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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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rffrydr
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rffrydr
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| Posted: Wed Jul 13, 2011 8:05 am Post subject: |
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Gross getting nailed to the stake this morning on CNBC for his "bond call"--probably yield low 
http://stockcharts.com/h-sc/ui?s=%24TNX
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rffrydr
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| Posted: Fri Jun 10, 2011 9:17 am Post subject: |
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Gross' pet project, PHK, blowing up. Hi Yield has been cruisin'-for-a-bruisin' but the publicity of the Treasuries mis-call and the (only half-deserved) extreme premium to NAV this fund had going for it is working in reverse now. I'll say we'll never see the likes of it again. And I'll buy it under $10 once it shakes out not just the retirees but the institutional cheerleaders in this.
Bought a little this on last shake out, Nov 10 but that was all muni overspray. Now the "double-dip" is striking to the heart of the matter. No doubt selling began, like Apple on a "bank withdrawl" covering other loosing positions. The Treasury call exacerbated things--and the institutional need to be "friends-of-Bill" is not so strong anymore as the premium of Washington insider fades. Leverage is the final kicker.
The Yield here is real however: full of GMAC among others bought at extreme lows in '08. Market can never wrap their heads around that. The duration of those bonds is past its peak but we should be in for two or years of exceptional yield. After that, still good.
This is Bill Gross' redemption chariot. No doubt he planned to ride it into the sunset. But myths, especially our own, burn bright--'til the end. PHK is now a distressed asset. I'm looking for sub $10 on tax loss selling later this year. Don't expect it trade above $13 again.
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HenryTo
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| Posted: Thu Mar 31, 2011 10:56 am Post subject: |
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Bill Gross says “We are out-Greeking the Greeks."
http://www.bloomberg.com/news/2011-03-31/gross-echoes-buffett-saying-treasuries-have-little-value-on-debt-dollar.html
| Quote: | | The U.S. has unrecorded debt of $75 trillion, or close to 500 percent of gross domestic product, counting what it owes on its bonds plus obligations for Social Security, Medicare and Medicaid, Gross wrote in his monthly investment outlook. The U.S. will experience inflation, currency devaluation and low-to- negative interest rates after accounting for consumer-price gains if it doesn’t reform its entitlement programs, he said. |
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rffrydr
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| Posted: Mon Aug 09, 2010 10:17 am Post subject: |
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File under "Myth of a Rational Market"?...no, truth of an irrational market. Beware the simple old arithmatic. It don't always add up:
http://www.forbes.com/forbes/2010/0809/opinions-william-baldwin-side-lines-yield-junkies-pimco-high.html
| Quote: | | I cite this particular insanity as a footnote to Neil Weinberg's story ("The Way to Win on Wall Street Now") on investing. His point: If you are looking for someone to blame for Wall Street's excesses, look in the mirror. In this case the company that controls the fund, the German insurer Allianz ( AZ - news - people ), is a mostly innocent party. The 44-cent cover charge you pay to get into this exclusive club goes not to Allianz but to one of the departing guests--who should be saying, on his way out the door, "I am so happy the world has greater fools than me." |
There's a reason why Mr. Bill "retired" to this fund. He's got yield to spare and enough "return of capital" to pay the 17% rate 'til the rest of his born days. He's gone from Mr. Big to Mt. Olympus. And no-one now can say it was his "connections." Only another '08 can do him in--and that's a pretty good risk/reward ratio. I know the portfolio because I've lived it. Somehow we've come to the same holdings from opposite points of view. And the funny thing is, after all that, you might not even call him a contrarian. I don't.
