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Pimco Borrows A Record $88 Billion To Bet On Fed's Upcoming MBS Monetization

Tyler Durden's picture





 

Regular readers of Zero Hedge know that in recent months tracking the portfolio and thoughts of one Bill Gross via the holdings of his flagship Total Return Fund (which just jumped by $6 billion in the past month and is just shy of its all time record north of $250 billion) has meant one thing and one thing only: betting on the Fed monetizing Mortgage Backed Securities or bust. Well, in January he just took it to a whole new level. The fund has now borrowed a record $88 billion, or -35% of its AUM, in cash (shows how much he thinks of the dollar) and used the proceeds (together with dumping European sovereign bonds from 18% to 11% of AUM) to bet on MBS which now stood at a whopping 50% of the entire portfolio - the highest since July 2009 when QE1 was in full force. However, in absolute dollar terms, due to the growth of the fund's AUM, the actual bet on MBS has never been bigger, and at $125 billion, represents the biggest notional bet ever made by PIMCO. Treasury holdings of just over $100 billion with an effective duration of 6.33 complete the epic bet that the fund has now put on QE3.

 


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Thu, 02/09/2012 - 19:54 | Link to Comment Seasmoke
Seasmoke's picture

looks like a sure thing

Thu, 02/09/2012 - 19:56 | Link to Comment Chris Jusset
Chris Jusset's picture

QE3 is a sure thing; and bailing out the banksters is a sure thing; ergo, betting that the Fed will buy toxic MBS is a sure thing.  It's a virtual certainty.

Thu, 02/09/2012 - 20:01 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Obama's ploy today solidifies the scheme to brush EVERYTHING under the rug, and the Fed is the rug.

Now the Fed begins to buy MBS from the banks at a time when they still have (perceived) value, because they won't when 20 million forclosures hit the market.

Thu, 02/09/2012 - 20:13 | Link to Comment trav7777
trav7777's picture

yep...artificial bond floor

Thu, 02/09/2012 - 21:52 | Link to Comment Chris Jusset
Chris Jusset's picture

Lennon Hendrix said:

The Fed is the rug.

Actually, the Fed is both the rug and the vacuum cleaner.  The only thing missing is the dirt ... oh wait ...

Thu, 02/09/2012 - 22:43 | Link to Comment Central Bankster
Central Bankster's picture

Just imagine the day when the Fed fails to monetize and all these leveraged bond funds blow up their "safe money" investors.

Thu, 02/09/2012 - 22:54 | Link to Comment Captain Kink
Captain Kink's picture

Until then buy DMO...still not too late.

Thu, 02/09/2012 - 23:42 | Link to Comment Kiwi Pete
Kiwi Pete's picture

Looks like the banks found their bagholder Mr Goss. No need for monetizing now is there?

Thu, 02/09/2012 - 22:58 | Link to Comment rosiescenario
rosiescenario's picture

Yes, and those 20 million foreclosures will put more borderline houses underwater thus generating more of the same. Deflation for the housing and real estate markets and inflation for the pm's, food, and fuel.

 

Also hitting this year will be many commercial real estate problems as loans come due and the appraised values will be far lower forcing the owners to either pony up more capital or walk.

Fri, 02/10/2012 - 11:46 | Link to Comment MachoMan
MachoMan's picture

and...  property tax valuations...  and then local governments will be forced to cut all of the fire and police personnel before any useless eaters in the ranks...  and threaten to kill puppy dogs at the pound...  etc.

CRE has been so fucking dead for so long I can't believe there is anything left to roll over...  nothing but turds.  It's no different than business credit...  If I can't borrow from a bank at 5% and make any profit with my business, then I don't go into business...  likewise, if I have to pay $X in rent every month and can't make any money with my business, then I don't go into business or I close shop...  no demand for loans, no demand for CRE from anyone with the wherewithal to repay or otherwise live up to the bargain.

Thu, 02/09/2012 - 20:16 | Link to Comment HedgeAccordingly
HedgeAccordingly's picture

5 10s 30's really took it on the nose today.. seinding ES into low.. though AH thye are bouncing a bit 

ES off highs just like yesterday http://hedge.ly/zBI375

Thu, 02/09/2012 - 20:24 | Link to Comment vast-dom
vast-dom's picture

nothing like borrowing against the profits you will make on the insider info from the very source of the insider deal -- talk about some perverted full circlular shit!

