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No More QE? Bill Gross Isn't Buying It, As Total Return Fund MBS Holdings Surge To New All Time High
The Fed may be using the WSJ to spread rumors of sterilized QE, but Bill Gross ain't buying. According ot the latest update from the world's largest bond fund, the firm lowered its holdings of cash and synthetic Treasury exposure to 38% of total from 41% (even as AUM increased from $250.5 billion to $251.8 billion), while hiking MBS to 52% of AUM: not the highest relative exposure ever, but at $131 billion in Mortgage Backed Debt, certainly the highest in absolute terms. Margin cash declined slightly from $87.7 to $78.1 billion, but one thing that appears to have increased even more is Gross' conviction that QE 3, or to borrow a recent euphemism, THE NEW QE, is coming and it will be all about mortgage backed debt. Of secondary note is that after extending the effective duration of its holdings to an all time high 7.58 years in October 2011, the fund has rapidly cut duration and was at 5.68 at last check as holding in the 1-3 year bucket saw a substantial jump: indicating the ramp up in short duration MBS paper.
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QE forever, bitchez!
Gross was probably waiting on the ISDA to see if he should put the bulk of his funds in Portugal, Spain, Italy, and Japanese Credit Default Swaps. It is open season now on the derivatives contracts. Good article here explaining what went down today in simple terms:
http://www.ftense.com/2012/03/bomb-triggered-isda-determines-greek.html
Gross may also be chasing yield in any place he can find it...
That's a good bet.
Ben must be blowing in his ear. Eeeeeeeeeeeeeeeeew, that's gross.
BB is doing QE right now. Stealthily!
He is in FED basement printing like a maniac. Remember the cash sent to Iraq? This is going on and on. It is easier to funnel USD's overseas. He is exporting inflation. A very dangerous game. Japan is catching on also. I came back from Tokyo last month and every ATM I used, every store and every train ticket booth that I received change, the bills were as crisp and as warm as if they were just printed.
This is not a joke. (Except the warm bills!) Money is distributed arround like there is no tomorrow. I also posted before about my Japanese friends who told me that the BOJ will loan merchants money to invest overseas only. No personal guarantee or any other restriction. Two of my friends opened gift shops in Macau. One in the main market square and the other in the Venetian casino.
That could well be the case. Shortening the duration does not show much conviction that rates can be kept permanently low. But if they are to be kept low in a twelve month tive frame, then the MBS will provide more yield even with a bit of prepayment risk. It is a higher income way to invest in No Change in effective rates for a bit longer.
Federal reserve opens in Toronto............
http://www.jrdeputyaccountant.com/
Have noticed a LOT of disparaging articles on Gross's TR fund in MSM these days. On whose wrong side has Gross gotten ?
And why is he taken such outright large positions (with other people's money) ?
I have a feeling BG is getting front run...
Again...
Gross is not a "Goldman Boy" so they constantly antagonize him.
Neihter is Kyle Bass...that makes it fun to watch and listen to their opinions and actions.
QE^64
Bill Gross is like a fly stuck in a lamp. He keeps hitting the light bulb as hard as he can believing this will result into something positive. Eventually he dies confused, disorientated, and in denial.
CTRL P
No more QE?
Ha! Just look "under the table!"
The Fed is putting Arthur Anderson to shame.
Yep! There's a lot of blowjobs going on under that table!
first person to smile pays for everyone.
I <3 QE
mortgage backed securities.......are you kidding me ?
Start with the premise that Bernanke & Co cream their pants at the thought of injecting another $800B into the economy via expanding the FED's balance sheet (QE). It gooses the economy, decreases the deficit, and keeps the game going. But it has to have plausible cover. How to pull it off in the current environment? The citizen peons are already pissed off about burgeoning bank profits and deteriorating middle-class prospects.
We'll tell the citizen dolts that we're doing something to help housing! Nobody can object to efforts to help housing. Bernanke has already laid the groundwork by telling Congress to get something going about housing.
I give it a 50% chance that those fucktards will cook up the damndest "plan" yet. It'll involve Fannie & Freddie and FHA and refinancing underwater houses and unwinding legacy toxic MBS. It'll generate lots of FEES throughout the convoluted process. It'll be billed as "ensuring the nascent recovery remains on track". Shut up and wave yer flag!
no the Fed does not. "Standing on the other side of that trade is Bill Gross." I called Bill Gross "the real Treasury Secretary" once...back when yields were pushing higher and it looked like the USA was heading towards a catastrophic failure. "It didn't happen" and the Administration proceeded to throw Bill Gross under the bus during the "restructuring negotiations over real estate." Don't know if that was the right thing to do (my understanding was that the Gross Plan was given in good faith and not merely something that would be "good for California.") Well..."the Devil get's his due"...and since my default setting is everywhere and always "don't mess with Mr. Bond" i would be greatly worried if i bet against both Bill Gross AND the Credit Default Swap. "You can't print taxpayers" and if the only alternative... "you"... are offering investors is a default...Bill Gross will know how to manhandle that issue. It will be very interesting to see if the realization of a CDS trigger on Greece "is the financial weapon going off." We know this: more debt is on the way not the least "because of the recession." none will be offered "without protection."
