Treasury Bubble, and Worst Is Over for Banks... Not Economy: Pimco's Gross

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cat233's picture
cat233
Status: Platinum Member (Offline)
Joined: Aug 20 2008
Posts: 575
Treasury Bubble, and Worst Is Over for Banks... Not Economy: Pimco's Gross

Worst Is Over for Banks... Not Economy:  Pimco's Gross

"Asked whether he was concerned
about some analysts' view that the Treasury market is in a bubble, Gross told
Reuters that U.S. government securities would still find demand given the anemic
economic growth.

'There is a large concern, of
course, that foreign central banks and sovereign wealth funds will at some point
have a rather full plate of Treasuries," he said. "We have a situation here over
the next 12 months I think where there are a number of possible buyers for these
trillions of dollars of Treasuries that are going to be issued and ultimately
the buyer of last resort, yes, will be the Federal Reserve.'"

Complete article

http://www.cnbc.com/id/28695655

 

Lemonyellowschwin's picture
Lemonyellowschwin
Status: Platinum Member (Offline)
Joined: Apr 22 2008
Posts: 561
Re: Treasury Bubble, and Worst Is Over for Banks... Not ...

I really don't understand what he was saying.  Of course the Federal Reserve is the buyer of last restort . . and are other buyers drying up or not? 

cat233's picture
cat233
Status: Platinum Member (Offline)
Joined: Aug 20 2008
Posts: 575
Re: Treasury Bubble, and Worst Is Over for Banks... Not ...

LYS,

You've got me... Sounds like he thinks his buddies can save him if bonds take a dive, not sure why he thinks that given who prints the money.  Buyers have to be drying up, they aren't going to buy our debt forever... They all have their own economic problems.

I am not
forgetting this past September and Gross' $1.7 billion in the Freddie/Fannie
robbery.  

Cat

Dogs_In_A_Pile's picture
Dogs_In_A_Pile
Status: Martenson Brigade Member (Offline)
Joined: Jan 4 2009
Posts: 2606
Re: Treasury Bubble, and Worst Is Over for Banks... Not ...

Cat, Lemon -  

 

Call me a pessimist, but is there any reason why we should believe anything these guys say?

I pulled this from the article and it speaks volumes with what it doesn't say:

"Still, Gross said he is not bearish on mortgage-backed securities (MBS), despite having trimmed his $132 billion flagship fund's holdings of these securities in December."

You are either bearish or bullish with how you construct your portfolio holdings (unless you are building your portfolio with Naked call or put option sells and allowing time value decay to reduce the price so you can buy it back to close at a cheaper price - then you can be neutral.  But I digress.)

Okay - if he's not bearish, what was the need to "trim" these securities from the fund holding?  Could it be that he realizes MBS are worthless and is getting out from underneath it while he can?  I watched the clip of Congressman Grayson eviscerating Fed Vice (Conspirator) Chair Kohn on where and how the $1.2T has been spent, no lent, spent, no wait, I mean lent.  I suspect the majority of the money went to prop up MBS and mortgage backed derivatives that are absolutely worthless.  The Fed knew they were worthless and don't want anyone to know it, hence zero transparency.  As long as no one knows that they are worthless there will be perceived value - especially if propped up by the Fed with invisible money.  No doubt the Fed is hoping for a miracle to come along that regenerates some value in these holdings so they can eventually show some return on the $1.2T. 

Gross probably had some insight or sense that MBS were/are/will be worthless and "trimmed" his holding while there still was some value.  As soon as people figure out that the $1.2 was probably poured down the drain to purchase sentiment and a false confidence, they would have trimmed themselves.

 

cat233:  Your golden is smiling.  That is pretty cool.  Can I borrow her for a few days for my pile?  (I'm guessing she's a girl because of the flowers)

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