His "secret sauce" in this here fund is what you'all love to hate, Detroit steel. More than a third of this fund (and most of its variance) was built in '08-09 on autos. Ford had deferred payments on its preferreds while institutions had to bite down and covert to equity. Bill was buying debt at 14c and I'd be surprised if his average is over 25 cents. Ally is GMAC and same deal. Remember his game of chicken with Treas? GM he's sold and reinvested so as not to carry the scarlet letters. Even better, GMAC "SmartBonds" were so much farmer-fodder. The "liquidity premium" alone I'm sure made them complete write-offs for anyone who'd sell: 24% baby at 25 cents; 50% at 13 cents. I got some of those. What other multi-billion fund was picking up $1000 paper out of our modern-day dustbowl?! Bill did. WaMu ARM tranches fill out the picture some select CDOs and lots of Fed imput fill out the picture. I went with a mortgage fund and got hit with the celebrity flipside. I also wasn't able to leverage up like Bill (and arbitrarily freeze my payments). And I'm much more aligned on the equity side so I guess the small guy can't win. But, so far, a happy distant second place.
Why do y'all think he put his name on it? He had everything to lose.... He has nothing to loose. "Full Faith and Credit"...how much do we owe "policy"?! Bill Gross may Jimmy Rogers secret twin after all.
Buy on any kind of premium panic back towards $10, maybe at year-end-- or celebrity "dalliance with tranny-stripper headlines" throw it in an IRA and forget about it. And to think, in '07 the world had almost washed their hands of this poor rich fellow. No pain, no gain.
PS the leverage ratio quoted in the Forbes blog is incorrect. It is the evil place into which we now habitually throw all things we can't explain.
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rffrydr
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| Posted: Wed May 26, 2010 12:56 pm Post subject: |
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But that's what the market will bear: That captain's heavy-handed ways unfairly restricted credit to those who needed it most. 
I'd bet Gross watched a lot of Phil Silvers growing up.
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HenryTo
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| Posted: Wed May 26, 2010 12:01 pm Post subject: |
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Latest monthly commentary from Bill Gross. The top part is the interesting part:
http://www.pimco.com/LeftNav/Featured+Market+Commentary/IO/2010/Bill+Gross+June+2010+Investment+Outlook.htm
| Quote: | | Debt will get you in trouble – on both sides of the dollar bill as Shakespeare wisely counseled long ago: Neither a lender nor a borrower be. That probably seems like a strange admonition coming from a guy who helps to lend $1 trillion of it – and I suppose it is. But there was a time back in 1968 when lending got me in lots of trouble – deep doo-doo, to tell you the truth – and I’ve regretted it ever since. I was a Naval officer back then, sailing between the Mekong Delta and Manila Bay. Strangely enough, it was in the Philippines, not Vietnam, where I lost my moral compass and ran aground. I started a shipboard replica of a “payday” lending company operating under the principle of “two will get you three.” Sailors in port were always short of cash and yours truly – engaged to be married and operating under a self-imposed one-beer, nine-o’clock curfew – was more than willing to extend them a hand. The “two gets you three” scheme sounded harmless enough, because, heck, what’s a buck between friends when you’re about to hit the beach and party hearty! Still, as the “payday” characterization connotes, the money was due only a few weeks down the road when we were back at sea and receivables could easily be collected. And the annualized yield, as most of us investor types can easily calculate, was well in excess of 1,000% annualized. Well, there’s usury and there’s grand larceny, and my payday-hayday scheme was clearly in the latter category. The amounts were small – paychecks were only a few hundred dollars – but 200 compounded into 300, which turned into 450, 675, 1,000 – well, you get the picture. It didn’t take too many ports of call before Uncle Sam’s next payday became the property of Uncle Bill, and I became the financial godfather of the USS Wish I’d Never Enlisted. Oh but loose lips sink ships, and it wasn’t too long before the authentic godfather – El Capitan – got wind of Ensign Gross’s growing fortune. Rather than cut himself in on the scheme, he did what every good captain would do. He made me give it all back and confined me to the ship for the rest of my tour. No beer, no sightseeing in Tokyo on the way back home. No nothing. Two got me three for awhile, but it eventually got me into a heap of trouble. Well deserved, I’d say, and I’ve learned my lesson. Never made a 1,000% loan since! |
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rffrydr
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| Posted: Fri May 07, 2010 6:53 am Post subject: |
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Gross just on the bloomie: notable for his coolness towards working with/for govt authorities. Clients, clients clients.
