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Pimco Takes Record MBS Position Even Higher, Dumps Treasurys
The trend continues: as has pointed out here every month for the past five months, Pimco's Bill Gross continues to layer into the "NEW QE" trade, only this time he is making it more clear than ever that he is certain that the Fed will have no choice but to monetize Mortgage Backed Securities. Indeed, in March the firm added another 100 bps in its MBS exposure, bringing the total to 54% of total, or a record $134 billion of the fund's $253 billion in AUM. And while before Gross would buy MBS and TSYs pari passu, that is no longer the case. In fact in March, Gross dumped the most Treasurys since February 2011, cutting his net exposure from 38% to 32%, and likely is in part or whole responsible for the big bond dump in the middle of March, now long forgotten (that or he merely piggybacked on the negative sentiment: April holdings will be indicative of that). Other notable shifts: Gross continues to sell European sovereign exposure, with Non-US Development holdings down to 6%, the lowest since April 2011, and surprisingly even cutting Investment Grade holdings to just 14%, the lowest since October 2008: is Gross smelling a bond bubble (in both IG and HY) and is getting out while the getting is good? Sure looks like it.
And TRF's maturity and duration distribution over time.
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Planned "opposition".
PIMPCO is the Fed's puppet "bad guy". Getting really old.
That is some crazy puppet money thats for sure
Reeeeeeeeversal
US imperialism is doomed
there you go. My bet as well. Unless you know what all the books look like, you don't know shit. DAmn straight you better have a plan B.
Seeing how the banks cannot unload shadow inventory en masse without causing a double dip, and seeing as how the Bernanke alluded in his most recent remarks that the FED is now cognizant to this dilemma (and has a plan to deal with said dilemma (TD Can you provide the link to your post)). I think it is safe to say that MBS at pennies on the dollar will probably not decline significantly in value from here. I'm with Gross on this, if you can handle the duration they are probably a good buy long term at these levels.
I do not know the back story (FED Plan) but the shadow inventory IV drip is key to 1. Housing Bottom being in 2. MBS NAV stabilizing. I can only assume they (TBTF) are watching zip code by zip code with inventory lined up to bring to market as demand dictates. Obviously this is a far bigger issue in some areas than others. This was what I meant when I said the central planning solution decision has been made. Maybe it was the robo-signing not a decision per se, but nonetheless. Fitting that TBTF may be forced to sit on a lot of the crap they created else they again wreck the economy and drive the populus to break back out the pitch forks. Something along these lines is my thesis for his purchases, not necessarily that he plans to unload to FED. Of course I am just another idiot in the peanut gallery so what the hell do I know.
If PIMCO's bet is wrong ... there will be an awful lot of angry people finding themselves with not enough income.
Mr. Gross is counting on his "anti-fed" rhetoric to cover his dissappearance. In every profession, it is in your best interest to make sure fraud is prosecuted, period, least your profession dies. The finger-pointing in the financial sector of our eCONomy has been going on for years. Get your shit together people, prosecute the fucking fraud with real consequences or your profession dies.
Amen.
peopl on zerohedge STILL HAVENT FUCKING FIGURED THIS OUT. IT AMAZES ME.
i'll break it down for you...........
bill gross. 3 scenarios.
1) he is in bed with the fed. ----fed monetizes and is rewarding him for something by letting him frontrun the banks on superior info OR fed is NOT going to monetize and regular old mom and pop intentionally get stuck with the loss and gross claims he didn't know while he blames the fed. fed deflects the blame by saying that they cannot interfer with the economy by doing more monetization
2) he is the enemy of the fed. ------fed is trying to reward the banks but he is stealing the banks profit by bidding up their risk asset mortgages and is weakening the profit margin of the fed shareholding banks thus making it even MORE likely the fed will have to pull off more monetization to support their shareholding tbtf banks OR when the fed stops monetizing bill gross can turn around to his investors and tell them that the fed is to blame for all this deflation because the fed created the MBS bubbble to begin with. the public is already angry with the fed and while bill gross might get blamed for his personal performance, the greater story is the fed is going to get a lot of angry pensioners yelling to shut down the fed because of the 'close the fed meme' ---meanwhile the fed will be claiming that the publics losses could have been averted with more monetization. inflation will be running high at this point and the fed's statements will not sway the public sentiment against the fed.
3) he is just 'another investor' albeit particularly big and doesn't give a rats ass about the fed. .---------and either way IT MAKES NO FUCKING DIFFERENCE BECAUSE THE MACHINE IS MUCH BIGGER THAN EVEN THE SINGLE BIGGEST INVESTOR.
----------
HM...so , ...conspiracy theorists , you decide which is more likely.
i vote for 3.
the treasury should just borrow at zero from the fed and buy their
own treasurys, capturing 2+ percent like the banks are doing.
the kids and whats left of the worker debt slaves will pay the
interest but thats the price of slavery in amerika.
I'm one of the unfortunate ones that amaze you who still hasn't figured this out.
If forced to select from your scenarios; I'd pick number 1.
The actual underlying collateral of the entire MBS racket is forever mark to fantasy.