Thu, 02/09/2012 - 20:33 | Link to Comment Caviar Emptor
Caviar Emptor's picture

One more step would be required: a promisory cut of the profits to the source of both the insider info and the loan. Now that's what I call a beautiful public/private partnership !

 

 As they walk off across the wet runway into the misty night:  "Benny, I think this is the beginning of a beautiful friendship!" 

Thu, 02/09/2012 - 20:56 | Link to Comment kill switch
kill switch's picture

Not observed you in the past,,,But, vast-dom you are someone that gets it...!!! Welcome aboard!!

Thu, 02/09/2012 - 21:44 | Link to Comment vast-dom
vast-dom's picture

thx kill....i've been defiling these here 0H threads for nearly a year now, and what a godamn amazing year it's been! :)

Thu, 02/09/2012 - 23:24 | Link to Comment Mike2756
Mike2756's picture

If he's right, could be another Corzine.

Thu, 02/09/2012 - 20:34 | Link to Comment kito
kito's picture

only the promise of qe is a sure thing...lay off the hopium, there is no qe3 anywhere in the near future.........

Thu, 02/09/2012 - 20:38 | Link to Comment fonzannoon
fonzannoon's picture

Kito if you still believe that what happens to rates on the long end of the curve once they are done buying every single 30yr via twist?

Thu, 02/09/2012 - 20:43 | Link to Comment kito
kito's picture

ben can purchase without expanding their balance sheet. there are enough scared gazelles running from europe into timmys corner looking to purchase uncle sams debt...........keep clicking your heels dorothy, it wont get you to kansas........

Thu, 02/09/2012 - 20:50 | Link to Comment Caviar Emptor
Caviar Emptor's picture

Ben still has one trick up his sleeve to use to push thru QE3: the BTU value of printed dollars (12.44 BTU). Dollars can substitute for oil in many cases if they are printed in sufficient quantities and boilers are retro-fitted. 

Thu, 02/09/2012 - 21:51 | Link to Comment Tijuana Donkey Show
Tijuana Donkey Show's picture

Hate to quote the click whore BI, but Europe is WWWWWWWWWAAAAAAYYYY ahead of us

http://www.businessinsider.com/hungary-money-burning-2012-2

Thu, 02/09/2012 - 20:51 | Link to Comment fonzannoon
fonzannoon's picture

You say he can purchase without expanding...how? By selling short dated paper?

Thu, 02/09/2012 - 21:28 | Link to Comment kito
kito's picture

Not hard to unload u.s. paper in secondary market. Plenty of crony banks to grab it. No qe3 for you!!!

Thu, 02/09/2012 - 21:50 | Link to Comment fonzannoon
fonzannoon's picture

Kito they don't need to call it QE and they don't need to show it on their balance sheet. I believe you are buying metals and you know this.

Thu, 02/09/2012 - 22:04 | Link to Comment kito
kito's picture

fonz have you been snooping around my faux dirty laundry basket with the secret pm compartment???????

Thu, 02/09/2012 - 22:14 | Link to Comment Bindar Dundat
Bindar Dundat's picture

will it be good for gold??

Thu, 02/09/2012 - 22:44 | Link to Comment fonzannoon
fonzannoon's picture

Kito deep down you are wearing a tin hat and stocking bottled water like the rest of us.

Thu, 02/09/2012 - 21:40 | Link to Comment J 457
J 457's picture

Nothing is for certain.  With the DOW approaching 13,000 how will FED gather the political support to buy more MBS?  I would guess we would need to see some bad data (unemployment and housing) in the next month to justify more QE.  Tough to gloat about a great recovery with ZIRP thru 2014.  It doesn't align.  If you like silver, now probably the time to start or add to your position, assuming QE does happen.

Thu, 02/09/2012 - 23:10 | Link to Comment Buck Johnson
Buck Johnson's picture

Hey knows that QE3 is on it's way big time. 

Thu, 02/09/2012 - 23:46 | Link to Comment Kiwi Pete
Kiwi Pete's picture

Just like Corzine betting the farm on PIIGS debt. What could go wrong??

Thu, 02/09/2012 - 21:15 | Link to Comment Id fight Gandhi
Id fight Gandhi's picture

Rule I learned the hard way years ago. When something is a sure thing, it ain't.

Fri, 02/10/2012 - 05:48 | Link to Comment Falkor
Falkor's picture

Gross is strecthing this a little too much. As things unravel, Bill Gross will become a stuff of legends. Its just that whterher he will the smart guy or the fool.

