Moments ago the bond king tweeted some unsolicited trade advice to his Twitter followers, namely to "Buy 5's"
Gross: Nominal GDP growing at 3.5% last 12 months. #Fed [11] wants/needs 5%. So they #taper [12]/tighten? Low odds. Buy 5’s.
— PIMCO (@PIMCO) July 23, 2013 [13]
We wonder if this means that PIMCO is now actively dumping 5 Year paper for two reasons: asset managers tend to want to buy low, not high. So if PIMCO is buying concurrent with "twitter", whom it is advising to buy, will PIMCO end up with a) higher or b) lower offers to lift if followers actually follows Gross' advice? Don't answer, that's rhetorical.
But more importantly, based on the firm's most recent June breakdown of the flagship Total Return Fund holdings (when the fund saw a record $17 billion drop in AUM to $268 billion), PIMCO's holdings in the 5-10 Year bucket soared from 36% to 46% at the end of June, a number which was only surpassed once in the day leading up to the Lehman collapse and culminating with a 79% allocation to the curve "belly" in October 2008. On an absolute dollar basis (due to the growth in the fund over the past five years), the June 2013 holdings in the "belly" amounting to $123 billion were an all time high.
Or perhaps another word for PIMCO's 5 Year holdings is "more than enough", as the chart below shows.
[14]
Which then begs the logical follow up question: are portfolio managers now actively using Twitter to peddle their wares ("please buy what I am selling") and if so, shouldn't there be a Twitter disclaimer to go with every unsolicited trade recommendation?
Or is Twitter exempt from Series 7, 63 supervision?