PIMCO

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Junk Bonds Are Going To Tell Us Where The Stock Market Is Heading In 2015





Do you want to know if the stock market is going to crash next year?  Just keep an eye on junk bonds.  Prior to the horrific collapse of stocks in 2008, high yield debt collapsed first.  And as you will see below, high yield debt is starting to crash again. 

 
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Frontrunning: December 17





  • Citigroup is pleased: Obama signs $1.1 trillion government spending bill (Reuters)
  • Oil holds below $60 as OPEC, Russia keep pumping (Reuters)
  • 5 Things to watch at the December Fed Meeting (WSJ)
  • Russia Tries Emergency Steps for 2nd Day to Stem Ruble Rout (BBG)
  • Ruble crisis could shake Putin's grip on power (Reuters)
  • Apple Curbs Russia Sales as McDonald’s Lifts Prices (BBG)
  • Traders Betting Russia’s Next Move Will Be to Sell Gold (BBG)
  • China Warms to a More Flexible Yuan (WSJ)
 
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Crude Continues Slide, Ruble Stabilizes, US Futures Rebound As Global Stocks Slump: All Eyes On Yellen





Previewing today's market: near record low liquidity, with chance of ridiculous volatility in the Ruble, energy and equity markets. While no doubt today's main event will be the "considerable" FOMC announcement and the Fed's downward-revised economic projections followed by Yellen's press conference, what traders will be most excited by is that, finally, Jim Bullard will no longer be bound by the blackout period surround FOMC decisions, and as such can hint of QE4 again at his leisure during key market inflection (i.e., selling) points.

 
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Frontrunning: December 15





  • Sydney Siege Sparks Muslim Call for Calm Amid Backlash Fear (BBG)
  • Oil Spilling Over Into Central Bank Policy as Fed Enters Fray (BBG)
  • Biggest LBO of 2014: BC Partners to acquire PetSmart for $8.7 billion (Reuters)
  • Tremble algos: the SEC has hired... "QUANTS" (WSJ)
  • When the bubble just isn't bubbly enough: There’s $1.7 Trillion Locked Out of China’s Stock Rally (BBG)
  • Oil price slide roils emerging markets, yen rises (Reuters) - may want to hit F5 on that
  • Libya Imposes Force Majeure on 2 Oil Ports After Clashes (BBG) ... and will resume production in days
  • Amid Crisis, Pimco Steadies Itself (WSJ)
 
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17 Signs You Were A CIO In 2014





"...You never want to hear the phrases "low-rate environment," "investment solution," or "tapering" ever again. Or "China's unwind" or "low-return projections" or "quantitative easing" or "I've learned so much working for you these last few years and will really miss the team… but made me an offer I couldn't refuse."" Asset managers, prepare to nod vigorously.

 
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Jobs, Shale, Debt And Minsky





We don’t see a whole lot of comprehension out there, so let’s try and link the obvious: employment to shale to plummeting oil prices to the debt the shale industry was built on (and which is vanishing). We know, people look at the US jobs report yesterday, and at the stock markets (Europe up some 2% across the board), and think salvation has landed on their doorstep, but the true story really is very different. We’ve been saying for weeks that lower oil prices would not be a boon but a scourge for the US economy, for several different reasons, and this is a big one. The losses to investors, the restructurings and bankruptcies, and perhaps even the bailouts, are a very much interconnected and crosslinked other. There’s no resilience – left – in a system like this, it bets all on red, and that makes it terribly brittle.

 
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Activist Hedge Fund Goes Postal On Jim Cramer





After last night's marvelous Bloomberg profile of Bill Gross' last days at PIMCO, we were confident that no written material today could surpass Mary Child's fascinating narrative of the fallen bond king. And then we read Cannell Capital's activist letter to one James J. Cramer, of CNBC and TheStreet director infamy, which is hands down the blockbuster reading material du jour.