Does anyone know about "making" gold? I've always had a sneaking suspicion that deep in the mountains of Geneva they're making gold and diamonds and trickling them onto the market
yup, with their top secret fusion reactor!
Don't laugh!
You can actually grow diamonds and can also make gold. The problem is that the diamond machine is only cost effective if you create very large diamonds. http://d.neadiamonds.com/creating-man-made-diamonds
Gold creation is not cost effective, as you need nuclear reaction and some dificult to control isotopes.
...or Gargamel succeeded. Luckily for me, I was in the weed patch. Fuck smurfberries.
One of the best articles in any magazine that I've ever read. Read, and enjoy.
The New Diamond Age
Armed with inexpensive, mass-produced gems, two startups are launching an assault on the De Beers cartel.
Next up: the computing industry.
http://www.wired.com/wired/archive/11.09/diamond.html
Sorry Rafter, I posted similar above before I read yours.
No worries, it's a great read; don't buy diamonds to protect youself.
Nope, the mountain goblins killed 'em all...then a bridge, big demon thing, old man with stick, ring of something or other...you get the picture.
Who will buy U.S. treasuries if not the Fed, and wouldnt that be QE? Well, actually I can think of other names for it.
Well... the Fed will buy those, too, if that's what is needed.
I think what needs to be understood here is that whether its MBS or Treasuries, the Fed is going to purchase these out the on the long end of the curve to keep rates low.
When the economy is gaining momentum and inflation appears to be an issue, the Fed will simply sterilize its purchases and place short term reverse repos on bank balance sheets. They will essentially be adding liquidity beyond 3 years and taking it away on the short end of the curve.
But the asset purchses will likey be persistent for a good deal of time. Gross is making a bet the MBS will be the next purchased asset of choice-- and why not? Many banks still wouldn't mind ridding themselves of questionable MBS paper, and its a partial reward for having to deal with reverse repos and competing for yield at the short end.
could be "just a market rally" as well. the QE thing i think is way overblown.
Assetman - That sums up Bernanke's official message. But there's a big problem:
"When the economy is gaining momentum and inflation appears to be an issue, ..."
Inflation, yes. But additional QE will not result in the US economy gaining momentum. Cheap US financing gets deployed anywhere on the globe where it can be used profitably. GM uses it to build Buick plants in China. ALCOA uses it to expand bauxite operations in Brazil. US Financial behemoths use it to buy European sovereign bonds. Etc. It's a simple carry trade. Ask Japan how it works.
Profits of US Corporations go up thanks to cheap US capital and cheap overseas labor. Their stocks go up as profits go up. We hail "economic recovery". But the US stock market is not the US economy, and these expanded overseas operations (fueled by easy QE dollars) are in direct competition with our domestic US economy. QE capital flows to the BRICs, or to commodities, or to global financier's bonuses.
i do agree "the US stock market is not the US economy"--having said that all stock markets do much better in a recovery than in "whatever it is we have now." also why go abroad for your labor when you have more than enough at next to nothing right here in the USA? the fact is "where does capital go" is the far more critical question since capital really doesn't care all that much about labor at the end of the day. China has been the destination for some time (obviously no workers paradise)...but when you have a highly centralized banking system as we do in the US "driving all that capital overseas" is very risky indeed. "Europe is safe...certainly safer than the USA" is what the current iteration either told others or told themselves i imagine. Same goes for Japan. The biggest problem in the USA remains "one of the lowest economic freedom indexes in the developed world." in other words "the total lack of the rule of law." Indeed there appears a very odd kind of "Jihadism" emerging in the USA. and of course we all know this here...we rail against it at every turn. and "we are attacked for it" as well. to those outside the Zero Hedge and Zero Hedge like community i say this: simply pursuing rote or mere idealogical media methodologies works counter to recovery itself. indeed i would argue "there is nothing better for creating and enhancing an economic growth model than putting Zero Hedge and its people front and center as advocates for freedom." We may be an odd form of welcome mat...but this is a welcome mat to the world. Indeed..."the world was here to begin with."
Yes, I understand the problem as presented... and I don't disagree with it at all. Up arrow for you.
At this stage, it's imporant to remember that QE isn't used primarily as a means to improve economic momentum, per se. Uncle Ben is utilizing QE as defense to avoid deflation at all costs. If there's positive economic momentum, well.. that becomes a nice little side effect.
The main goal that Bernanke is trying to achieve is gaining total control of the costs of funds at the long end of the curve. If he doesn't maintain command and control there, funding our massive Treasury debt is going to become an unabated nightmare. It's the worst of worse case scenarios.
