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PIMCO (biggest bond fund) Dumping All Treasuries, Bringing "Government Related" Holdings To Zero
ZeroHedge ^

Posted on 03/09/2011 12:27:54 PM PST by gregd0180

And many thought Bill Gross was only posturing when he said he is getting the hell out of dodge. Based on still to be publicly reported data by Pimco's flagship Total Return Fund, the world's largest bond fund, in the month of January, has taken its bond holdings to zero (and -14% on a Duration Weighted Exposure basis). The offset, not surprisingly, is cash. After sporting $28.6 billion in "government related" securities, TRF dropped to $0.0, while its cash holdings surged from $11.9 billion to a whopping $54.5 billion (based on total TRF holdings of $236.9 billion as of February 28). This is the most cash the flagship fund has ever held, and the lowest amount in Treasury holdings since January 2009 before it was made clear that the Fed was going to adjust QE1 to include Treasurys in addition to Mortgage Backed Securities. PIMCO's Treasury holdings peaked in June 2010 at $147.4 billion and have declined consistently ever since. And while we expected that the spike in MBS holdings (at times on margin) was indicative of an expectation that QE3 would monetize mortgage backed securities, the ongoing decline in that asset class now leads us to believe that Bill Gross is now convinced there will be no QE3 at all, at least based on his just putting his money where his monthly pen is! And if Bill Gross, the most connected person to the upcoming actions by the Fed, believes there is no more quantitative easing, it is really time to get the hell out of dodge in all security classes - bonds, and most certainly, equities.

Note the plunge in Treasury holdings in the chart below (blue line), offset by the surge in cash (dotted pink line). Time to panic.

[...]

(Excerpt) Read more at zerohedge.com ...


TOPICS: Breaking News; Business/Economy; Front Page News; News/Current Events
KEYWORDS: bankrupt; broke; china; debt; deficit; economy; obama; palin; pimco; qe3
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To: SonsOfLibertyII
How do I convince my wife that this is not going to end as a nice cycle up and down and back again?

I'm no hedge fund manager but all one has to do is look at the government's insatiable appetite for spending money it doesn't have and its reluctance to embrace critical austerity measures. With everything so tightly connected due to the recession, bailouts, federalization, etc., there are fewer institutional buffers to absorb financial shocks.
21 posted on 03/09/2011 12:54:01 PM PST by TSgt (Colonel Allen West & Michele Bachman - 2012 POTUS Dream Team Ticket!)
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To: gregd0180

Interesting move; now what does he do? It’s not like he can run down the the street and buy some gold or junk silver.


22 posted on 03/09/2011 12:56:05 PM PST by MSF BU (YR'S Please Support our troops: JOIN THEM!)
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To: bill1952

That’s it.

I’m moving to Mars.


23 posted on 03/09/2011 12:57:31 PM PST by RockinRight (I once had my identity stolen. Once they got to know me, they gave it back right away.)
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To: sickoflibs; stephenjohnbanker; hiredhand
ping fer a lil clarification...

is this a CYA dump, or is this a hedge vs QE3 [both ???]

seems to be that tradin bonds for dollars aint real bright unless youre sure that the next wave from helicopter ben has been stifled...

24 posted on 03/09/2011 1:01:28 PM PST by Gilbo_3 (Gov is not reason; not eloquent; its force.Like fire,a dangerous servant & master. George Washington)
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To: Frantzie
LOL! Well people need to keep watchin Obama TV because it supports him. Yeah yeah I know Fox-Al Waleed is our friend and Ma Kettle loves TCM because they show the old Jimmy Cagney films. Obama TV we love you.

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25 posted on 03/09/2011 1:02:41 PM PST by Lazamataz (NPR is the ACORN of the media world.)
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To: Gilbo_3
seems to be that tradin bonds for dollars aint real bright unless youre sure that the next wave from helicopter ben has been stifled...

It seems odd to me, too, although I am no trader. But just on the face of it, it seems someone's not as concerned about dollar devaluation as I am.

26 posted on 03/09/2011 1:04:19 PM PST by Lazamataz (NPR is the ACORN of the media world.)
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To: paulycy
Would someone kindly translate this into english and advise?

Well, it would seem to suggest that Pimco doesn't have much faith in the ability of the US to repay it's bonds. An all cash option probably means they are buying into non dollar related holdings.....soon.

27 posted on 03/09/2011 1:07:54 PM PST by ScreamingFist (Quiet the Idiot)
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To: TSgt

“Nothing to worry about. Just the potential for crushing deflation and the halt of all U.S. commerce.”

