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Bill Gross On Where "Bad Bonds Go To Die": Joins Paul Singer In Hatred Of Treasurys

Tyler Durden's picture


A week ago we brought you Elliott Management's summary opinion on US paper: "We Make This Recommendation To Our Friends: If You Own US Debt Sell It Now." Today, Bill Gross doubles down.

And the amusing thing, of course, is that the short bus brigade will, as usual, take this as an endorsement of stocks even as the bear flattener thesis develops.


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Tue, 08/14/2012 - 11:31 | 2703861 vinu02
vinu02's picture

Bond is gonna die and people think vix is also gonna die HOW LOW CAN VIX REALLY GO ? CAN VIX REACH ZERO ? 

Tue, 08/14/2012 - 11:45 | 2703908 Renewable Life
Renewable Life's picture

Wouldn't a VIX at zero, be an indicator that the market was 100% centrally planned, no voliltility left, no need, when the Fed and Computers are controlling every move!!!!!

Tell me which candidate will arrest Ben Bernanke and round up the rest of the thieves and put them on trial???? Neither, that's what I thought, well then the VIX will probably go to zero!!!

Tue, 08/14/2012 - 12:02 | 2703966 alangreedspank
alangreedspank's picture


Tue, 08/14/2012 - 12:25 | 2703998 TruthInSunshine
TruthInSunshine's picture

Who/What will be the bigger fools when the Federal Fractional Reserve Racketeering Syndicate and its Primary dealers own the overwhelming majority of equities and bonds (and MBS and anything else that can be purchased with The Bernank's electronic credits and alchemy)?

How does AAPL get traded higher even amongst a group in collusion, using electronic credits, when they all already own massive portions of it?


Good luck carbon life form 'investors,' good luck carbon life form 'traders.'  He/She without an electronic printing press spewing electronic, monopolistic, 'legal tender' is up a creek with no paddle.

Oh look! Niagara Falls!



Tue, 08/14/2012 - 12:24 | 2704041 drivenZ
drivenZ's picture

bernanke is not the problem, congress and the rest of the folks in washington are the problem.  

Tue, 08/14/2012 - 12:47 | 2704112 Everybodys All ...
Everybodys All American's picture

Bernanke allows the government to continue to run without a budget to our long term detriment. Because he is willing to print indefinitely the real tough choices that Congress is elected to decide upon do not have to be made. Even worse you can't vote the jerk in charge of the Fed out of his office. So nothing ever changes.

Tue, 08/14/2012 - 13:27 | 2704282 drivenZ
drivenZ's picture

"Bernanke allows the government to continue to run without a budget"


technically speaking but that's completely letting the white house and congress off the hook. Just because you can do something doesn't mean you should. To Bernanke's defense he's said this a number of times now. He shouldn't have to force politicians to make tough choices.  That's Washington's job and they should cut the partisan crap and just do it. That's what we pay them to do. 

Tue, 08/14/2012 - 14:11 | 2704443 Bay of Pigs
Bay of Pigs's picture

Defending the Bernank now are we? LOL.

Tue, 08/14/2012 - 14:31 | 2704517 drivenZ
drivenZ's picture

it's just the reality of the situation. People here need to pull their heads out of other ZH commenters asses and start thinking for themselves. bunch of sheep on this site. 

Tue, 08/14/2012 - 22:23 | 2705694 Renewable Life
Renewable Life's picture

I think for myself everyday idiot, maybe you might want to pull your delusional, fractionally bankster addicted head, out of Benancke's ass!!

You think that crook is a hero who saved your sorry ass, but you think Bernie Madoff and Robert Sanford as criminals!!! Get your sorry ass back to and Bloomberg where you belong, you can't handle hanging around the truth punk, you can't handle the truth! And the truth is......your belief in a credit addicted, bailout crazed, moral hazard destroying, fractional banking system, is as pathetic as believing in Santa Claus at your age!!!

Tue, 08/14/2012 - 15:02 | 2704656 Panafrican Funk...
Panafrican Funktron Robot's picture

Please kindly look up.  See that light?  That's the entrance to the cave.  Please get the fuck out of the cave.  