Thu, 02/09/2012 - 19:55 | Link to Comment AndrewJackson
AndrewJackson's picture

So if pimco is betting the farm on this one, can we expect a 1 trillion plus number of QE? 

Thu, 02/09/2012 - 20:04 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Tyler has outlined how and why the Fed's book needs to match the ECB's, and the ECB said today they would up their's to $7 trillion, essentially doubling it, which means the Fed has to follow suit and double down.

It may not all be put on QE X, but the Fed will, through POMO/OT2/etc double their balance sheet.

Thu, 02/09/2012 - 19:55 | Link to Comment Thomas
Thomas's picture

Now they don't need to monetize.

Thu, 02/09/2012 - 20:05 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

+1

Now that Gross bought all the MBS, the Fed doesn't need to.

Thu, 02/09/2012 - 20:50 | Link to Comment Rainman
Rainman's picture

Kill dollar, dollar kill, kill dollar, dollar kill. Dollar down, down dollar, dollar down. Equities up, up equities, equities up.

 

Fri, 02/10/2012 - 07:36 | Link to Comment wandstrasse
wandstrasse's picture

Btw, the German word 'groß' means big/large.

Thu, 02/09/2012 - 19:55 | Link to Comment fonzannoon
fonzannoon's picture

Are these the same mortgage backed securities that should lose value as this refinancing program takes shape?

Thu, 02/09/2012 - 23:05 | Link to Comment Captain Kink
Captain Kink's picture

Re-fi pays off the previous mortgage in full.  These guys own the mortgages at distressed prices, 50-60 cents on the dollar.  It's the mortgage REITs (like NLY) that take a hit, as they hold many originally purchased at premium

Thu, 02/09/2012 - 19:55 | Link to Comment dfh85
dfh85's picture

Forgive my ignorance; what financial product(s) is he using to facilitate his Fed MBS bet?

Thu, 02/09/2012 - 20:06 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Cash; some he had and some he got when he liquidated his euro bond exposure.

Thu, 02/09/2012 - 20:56 | Link to Comment Rainman
Rainman's picture

Managed account cash...the client piggy bank.

Fri, 02/10/2012 - 14:24 | Link to Comment dfh85
dfh85's picture

I understand he's using client money, but I mean; is he going out there and buying MBS's himself in the hope that the Fed steps in @ a later days and also buys MBS's in the form of QE3? Or is there a more complex strategy?

Thu, 02/09/2012 - 19:59 | Link to Comment Lost Wages
Lost Wages's picture

Makes me want to switch my wife's 401K to the PIMCO Total Return Fund or that Spartan Bond Index fund which is also filled with MBS garbage. Should I go for it? I won't hold you liable for my final decision as I will do my own research. ;)

Thu, 02/09/2012 - 20:10 | Link to Comment blu
blu's picture

All the signs right now point to a huge bailout of MBS. More US$ fiat is about to pour into that sink hole than ever went in a single direction at any time in the history of the earth.

This is going to be way beyond epic. Who the hell knows how it will turn out. But most people in this business seem to say the same thing; follow the money.

Thu, 02/09/2012 - 20:15 | Link to Comment spinone
spinone's picture

They are just filling a bottomless pit.  Good luck.

Thu, 02/09/2012 - 20:50 | Link to Comment itstippy
itstippy's picture

It's a big part of the Fed's exit strategy.

Thu, 02/09/2012 - 21:03 | Link to Comment nmewn
nmewn's picture

"Should I go for it? I won't hold you liable for my final decision as I will do my own research."

I don't think it matters at this point, but from a purely digitized fiat & technical standpoint I'd wait on PTTRX.

Speaking of junk, I've had the good fortune with one in my 401k (NEHYX) that is junk. I don't hold anything long, well, anyways...lol. My strategy is to watch for one to take a hit (with fundamental merit or not), stabilize and start going back up, be mindful of the deadcat bounce.

I've found this useful lately...

http://stockcharts.com/h-sc/ui?s=PTTRX

at the bottom of the chart you will see Annotate (Flash). This brings a screen where you can throw up a fibonacci scale (across the top of the pop up screen) on the most recent crash victim you have the ability to choose from within your wifes 401k.

Be mindful always, you are playing in their casino, with her money ;-)

Good luck.

Thu, 02/09/2012 - 21:43 | Link to Comment I should be working
I should be working's picture

You realize trying to forecast returns on PTTRX by one chart is beyond stupid.  Their portfolio changed quite dramatically over the course of the time frame you are looking at.  

