Bill Gross Responds: "Sick Of [El-Erian] Undermining" Him
Following last week's discovery that Mohamed El-Erian was "sick of cleaning up [Bill Gross's] shit" as tensions soared at PIMCO, the "bond king" has struck back blasting to Reuters that he's "so sick of Mohamed trying to undermine me," claiming El-Erian wrote the damaging WSJ article. Furthermore, the somewhat paranoid-sounding Gross indicated that he had been monitoring El-Erian's phone calls but when questioned by Reuters for evidence of El-Erian's undermining, Gross responded "you're on his side. Great, he's got you, too, wrapped around his charming right finger." As one analyst noted, "I've never seen Bill and Pimco scrutinized like this before... a couple of high-profile stumbles and mediocre showings, coupled with some outflows clearly has some investors on edge."
Gross told Reuters that he had "evidence" that El-Erian "wrote" a February 24 article in the Journal, which described the worsening relationship between the two men as Pimco's performance deteriorated last year, including a showdown in which they squared off against each other in front of more than a dozen colleagues at the firm's Newport Beach, California headquarters.
Gross, who oversaw more than $1.91 trillion in assets as of the end of last year and who is known on Wall Street as the 'Bond King', said in a phone call to Reuters last Friday: "I'm so sick of Mohamed trying to undermine me."
When asked if Reuters could see the evidence about El-Erian and the allegation he was involved in the article, Gross said: "You're on his side. Great, he's got you, too, wrapped around his charming right finger."
He said he knew that El-Erian, who had been widely seen as the heir apparent to Gross but is now due to leave in mid-March, had been in contact with Reuters as well as the Wall Street Journal.
Gross indicated he had been monitoring El-Erian's phone calls.
The Wall Street Journal quickly denied Gross' claims...
When asked about Gross's claim that El-Erian "wrote" the article, a spokeswoman for Dow Jones, the publisher of The Wall Street Journal, said: "This is an astoundingly incorrect claim about a thoroughly reported article that was in the best tradition of The Wall Street Journal."
As we noted previously, isn't it interesting that all these tensions occur as the Fed starts to taper and bonds , according to many strategists, end a 30 year bull market...
The latest signs of a rift between Gross and El-Erian, who once praised each other fulsomely, come as Gross is grappling with clients who are also turning their backs on the very asset class that has made him famous.
That is happening partly because the Federal Reserve continues to reduce its controversial bond buying that has provided stimulus to the U.S. and world economies.
Pimco saw its assets under management shrink by $80 billion in 2013 due to outflows and negative returns, according to Morningstar.
"I've never seen Bill and Pimco scrutinized like this before. This is the most attention I have seen on them," said Eric Jacobson, Morningstar senior analyst who has covered Pimco for nearly two decades. "A couple of high-profile stumbles and mediocre showings, coupled with some outflows - and with no identified successor for life after Bill - clearly has some investors on edge."
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