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View Full Version : Bill Gross Dumps All Treasuries, Brings Total "Government Related" Holdings To 0



Ares
9th March 2011, 06:11 AM
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.

<img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/von%20havenstein/PIMCO%20Jan%201_0.jpg"/>

And when it comes to duration adjusted holdings, something wierd is going on: PIMCO has increased its holdings of securities with a 0-1 duration to 14%, quite possibly the highest ever, and certainly the most to where our records go back. Nonetheless, the effective duration on the entire portfolio jumped to 5.38, the highest since October 2008. This one we can't quite reconcile, yet.

<img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/von%20havenstein/PIMCO%20Duration%20Jan%201_0.jpg"/>

http://www.zerohedge.com/article/exclusive-bill-gross-dumps-all-treasuries-brings-total-government-related-holdings-zero-flee

chad
9th March 2011, 06:22 AM
bill gross pretty much has ben + timmy on speed dial, so i'd say the SHTF is coming.

Neuro
9th March 2011, 06:38 AM
Does anyone know how much government needs to borrow in say the next 6 months? If it is not that huge amount needed in roll over and new debt. Bernanke could very well stop adding liquidity to the market, get bond rates rising substantially, get a correction/plunge in the stock market, and when he wheels out QE3 in the autumn, he is the hero who saves the day, and the new money will have some bite, QE3 now would totally destroy the credibility of the dollar in the market. A limited amount of suffering for a few months, would make congressmen and Senators appreciate how important the Fed is for them too, and who actually decides...

chad
9th March 2011, 06:43 AM
Does anyone know how much government needs to borrow in say the next 6 months? If it is not that huge amount needed in roll over and new debt. Bernanke could very well stop adding liquidity to the market, get bond rates rising substantially, get a correction/plunge in the stock market, and when he wheels out QE3 in the autumn, he is the hero who saves the day, and the new money will have some bite, QE3 now would totally destroy the credibility of the dollar in the market. A limited amount of suffering for a few months, would make congressmen and Senators appreciate how important the Fed is for them too, and who actually decides...


720 billion (4 billion per day).

Neuro
9th March 2011, 07:26 AM
Does anyone know how much government needs to borrow in say the next 6 months? If it is not that huge amount needed in roll over and new debt. Bernanke could very well stop adding liquidity to the market, get bond rates rising substantially, get a correction/plunge in the stock market, and when he wheels out QE3 in the autumn, he is the hero who saves the day, and the new money will have some bite, QE3 now would totally destroy the credibility of the dollar in the market. A limited amount of suffering for a few months, would make congressmen and Senators appreciate how important the Fed is for them too, and who actually decides...


720 billion (4 billion per day).

Apparently http://www.investingcontrarian.com/index.php/financial-news-network/treasury-sees-194-billion-drop-in-borrowing-needs-due-to-sfp-program-roll-off-over-half-a-trillion-in-financing-needs-for-jan-mar-quarter/ , the treasury thinks that it can get by with borrowing "only" $295 Billion, between April to end of June, leaving a cash balance of $95 Billion at the end of June... Possibly with only some moderately raised interest rates, this borrowing can be done without Fed launching QE3, probably they need to borrow way more next quarter, government starts running on fumes in the middle of summer. Crisis a fact at end of August... Everyone will BEG BIG BEN BERNANKE for much more money, mister.

Book
9th March 2011, 07:55 AM
Bill Gross trusts paper wealth nevertheless.

Neuro
9th March 2011, 08:05 AM
Bill Gross trusts paper wealth nevertheless.
Yes, he holds cash now, however short term it may not be such a terrible idea, the fed temporarily holding back the creation of more fiat will have consequences also for the price of gold and silver in fiat terms, it will be a designed cash squeeze, just like 2008...

mick silver
9th March 2011, 08:07 AM
he just traded more paper for lots more paper like book said . so were he hiding all his paper now . is he buying gold are silver . are is he just moving his funds oversea . why would he just set on paper if he thinks every thing is ready to come apart

Twisted Titan
9th March 2011, 10:02 AM
I wonder if he will sink that money into the SLV or CRIMEX???



T

cthulu
9th March 2011, 12:29 PM
Yes, he holds cash now, however short term it may not be such a terrible idea, the fed temporarily holding back the creation of more fiat will have consequences also for the price of gold and silver in fiat terms, it will be a designed cash squeeze, just like 2008...




Sounds like the same thing that happened to bush sr. same plot, different story. Bush sr didn't invade iraq, greenspan said the markets were too frothy, and suddenly george "read my lips no new taxes" bush sr became a one-term president.

Neuro
9th March 2011, 12:54 PM
Yes, he holds cash now, however short term it may not be such a terrible idea, the fed temporarily holding back the creation of more fiat will have consequences also for the price of gold and silver in fiat terms, it will be a designed cash squeeze, just like 2008...




Sounds like the same thing that happened to bush sr. same plot, different story. Bush sr didn't invade iraq, greenspan said the markets were too frothy, and suddenly george "read my lips no new taxes" bush sr became a one-term president.
I am sorry I can't see the connection, can you explain/expand please?

Horn
9th March 2011, 01:30 PM
First you create a +1 dollar positive swell in oil, than you ride the wave.