Going into the summer PTTRX was in riskier bonds (reaching for yield) and no treasuries.  That's why they went down over the summer.  The market got all hot and bothered in its flight to quality.  

Now Gross is taking duration risk and MBS.  The question to ask if buying PTTRX is: do you believe interest rates will remain low (um is that a question)? Do you think more QE is in store?  Do you not want any sovreign exposure?

The reason the fund has been kicking ass this year is the feds zero interest for evva stance. I'm sure we'll see more QE sooner or later the fed doesn't know how to leave well enough alone.

Thu, 02/09/2012 - 22:13 | Link to Comment nmewn
nmewn's picture

"You realize trying to forecast returns on PTTRX by one chart is beyond stupid. Their portfolio changed quite dramatically over the course of the time frame you are looking at."

Yes, I realize this has nothing to do with economic fundamentals or the "quality of their portfolio"...such as it is.

I never said it was. You need to read more carefully.

What I clearly said, is if I'm going to risk my fiat capital (my saved earnings from my labor) in that warped venue, its not going to be from the top of any chart...it'll be from the lower end of it and I won't be holding "long".

I hope I made myself clear this time ;-)

Fri, 02/10/2012 - 10:03 | Link to Comment I should be working
I should be working's picture

I think you aren't paying attention here.  It is an actively managed portfolio.  The price is set by the underling value of the assets, not a bid/ask like a stock.  The assets in July are not the same as the assets in September, ergo what goes down does not need to go up.  It did go up because Gross changed from a losing to a winning asset allocation, but you can't deciper this from technical analysis.

This should make sense, but it's not as pretty and shiny as reading a chart so you probably aren't interested.

Fri, 02/10/2012 - 20:41 | Link to Comment nmewn
nmewn's picture

I gave you an up arrow just to even it out.

You still don't get it. I don't care about "investing" as it's always been known. What I care about is increasing the digits in an account which doesn't allow me to "invest" in what I want.

I have zero interest in placing those digits at risk, walking away and forgetting about them because they're in an "actively managed portfolio" run by "professionals" or on some Bernanke pledge to keep interest rates at insane levels.

In short...I don't care what paper is in Total Return...I don't have any of my assets in there and I still wouldn't touch it with a ten foot pole.

You really need to grow up dude, the day's of fire it and forget it portfolio management died in the 90's, rotted out in the sun a little bit and was finally buried in 2008 when bond holders and stock holders alike saw years of savings evaporate thinking they may not even be able to "cash out" half of their losses if they wanted.

Why, what if the banks crash?...lol.

I wasn't one of them.

Do what you want...opinions are just like assholes, everybody has one. And I'm starting to suspect you have more than just a casual interest in Billy Boy's funds ;-)

Thu, 02/09/2012 - 22:49 | Link to Comment AccreditedEYE
AccreditedEYE's picture

You SHOULD be working... on better research before you comment. The Pimco Flagship is up 2.29% YTD...hardly what I would call "kicking ass". There are other intermediate term bond funds that have been kicking ITS ass. Dan Fuss is up 3.84% and with, I might add, way less "derivative magic" happening in the portfolio.(actually, something happening across all of the Pimco funds and does not at all inspire a feeling of safety) Lastly, to see this size wager being put on makes my brain scream "liquidate!!" as visions of Bruce Berkowitz portfolio performance of 2011 crossed with Harvard's endowment performance during the financial crisis ringing in my brain.   

Thu, 02/09/2012 - 20:00 | Link to Comment BaggerDon
BaggerDon's picture

Excuse my ingorance too................If the Fed does this QE3 in buying MBS, does this mean that stocks are going higher like QE 2 and QE2?  Would this not send bonds higher, and shut off the fuel to keep the market up here in the ozone with appl???

Thu, 02/09/2012 - 20:09 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

The reason the Fed buys bonds is to keep their demand high, to keep rates high.  High demand and low supply squeeze price.  Higher price lowers yield.  So if you want to trade bonds, it is a very lquid market.

It increases stock prices by proxie, because it forces people to chase growth.

Thu, 02/09/2012 - 20:15 | Link to Comment dracos_ghost
dracos_ghost's picture

I think it depends on the size of QE3. Too much might be just as bad as too little. The $7T being thrown around would see a blowoff top and then an unbelievable crash as they sell the overvalued crap to the sovereigns and pension funds who would scramble for return. Gotta get back some of the haircuts being handed out in the credit markets by hyperinflating equities.

