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PIMCO's Bill Gross Commentary |
HenryTo
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 Posted: Wed Apr 04, 2007 12:56 pm Post subject: PIMCO's Bill Gross Commentary |
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April 2007 commentary from Bill Gross:
http://www.pimco.com/LeftNav/Featured+Market+Commentary/IO/2007/IO+April+2007.htm
Along the lines of what I wrote in our weekend commentary. The danger is in overregulation and tighter lending standards for months/years to come, not the current/potential losses from higher resets, etc.
| Quote: | | It will not be loan losses that threaten future economic growth, however, but the tightening of credit conditions that are in part a result of those losses ... Bulls and bears argue over websites as to the percentage of all lending that subprime and alternative mortgage loans provide but while important, the argument obscures the critical conclusion that tighter lending standards and increased regulation will change the housing outlook for some years to come. As past marginal buyers are forced to sell their home to prevent foreclosures, so too will future marginal buyers be restricted from buying them. |
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PIMCO's Bill Gross Commentary Replies |
rffrydr
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| Posted: Wed Jan 30, 2008 1:45 pm Post subject: |
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Gross vindicated. Went all wrong last year but now has nailed dramatic call for Fed cuts.
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rffrydr
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| Posted: Tue Jan 29, 2008 12:28 pm Post subject: |
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There is a war on. That used to be the fiscal fix non-plus ultra.
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HenryTo
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| Posted: Tue Jan 29, 2008 12:11 pm Post subject: |
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Latest February commentary from Bill Gross:
http://www.pimco.com/LeftNav/Featured+Market+Commentary/IO/2008/IO+February+2008.htm
| Quote: | My point is that Chairman Bernanke must recognize the reduced benefits and obvious dangers of a déjà vu trek to 1% short rates. Those yields produced 5% 30-year mortgage rates to the homeowner for a 2-3 month period in 2003 and they could do so again, but bubble creating, inflation inducing damage to the U.S. dollar would be the likely result now. Best to stop far short of 1% and at the same time encourage reforms in FHA government assisted programs that would permit subsidized mortgage rates with minimal down payments.
An artificially low, 1% short-term interest rate was an elixir during the days of a burgeoning shadow banking system. It cannot be the solution now.
In combination, a well constructed, more than temporary fiscal/monetary stimulus plan is what is required to rejuvenate a U.S. economy reeling from a low punch delivered by a private market economy gone too far. Its "Rosemary’s Baby" took the form of a shadow banking system based on leverage and the fateful conclusion that a finance-based economy alone can deliver prosperity. It cannot. As Keynes theorized and then Krugman affirmed, when private demand falters, it becomes the responsibility of government to fill the breech. Because it likely will not do so effectively until after a new Administration is elected in late 2008, the U.S. economy and its somewhat coupled global companion will sleep walk for some time and a resumption of prosperity as we knew it will be dependent on reforms of monetary and fiscal policy resembling the 1930s more than our past decade. Better late than never. |
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rffrydr
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| Posted: Fri Jan 11, 2008 5:18 am Post subject: |
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Blackstone follows. And in the process redefines itself--no longer the "client."
| Quote: | Blackstone buys debt specialist for $1bn
By Henny Sender in New York
Thursday Jan 10 2008 14:05
Blackstone Group is acquiring GSO, a hedge fund specialising in debt, for about $1bn in a deal that seeks to exploit the opportunities created by the credit market turmoil.
With GSO's $10bn in assets, Blackstone's debt business will grow to $22bn, putting it closer to competing head to head with the leading Wall Street investment banks. Goldman Sachs (NYSE:GS) launched a $20bn mezzanine fund last year to provide capital at a time when many companies are having trouble borrowing.
"There are lots of ways in which our debt business is a client of Wall Street, but this deal does have an element of competition," said Blackstone's chief executive, Stephen Schwarzman, who characterised the acquisition as a response to recent market upheaval.
"At this point in the cycle, we are looking at more conservative deals with much better economic returns," Mr Schwarzman said. "There are a lot of middle-market companies that need to be financed."
Blackstone is buying GSO for cash and shares to accommodate the GSO partners' desire for a share in Blackstone. Blackstone will then repurchase up to $500m of its own shares. At midday, Blackstone shares were trading at $19.59, up more than 8 per cent, but well off its issue price of $31 last year.
The deal reunites many top executives of the old Donaldson Lufkin & Jenrette investment bank, acquired by Credit Suisse in 2000.
Tony James, Blackstone's president, had served as chairman of the banking group at DLJ, where he worked with Bennett Goodman, Doug Ostrover and Tripp Smith, the founders of GSO.
Since joining Blackstone, Mr. James has recruited many former colleagues.
Since it was founded in 2005, GSO has cultivated a reputation as a careful investor. Blackstone was an original investor in GSO. Other investors included Merrill Lynch, which is selling its 20 per cent stake as part of the transaction.
GSO operates credit hedge funds, a mezzanine fund and collateralised loan obligation businesses.
Blackstone and GSO are likely to launch a new mezzanine fund. The GSO brand will survive the merger. |
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rffrydr
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| Posted: Thu Jan 10, 2008 4:44 pm Post subject: |
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If you use anything close to The Fed Model that's where the value is. I wonder if there's any EEM to the mix. Gross took a lot of flak for that one.
ETF is HYG.
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HenryTo
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rffrydr
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| Posted: Tue Jan 08, 2008 2:18 pm Post subject: |
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Well...that's the flipside right there: to all these issues of securitization, parties willoffset in the end and there will be winners. Even in subprime, even in subprime that WILL fail there will be payment streams...in many cases for years.
This leaves aside leverage (and leverage where there should be none)--that's whole different kettle of fish.
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HenryTo
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| Posted: Tue Jan 08, 2008 12:35 pm Post subject: |
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Bill Gross on credit default swaps:
http://www.bloomberg.com/apps/news?pid=20601087&sid=a0bPUzHR3dJs&refer=home
| Quote: | Assuming default rates on corporate bonds reach historical averages of about 1.25 percent, $500 billion of credit-default swap contracts will be triggered, causing losses of $250 billion to sellers of the derivatives after accounting for the recovery value of the securities, Gross said.
``Of course, `buyers of protection' will be on the other `winning' side, but the point is that as capital gains and capital losses slosh from one side of the shadow system's boat to the other, casualties and shipwrecks are the inevitable consequence,'' Gross said. ``Goldman Sachs wins? Fine, but the losers in many cases will not be back for a return match.'' |
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rffrydr
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| Posted: Tue Jan 08, 2008 8:43 am Post subject: |
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Gross taking the steam of overnight rally saying king has no clothes. Say's Moody's 5% anticipated corporate default rate will actually have to be paid for in credit default markets.
We have cycled back to leading, not following, overnight markets.
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HenryTo
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HenryTo
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HenryTo
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HenryTo
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rffrydr
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