Tue, 08/14/2012 - 12:48 | 2704117 TruthInSunshine
TruthInSunshine's picture

Are you at least implying that The Bernank is the identifiable face of someone who is a bagman and who works for other bagmen of The Money Masters?

Tue, 08/14/2012 - 12:52 | 2704134 vast-dom
vast-dom's picture

TBT up day trade. Bond bubble will pop.

Tue, 08/14/2012 - 11:55 | 2703938 Dr. Engali
Dr. Engali's picture

When the vix hit 10 and change that's the time to buy volatility. Bad things happen when the vix hits 10, or good things depending on one's perspective.

Tue, 08/14/2012 - 11:58 | 2703948 ITrustMyGut
ITrustMyGut's picture

maybe this is optimistic... but...

recall Willie and a few others spoke about %1.5 10Y as a black hole.. that would suck all capital.. then.. it happened..we saw 1.5.. and below....

now... its rising.... suggests... maybe too early to call..just the same... collapse of UST bonds... could now be beginning... which will implode all things UST debt will be OFF THE CHARTS...

and the bad  petro dollar experiment... over?

Tue, 08/14/2012 - 11:31 | 2703863 GMan_
GMan_'s picture

Bill Gross: The most interesting man in the world.

Bond, James Bill Bond..

Tue, 08/14/2012 - 11:53 | 2703927 cocoablini
cocoablini's picture

Remember the last time Gross closed a few bond.funds and went short? It didn't go well for Whatbonds will he invest in since he does not buy stocks?
He sold bonds and the FED mopped it all up and Bonds stayed chronically resolute. The fact is in a depression the senior currency and debt vehicles stay firm because all other debt is an order of magnitude worse . Yes.US will never pay off its debt. Yes the US dollar is a piece of shit. Yes the political system was broken by the financial system No the dollar will not go to zero in the next.20 years. See British Pound Sterling before WW1. It takes decades.for a senior currency to unwind from the financial mechanisms.

Tue, 08/14/2012 - 12:00 | 2703957 ITrustMyGut
ITrustMyGut's picture

thts the Nick Gaurdino perspective... has asome legs...  or could be absolutely wrong too... only time will tell...


Im betting the end of petro dollar is at hand....

Tue, 08/14/2012 - 13:56 | 2704386 Thomas
Thomas's picture

I use Treasury-backed money market funds at 0% because the yield gain of the 10 year is just so uninspiring. I am going to lose 1.4% per year. Oh shoot me now. With that said, Bernanke is the biggest fucking socialist on the planet. He thinks central planning of complex systems by a committe of idiots and dildos will work. What a fool.

Tue, 08/14/2012 - 12:36 | 2704081 disabledvet
disabledvet's picture

Factually spot on. And we all here are forever "peering into the future" to gain advantage "over the other guy who's going to get killed fer sure!" as all those Fighter and Bond traders say. All I would say...indeed CAN that once you "lose control of the long end" (Greece, Spain, Portugal, Ireland, Italy) you don't just "get it back." do we do as France and "throw the entirety of the State to keep that sucker DOWN!"? Or do we "allow for a return" and the commensurate principal reduction of course.

Tue, 08/14/2012 - 11:34 | 2703864 slaughterer
slaughterer's picture

Money flowing out of 20+ Treasury and European MMs into the US stawk market.   Even zombified high-beat momo (PCLN, CMG) getting a bid, now that GOOG/AAPL are inflated beyond all reason.   

Tue, 08/14/2012 - 11:39 | 2703889 CrashisOptimistic
CrashisOptimistic's picture

How can you possibly conclude that when volume is hitting decade lows?

Do you realize how much money is in Treasuries and how much volume they would generate if they actually were going to stocks?

If there are bond sellers (rather than merely a pause in buying from terrified Europeans) then they are going to cash.  Probably out of fear of oil price, which is inflation, which is bad for bonds.

Older stodgy bond investors who were in bonds because they were scared do not suddenly become swashbuckling stock buyers, and they certainly don't when you have clear evidence (microscopic volume) that they are not doing that. 