Thu, 02/09/2012 - 20:03 | Link to Comment maxw3st
maxw3st's picture

So, with rising employment #'s, low inflation (except for oil) and a slowly improving economy making QE3 less and less likely, I'm not sure I'd be taking that bet with Bill.

Thu, 02/09/2012 - 20:11 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Employment is not rising, inflation is high, and the economy is not growing, but if you are asking how QE X is possible, well, it will need a flash point, won't it?

Thu, 02/09/2012 - 21:18 | Link to Comment Rainman
Rainman's picture

yeah, a flashpoint. Like the banking sewers getting plugged up with too much bad paper.....that's a flashpoint. They is gettin out the plunger. The shit is starting to stink up the place bad. And FAS 157 can't create real fiat....a real problem. Who could have known ?

Thu, 02/09/2012 - 20:07 | Link to Comment BigMike
BigMike's picture

Bill Gross was short treasuries last spring, lest we forget.

Thu, 02/09/2012 - 20:12 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Bill Gross sucks at trading.  Agreed.

Thu, 02/09/2012 - 20:15 | Link to Comment blunderdog
blunderdog's picture

That's what I was just thinking.  His crystal ball may be wearing out--Gross' plays don't seem like a sure thing by any stretch.

Thu, 02/09/2012 - 20:57 | Link to Comment davepowers
davepowers's picture

indeed, plus Gross has been shooting his mouth off with some not so friendly to the FED speak lately. He may not be part of the insider gang anymore.

 

Thu, 02/09/2012 - 21:28 | Link to Comment earleflorida
earleflorida's picture

PIMCO = ?

electoral votes

Thu, 02/09/2012 - 20:12 | Link to Comment TradingJoe
TradingJoe's picture

DMO would benefit greatly from ANY QE!!! Aside of the overal market and "ZE" financials!!

Thu, 02/09/2012 - 20:13 | Link to Comment Bruce Krasting
Bruce Krasting's picture

A little help from some mortgage traders please?

 

Today we have a (pretty) big deal from the banks on mortgages. They will contribute $17b to facilitate write downs of mortgages. As a result there will be mortgage pre-pays (refi's) in significant quantity.

There is an open question what will happen with Fannie and Freddie. I am convinced that they too  will be forced to re-write their mortgages. There will be little principal reduction, but there will be a refi at lower rates. The talk is of 10mm mortgages. That is very big pre-pay action.

Finally, we have FHA. Not clear what happens here, but the Prez has legislation coming that would open the door for low interest refi's of FHA loans. More of the damn pre-pays here.

 

Now my dumb question, "When pre-pays accelerate, is it "long and wrong" on LT duration mortgages?

Ah.. I think it is...

bk

Thu, 02/09/2012 - 20:19 | Link to Comment fonzannoon
fonzannoon's picture

My assumption here is the same. As the mortgages are pre paid the MBS lose value. However if the Fed will be buying them QE style I would think the only reason Gross did this was so that he could be the one to sell to the fed when they announce the program. Just like the bond shops frontran QE buy buying treasuries ahead of time.

Thu, 02/09/2012 - 21:54 | Link to Comment rawsienna
rawsienna's picture

THe bank settlement deal has nothing to do with agency MBS. President refi plan for agency MBS would increase refi efficiency which would decrease the value of most premium agency MBS.  Too much bullshit floating around how this in unfair to investors but the fact is that the rules were changed on the borrowers (who paid for the option to refi) which was a wealth transfer to the bondholders. A refi plan that allows agency MBS borrowers a more streamline process levels the playing field.  It is NOT  auto-refi as some have claimed.  As I have ssid many times before, holders of premium MBS have benefitted from the decline in home prices and tightening underwriting standards from the GSE's but they have none of the credit risk.  All that risk already is owned by the taxpayers.  With short term rates so low, a moderate increase in prepayment rates would not have a material impact on premium MBS, They may just go down in price to where they were this time last year. 

