Will PIMCO Be Needing a Bailout Soon?

Treasury selloff continues. As equities are poised to hit ridiculously high fwd P/E ratios, someone is making sure that Bernanke and Bill Gross hit the Prozac handout line. Hold on, wasn't the Fed buying treasuries? What about the world's biggest bond fund? Based on this chart (click to enlarge), seems like sellers are outnumbering buyers by just a tad...

At this rate, I can't wait to see 30 year mortgages below comparable treasuries in about a week.

Comments

[CJJ:]

This is like watching the experiments that really show human psyche when the tough times come to pass.
All these stories about making money shorting. Ha, maybe you slugs will have a bit more money when the dust settles but if things get as bad as you all portend its not going to matter.
The experiment is to put 20 $1 bills on a table with 5 people sitting around it. If all 5 people will resist taking any of the $1 bills for 5 minutes all 5 will get $15, but if anyone takes any of the dollar bills people get what they can get out of the $20 and no one gets anything additional.
You would think the group could wait the 5 minutes and as a group get $75. Guess what, that's not what actually occurs. The greedy idiots(shorts) grab what they can and screw the rest.
Guess what, you're going to be getting you a's kicked when this all ends. So spout your crap now you worthless losers.

Feb 09 03:09 PM

[ROLEX18:]

Never underestimate Bill Gross, this is big boys games not some newborn hedgie who made first buck selling bonds, the big gang club will let you make more, then you go short more and when all the hedgies will celebrate the death of bonds, big balls mens will take their big guns and .... you like a puppy.
When you win with big guys this is OK, when you lose with them it is OK too, but when you go against them and win you are insane as free lunch is only in a mouse trap.

Feb 09 03:11 PM

[bc818:]

Are any of you even reading Gross's op eds? He's moving to inflation protected treasuries. TIPS. Expected inflation has risen over the past 2 months to 1%. (Historically, its more like 3-4%) If we do experience high inflation, stagflation, or hyperinflation like all the nay sayers are predicting TIPS will soar.

Is it better to buy TBT or just buy a long (slightly in the money) put option on TLT?

Feb 09 03:20 PM

[Prudent Man...:]

Every generation has "big boys" and geniuses who trip over their own p.r. clippings and fall on their faces.

Gross is too cozy with the Fed and Treasury for me. He also is managing many of their bailout programs. Conflicts of interest? Not in the Obama Administration.

Feb 09 03:54 PM

[nosajio:]

No, the Fed said it was 'prepared' to buy Treasuries. They have not actually done so.

Feb 09 03:55 PM

[Robert Radano:]

PIMCO today. China, OPEC, Japan and other traditional buyers of US debt tomorrow...currency values, bond yields and even equity prices are stable now. However, in order for the Bernanke/Paulson/Geith... gambit to pay-off, foreign investors must show up on a regular basis for years to come.

Feb 09 04:05 PM

[Tom Bombadil:]

This is an article? One chart and a few words to the effect of "Treasury prices are dropping?" Yeah, we already know, thanks anyway.

Feb 09 05:11 PM

[Dean M:]

I don't think PIMCO's 5% yield is from long term treasuries. THis is one fund you want to own because of their afforementioned cozy relationship with the fed.

Feb 09 05:49 PM

[Dean M:]

ANd incidentally they're up pretty nicely ytd

Feb 09 05:51 PM

[SW Richmond:]

Maybe not, but they're buying MBS from Fannie and Freddie, and since Fannie and Freddie MBS are now fully guaranteed by the US taxpayer, guess what that makes them?


On Feb 09 03:55 PM nosajio wrote:

> No, the Fed said it was 'prepared' to buy Treasuries. They have not
> actually done so.

Feb 09 08:09 PM

[tonyb:]

i agree with you sir. where are the editors. don't they screen such rubbish out. in addition this gentleman's mug shot looks like that of a 15 yr old hooligan or gangster.


On Feb 09 05:11 PM Tom Bombadil wrote:

> This is an article? One chart and a few words to the effect of "Treasury
> prices are dropping?" Yeah, we already know, thanks anyway.

Feb 09 08:22 PM

[optionsgirl:]

In order to determine whether you buy a put or long position, take a look at a timeline-let's say look from 1/1/09 to present for both, and see which one gained or lost more during that period. Of course, it depends on the delta of your option. Pick a delta somewhere around -80% of each move. I did this with the Q's v. qid in January. QID had an approximate $11.00 move while an in the money put on QQQ moved around $2.37 in the same period. Of course, by picking a put, you put down much less $ on the position. And your timing had better be right-you can have the right idea but your put can still erode because of the time-value. Generally, that is what I look at, plus, you have to be sure the options are volatile enough. If there isn't enough volume, they just don't move. I hope this helps.


On Feb 09 03:20 PM bc818 wrote:

> Are any of you even reading Gross's op eds? He's moving to inflation
> protected treasuries. TIPS. Expected inflation has risen over the
> past 2 months to 1%. (Historically, its more like 3-4%) If we do
> experience high inflation, stagflation, or hyperinflation like all
> the nay sayers are predicting TIPS will soar.
>
> Is it better to buy TBT or just buy a long (slightly in the money)
> put option on TLT?

Feb 10 09:05 AM

[MarkitWacha:]

Great response, options girl.

What's your opinion on buying an options chain vs. a single option? It would seem to me that that would take the Delta changes out of the equation.

For instance, instead of just buying 9 slightly in the money options, buy 3, then buy 3 further out, and 3 further in. ?


By the way, does anyone know if there is a good reason TIP has gone up 3% recently? With mild deflation expectations around the world (long term Japan bonds at -1%, same with some others), I would expect it to stay flat. I can't explain it, unless a big player is accumulating, like PIMCO.


On Feb 10 09:05 AM optionsgirl wrote:

> In order to determine whether you buy a put or long position, take
> a look at a timeline-let's say look from 1/1/09 to present for both,
> and see which one gained or lost more during that period. Of course,
> it depends on the delta of your option. Pick a delta somewhere around
> -80% of each move. I did this with the Q's v. qid in January. QID
> had an approximate $11.00 move while an in the money put on QQQ moved
> around $2.37 in the same period. Of course, by picking a put, you
> put down much less $ on the position. And your timing had better
> be right-you can have the right idea but your put can still erode
> because of the time-value. Generally, that is what I look at, plus,
> you have to be sure the options are volatile enough. If there isn't
> enough volume, they just don't move. I hope this helps.

Feb 10 10:00 AM

[Stock Marke...:]

Bill Gross has the same relationship with the FED that some of Sports Illustrated's writers have with Scott Boras. He is the "leak" in every byline about the FED rescue.

Feb 10 11:05 AM

[liack:]

what do you expect when its from someone called "Tyle Durden" and even sports a Brad Pitt icon to go along with it.


On Feb 09 05:11 PM Tom Bombadil wrote:

> This is an article? One chart and a few words to the effect of "Treasury
> prices are dropping?" Yeah, we already know, thanks anyway.

Feb 10 12:35 PM