Tue, 08/14/2012 - 11:41 | 2703896 slaughterer
slaughterer's picture

Not all stawks receiving low volume.  

Tue, 08/14/2012 - 11:51 | 2703915 CrashisOptimistic
CrashisOptimistic's picture

But what are you imagining?

You are suggesting a 67 year old man whose retirement is largely funded by his nest egg and miniscule Soc Sec, who was in bonds to keep his LIFE safe, not seek profit, just keep safe in a terrifying environment . . . this old guy is suddenly going to become a swashbuckling buyer of PCLN and CMG?

If you were trying to make a case like this with Exxon or Procter and Gamble, it might hold at least a teaspoonful of water -- though not much more because the old guy CANNOT risk 2008 or he will literally starve, but regardless of that, this scenario of yours seriously needs to recalibrate.  No old guy whose life depends on his nestegg is leaving bonds to swashbuckle.

Equities are rising for the same reason they have risen for the last few years.  There is no volume.  There is no price discovery.  There is no market.  It's all computer HFT, and everyone here knows it, and if they are in this market they are not trading or investing.  They are betting.

This is not what we grew up with.  This is no longer capitalism.  Take your money out and buy farmland.  Nothing else has value that can survive.

Tue, 08/14/2012 - 11:56 | 2703942 slaughterer
slaughterer's picture

It is not 67 year old men buying AAPL and GOOG right now.  

Tue, 08/14/2012 - 12:00 | 2703954 CrashisOptimistic
CrashisOptimistic's picture

What has that got to do with bonds?  Bond investors are historically far older than stock investors.  You started your scenario with stock money coming from bonds, and volume disproves that.

Now you're jumping all over the place.

Wed, 08/15/2012 - 00:19 | 2705903 FEDbuster
FEDbuster's picture

"GET OUT NOW! Invest in things you can stand in front of and defend with an AR-15", Ann Barnhardt, July 2012

Farm land/seeds, silver/gold, plenty of food, guns/ammo, etc....

Tue, 08/14/2012 - 13:15 | 2704220 LongSoupLine
LongSoupLine's picture

all the farmland is dry right now.  You can get it real cheap!

Tue, 08/14/2012 - 12:05 | 2703977 J 457
J 457's picture

The money flowing out is being used to buy groceries, health care, gasoline, and pay property taxes.

Tue, 08/14/2012 - 14:52 | 2704610 post turtle saver
post turtle saver's picture

"... and pay property taxes."

Can I get an AMEN? Of all the items you listed that one gets the least attention and arguably has the most impact. You can never be comfortable in truly owning your home because of that nefarious tax. It's a mis-incentive as well since assessors are always pressured to value everything up even when it's depreciated / old / junk, all in the name of maintaining government revenue.

Property tax needs to be made illegal.

Tue, 08/14/2012 - 11:51 | 2703865 Mercury
Mercury's picture

If only Bill. 
It's more like:

The government is where  bad debts get transformed into a zombies that will never be extinguished until they feast on and ultimately absorb their opposite value from private wealth.

Bad government debt doesn’t die until someone else takes it in the neck.


Tue, 08/14/2012 - 11:32 | 2703866 buzzsaw99
buzzsaw99's picture

lmao gross said the very same thing @tnx ~ 3.5

Tue, 08/14/2012 - 11:32 | 2703867 derek_vineyard
derek_vineyard's picture

fxxking fed might make him broke first....if we double dip hard as I think we are doing we might see 1% paper like japan

fundementals don't matter

Tue, 08/14/2012 - 11:32 | 2703868 Dapper Dan
Dapper Dan's picture

Do not believe his vows; for they are brokers,
Not of that dye which their investments show,

But mere implorators of unholy suits,
Breathing like sanctified and pious bonds,
The better to beguile. This is true for all:

Tue, 08/14/2012 - 11:39 | 2703894 Frank N. Beans
Frank N. Beans's picture

what he said.

Tue, 08/14/2012 - 11:33 | 2703870 larz
larz's picture

Sell it??!! what about my interest payments!