Says Fed won't be moved by today's jobs.
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rffrydr
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| Posted: Sat Apr 03, 2010 10:03 pm Post subject: |
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That would be a surprise as nearly half that hit is already covered by "self-regulation" and 30million in premiums are coming from people who mostly don't really need it anyways. Social hygeine and personal regimen buy life expectency. Miracleworking was, is, and will continue to be availble to anyone who can get to a hospital. And this "program" is barely a blueprint. Expect a rolling reform. Expect that curve to be bent. Expect genetic "determinism" to up-end medical insurance as we know it anyway.
Meanwhile we're busy on the other end: Delphi et. al. pensions brought down to (govt. style) earth; well-taxed indian casinos taking back the social security money that wasn't squeezed into "capital assets" with a flat-line rate and the good 'ol market working its magic with shadow workers below...and shadow benefits like this:
http://www.nytimes.com/2010/04/04/us/04talx.html?hp
Animal spirits do not need a clearing house.
What could have happend to make Gross give up his faith in his own line of work? --Or, maybe that has changed. Watch for Secretery Gross coming to a political theatre near you.
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HenryTo
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| Posted: Sat Apr 03, 2010 12:02 pm Post subject: |
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http://www.pimco.com/LeftNav/Featured+Market+Commentary/IO/2010/Rocking-Horse+Winner+April+2010+IO.htm
| Quote: | The reason is complicated, but at its core very simple. As a November IMF staff position note aptly pointed out, high fiscal deficits and higher outstanding debt lead to higher real interest rates and ultimately higher inflation, both trends which are bond market unfriendly. In the U.S. in addition to the 10% of GDP deficits and a growing stock of outstanding debt, an investor must be concerned with future unfunded entitlement commitments which portfolio managers almost always neglect, viewing them as so far off in the future that they don’t matter. Yet should it concern an investor in 30-year Treasuries that the Congressional Budget Office estimates that the present value of unfunded future social insurance expenditures (Social Security and Medicare primarily) was $46 trillion as of 2009, a sum four times its current outstanding debt? Of course it should, and that may be a primary reason why 30-year bonds yield 4.6% whereas 2-year debt with the same guarantee yields less than 1%.
The trend promises to get worse, not better. The imminent passage of health care reform represents a continuing litany of entitlement legislation that will add, not subtract, to future deficits and unfunded liabilities. No investment vigilante worth their salt or outrageous annual bonus would dare argue that current legislation is a deficit reducer as asserted by Democrats and in fact the Congressional Budget Office. Common sense alone would suggest that extending health care benefits to 30 million people will cost a lot of money and that it is being “paid for” in the current bill with standard smoke, and all too familiar mirrors that have characterized such entitlement legislation for decades. An article by an ex-CBO director in The New York Times this past Sunday affirms these suspicions. “Fantasy in, fantasy out,” writes Douglas Holtz-Eakin who held the CBO Chair from 2003–2005. Front-end loaded revenues and back-end loaded expenses promote the fiction that a program that will cost $950 billion over the next 10 years actually reduces the deficit by $138 billion. After all the details are analyzed, Mr. Holtz-Eakin’s numbers affirm a vigilante’s suspicion – it will add $562 billion to the deficit over the next decade. Long-term bondholders beware. |
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HenryTo
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| Posted: Wed Mar 03, 2010 2:07 pm Post subject: |
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http://www.pimco.com/LeftNav/Featured+Market+Commentary/IO/2010/Investment+Outlook+March+2010+Bill+Gross+Dont+Care.htm
| Quote: | This metaphor doesn’t really answer the critical question of whether a debt crisis can be cured by issuing more debt. The answer remains: It depends – on initial debt levels and whether or not private economies can be reinvigorated. But it does suggest the likely direction of sovereign yields IF global policymakers are successful with their rescue efforts: Sovereign yields will narrow in spreads compared to other high-quality alternatives. In other words, sovereign yields will become more credit like. When sovereign issues become more credit-like, as evidenced in Greece, Spain, Portugal, and a host of others, they move closer in yield to the corporate and Agency debt that supposedly rank lower in the hierarchy. That process of course can be accomplished in two ways: high-quality non-sovereigns move down to lower levels or governments move up. The answer to which one depends significantly on future inflation, the aftermath of quantitative easing programs, and the vigor of the private economy going forward. But the contamination of sovereign credit space with past and future bailouts is a leveler, a homogenizer, a negative for those sovereigns that fail to exert necessary discipline. Only if global economies stumble and revisit the recessionary depths of a year ago should the process reverse direction and place Treasuries, Gilts, et al. back in the driver’s seat.