Care to give us your argument that no QE3 will cause deflation?

The absence of a QE3 will not reverse the previous debt monetization, which will continue to spur inflation for awhile. All this absurd borowing the federal government is doing will eventually lead to much higher inflation and interest rates; and the longer the fed delays that effect, the greater the effect will be.

The piper must eventually be paid. Obama knows that. I believe he wants (1) to delay the misery until after his re-election, and (2) then to have the misery destroy what is left of America’s free enterprize. His idea is to respond to the public’s plea for help with a totalitarian, Marxist state that will enforce “from each according to his ability, to each according to his needs.”

Your kids and grandkids are up the creek.


28 posted on 03/09/2011 1:09:57 PM PST by olrtex
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To: paulycy
Would someone kindly translate this into English and advise?

OK. This is a really, really, really big deal.

Bill Gross runs Pimco, the largest and arguably the best run bond fund family in the world. Their largest fund is the single largest bond fund in the world. That bond fund normally has lots of money in U.S. government bonds of one kind or another. $147 billion worth as of last June.

Bill Gross is one on the world's leading experts on bonds. Some would say he is number one. He has just put all his chips on a big bet that the value of U.S. government bonds will fall. A lot. It wasn't just a big bet. It was ALL his chips.

Big time investment firms just don't do that.

He's not keeping quiet about it either. Check out the article below. It starts slow, so be sure to read the whole article.

Bill Gross: Who will buy Treasuries when the Fed doesn't?

Here's the "Money Quote" from near the end of the article:

PIMCO's not sticking around

29 posted on 03/09/2011 1:09:57 PM PST by EternalHope (You can't make a deal with the Devil, or reach across the aisle to Obama.)
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To: MSF BU

He’s buying Euro-denominated corporate and government bonds.


30 posted on 03/09/2011 1:11:13 PM PST by riverdawg
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To: EternalHope; ScreamingFist

Thank you very much for making this understandable to me. I don’t have any holdings but my elderly mother does and if they go... well, that’s going to be really bad. But she has people that handle things so I’m sure they are reading the same things that FReepers are.

Again, I really do appreciate your time on this complicated stuff.


31 posted on 03/09/2011 1:12:52 PM PST by paulycy (Islamo-Marxism is Evil.)
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To: paulycy

When interest rates go up, it’s not good for the bond market because they’re fixed-rate long-term. PIMCO was mostly bonds. If they’re getting out of bonds, it appears they think interest rates (i.e. inflation) are going up.

I just re-scoped my 401K on Monday and left PIMCO off because they were bond-heavy.


32 posted on 03/09/2011 1:14:11 PM PST by Larry - Moe and Curly (Loose lips sink ships.)
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To: gregd0180

I hope he makes the right move as half my retirement 401k is in his total return fund.


33 posted on 03/09/2011 1:15:50 PM PST by central_va (I won't be reconstructed, and I do not give a damn.)
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To: EternalHope

This is not good. Things are going to end badly. Very, very badly.


34 posted on 03/09/2011 1:17:06 PM PST by Lurker (The avalanche has begun. The pebbles no longer have a vote.)
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To: gregd0180

The canary just died.


35 posted on 03/09/2011 1:17:24 PM PST by Dr. Sheldon Cooper (The truth can indeed be a finger-down-the-throat for those unprepared to hear it.)
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To: paulycy
so I’m sure they are reading the same things that FReepers are.

Tell your mom not to bet the farm on that.

36 posted on 03/09/2011 1:17:47 PM PST by Lurker (The avalanche has begun. The pebbles no longer have a vote.)
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To: Larry - Moe and Curly
it appears they think interest rates (i.e. inflation) are going up.

So the guy that said deflation is coming is likely incorrect? He's the only one I've ever heard say deflation was coming.

37 posted on 03/09/2011 1:18:53 PM PST by paulycy (Islamo-Marxism is Evil.)
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To: gregd0180

He could be wrong. Investment gurus make mistakes all the time off of bad advice.


38 posted on 03/09/2011 1:19:03 PM PST by crusty old prospector
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To: Lurker
Tell your mom not to bet the farm on that.

Well, that's a good point isn't it. I'll pass this on to the right people. Thanks.

39 posted on 03/09/2011 1:19:50 PM PST by paulycy (Islamo-Marxism is Evil.)
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To: Dr. Sheldon Cooper
The canary just died.

No he didn't. He is just pining for the fjords of Norway.

40 posted on 03/09/2011 1:21:47 PM PST by Drill Thrawl (I don't prep for the disaster. I prepare for the rebuilding.)
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