PIMCO

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4-Week Bills Price At Highest Bid To Cover Since 2011; Continue Trading Negative In Secondary Market





Today the ante was just upped once more, as the 4 Week Bill Bid to Cover rose yet again, from 6.4x to 6.6x. Logically, this print is now the latest and greatest highest Bid to Cover since December 2011, and the question remains: why the scramble for safety?

 
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Frontrunning: January 22





  • Winter Storm Expected to Make Northeast Commutes Harder  (BBG)
  •  Invasion of Spanish Builders Angers France Struggling to Compete  (BBG)
  • Toronto mayor, caught ranting on video, admits drinking a 'little bit" (Reuters)
  • IBM's Hardware Woes Accelerate in Fourth Quarter (WSJ)
  • Sharp Divisions Come to Fore as Peace Talks on Syria Begin (NYT)
  • Afghanistan cracks down on advertising in favor of U.S. troops (Reuters)
  • Microsoft CEO Search Rattles Boards From Ford to Ericsson (BBG)
  • Banks Sit Out Riskier Deals (WSJ)
  • Netflix Seen Reporting U.S. Web Users Reach 33.1 Million (BBG)
 
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Mohamed El-Erian Leaving PIMCO





Said Dr. El-Erian: “I have been extremely honored and fortunate to work alongside Bill Gross, who is one of the very best investors in the world. His talents are truly exceptional, as is his dedication. I have also been amazingly privileged to work with the most talented group of professionals in the investment management industry. Their commitment and tireless work on behalf of our clients have been a consistent inspiration for me since I first joined PIMCO back in 1999.  I wish them continued great success.”

 
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Bill Gross On Central Banker Bartenders





 
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Hoping To Get Rich? Bill Gross Has Some Bad News For You





 
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Frontrunning: January 10





  • From the guy who said the market is not overvalued: Q&A with Fed’s Williams on Upbeat 2014 Outlook and What Keeps Him up at Night (Hilsenrath)
  • Obama Readies Revamp of NSA (WSJ)
  • Indian envoy leaves U.S. in deal to calm diplomatic row (Reuters)
  • China overtakes US as largest goods trader (FT)
  • Wall Street Predicts $50 Billion Bill to Settle U.S. Mortgage Suits (NYT)
  • Low-End Retailers Had a Rough Holiday: Family Dollar, Sears Struggle as Lower-Income Customers Remain Under Pressure (WSJ)
  • ECB charts familiar course as Japan, US and UK begin to diverge (FT)
  • Housing experts warn of hiccups as new U.S. mortgage rules go live (Reuters)
  • It's a HFT eat HFT world: Infinium ex-employees sue over $4.1m loss (FT)
  • Slowing China crude imports to challenge exporters (FT)
 
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Bill Gross' 2014 Investment Outlook: All About Inflation





According to Bill Gross the outlook for 2014 is all about inflation, and how it will impact bonds in the 1-5 maturity bucket: "I am amazed at the fascination and emphasis placed on the u-rate during employment Fridays. Bond prices will move (in some cases by points) with a minor up or down change in unemployment relative to expectations, but when it comes to the third little pig of the litter – inflation – no one seems to care. This number – the PCE annualized inflation rate – is released near the 20th of every month but you will not see CNBC or Bloomberg analysts waiting with bated breath for its release. I do. I consider it the critical monthly statistic for analyzing Fed policy in 2014. Why? Bernanke, Yellen and their merry band of Fed governors and regional presidents have told us so. No policy rate hike until both unemployment and inflation thresholds have been breached and even then “they’re not thresholds,” they’re forks in the road that may or may not lead in a different direction. If so, then 1-5 year bonds, combined with credit, volatility, curve rolldown, and a dollop of currency should float a bond investor’s boat in 2014 and avoid breaking the buck in total return space.... If PCE inflation stays below 2.0% and inflationary expectations don’t rise appreciably above 2.5%, then a 3-4% total return for 2014 is realistic. "

 
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Frontrunning: January 3





  • Heavy snowstorm hammers northeastern U.S. (Reuters)
  • Coins Remain a Bright Spot for Gold (WSJ)
  • Gross’s Mistake on Fed Taper Echoes Across Pimco Funds (BBG)
  • China December services PMI falls to four-month low (Reuters)
  • General Mills Starts Making Some Cheerios Without GMOs (WSJ)
  • U.S. considers flammability risk of Bakken crude after accidents (Reuters)
  • China Mobile’s Costly iPhone Deal with Apple (WSJ)
  • Hezbollah Upgrades Missile Threat to Israel (WSJ)
  • UK House Prices Cap Best Year Since 2006 as Mortgages Surge (BBG)
  • China tells police to be loyal to party amid graft crackdown (Reuters)
 
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Bill Gross: The Grinch Who Doesn't Like A 25% Gain In 2013





 
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Bill Gross Muses On Bitcoin, And Prosperity In A Time Of Central Planning Cholera





 
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5 Things To Ponder This Weekend - The Taper Edition





This past week the Federal Reserve began tapering their current large scale asset purchase (LSAP) program, more commonly referred to as Quantitative Easing (QE), by trimming $10 billion in bond purchases from the previous monthly totals.  This week's "Things To Ponder" is a diverse set of views on the potential effect of the taper on the financial markets and the impact to investors.  Regardless of your personal expectations as to the impact of the reduction of liquidity in the months ahead, it is always a good mental exercise to consider opposing viewpoints to balance your own views by eliminating confirmation bias.  Here are 5 disparate views on the effect, and potential outcome, of the Federal Reserve's latest move.

 
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Bill Gross Has A Message For Paranoid Investors





 
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The Taper Morning After: A Full Summary Of What "They" Are Saying





Strategists were largely wrong about the yes taper in September, and then they were just as largely wrong about the no taper in December, and yet their opinion is just as largely gospel and people continue to listen to them (what else is there to be distracted by in a still very much centrally-planned market and economy). Which is why the below summary by Bloomberg of what global financial strategists and investors, also known as "they", are saying about how to trade assets in the post-taper world, should probably be taken, largely, with a grain of salt.

 
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Santa Yellen Or Scrooge McBen





Of the 8 "most important ever" FOMC decisions in 2013, this one is undisputedly, and without doubt, the 8th. As Jim Reid summarizes, what everyone wonders is whether today’s decision by the FOMC will have a bearing on a few last-minute Xmas presents around global financial markets. No taper and markets probably breathe a sigh of relief and the feel-good factor might turn that handheld game machine into a full-blown PS4 by Xmas day. However a taper now might just take the edge off the festivities and leave a few presents on the shelves. Given that the S&P 500 has pretty much flat-lined since early-mid November in spite of better data one would have to say that some risk of tapering has been priced in but perhaps not all of it. Alternatively if they don’t taper one would expect markets to see a pretty decent relief rally over the rest of the year. So will it be Santa or Scrooge from the Fed tonight at 2pm EST?

 
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ECB Admits Sovereign Bonds Are Not Riskless





For the last year or two, European banks have engaged in the ultimate of self-referential M.A.D. trades - buying the sovereign debt of their own nation in inordinate size to maintain the ECB's illusion of control (even as their economies collapse and stagnate) while referentially obtaining the funding for said purchase from the ECB by repoing the purchase back to the central bank, usually with no haircut to mention. Today though, as The FT reports, a top official at the European Central Bank has signalled it will try to force eurozone banks to hold capital against sovereign bonds, in an attempt to stop weak lenders using its cash to hoover up the debts of crisis-hit countries.

 
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