Investors should obviously focus on those sovereigns where fundamentals promise lower credit or inflationary risk. Germany and Canada are amongst those at the top of our list while a rogues’ gallery of the obvious, including Greece, Euroland lookalikes, and the U.K. gather near the bottom. PIMCO’s “Ring of Fire” remains white hot and action, as opposed to xxx blather, is required to maintain or regain trust in sovereign credits approaching the rocks. Just last week Bank of England Governor Mervyn King said that it would be difficult to cut government spending quickly, but that there needs to be a clear plan for doing so. Not good enough, Mr. King. Don’t care. Show investors the money, not vice-versa. An investor’s motto should be, “Don’t trust any government and verify before you invest.” The careful discrimination between sovereign credits is becoming more than casual xxx conversation. A deficiency of global aggregate demand and the potential impotency of policymakers to close the gap are evolving into a life or death outcome for the weakest sovereigns, with consequences for credit and asset markets worldwide. |
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rffrydr
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| Posted: Mon Feb 01, 2010 2:34 pm Post subject: |
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"unlevered emerging economies"...... 
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HenryTo
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| Posted: Mon Feb 01, 2010 1:41 pm Post subject: |
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Beware the ring of fire:
http://www.pimco.com/LeftNav/Featured+Market+Commentary/IO/2010/February+2010+Gross+Ring+of+Fire.htm
| Quote: | Investment management is a privileged profession – not just for being paid by X-times what you’re really worth to society, but from the standpoint of longevity. If you’re good, and you at least give the impression that you still have most of your faculties, you can literally hang around forever. James Carville, the well-meaning but evil-lookin’ guy from the Clinton Administration once remarked that in his next life he’d like to come back as a bond manager. He had part of it right – the influence, the wealth, and even fame – but there was no need to imagine himself as some cryogenically preserved Wall Street version of Ted Williams – he was young enough at the time to make the leap and still have a 20-year career ahead of him. Other professions do not afford such opportunities – the gold watch at 65 is not only symbolic, but a statement in most professions that says you are more or less washed up. Athletes have at most 20 years and musicians seem to have that brief window of creation as well. The Beatles, for instance, were done after a decade’s time. Paul is still writing songs, but the magic clearly disappeared in the 70s and now his concerts are “garden parties” of remembrances as opposed to creation.
