• GoldCore
    07/25/2014 - 09:41
    The EU and global drive toward bail-ins continues unabated. Bail-ins are coming to financial institutions and banks in the EU, UK, U.S. and much of the western world - with painful consequences for...

PIMCO

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NOctaper Or Shocktaper: Deutsche Bank's Five Reasons Why The Fed May Stun Everyone Once Again





Remember when minutes before the September FOMC announcement everyone was absolutely certain the Fed would announce tapering, only to leave a lot of very angry traders fuming? Fast forward one month when everyone is absolutely certain, again, that there is no way the Fed can announce anything even remotely suggesting a taper. One wonders though: since the Fed has by now burned all credibility bridges, and since the capital market bubble is now far greater than it was when both Stein and Bernanke, implicitly, warned about a building asset bubble (a chorus which has now been joined by JPM, Pimco and BlackRock) in early 2013, would today not be the best opportunity for the Fed to once again stun the market with a dramatic policy U-Turn, just to teach those momentum wave-riding vacuum tubes who is in charge? Probably not. However, as Lloyd Christamas noted, there is a chance. Deutsche Bank's Jim Reid explains why.

 
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Head Of World's Largest Asset Manager Says Taper "Imperative" To End "Bubble-Like Markets"





JPMorgan, Pimco, and now BlackRock, the world's largest asset manager, all join the bubble warning chorus. From Bloomberg:

  • FINK SAYS IT'S "IMPERATIVE" THAT THE FED BEGIN TO TAPER
  • FINK CALLS MARKET `OVER-ZEALOUS' 
  • FINK SAYS THERE ARE "REAL BUBBLE-LIKE MARKETS AGAIN"

So... when the three largest banks/asset managers in the US say that Ben Bernanke has blown the largest asset bubble in history and that the time to taper has come, will Janet Yellen once again turn a blind ear to warnings that come not just from the "tinfoil" blogosphere but the "respected" legacy financial institutions made up of serious people, and after the cataclysm admit that, just like last time, she "never saw it coming?"

 
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Bill Gross: "All Risk Asset Prices Artificially High"





 
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Bill Gross' Latest Target: Bill Gross





Having fired a shot across Carl iCahn's bow yesterday, PIMCO's Bill Gross has a new target - once again talking his book...

Perhaps more Americans should spend more time that way... instead of watching every tick in AMZN and dreaming of retirement...

 
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PIMPCO Smack Down: Gross Vs Icahn, Or Fight Of The Book-Talking Titans





 
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Blackrock Joins JPMorgan And Fidelity - Sells All October And November T-Bills





Yesterday it was JPMorgan's money-market funds adjusting to their fiduciary duty and following Fidelity's lead in getting out of any and all short-term non-risk-free Treasury Bills. Today, another massive money-market fund provider sells it all...

  • *BLK'S MONEY FUNDS HAVE NO ASSETS IN TREASURIES TIED TO DEFAULT
  • *BLACKROCK SAYS `ZERO EXPOSURE' TO DEBT MATURING IN LATE OCT.
  • *BLACKROCK SAYS NO HOLDINGS IN TREASURIES MATURING IN EARLY NOV.

It seems remarkable that all three of these funds would ignore the advice of blowhard bloggers who suggested this was nothing. But, as Barack Obama himself said yesterday, "Ultimately, what matters is: What do the people who are buying Treasury bills think?" It seems only the Fed (and PIMCO) is left.

 
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Bill Gross Recaps The Washington Soap Opera (And Talks His Book)





 
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Frontrunning: October 10





  • The ice breaks; fiscal talks set (The Hill); Ryan steps up to shape a deal (The Hill), as predicted here yesterday
  • Republicans consider short-term U.S. debt ceiling increase (Reuters)
  • Shutdown Standoff Shows Signs of a Thaw (WSJ)
  • JPMorgan Clients in Cash as Schwab’s Options Hedge Default (BBG)
  • Mitch McConnell, Senate GOP search for way out (Politico)
  • Meredith Whitney Winds Down Brokerage Unit After Setting Up Fund (BBG)
  • Washington Budget Chaos Keeps Fed Rates Low for Longer (BBG)
  • Chinese Premier Outlines US Debt Concerns (FT)
  • Saudis brace for 'nightmare' of U.S.-Iran rapprochement (Reuters)
  • Obama Urges Action on Yellen’s Fed Nomination (Reuters)
  • Libyan Prime Minister Ali Zidan Freed After Kidnap (WSJ)
 
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Bill Gross' Advice On Why You Should "Run For The Hills"





 
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Bill Gross' Monthly Thoughts: Expect The "Beautiful Deleveraging" To Conclude... Some Time In 2035