As far as its impact on mtg rates to consumer, it will not be terribly meaningful. Perhaps 10 bp due to increased supply and option costs to bond holders but rates to borrowers are already at record highs vs secondary market rates banks are making a fortune. Say no to agency principal reductions and non-agency to agency refi schemes but not to allow streamline refi's to ALL borrowers is just a attempt to protect the agency portfolios, reits and hedge funds

Thu, 02/09/2012 - 21:54 | Link to Comment rawsienna
rawsienna's picture

THe bank settlement deal has nothing to do with agency MBS. President refi plan for agency MBS would increase refi efficiency which would decrease the value of most premium agency MBS.  Too much bullshit floating around how this in unfair to investors but the fact is that the rules were changed on the borrowers (who paid for the option to refi) which was a wealth transfer to the bondholders. A refi plan that allows agency MBS borrowers a more streamline process levels the playing field.  It is NOT  auto-refi as some have claimed.  As I have ssid many times before, holders of premium MBS have benefitted from the decline in home prices and tightening underwriting standards from the GSE's but they have none of the credit risk.  All that risk already is owned by the taxpayers.  With short term rates so low, a moderate increase in prepayment rates would not have a material impact on premium MBS, They may just go down in price to where they were this time last year. 

As far as its impact on mtg rates to consumer, it will not be terribly meaningful. Perhaps 10 bp due to increased supply and option costs to bond holders but rates to borrowers are already at record highs vs secondary market rates banks are making a fortune. Say no to agency principal reductions and non-agency to agency refi schemes but not to allow streamline refi's to ALL borrowers is just a attempt to protect the agency portfolios, reits and hedge funds

Thu, 02/09/2012 - 20:14 | Link to Comment absente reo
Thu, 02/09/2012 - 20:41 | Link to Comment Yen Cross
Yen Cross's picture

 Is it financed @ 15%?  [ LIGHTSQUARED] Please listen to Mr. Krasting before you all become "PRO" bond traders.

Thu, 02/09/2012 - 20:20 | Link to Comment fonzannoon
fonzannoon's picture

Bruce if you are still on here....If the fed commits their purchases to MBS who picks up the slack for them when they stop buying 91% of the 30yr in June? How do they stop the inevitable "price discovery" from taking rates much higher? Market crash? Thats my guess. Whats yours?

Thu, 02/09/2012 - 20:22 | Link to Comment Dr. Engali
Dr. Engali's picture

Ok so the CME lowered margins on gold and Pimco is levering up for qe3. Gold is going much much higher.

Thu, 02/09/2012 - 20:27 | Link to Comment tallen
tallen's picture

+1

The CME has just announced initial and maintenance margin cuts for silver (13%), gold (12%), platinum and copper!

Thu, 02/09/2012 - 20:31 | Link to Comment scatterbrains
scatterbrains's picture

I'm seeing gas prices skying and taking out everything including gold down to 1250ish this spring.

Thu, 02/09/2012 - 21:43 | Link to Comment Yen Cross
Yen Cross's picture

Since when are you a commodities trader? I'm nick naming you Mr. Headline.<>

Thu, 02/09/2012 - 22:19 | Link to Comment scatterbrains
scatterbrains's picture

If your asking me, I'm not claiming to run a hedge fund or trade in size but back when it was Lind Waldock  they did use to send me one ounce silvers for the holidays   Unlike your boy above I can only "guess" what's going to happen though, and yea golds going to 1250ish before $2500.

Thu, 02/09/2012 - 23:12 | Link to Comment Yen Cross
Yen Cross's picture

 Tatar Tots, My friend! I agree. Wecome to the club of " Ponzi:  Dead cat bounce!!!!

Thu, 02/09/2012 - 20:33 | Link to Comment Hedgetard55
Hedgetard55's picture

Gross is being set up for a HUGE FALL by the PTB. Maybe they even whispered to him that Ben would be buying MBS, then... he doesn't.

Thu, 02/09/2012 - 21:05 | Link to Comment Hopium Dealer
Hopium Dealer's picture

I don't know. It has been a goal for the bankers and the Obama administration to inflate the housing bubble, again. I do believe QE3 will be the FED buying toxic MPS from the insolvent banks. Obama is only worried about winning the election. By doing this, it is no way the smart of logical thing to do, but this would actually make things seem peachy for definitely a year, though no more than 3 years.

Thu, 02/09/2012 - 21:12 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Buying MBS is not going to stabolize the housing market, it's going to stabolize the bond market.  The difference will be akin to paper gold vs. gold bullion.

Thu, 02/09/2012 - 21:24 | Link to Comment Hopium Dealer
Hopium Dealer's picture

Out of curiousity, how would buying MPB going to stabolize the BOND market.

Thu, 02/09/2012 - 21:50 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

MPB?

Monthly Playboy?

Thu, 02/09/2012 - 21:51 | Link to Comment Hopium Dealer
Hopium Dealer's picture

MBS*

Jackass lol

Thu, 02/09/2012 - 21:55 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

MBS are traded as bonds.