He will act surpised when he suddenly learns this and hand it right to the taxpayer minus his cut.
(Or better yet pretend to believe that collateral is worth what it was in 2004. He was on vacation during the real estate bubble/boom...lol.)
The machine is bigger than just PIMCO but who cares? They'll all do the same thing.
"Old Mom and Pop" will get screwed every which way but loose.
All their investments get wiped out and they get foreclosed.
Oh...and a nice 1099 just for playing.
Gross already tried to call the top of the bond bubble once and missed it. Not to sure about the MBS, the fed has several options. They probably should buy gold.
Don't get to greedy Bill, before they dump you...
They won't. Bill reports to the Germans. The profits go to Germany.
What have you not learned about backdoor bailouts? Sheesh.
Blathering Bill on Twitter! I can't wait! ( SARCASM) / Heavy!
This is the corzine trap. You should be smarter than this Bill.
Team Fed strictly won't do it because Pimco is hedging their bet with it. Pimco should just have shut their mouths.
Can you link the second graph so a larger version can be viewed?
Just curious but what type of instruments can a average investor buy to mimic Gross's bet? What can one possibly buy to benefit on this bet?
Gross's bets aint for the average investor mang....
"I always tell the truth...even when I lie."
When I read "... $134 billion of the fund's $253 billion in AUM..." I assumed it was the Total Return Fund.
Possibly your neighbor's mortgage?
Au.
Uh, PTTDX?
To emulate, buy the etf BOND
Bill Gross miscalculated in 2011, but has gotten it very right for 29 years otherwise.
Put your 401K in PTTRX.
"Hi, my name is Bill Gross and I deal in garbage, you just don´t know it´s crap yet!"
Not only does he make a huge bet on QE3, quite publicly too, but he even narrows down a specific asset class. Mr Gross, were do you buy your pants? I mean with those balls...
Or he´s just another insider taunting us and getting rich in the process. But still, my bet is on a QE free 2012.
How is 2012 "QE free" if we have ZIRP and TWIST and LTRO and whatever other printing scams are out there?
Oh my God, another one... Is any and all monetary scams by the puppet masters QE to you? QE is a pretty specific type of operation, ZIRP, Twist and LTRO another, Or is it all just Dark Banker Evil in your eyes?
Don't make me have to educate you again. Does it really matter what flavor of rape it is?
Only paper-pushers fear total collapse becasue they know the true value of their labor is fucking zero.
Oh, so your view is that you are educating me? Like those employees you had to send back to school?
Let´s agree to disagree. I come here to find the other side of the story, an occasional investement tip and a macroeconomical view that that I find correct. You lot come here to get your bitter, tinfoil wrapped goldbug distortion of a world view validated. Apparently we both get what we want, although I must say that information that can be translated in to profitable investment has become scarce around here. Perhaps you lot make the Tylers more money through the dystopic ads you attract, I dunno.
But anyhow, let´s just stay the fuck out of eachothers way, OK? I will never agree with your un-nuanced and crude view of things and you´re never going to agree with my *insert favorit pejorative*.
You are a fucking moron. Open you mouth again, I dare you. I'll also stack my portfolio against 95% of the world. I only visit this site to front-run the stupidy of people such as yourself. How much have donated on behalf of the foresight you supposedly get here? Put your money where your mouth is.
I served my country in two theaters, so fuck yes, I am bitter about the treason paper-pushers like yourself are committing. I built a small business just the same and now these paper games make it harder every day (margin fucking compression) because we deliver real fucking produce, not paper promises. educating engineers on the latest technology is always a good investment (again your ignorance comses through). Atlas is shrugging my friend, know the real value of your labor? You fucking better. I would have responded sooner, but I had work to do.
Nuance doen't mean shit when real products have to be delivered, fucking moron. You come on here and outright admit that paper games are being played, but somehow, this is all good. totally fucking stupid. Here is another word you should be familiar with;
Integrity, look it up.
Tree/Forest
Free money buys stuff/Free money is evil
Perhaps I am just a sheepfukker, but call it whatever you want. I will call it money printing.
It's money lending. Every man, women, child and goat owes it back to the Fed.
Money printing is one thing, QE another. QE is still GIVING money away and that is not happening until earliest this fall. Should I be wrong I am man enough to come back and apoligize but I doubt I´ll need too.
Printing can be done a lot of ways, most of them without upsetting the public or Mitt Romney, your next president. Yes, another thing I´m quite sure about.
I think if I'm now reading you correctly you are in agreement that these are bankster scams. Whether actual new funny money is created I guess is a debate we can have, but is probably irrelevant so why bother.
These are bankster scams. New money is created, as I said, LTRO is going to be rolled in to infinty.
But there is still a huge difference and that difference is mostly noted in the markets, something which is quite revealing as to their nature. QE shows up the same day in the charts, LTRO showed up pretty much the same week. ZIRP does not.
All birds are not ducks, just the ones that quack.
Ignorance is strength; thanks for the demonstration.
One wonders if Gross has been given an offer he couldn't refuse...
I'm wondering too.
Unemployment, under-employment, gas prices, tuition debt, food going through the roof, real estate values going down, foreclosures going up, clouded titles, so on and so forth...