Tue, 08/14/2012 - 11:36 | 2703885 buzzsaw99
buzzsaw99's picture

your coupon is under the cushions in the sofa

Tue, 08/14/2012 - 12:00 | 2703955 NotApplicable
NotApplicable's picture

Thanks to kids, EVERYTHING ends up there.

I once pulled out an entire slice of cheese; still wrapped, thankfully.

Tue, 08/14/2012 - 11:35 | 2703879 FRBNYrCROOKS
FRBNYrCROOKS's picture

Last year he sold all his T-Bonds and shorted the USD, then did a Mea Culpa, now he is bashing Bonds again? Make up your mind Bill! I'm putting my 401 in Money Market account and it , probably, isn't safe there.

Tue, 08/14/2012 - 11:37 | 2703888 buzzsaw99
buzzsaw99's picture

last week he said stocks are dead too. wtf?

Tue, 08/14/2012 - 11:48 | 2703914 Dr. Engali
Dr. Engali's picture

You'd be better off putting some  in PM's before you get vaporized.

Tue, 08/14/2012 - 11:38 | 2703891 orangedrinkandchips
orangedrinkandchips's picture

dont fool yourself....BILL IS BUYING!!



Tue, 08/14/2012 - 11:39 | 2703892 slewie the pi-rat
slewie the pi-rat's picture

don't buy them if you don't like them, billy-boy-buy

short anything ya want billy-boy

how's that pension-funding going? 

in spite of all yer ongoing, non-stop bullshit, bill, every twitter & tweet so impotent, especialy for tyler who has founded a new industry picking the corn outa yer shit and letting us smell every little hernel of shit you produce!


Tue, 08/14/2012 - 11:41 | 2703897 ATG
ATG's picture

The nomination of Paul Ryan confirmed BG on TNX as surely as the election of 0 confirmed the end of his "precious" middle class. 

TNX now targeting +39%:

TYX still targeting -46% to 1.5%:

VIX targeting 8.5 with AAPL ~3 points from testing previous highs:

Options Overnight now holds SPY puts:

Tue, 08/14/2012 - 11:44 | 2703904 Atlantis Consigliore
Atlantis Consigliore's picture

its the Cramer Gross Show, bye bye bye, sell sell sell, run ru nrun 

Tue, 08/14/2012 - 11:44 | 2703905 orangedrinkandchips
orangedrinkandchips's picture

Yes, in a REAL world ruled by natural law, like the shit we learn about in school, you would run, not walk, away from Treasuries. Of course.

Yes, in a REAL world ruled by natural law, like the shit we learn about in school, equities should not be going parabolic.


However, Stocks will keep going up and bond yields will sit on these low yeilds forever like the fat-ass at an all-you-can-eat chinese buffet that never leaves....(YOU GO NOW! YOU BEEN HERE FOUR HOUR!)

Bernake ordered the code red.....the truth is our 'beloved' govt CANT HANDLE HIGHER RATES.....PERIOD.


BILL KNOWS THIS...stupid fuck, tricks are for kids!


Tue, 08/14/2012 - 11:53 | 2703929 NotApplicable
NotApplicable's picture

Yeah, it's hard to understand the logic of shorting in a ZIRP world. If they ever do "pay off," there will be no entity left to collect from.

Muppet Show 2.5?

Tue, 08/14/2012 - 12:35 | 2704070 laozi
laozi's picture

Did you read Currency Wars by James Richards? He has this theory that complex systems implode spontaniously, and if this is true Bernanke will not be able to control stuff indefinitly.

Anyway. Markets are not rational anyway. Things _have_ to be absurd (so that even the thick-headed gets it) before the trend turns.

Tue, 08/14/2012 - 12:58 | 2704148 NotApplicable
NotApplicable's picture

There is no need control. All that is needed is continuous, destructive influence upon a system in order to undermine any competition it would otherwise produce (the ole "nature abhors a vacuum").

Take away our escape routes, and they have little left to fear from the masses.

I fully expect that FEMA camps will someday fill up voluntarily, as it will provide the last facade of "civilized" life.

Tue, 08/14/2012 - 15:44 | 2704824 FRBNYrCROOKS
FRBNYrCROOKS's picture

I think the plan is for them to get their's before everything crumbles. Then they can hang out, Gatspy like, and have parties while the rest of humanity grovels in the dirt ekking out a meager existence. 

