up at the same conclusion as you.
Simple answer. Money printing by the Fed is supporting all "markets". Please, the PDs do the actual dirty work and all the TBTF banks have trading arms that can trade in anything. What's more, they have inside information on "trades" that will move the marktet, so while you pick up those pennies, they are driving the steamroller and can take considerable more from their "skim". That's all this is is a fucking skim and precisely why it's a currency crisis this time around.
We'd rather the Treasury Borrowing Advisory Committee explain:
Alas, you are on your own to look up "discounting" as well as "priced in"
:)
Someone's got their pants down and they're aren't a Palahniuk character.
Here's a good example. Gov lends X to Fred for 3%. Fred lends X to Bo for 3.8%. Fred produces coupon for 3.25% pocketing .55% in short (- delivery charges and interest). Fed buys back X at 3.25% gleaning additional yield of .25% in indirect relationship with Bo.
You can plug this little formula into your reasoning of QE's effect on 10YRCMUSTB.
Absent QE, 10 year yields would be lower
Is this a signal that we should ignore all of your posts?
Sweet, bonds will rally monday, thanks for the head's up Bill.
Why anyone would believe buffet or gross is beyond me. The truth is disgusting and they know it.
I consider Gross actually a pretty decent guy (as compared to say, that old liar Buffet) but I think Tyler just nailed him. Course, the bond bull market being over doesn't mean you can't play it ever again.
The ginormous bubble is in stocks in this shitty economy.
Bill Gross is now officially a contrarian indicator.
Buy when he says sell, and sell when he says buy.
And run for your life when he says 'Hold.'
This move is all about the move in the yen affecting some exotic financial products, creating a temporarily illiquid market.
Where will the money in stocks and high risk bonds go when QE ends? Tbills of course.
Well, if your making a killing...something's gonna end up dead eventually.
Gross is a complete idiot along with Buffett. Proving yet again you don't have to be smart to be rich - just connected and/or criminal.
The guy is smart and he gets the game. Watching him, you can see there's a lot that he won't say. Even though he dances around the edges of the real problems, he is too scared/dishonest/weak to share the truth and really help people. Occassionally, he outright lies to appease his centrally planning buddies and not be ousted from their circle for being totally against central planning of the monetary system.
He's stacking gold.
He knows...
wait wait
bill gross isnt buying bonds with his money. he is using customers money
how would he benifit from BSing or being a hypocrit? it isnt his money he is playing with.
I'm pretty sure his income is partly based on AUM and performance.
And how do you think he gets paid? AUM or Hourly salary?
ok BUT...
who is he faking out and how does this benifit pimco? essentially he and the FED are the only fuckers buying the shit
Strange to see this large of a flow today out of bonds and into USD at the same time, all whiile gold gets kicked in the face and equities do nothing. The only thing that makes sense today is that the market moved in the direction of that Fed might actually slow on QE (how wrong they are). Slowing QE would mean a stronger dollar and lower gold (at least at the beginning because QE is the only thing keeping the ponzi scheme together), and it would also mean rising yields as the main purchases of Treasuries slows down its buying.
I have to think the Fed and MSM will hold on to this bluff that they will slow QE soon right up until they have to increase QE. If rates have a few more days where they move up like they did today, the Fed will have to jump in and do even more QE to keep rates down.
Bill Gross is the Rothchild of our times.
The biggest modern predator.
Bill dosn't have much choice. He is mandated to buy bonds in his funds. Thus he is buying now what will do the least damage later on.
Precisely.
If credit spreads are as low as they can go, then corporates and junk will get whacked harder when rates rise.
Bill can hang out at the short end of Treasuries, and ride the upward-sloping yield curve by constantly rolling 2-yrs into 3-yrs.
Whatever.
What exactly is the fund suppose to buy other than bonds?
He's accumulated a huge position in treasuries. And he's saying the bull market is over. Fair enough. He's simply forcing the hand of the Fed to either probe him wrong by buying up his inventory or letting the whole thing go to shit. And I'd rather hold on to treasuries with a short duration than stocks in the event the bond market collapses. At least you can hold bonds to maturity. Your stocks can in fact go to zero and stay there.