So... Ben is going to buy, buy, buy. We are at the point, though, that Ben will need to sacrifice a bit of the short-term part of the curve when prices run rampant. And to your point-- at some stage soon, we will be seeing accelerating prices with little or no momentum in the economy.
The biggest fallacy in Bernanke's line of thinking is that economic activity follows the stock market. That might work when the forces of capitalism are given free reign in the marketplace-- but it doesn't work that market is manipulated on a daily basis. As a result, we have a dangerously narrow market with less participation and less volume.
Not sure if these gals know what QE3 is but they're pissed at BoA and flash their mammalian protuberances at a branch today to prove it.
Bust Bank Of America Raw video footage
Nudity alert for those still at the office...lol.
notice how the only one manhandling the protestor is a pig faced white shirt......those white shirts have some karma coming their way this summer
Friend of mine told me the white shirt indicates some sort of officer. Not sure though.
yeah probably right....they always look older and they have no fear of harming protestors
i just hurled my hors' douvres...
"Mammalian Protuberances" lol I just had the whole wet T-shirt scene from 'Joe's Garage' flash before my acid burnt out eyeballs.
I haven't been the same since Lucille messed my mind up.
He has to print to offset the with holding tax decline, since the unemployment chart now coincides 1:1 with future with holding tax revenues.
To the victor, also go the spoils.
Now, a declining unemployment rate is not so good, as will be discovered.
The impact always comes from the direction in which one is not looking.
UST yields are range bound for now--maybe years--after a 30 year bull market that is now being perpetuated by the Fed to facilitate support of asset values and controlled private-sector de-leveraging (in theory). Bill's moves are technical in nature related to relative values in the context of adjusting a battleship of a balance sheet. When duration drops to ~3 years, he will be projecting a sustained upward move in rates within 12 months. He may or may not be right then.
“These people intend to run off billions of dollars of this currency. They want to obliterate their debts… You see Shelly, all of these countries owe billions of dollars and they can never pay it back. Their only hope is worldwide inflation. But, it has to be a huge one, I mean so big that paper money’s not worth anything, you use it for wall paper…Well, what do you think is going to happen when they start running off this dough and suddenly there’s trillions of extra dollars floating around. You’ve got a collapse of confidence in the currency, people are going to panic, there’s going to be gold riots, A. Paul music, political chaos, mass suicide, right? It’s Germany before Hitler, you can see that. Jesus, I don’t know what people are going to do when a six pack of Budwiser costs $1200. “
Peter Falk, The Inlaws
I think it’s amazing to see this dialogue by a reckless CIA agent in a diner scene from a dark comedy circa 1979. You know the movie is dated, because, at that time the most likely group the writers imagined would pull off such a dastardly scheme was a bunch of international terrorists from a corrupt South American government. Nonetheless, the movie is still relevant today, because, (a) the world’s leading nations are now actually doing it for real and (b) all the characters in the movie behind the scheme were raving lunatics.
LOL great movie....."serpentine Shel, serpentine!"
If the Fed opens their mouth ,they lie,and if they go near a key pad they steal.
Fucking thieving liars.
If he really wants to front-run the Fed, he might consider buying stocks, since central banks are starting to look into doing that very thing directly. For the Total Return Fund, maybe high-dividend stocks will be most appropriate.
Why not just have the Fed buy out every mortgage and give everyone their home free and clear. At least that would be fair. Otherwise the only other fair option is for everyone to lose their home.
Or just stay the fuck out of the economy and let it fix itself. Took on more than you could afford, you lose. If you lived within your means, you win.
I don't see a problem there.
actually relative to what's been done so far...and continuing to be done as well...i would call this "a sensible plan."
Buy PM's bitchez.
BG and his Silly Wabit sidekick being taken down. But it is the money Pimco controls that the bankers are after. If you control other people's money you can bet you're on their list.
BG thinks he is in the TBTF camp. Wouldn't take too many investor pullouts to make him the next Madoff.
QE till the cows come home. Ben won't stand for anything less http://tinyurl.com/7ynfka6
history doesn't repeat but it sometimes rhyme, and Do-Wah what the fed Do-Wahs. increasingly we can make the point that FED is the primary GSE, (the mortgage GSE's all start with F's and their balance sheet is not really backed by taxpayer assets, -remember McCain saying that?-but you and I know it is, or was) and how long will it take before Countrywide is back in business, doing liar loans, robosigning, etc, and passed the paper on to Ben and Bill?? if the pernicious way in which corruption is first leveraged and then assigned to taxpayers - private debt = public good, which is a machievellian axiom, and the process by current standards is to force feed debt onto civilians who have none. in the future not only will your children have the spectre of public debt hanging over their head, they will be forced to take that debt on as personal baggage, indentured servitude at birth. Stop the Fed-ness Now. Impeach Obama, why wait for the election which is rigged anyway.
Since when did a country ever pay off it's debt?