What is Pimco up to and why do I care?

Zerohedge posted another article on Pimco today; http://www.zerohedge.com/article/exclusive-bill-gross-now-short-us-debt-hikes-cash-73-billion-all-time-record
The headline says it all. In the last few months they have dumped Bonds and gone into cash.
So why should you care what these guys do is the question. Simply put these guys know well in advance what the Fed are going to do. They know what the Treasury is going to do. These guys can pick up the Bat Phone and get Bernanke, Obama or anyone else on the phone.
So what they are saying here is "we don't think there is any money to be made in Bonds right now or it's not worth the risk". Bill Gross of Pimco has been saying for months now they don't like the way things are going in this country. A word of caution though, these guys just like all the bobbing heads they wheel out on CNBC etc are masters at disinformation, slight of hand and generally making sure we are the suckers in the room.

It's impossible to know right now exactly where they are positioned but whatever way they go will determine where everyone else goes. If you say US bonds are crap then you are implying the same about US cash.

Well sitting on cash doesn't make cash so what are they up to? Will they return the money to their investors? Will they start buying equities? Commodities? Gold, Silver, Oil etc.? Simply waiting for a buy the dip moment in Bonds?

Sometimes to find the answer you really just have to look.


It's all equity related hiring with a smattering of derivatives and Credit Default Swap knowledge required.  So it looks like they are going to ride the equities bull but grab some credit default swaps for the inevitable down hill ride. Which is Bullish for us bugs.


Warren said...

I have a new investment strategy which is 'what currency movement would screw me the most right now?', usually quite an accurate indicator. I think the same applies here, as you imply.

Good thought to look at the hiring as an indicator/tell of direction - that absolutely displays their real-world intent/focus.

There is also good discussion @ fofoa regarding the movement of the long bond into cash/short bonds and the implications for this (think ice-sheetsmelting). Treasuries topics are beyond my ken but if investors are chasing yield then we get a repeat of the 70's shortly (or something like that - I wasn't born when Nixon unpegged the dollar).

Louis Cypher said...

I'm an avid slashdot.org, Macsurfer etc. / tech reader and I just stole a page from their sleuthing methods in figuring out what Apple might be up to. That is looking at the hiring.
Thanks for the tip on FOFOA I'll head over there later today.