Monetary Psy-Ops With a "Twist"

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ashvinp's picture
ashvinp
Status: Gold Member (Offline)
Joined: Jan 21 2010
Posts: 412
Monetary Psy-Ops With a "Twist"

Re: Bill Gross, QE3 and "Operation Twist 2"

Quote:

Bill Gross just loves to manufacture heavily publicized comments about the U.S. Treasury market every now and again. At first glance, they may even come off as his deeply personal opinions about Treasury bonds and the future of U.S. fiscal and monetary policy. Take more than a glance, though, and it becomes easy to see that men like that, in such lofty positions of financial power, never make any "public statements" very lightly. In fact, they are usually calculated to several decimal places in a room full of financial vultures, political hawks and public relations wizards before they ever see the light of day.

That was the subject of a piece I wrote about two months ago, found here at The Automatic Earth, which argued that Pimco's net short position on Treasuries in its flagship fund was very little more than a magician performing a misleading sleight of hand on stage. It was certainly not an unconditional bet against the U.S. Treasury market, the Fed and the entire debt-dollar system of corollary bonds and derivative instruments, as some had began to claim when the position was made public. It is very well known that Gross has an all-access VIP pass to the Fed's monetary nightclub, but that level of inside connect is exactly why we should be skeptical of his public actions or statements.

[Bill Gross, Master of Monetary Psy-Ops]: "Now, the TRF is net short treasuries and many people are convinced that its short position is, in fact, nothing short of a prediction by Gross that the treasury market will soon collapse. Indeed, he seems to be at least betting that rates will increase significantly in the short-term. Perhaps that is true or perhaps he is making a bad bet, but perhaps we should also be wary of such plainly advertised convictions. After all, the insider "beltway" encompassing Wall Street and Washington has two lanes running in both directions.

...An unexpected end to QE operations will send the dollar soaring, and as mentioned before, all asset markets plunging except for the U.S. treasury market. Bill Gross may have dumped all of his treasury exposure for now, but has any other major financial institution or money manager followed suit? Has the Fed announced any plans to sell its treasury holdings back into the primary or secondary markets?

I suspect that, by that time [when the rush to Treasuries as a "safe haven" really gets underway],  there would have been a significant reversal in the treasury holdings of TRF and the superficial justifications for the investment decisions of  the omniscient Bill Gross. Perhaps he will continue to have minimal exposure to U.S. treasuries throughout the year, as a partial hedge to his fund's enormous cash holdings, but that certainly should not be taken as an absolute bet against the treasury market."

ashvinp's picture
ashvinp
Status: Gold Member (Offline)
Joined: Jan 21 2010
Posts: 412
Full piece - Monetary

Full piece - Monetary Psy-Ops with a "Twist"

Johnny Oxygen's picture
Johnny Oxygen
Status: Diamond Member (Offline)
Joined: Sep 9 2009
Posts: 1443
Re: Monetary Psy-Ops With a "Twist"

Yep

I posted more on this same topic this morning.

Peter Schiff also mentions it:

http://www.peakprosperity.com/forum/bill-gross-warns-qe3-coming-form-ope...

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