 
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Frontrunning: December 3





  • Fall of the Bond King: How Gross Lost Empire as Pimco Cracked (BBG)
  • Hong Kong 'Occupy' leaders surrender as pro-democracy protests appear to wither (Reuters)
  • Ashton Carter, Ex-Pentagon No. 2, Emerges as Obama Favorite for Defense Secretary (WSJ)
  • Oil, the Ruble and Putin Are All Headed for 63. A Russian Joke -- for the Moment (BBG)
  • New U.S. oil and gas well November permits tumble nearly 40 percent (Reuters)
  • Swedish government on brink of collapse (AJ)
  • China says Britain has no moral responsibility for Hong Kong (Reuters)
  • Indian Labs Deleted Test Results for U.S. Drugs, Documents Show (BBG)
 
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Veteran S&P Futures Trader: "I Am 100% Confident That Central Banks Are Buying S&P Futures"





"This last 1900 point Dow Jones push upwards - and the Ebola events leading into it - it was so orchestrated and heightened at critical points but the ascent and push straight up in price, and sideways nonreaction after was completely unlike anything I've seen before.   After going up for a record-breaking amount of time the last five or so years, in a nonlinear exponential mania type of ascent, there should normally be tremendous volatility that follows... After this year and especially this last 1900 point Dow run up in October, and post non-reaction, that I am 100 percent confident that that one buyer is our own Federal Reserve or other central banks with a goal to "stimulate" our economy by directly buying stock index futures."

 
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Pimco Paid Gross, El-Erian Over Half A Billion Dollars In 2013 Bonuses





PIMCO PAID GROSS $290 MILLION BONUS FOR 2013, DOCUMENT SHOWS
PIMCO PAID FORMER CEO EL-ERIAN ABOUT $230 MLN BONUS IN 2013

 
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Frontrunning: November 13





  • Moar central banks! Asian Stocks Rise Amid Stimulus Speculation; Topix Jumps (BBG)
  • Syria rebels in south emerge as West's last hope as moderates crushed elsewhere (Reuters)
  • Bufett's Berkshire to Buy Duracell Business From Procter & Gamble in $3B Deal (AP)
  • Weak Demand, Real-Estate Slump Signal Headwinds for China (WSJ)
  • China Slowdown Deepens as Leaders Said to Mull Cutting Target (BBG)
  • Saudis Reject Talk of OPEC Market Share War as Oil Slides (BBG)
  • Oil Tankers Stream Toward China as Price Drop Sparks Boom (BBG)
 
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Treasury Issues $24 Billion In Boring 10 Year Auction At Lowest Yield Since June 2013





While there was some selling of 10 Year paper following today's earlier 52-Week Bill auction which came in week, today's refunding of $24 billion in 10 Year paper was a snoozer. Closing moments ago at a 2.365% high yield (33% allotted at high), this was a 0.1% bp tail to the 2.364% When Issued. It was almost nearly identical to last month's 2.381% auction, although the small decline in yield means this was the lowest yield for the On The Run security since last June. The internals were also tame, with the Bid To Cover of 2.52 a carbon copy of last month's 2.52, if a little weaker than the TTM average. Finally, 42% of the allotment went to Dealers, or 4% above the 12 month average, while Indirects took down 44.7%, again nearly an identical amount to last month's 44.4$, and Directs, traditionally the domain of Pimco, were left with 13.4% of the auction. It is unclear if the Total Return Fund was the big bidder here now that Gross is long gone.

 
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Frontrunning: November 6





  • LOL@Fundamentals: European Stocks Fall as Investors Seek Stimulus Clarity (BBG)
  • Obama, Republicans sound conciliatory note but battles loom (Reuters)
  • Firms drop Pimco funds from managed accounts (Reuters)
  • Not All QE Is Created Equal as U.S. Outpunches ECB-BOJ (BBG)
  • Ukraine Accuses Russia of Sending Troops as Truce Wobbles (BBG)
  • Lenovo Slumps After Projecting China ‘Hypergrowth’ to End (BBG)
  • Palo Alto Networks discovers new malware targeted at Apple devices (Reuters)
  • IPO That Brought In $1 Billion in March Implodes in Denmark (BBG)
 
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Charting The Devastation At PIMCO





We applaud PIMCO's attempt to stem the bleeding, however by publicly confronting such a critical, for any asset manager, topic as fund outflows and even providing a handy daily chart of outflows, we fear it will only push the situation from bad to worse, as increasingly more investors ask themselves: "what are we missing." Especially since the appropriate chart to focus on is not the one showing the outflows from the TRF since September, but the one below, showing the epic devastation that the flagship fund, the Total Return Fund, of the world's largest bond manager, has suffered since April 2013, when its AUM peaked at just inder $300 billion, and fast foward to October 2014, when it is now a whopping 42% lower and declining fast.

 
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