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Why Everyone Should Be Watching PIMCO (In 2 Worrying Charts)
By now it is clear to everyone that the force-feeding of free-money into financial markets by The Fed et al. has led to a scale of financial repression never before witnessed as bond yields for even the riskiest of risky names collapse to record lows and cheap-financed share buybacks raise leverage to record highs and support an ever more fragile equity wealth creation machine. As Blackrock (and many others) have recently proclaimed, the corporate bond market is "broken" and the risk posed by investors trying to dump bonds is"percolating right under" the noses of regulators; so it is with grave concern we suggest the following two charts - showing the massive out-sized holdings of PIMCO's funds in the high-yield and emerging market debt markets leave a bond marketplace in fear that forced sales via redemptions are the straw that breaks the 'central bank omnipotence' narrative's back...
PIMCO - simply put - dominates the market for high-yield and emerging market debt...
Source: IMF
And if you are under some mistaken belief that they can fund redemptions from cash or more liquid assets... think again...
In other words, the massive (and likely levered) positions The Fed has forced the world to take on by its repression face a dramatic liquidity risk cost if they are ever to 'realize' any gains from the Fed's handouts (by actually selling).
That's what every bond manager 'knows'...
* * *
To BlackRock, the dangers of price gaps and scant liquidity have been masked in a benign, low interest-rate environment, and need to be addressed before market stress returns.
...
The risk posed by investors trying to dump bonds after the Federal Reserve raises interest rates is “percolating right under” the noses of regulators, he said.
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Just so, but it's not only bonds.
Stocks, real estate, pensions, and government at all levels are being held, suspended in midair by this house of cards.
Somehow, there is never a good day to stop sniffing glue.
Absolutely true, but only the bond market has the potential to unravel because of the firing of one man. That's a measure of how inverted the pyramid has become. Is Bill Gross a black swan?
The people running around saying bonds are a safe investment might have a few problems ahead...
Listen Boy.
Gross timed his exit like an insider with "INFORMATION".
you should'nt have forced him out!!!
So, will the sound of the global Ponzi collapsing actually be heard if no one wants to hear it??
http://olduvai.ca
The collapse will be televised exclusively on iWatch...so, no.
The Fed won't raise rates. Problem solved... for now.
The theory that "reserve banks" control anything is just that.
A THEORY.
"The Fed ain't hiring" and they can't create final demand either.
Now the entire US healthcare system is under attack....from whence comes the liquidity again?
I'm thinking "forced normalization" as rates of return suddenly revert.
Reaching for yield is one thing...reaching for return however
Sure they can and they have been doing for the past 5 years. Just print and buy. Just print and buy. The only thing that suffers is the dollar... and the taxpayer... and the 99.99% who don't have access 0% rates.
Listen to your own logic. If the 99.9% suffer, end demand will suffer. Period, end of story. Fed looses. We all loose. The Fed is destroying the economy with their clueless untested policies. Pure desperation. All that is occuring is a massive wealth transfer to the 1% who can only buy so many yachts. This thing will flame out in grand fashion. Getting closer every day.
Yes, problem solved until the whole house of cards collapses.
What prevents Fed from bailing out PIMCO?
Nothing. The minute they are starting to lose the game they change the rules.
Say mold, say mold (<----joke)
Treasury's desire to seize PIMCO's AUM in order to underwrite Washington's profligacy just a little longer...
But to the little guy on the street it will look like a bailout and smell like a bailout, it just won't quack like a bailout - since those who are supposed to profit by a bailout will lose instead...
Exactly - just look at their top 3 holdings of high yield external debt:
!!!
Wow; that's amazing. No risk, there. what could go wrong? Thanks; I'll be remembering this; (if I'm lucky).
None of this will matter when Ebola has wiped out the human race.
Look, I keep tellin ya, we need more playful kittens and smiling puppies on here, or it's going to get depressing? how about it, huh? playful kittens? why not.
It just a matter of time....but, I'm tired of waiting. Hurry up and crash this shit.
Those charts look like a row of dominoes, seen edge-on.
"a scale of financial repression never before witnessed"
And what is waiting on the other side of that scale? Something else never before witnessed.
Nobody can predict the effects of loss of faith in the corporate bond market.
OH yes they can; but I'm not going to be the one to do it; let somebody else take the blame for it; my oficial position is, "I don't know nuthin".
Government, "We need to do something.... for the children." Seen it already.
"To BlackRock, the dangers of price gaps and scant liquidity have been masked in a benign, low interest-rate environment, and need to be addressed before market stress returns."
Horses are already out of barns.
I heard the other day that regulators are getting concerned about sub prime auto loans. The time for them to have started getting concerned about them was back when Zero Hedge brought up the subject- a long time ago.
BlackRock is a day late and a dollar short.
Print.
U.S, Treasury yields are about to rise to completely unexpected levels. This rise will probably happen quite quickly and will come as a total surprise to most investors, traders, and mainstream economists, who are currently watching yields decline with no expectation of a significant reversal.
Here's an Elliott Wave look at the future of the 10 YR,
http://www.globaldeflationnews.com/10-yr-treasury-index-yieldelliott-wav...
I'm about 99% sure you're wrong. the flight to quality in US Bonds and Notes is just getting underway; look forward to further increases in the price of the intruments; ie; lower rates.
We are stuck in QE and ZIRP more or less forever. The government which is the biggest borrower in the world goes bankrupt with as little as a 2% rise in rates and the bond market goes south if the Fed stops supporting it. In fact, the bond market, traditionally the hedge against stocks is now in tandem as interest rates have been squeezed in order to move money into stocks and asset prices.
One day I am hoping we become government atheists...meaning we give up our religious beliefs in the wisdom, caring and expertise of government as if it is a god. They are men, fallible men with their own agendas and flaws.
You should hop on over the msnbc.communist. They are the ones who need convincing. Here as ZH, we get it, even if we don't really get it, we do get it.
watch these fucking "hedge funds" suing the Fed in the coming months! We want our money back and shit! what a fucking shit circus!
In what court ?
so el erian and gross knowingly got out before they start throwing shit at the fan.
I do recall comments after the arab named guy left that it smelled like a play at the town theatre.
"You just get out and save yourself. I'll be right behind you."
Non-sustainable doings - including CB "monetary policies" work until they don't anymore. How long can they hold it back together? That's the current ~2 quadrillion $ question.
Here are your kittens sir.....
http://thechive.com/2014/10/11/cat-saturday-26-photos-23/
Oldest trick on the book ...
Gross gets out of the PIMCO because he KNOWS bonds aregoing to Blow out! So ... he gets out Before and then tells everyone ... see ... I was so so good that the market collapsed ...
Typical!