A week ago, we first reported that Bridgewater's Ray Dalio had finally thrown in the towel on his latest iteration of hope in the "Beautiful deleveraging", and realizing that a 3% yield is enough to grind the US economy to a halt, moved from the pro-inflation camp (someone tell David Rosenberg) back to buying bonds (i.e., deflation). This was music to Bill Gross' ears who in his latest letter, in which he notes in addition to everything else that while the Fed has to taper eventually, it doesn't actually ever have to raise rates, and writes: "The objective, Dalio writes, is to achieve a “beautiful deleveraging,” which assumes minimal defaults and an eventual return of investors’ willingness to take risk again. The beautiful deleveraging of course takes place at the expense of private market savers via financially repressed interest rates, but what the heck. Beauty is in the eye of the beholder and if the Fed’s (and Dalio’s) objective is to grow normally again, then there is likely no more beautiful or deleveraging solution than one that is accomplished via abnormally low interest rates for a long, long time." How long one may ask? "the last time the U.S. economy was this highly levered (early 1940s) it took over 25 years of 10-year Treasury rates averaging 3% less than nominal GDP to accomplish a “beautiful deleveraging.” That would place the 10-year Treasury at close to 1% and the policy rate at 25 basis points until sometime around 2035!" In the early 1940s there was also a world war, but the bottom line is clear: lots and lots of central planning for a long time.

 
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Frontrunning: September 27





  • House GOP banking on Plan C (Politico)
  • Pimco shook hands with the Fed - and made a killing (Reuters)
  • BlackBerry's Torsten Heins has a $55 Million golden parachute (Reuters)
  • JPMorgan Urged to Pay More in Mortgage Deal (NYT)
  • Soros Adviser Turned Lawmaker Sees Crisis by 2020 (BBG)
  • U.N. Members Agree on Syria Disarmament (WSJ)
  • U.N. Says Humans Are 'Extremely Likely' Behind Global Warming (WSJ)
  • The non-falsifiable threats emerge: Shutdown Would Shave Fourth-Quarter U.S. Growth as Much as 1.4% (BBG)
  • Swaps Rules Worry Industry: Coming Regulations Have Market Players Concerned About Possible Disruption (WSJ)
 
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Long Bond Retraces 50% Of Taperuption Gains





Yesterday, when in the aftermath of the Fed's "shocking" announcement bond yields plunged, the bond kings, both old and new couldn't get to a media outlet fast enough to express their euphoria over the end of the selloff. Gross tweeted immediately that he was "not bragging but what did we tell you" while Gundlach added that he "sees a change in Psychology with the 10 Year below 2.7%." It is unclear just what psychological change he was referring to, because looking at the market it was one of resumed selling: as of moments ago, the 10 Year has retraced over a third of its plunge and is back to 2.75% and rising once again; and the 30Y has retraced over 50% of its gains at 3.80%. We are going to need another un-Taper soon.

 
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Bill Gross: Summers-Off Is "Hugely" Risk/Belly-On





 
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El-Erian: What's Happening To Bonds And Why?





To say that bonds are under pressure would be an understatement. Over the last few months, sentiment about fixed income has flipped dramatically: from a favored investment destination that is deemed to benefit from exceptional support from central banks, to an asset class experiencing large outflows, negative returns and reduced standing as an anchor of a well-diversified asset allocation. Similar to prior periods, history will regard the ongoing phase of dislocations in the bond market as a transitional period of adjustment triggered by changing expectations about policy, the economy and asset preferences – all of which have been significantly turbocharged by a set of temporary and ultimately reversible technical factors. By contrast, history is unlikely to record a change in the important role that fixed income plays over time in prudent asset allocations and diversified investment portfolios – in generating returns, reducing volatility and lowering the risk of severe capital loss. Understanding well what created this change is critical to how investors may think about the future.

 
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Frontrunning: September 13





  • U.S., Russia to push for new Syria peace talks (Reuters)
  • Elite Syrian Unit Scatters Chemical Arms Stockpile (WSJ)
  • Obama to nominate Summers as Fed chief: Nikkei (Reuters)
  • Boehner Wants Joint Talks on Debt, Budget (WSJ)
  • House Republicans go for broke in fiscal battles (Reuters)
  • Pimco, BlackRock Together Received More Than a Quarter of Verizon's $49 Billion Bond Deal (WSJ)
  • Insane financial system lives post-Lehman (Gillian Tett)
  • JPM to add $2.5 billion to its litigation reserves in the second half of the year (WSJ)
  • Goldman’s Zurich offices visited over working-hours complaint (FT)
 
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