Tue, 08/14/2012 - 19:06 | 2705277 boogerbently
boogerbently's picture

...see Knight Financial.

Picture it happening with $440 BILLION, instead of million.

Someone big will achieve HFT suicide, and we'll need to bail them out too.

TCTF    (Too Connected To Fail).

Tue, 08/14/2012 - 15:40 | 2704813 FRBNYrCROOKS
FRBNYrCROOKS's picture

"Yes, in a REAL world ruled by natural law, like the shit we learn about in school, equities should not be going parabolic."


I don't mean to be a smart ass but, I think the term you want to use is exponential, not parabolic. A parabola, such as x^2+2x+2, looks like the path of a thrown baseball up and then down in a arch pattern. 

Tue, 08/14/2012 - 11:55 | 2703940 Lucius Corneliu...
Lucius Cornelius Sulla's picture

Order of default:

1) Junk

2) Muni

3) State

4) High grade corporate

5) Federal

The FEDs will hold up the longest because they can print.  Better to short junk and low grade munis.

Tue, 08/14/2012 - 13:02 | 2704163 NotApplicable
NotApplicable's picture

After much painful arm-twisting, I expect the Fed to fully monetize state and muni bonds in some fashion. Meanwhile, the Squid, et al., will use the disaster to absorb what's left of the corporate world at pennies on the dollar (with our pennies).

Then, once that's over with? Why then our Glorious Revolution begins, and roast pigeons will fill the air!

Tue, 08/14/2012 - 12:03 | 2703971 Everybodys All ...
Everybodys All American's picture

Might this be that Gross is thinking that further QE is unlikely. If more QE were coming these Treasuries would be still highly sought and Gross would be wrong short term.

Personally I think rates could go lower and even more negative before the short of the century takes hold. Having said that why take the chance to run in front of the road grader to pick up the last nickle.

Tue, 08/14/2012 - 12:06 | 2703973 JuicyGrabs
JuicyGrabs's picture

Yeah... problem is Paul Singer has been short bonds since May as was betting on more QE(his own words) which didn't materialize and won't anytime soon.

If you check Singer's biggest positions, you'll see his short treasuries position is really small and that he opened some new positions that make up biggest chunk of his portofolio. He's now short the S&P and short Nasdaq via put options.

Tue, 08/14/2012 - 12:04 | 2703975 LMAOLORI
LMAOLORI's picture



I don't have a dog in this fight but Gross has been wrong before plenty of times...

Gross Folly

Exercises In Supreme Hypocrisy: Bill Gross Edition

Spend Now, Save Later, Bond Fund Leaders Say

Tue, 08/14/2012 - 12:06 | 2703984 apberusdisvet
apberusdisvet's picture

It's no longer your assets being vaporized.  The new correct  term is "corzined".  I expect it to be in Webster's next year.

Tue, 08/14/2012 - 12:21 | 2704022 warezdog
warezdog's picture

European fools and their money will still flock to the US whether in bonds or stocks because compared to risk there we look like heaven here. When smart money finally figures out that the risk here was that of their home country masked by lollipops and sunshine then the fun really begins.

Tue, 08/14/2012 - 12:38 | 2704087 mind_imminst
mind_imminst's picture

the FED will buy bonds until the cows come home (or the chickens come home to roost). The logical thing to do is short bonds, of course, but this is not a rational market. The FED will force rates lower and lower and lower. As Japan found out, there is nothing else they can do.

Tue, 08/14/2012 - 12:42 | 2704095 Lost Wages
Lost Wages's picture

Bill Gross's investment advice: No stawks, no bawnds, no nuttin.

Tue, 08/14/2012 - 14:58 | 2704641 RaymondKHessel
RaymondKHessel's picture

MBS + Au + Ag

Tue, 08/14/2012 - 17:10 | 2705035 thepigman
thepigman's picture

When Gross says, "Stay short my friends", he is not advising you to

short Treasuries, he is advising you to stay short duration..... the

belly of the curve... 4-7 years.  Just sayin'

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