Thu, 02/09/2012 - 21:09 | Link to Comment SilverIsKing
SilverIsKing's picture

I agree. JPM is probably short MBS.

Thu, 02/09/2012 - 20:50 | Link to Comment Threeggg
Threeggg's picture

The dude with Trimtabs.com and another guy on Faux Business with Lou Dobbs blowing out the job numbers as "TOTAL BULLSHIT FUCKING LIES" from our keepers !

Suprised Lou didn't cut them off......................word is getting out that the job numbers are a fraud !

 

Thu, 02/09/2012 - 21:51 | Link to Comment Sam Clemons
Sam Clemons's picture

I can't believe it took so long for the bullet-wound-to-the-head obvious lies about economic progress to make the Obama hater Faux news wake up.

http://www.nowandfutures.com/images/real_gdp2.png

 

Thu, 02/09/2012 - 20:50 | Link to Comment 1929agin
1929agin's picture

Story telling, I doubt this to be the whole story or the 'real'  true story... fyi

 

Thu, 02/09/2012 - 20:50 | Link to Comment sabra1
sabra1's picture

OT:

revenge of the globalists!

Greek doctors are fighting a new invisible foe every day at their hospitals: a pneumonia-causing superbug that most existing antibiotics can’t kill.

The culprit is spreading through health centers already weighed down by a shortage of nurses. The hospital-acquired germ killed as many as half of people with blood cancers infected at Laiko General Hospital, a 500-bed facility in central Athens.

Thu, 02/09/2012 - 20:57 | Link to Comment Stuck on Zero
Stuck on Zero's picture

Wow.  Don't you with Bil Gross bet like that on PMs?

Thu, 02/09/2012 - 21:08 | Link to Comment tallen
tallen's picture

Good old Bill Gross, the king of frontrunning.

Thu, 02/09/2012 - 21:08 | Link to Comment fonzannoon
fonzannoon's picture

dude scroll down about 5 links and you will see the link

Thu, 02/09/2012 - 21:14 | Link to Comment Spaceman Spiff
Spaceman Spiff's picture

The name QE has become too politcally toxic.    Time for some Orwellian inventive language.   Operation twist was a neat easing.   They are only selling some short stuff and buying the long term stuff.   No biggie.    

What names might work?

 

Thu, 02/09/2012 - 21:27 | Link to Comment deflator
deflator's picture

computated abatement or Measured Abatement of Debt lol

Thu, 02/09/2012 - 21:32 | Link to Comment web bot
web bot's picture

That's simple:  Call it "Operation Ctrl-P", or "Quantitative Printing".

Thu, 02/09/2012 - 21:53 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Operation Vaginamen

Thu, 02/09/2012 - 21:55 | Link to Comment r00t61
r00t61's picture

PATRIOT Bond.

Thu, 02/09/2012 - 21:29 | Link to Comment virgilcaine
virgilcaine's picture

Rates have been low for two years and still housing prices fall.  EPic Fed fail. Wake me in twenty Yrs when this is over..

vc signing out..

Thu, 02/09/2012 - 21:32 | Link to Comment Sam Clemons
Sam Clemons's picture

No one thinks the Fed would leak false information to the increasingly outspoken and critical of the Fed, Bill Gross?

Thu, 02/09/2012 - 21:38 | Link to Comment Eric L. Prentis
Eric L. Prentis's picture

As it is, Bernanke will never be able to unwind QE1&2, without tanking the economy. QE3 will be suicide. Resulting in gas, food, clothing and medical expenses through the roof. The natives will start to get restless. Bread and circus only goes so far. Let’s hope the experiment in QE will be the death knell for the Fed.

Thu, 02/09/2012 - 21:39 | Link to Comment chump666
chump666's picture

Gross/PIMCO will get destroyed on USD bids...again.

Thu, 02/09/2012 - 21:41 | Link to Comment Scalaris
Scalaris's picture

I shall never make fun of Gross' testosterone flactuations anymore.

His testicular fortitude has rendered me speechless.

Thu, 02/09/2012 - 21:45 | Link to Comment Yen Cross
Yen Cross's picture

 Bill " GROSS"?  Ok I'll lighten up.  Did anyone catch the B/C on T-30'3 today? Where is the cash going?

Thu, 02/09/2012 - 21:47 | Link to Comment icm63
icm63's picture

QE3 will be only about crashing the USD dollar AFTER the USD as rallied hard after Greece/Germany have exited the EURO...yes that will happen !