What I think is close to unique about investment management is that it’s really about the stewardship of capital markets, and that time weeds out the impostors, leaving the aging survivors to appear as wise and capable of guiding clients through the next crisis – whatever and whenever it might appear. That assumption has some logic behind it, but critically depends on the investor truly enjoying the game and – of course – holding on to at least a few billion brain cells that keeps him from being obviously senile or at least being accused of having “lost it.” An investment manager at 65 fears both. I remember having met John Templeton on the set of Wall Street Week nearly 20 years ago. I was a young buck and he was – well – on the downside of his career. About the only thing he could tell Rukeyser, it seemed to me, was to cite the rule of 72 and proclaim that stocks and the Dow would be at 100,000 by 2030 or something like that. Now, approaching that same age, I’m a little more understanding and a little less young-buckish. If that was his only lesson, then it was a pretty good one I suppose – Dow 5,000 and the New Normal notwithstanding. And despite the strikingly premature departure of Peter Lynch and the transition of George Soros to philanthropic pursuits, there are some great examples of longevity in this business. Warren Buffett, of course, comes immediately to mind, as does Dan Fuss of Loomis Sayles, who may wind up as the Bear Bryant or Adolph Rupp of the bond business. Peter Bernstein, who passed away but a few months ago, was a brilliant writer and commentator on the investment scene well into his 80s. So there’s hope for you still, James Carville, and, I suppose, for me as well. It’s quite a privilege to be a “steward of the capital markets,” to have done it well for so long and to still be able to walk up to the plate and face a 95-mile-an-hour fastball. Or, is it a curve? Time will tell.
.....
Of all of the developed countries, three broad fixed-income observations stand out: 1) given enough liquidity and current yields I would prefer to invest money in Canada. Its conservative banks never did participate in the housing crisis and it moved toward and stayed closer to fiscal balance than any other country, 2) Germany is the safest, most liquid sovereign alternative, although its leadership and the EU’s potential stance toward bailouts of Greece and Ireland must be watched. Think AIG and GMAC and you have a similar comparative predicament, and 3) the U.K. is a must to avoid. Its Gilts are resting on a bed of nitroglycerine. High debt with the potential to devalue its currency present high risks for bond investors. In addition, its interest rates are already artificially influenced by accounting standards that at one point last year produced long-term real interest rates of 1/2 % and lower.
The last decade – the “aughts” – were remarkable in a number of areas: jobless recoveries in major economies, negative equity returns in U.S. and other developed markets, and of course the financial crisis and its aftermath. If an investment manager and an investment management firm proved to be good stewards of capital markets during the turbulent but vapid “aughts,” they may be granted a license to navigate the rapids of the “teens,” a decade likely to be fed by the melting snows of debt deleveraging, offering life for unlevered emerging and developed economies, but risk and uncertainty for those overfed on a diet of financed-based consumption. Beware the ring of fire! |
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rffrydr
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| Posted: Wed Dec 30, 2009 8:31 pm Post subject: |
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Gross' personal plaything, PHK got played with today. Always get an eye out for the shenanigans. They can make up for a whole cycle of misplaced macroeconomics.
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rffrydr
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| Posted: Tue Oct 27, 2009 2:41 pm Post subject: |
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Hopefully this is just Halloween-speak 'cause it sure is gloomy:
http://www.pimco.com/LeftNav/Featured+Market+Commentary/IO/2009/Midnight+Candles+Gross+November.htm
Howard Simons
Depression's Just Another Word For Nothing Left To Goose
10/27/2009 2:58 PM EDT
| Quote: | Tim, as a devotee of such country classics as "You Broke My Heart, So I Busted Your Jaw," I can sympathize with Mr. Gross' lugubrious outlook on life in these United States. I mean, come on, Newport Beach makes Butcher Hollow, KY, look like Shangri-la.
But sometimes you never see things so clearly as when your chin's dragging a trench through the old terra firma. And he sees the end of the line for the most-disbelieved 28 year-long bull market in human history, that for U.S. Treasuries. No more free carry, no more Federal Reserve buying mortgages, no more 0% money (at some point) and no more of those freebies that help you make it through another miserable day managing hundreds of billions of dollars for a fee.
I was rummaging through my files to see who was calling forever for the Federal Reserve to engage in such policies, but as my desk is in a permanent state of disarry, I can't find anything. Maybe someone can refresh my memory as to who was cheerleading these oh-so-depressing policies. |
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