Haha stocks can't go to zero. Whoever told you that doesn't listen to the Bernankrugman.
Gross is going senile. He needs to start a 'kabuki Theatre' of his own...
The bond bull market has plenty of space to run before it blows up. Rates haven't turned negative yet on a nominal basis.
Is this being upvoted for humor value?
Because really, there are a lot of advantages to cash in the mattress, above and beyond higher yield.
Think of being able to show people your suitcases full of cash during a lecture to make oratorical points, for example.
Gross, aptly named, is ANOTHER front-running candidate for "DoucheBag of the Decade". The guy is completely disingenuous. Here's a guy giving Bernanke and the Fed S#!t, when it was Gross who loaded up on MBS/Freddie/Fannie and then pressured the Fed and Tsy Dept to "Guarantee" those losers...INSIDE JOB by a bully.
Take your $2.4 billion from the FOREIGNERS (ING) and go play golf and blackjack...!!
So if CNBC was smart, they'd get him on and ask him to explain "the numbers" and this disconnect. Like my old prof from Bschool would say... follow the money and you'll never go wrong...
Oh, God.
The clearest sign Martin Armstrong has lost it.
http://armstrongeconomics.com/2013/05/10/unemployment-the-lowest-since-2008/
"The private sector continues to expand albeit modestly"
Yes I'd say he's lost it.
Too bad.
everybody's got a price.
Bill Gross comes cheap
He is happy to be out of jail, and has decided that genuflecting to TPTB is easier than fighting(?).
I had my doubts, also.
Could it be... could it be... that he knows Leo?
Just askin.
Gross: Sell all your 30y Ts - TO ME.
it sounds like gross got that old time religion: http://www.youtube.com/watch?v=Sxk3NJWngm0
What is this "cost basis" you speak of?
Is that like working more hours yet getting further behind?
I find it very interesting that Bo Polny's predictions for gold "price" moves are as of this minute so far playing-out exactly.
When Gross retires he can become 'Press Secretary' for the administration that's in office. ( he's a master of disinformation)
10000% correct
Who wants to wager that he already has the cufflinks?
what do you think yen? Time to buy the yen and sell usd? don't trade currencies but hoo boi i'd be backing that horse named the bernank right about now if i did.
I got long usd/jpy @ 100.10 yesterday buzz. I think it will consolidate and head even higher. 104-105 area. The U.S. equity markets are going to be challenged with this spike in the $. 61.8% Fibi comes in @105.440 area, on the 75.30-124.00 move.
OK, I am missing something. I always assumed bond prices fall when interest rates rise & visa versa. Well interest rates could fall to 0%, and Treasuries may be safer than a deposit in the bank (re Cyprus) but if inflation starts, interest will rise and bonds will crater.
Is he thinking that Bonds are the safest spot now as commodities, the stock markets, and banks all are about to fall and fall hard.
Has there ever been a case of negative nominal rates? I would think it better to just store cash in a safe.
Is Pimco just making up dates now? 4/29? If bond bull ended it would be 7/24/12 when the 10yr was at 1.4% not 4/29/13 when it's lowest point was 1.65%. Pimco just trying to get headlines now.....
The Wall Street Ranter
BG is the only guy out there who can talk for hours and say nothing. Did he train Berstanke and GreenSpit?
Those numbers are from March. Why can't it simply be that Gross has gotten bearish since then, sold, and now is talking his book?
Just because he's manipulating his followers doesn't mean he's lying.
I personally doubt Fed monetization is affecting much anymore. The Hilsenrath Tapering article presupposes that point with the silly notion that the Fed might be capable of somehow unwinding the bird's nest of fishing line it has created. If Gross is right, and I suspect he is, the stock market will follow commodities and oil and bonds and housing and gold into the deflationary toilet that Fed policies have sadly created. The dollar should do well though. I'm buying a new mattress this weekend.
I see the buying of Treasurys as a defensive play, no?