Either he has been given an offer he can't refuse; or he knows millions of people are about to get one they won't be able to refuse????
Like maybe the AG secret settlement?
I hope all the truth comes out on all this shit.
It will make one Hell of a read.
QE goes on daily. They just change the name to protect the guilty.
We're going to get QE forever, until we don't.
Greenspan works for Pimco. They know what's coming next.
"-- Alan Greenspan, the former Federal Reserve chairman, has helped Pacific Investment Management Co. make ``billions of dollars'' in his role as a consultant, saidBill Gross, the bond manager's co-chief investment officer."
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a1c7Ck736daM&refe...
If you cannot afford Greenspan, no billions for you.
With AIG getting in on the action, Pimpco may indeed have spotted the latest 'backdoor bailout' (with the Fed implicitly underwriting real estate portfolios)
Report: AIG Prepares to Jump Back Into Real-Estate Market
http://www.foxbusiness.com/industries/2012/04/11/report-aig-prepares-to-jump-back-into-real-estate-market/#ixzz1rm4nGdxo
PS: Can BAC be very far behind?
This was actually first reported two Sundays ago in the FT.
One of two things is at play here:
Bennie knows he cannot pull off another QE3, so he just has AIG buy the MBS as a buyer of last resort. Remember, the taxpayer DOES NOT own 70% of AIG, the Federal Reserve DOES.
More likely... the Fed is getting antsy and wants out of their AIG investment but needs the stock higher to avoid huge losses. So, the Fed does in fact plan to buy MBS, but they plan to buy it from AIG and hand AIG a carry trade that will drive up the price of the stock... all paid for by you and me.
Don't think it could happen? This is the same fed that lent billions to banks and instructed them to buy each other's stock, then spent trillions buying bonds to drive those stock prices higher.
Just one big game of chicken. The only problem is that "the loser" gets his bets covered by the people via monetary debasement.
I'd like to see the righteous indignation over fraudclosure actually taken to a different level. You'll know the fix is in when Pimco doesn't sue anyone.
How does the saying go...there's no such thing as an old bold trader...good luck with it Bill
Poor bond traders. Who knows what will happen with the second greatest bubble ever (behind the fiat bubble) once rates are forced to rise due to a lack of demand? Where will the investors run? To cash? Where they will lose to inflation? To stocks? Where accounting giicks are the norm? Or to comodities and PMs, where JPM naked shorts at will, ignoring any rules the CFTC should be inforcing?
Rates will never rise as central banks rush to monetize debt and cover quadrillion-dollar 'bond auctions' through their minions. But here's the catch: they'll repay the bonds in debauched currency that won't buy squat by the time it's repaid. That alone ensures that there's a future for the grey economy.
Give the man a cigar. Hence, why Bill is buying all these mortgage bonds.
I think the FED will have to monetize treasuries, mortgasge bonds, and even maybe have to buy some stocks (fannie, freddie, etc)
When you least expect it, expect it.
The inquisition.
What's the point of this note. Wasn't this guy wildly wrong about everything last year?
why signal what you are doing.....i dont understand Gross
Here's the fix: Fed buys (monetizes) MBS and implicitly underwrites the real estate debt market while perma-bailed out banks and entities (read AIG, BAC and the other zombies) keep on receiving "free juice" by borrowing short from and lending long to the Fed. The juice is used to start a fresh new round of speculating in the real estate market, building portfolios as announced today by AIG in case you missed it (http://www.foxbusiness.com/industries/2012/04/11/report-aig-prepares-to-jump-back-into-real-estate-market/#ixzz1rm4nGdxo).
Next thing you know we pick up where Beijing left off now that their real estate market is entering the next phase of crashing as Hangzhou Glory Real Estate Co. declares BK http://online.wsj.com/article/SB1000142405270230362400457733735370896073...
Blowin bubbles....it's livin the dream
Hell with the economy Earthquakes coming to LA.
Yesterday:
8.6+- in Indonesia (2 in 2 hours)
7.0 in Mexico
6.2 off Oregon Coast
5.3 off California Coast
Im all for clash of the titans and that shit, but, god damn, i know a pissing contest when i see one.
Bill better hope Ben doesn't have a light stroke, and decide to implement capitalism. As that would be it for Pimco.
Didn't fuck up this same call last year? And then have to recant andbuy back into TBs? So why pay attention to this call? Fade.
Pimco's Bill Gross continues to layer into the "NEW QE" trade, only this time he is making it more clear than ever that he is certain that the Fed will have no choice but to monetize Mortgage Backed Securities.
Between Gross and all the piggybackers buying MBS the Fed may not have to.
2.XX % 30-year mortgage, here we come.
who is bill gross?
The father on Family Ties...his sister was on SNL.
Gross seems to betting on the Obama admin getting desperate and working with BenDover to buy up / support the MBS market.
Hell, if the Fed owns 60% of outstanding TSYs, why not crank up the presses and buy up some mortgages?
Housing market firms, muppets dive in fearing a mortgage rate rise.....and all is well for the Chosen One's re-election.
What did I leave out...?