Skip to comments.PIMCO (biggest bond fund) Dumping All Treasuries, Bringing "Government Related" Holdings To Zero
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 ...
PIMCO founder Bill Gross — one of the world’s largest mutual funds managers, who focuses mostly on bonds —
Earlier today and yesterday....
“No Way Out” of Debt Trap, Gross Says: U.S. Living Standards Doomed to Fall
There is really no way out of this trap and this conundrum at this point, says Gross. From an investment perspective his advice is to stay clear of bonds in dollar denominated terms and to be wary of higher interest rates going forward. http://www.freerepublic.com/focus/f-news/2685988/posts
Me too. Moving it to precious metals - sure, I could understand that.
Canned goods ... sure (he could corner the Spam market I suppose).
But dollars? I can understand the fleeing Government Bonds part - but moving it to dollars I don't understand... Maybe 'cash' meant something else (e.g., Swiss Francs; etc)...
They’ve been sending up warning signals now for a while...
of course ya’ know ya’ never believe a conspiracy theorist...
Of course, Gross now has a huge interest in bonds dropping like a lead balloon. He could easily be trying to drive bonds down so he can swoop in when they reach the basement.
Still, I do not see how we get out of this mess without a catastrophe, part of which will be a huge drop in bond values as interest rates skyrocket. There is really no where to hide, either for Gross or for the rest of us. Cash may be better than bonds, but inflation will destroy the cash too (slower than it destroys the bonds, I suppose, but dead is dead). It looks like I will leave my wife to live out her life in poverty, regardless of how hard I have worked to be sure that did not happen.
Eeeegads- have you seen this?
Yes, it causes the collapse to get us out of the cycle.
Q.E. Money Printing Negative Feed Back Loop to Hyper-Inflation Oblivion
WHAT IS THE PLAN? What would we likely see next? What is the next domino? Is China making T-bill purchases contingent on US agreeing to a particular policy? Will they in the future? If BIG purchasers did demand it how would we know? Do you think the Fed or WH is giving them assurances or something more concrete than assurances? Didn’t we just learn that we were lied to, that China was owed a trillion rather than just holding 500 billion?
“Something smells here.... Like a few insiders who know QE3 is on the horizon and want to ride the bogus equity bubble a few hundred points higher? These crooks are manipulating the country as we know it into oblivion....”
It does not take insider information to know that QE3 is on the way. It does not take insider information to know that QE1000 is not far behind. The only ones manipulating the country are the rats and their comrades (labor cartels, environmentalists, corporate welfare seekers, racial hustlers, and trial lawyers). The rest of us are ducking for cover and preparing to return fire.
Just reading the graphs it appears that they are still above the level that they had back in 2008. What this graph doesn’t show is what the “normal” holdings of government securities are. I would not panic based on the first chart.
It’s not a move to dollars. The bonds were denominated in dollars, and the cash is denominated in dollars. Devaluation has the same effect, regardless of your dollar-denominated investment. With bonds, however, you have the additional loss from higher interest rates driving down the value of the bonds.
Gross is screwed, just like the rest of us. There is no where to hide. Even if a move to hard assets (or some equity substitute) is a solution, I’m sure Gross’s bond funds are contractually bound to avoid such investments. Gross’s big worry may be the need to satisfy the huge redemptions that will occur when his investors decide they must try some alternative to bonds and cash—an alternative that Gross does not have.
In related news, Carl Icahn is bailing out. Actually, he's not just bailing out, he's shutting his whole operation down. He's returning all of his investors money.
His stated reason is that he doesn't want to be responsible for a big loss of his investor's funds if there is another market meltdown.
probably a good idea.
The government might just mandate we buy these bonds, if they can mandate healthcare insurance...
I’m wondering if we can have inflation and deflation at the same time. Of course the brain trust up there in Washington would say on the average, we’re perfectly fine.
Not panicking is a good idea in any case. I forwarded this original article to my mother's financial guy so I'll get his feedback at some point soon. In the meantime, no panic. :0)
LOL! Of course they would. Nothing wrong here! We should be thanking zer0 for how good he is to us and our soon-to-be commie country...
by futurist Richard Worzel, C.F.A.
Ive noticed a strange development recently: two indicators that I follow for inflation and deflation are both rising, implying that we may be headed for a period of both inflation and deflation at the same time. Since no reputable economist that Ive ever read would conceive of such an apparent oxymoron, this caught my attention. First let me describe the indicators, discuss how it might happen despite the apparent contradiction, and then talk about some of the potential implications and what you might do about them.