So a bet on QE3, is a bet on the EURO crashing !

Thu, 02/09/2012 - 21:57 | Link to Comment ljag
ljag's picture

Is that greed I am smelling? Getting onto the coat tails of the PTB is mighty risky. Since the end is near, my guess is they want to ride that bull ALONE!

Thu, 02/09/2012 - 22:41 | Link to Comment Dermasolarapate...
Dermasolarapaterraphatrima's picture

Summers repeated his mantra recently in Boston the only way out of this depression is thru exports via a weaker dollar.

Another Mega-QE will devalue the dollar and help kick start the economy via export growth is what Summers believes I am guessing.

Thu, 02/09/2012 - 22:45 | Link to Comment Yen Cross
Yen Cross's picture

That scraping for cash _50% Summers? That Hedge ... Fallout  Summers?

Thu, 02/09/2012 - 23:03 | Link to Comment israhole
israhole's picture

Print some more money, it's not like it costs them anything and the people are hungry.

Thu, 02/09/2012 - 23:27 | Link to Comment ATG
ATG's picture

Armchair prediction:

Looks like early retirement for somebody...

http://silversenator2012.blogspot.com/

Thu, 02/09/2012 - 23:38 | Link to Comment vh070
vh070's picture

Gross dismisses concerns about PIMCO's girth. He says the firm isn't "levered," or making bets with borrowed money, in the way that failed players like Bear Stearns or Lehman Brothers did. The asset manager is using only client money to trade.

 

http://www.reuters.com/article/2012/02/09/us-pimco-gross-idUSTRE8180VX20...

Thu, 02/09/2012 - 23:41 | Link to Comment blueridgeviews
blueridgeviews's picture

Didn't the Fed just announce today that they were indeed buying MBS's? I could have sworn I heard Obuma say that in his daily reading, I mean speech.

Fri, 02/10/2012 - 00:40 | Link to Comment Yen Cross
Yen Cross's picture

 GBP/AUD ? aud/usd has a long way to go.

Fri, 02/10/2012 - 01:10 | Link to Comment ebworthen
ebworthen's picture

That's a big bet for showing your cards.

Fri, 02/10/2012 - 05:55 | Link to Comment Falkor
Falkor's picture

Good luck to him but this looks bad.

Fri, 02/10/2012 - 08:29 | Link to Comment YHC-FTSE
YHC-FTSE's picture

Haven't changed my mind about Pimco/Bill Gross since last year, when he had to stand in front of his clients and apologise for a shit 2011 AND he publicly voiced his support for Ron Paul as well earlier this year. Two dangerous moves that would have irritated the predators swimming with tptb. It's HIGHLY LIKELY that the Fed will start a huge buying spree of MBS, but if this does not materialize, he is finished. I do wish him luck, (& others who have gone in with him - I think Tyler is one of them), but that play is all-in against a rigged market run by psychotics - I would not do it. (But then again, I'm not a billionaire success story). 

The only people who believe in a sure thing are people who sleep with prostitutes. So, have the political prostitutes been paid enough to do his bidding? or is he a deluded mark? 

Fri, 02/10/2012 - 10:13 | Link to Comment Youri Carma
Youri Carma's picture

US MORTGAGE MEMO: Fed Buys $6.25B Agency MBS In Week Feb. 8
https://mninews.deutsche-boerse.com/index.php/us-mortgage-memo-fed-buys-625b-agency-mbs-week-feb-8?q=content/us-mortgage-memo-fed-buys-625b-agency-mbs-week-feb-8

NEW YORK, Feb 9 (MNI) - The New York Federal Reserve purchased $6.25 billion agency mortgage-backed securities in the week ended February 8.

The largest purchases in the latest week were in Fannie Mae and Freddie Mac 30-year "to-be-announced" (TBA) securities with 3.50% coupons for March delivery. Those buys totalled $3.55 billion.

In its next largest purchase of the week, the Fed stepped up its buying of Ginnie Mae and Ginnie Mae II securities by purchasing a total of $950 million 30-years with a 3.5% coupon for April delivery.

The NY Fed executed no TBA dollar roll trades in the latest week.

The Fed also said it will announce how many agency MBS it expects to buy in the month ahead on Friday.

Fri, 02/10/2012 - 12:50 | Link to Comment dcb
dcb's picture

consumers have trouble getting a housing loan at a decent rate, and this guy borrows 88 billion, but krugman won't admit there is something wrong with the transmission mechanism of monetary policy. wonder what rate he's paying

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