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In the face of a nasty Greek exit from the eurozone, investors have little choice now but to...

In the face of a nasty Greek exit from the eurozone, investors have little choice now but to cling to low-yielding U.S. government debt, says Pimco's Bill Gross. Despite our own debt mess, a flight from risk assets is going to continue to send money into Treasurys. "It's what we call the cleanest dirty shirt," Gross says; "at the moment the cleanest dirty shirt is the United States."
Comments (25)
  • He is wrong about Treasuries. Whoever buys treasuries now is playing with fire. In spite of the market sell-offs of the last few days TLT has failed to make new highs, and has in fact ended in the red.

     

    If Europe meltdowns, of course, then it won't matter.... but as of right now treasuries are looking toppy.
    24 May 2012, 08:03 PM Reply Like
  • Treasuries are like that tidbit of tasty cheese that the mouse nibbles on before the trap spings shut and crushes his little neck. You can keep nibbling, but that loud snap is always nearby.
    24 May 2012, 09:39 PM Reply Like
  • Very funny analogy. And true. It's why I bought some TBT under $18. Not a lot, a little. It will pay off before too long.
    25 May 2012, 05:19 AM Reply Like
  • Yeah, little choice, right...like buying beaten-up dividend-paying stocks, some with over 7% and even 10% yield...yeah, little choice there Bill. Why donĀ“t you tell us how long you are treasuries?
    24 May 2012, 08:05 PM Reply Like
  • If you think long term, then yes, you are right...but short term, if the world falls apart, you will probably not be happy with your beaten-up dividend stocks.
    24 May 2012, 08:33 PM Reply Like
  • klar,
    Yep, that's exactly right. One has to ask how happy are those who brought those dividend payers and are now down 25-50+% on their equity purchase prices. There are many many equities down 25-50+% from their 52-week highs. It really is only the mega-cap multinationals that are holding up now, and their turn will come for significant price declines as well.
    24 May 2012, 09:24 PM Reply Like
  • UI:

     

    Please list those dividend payers down 25-50%. Go ahead, if for no other reason than I want to buy some.
    24 May 2012, 09:41 PM Reply Like
  • UI,

     

    Since this is an investment site, shouldn't the take-away here be to start buying those "beaten down" dividend stocks? That's what I've been doing, including the mega-cap multinationals. Those big companies aren't going away no matter what happens to Greece and all the other EU countries. I don't think the folks at Shell, Nestle, Glaxo, etc. are really worried too much about Greece. And yes, as Tack says, please let me know some that are down 50% so I can buy them.
    25 May 2012, 05:25 AM Reply Like
  • If the sheeple will just buy, then the Gross's can sell.

     

    Simple as that.
    24 May 2012, 08:32 PM Reply Like
  • Remember:

     

    The "Bond King" isn't going to sell you on something he would like to buy cheap but he may sell you on something he would like to sell while expensive.
    24 May 2012, 08:52 PM Reply Like
  • TLT is going to $132
    24 May 2012, 09:00 PM Reply Like
  • In 1937, we were in an awful situation, too.

     

    But capital and people flocked to our shores nevertheless.

     

    Today, we are in a similar, albeit less severe situation.

     

    And again Germany will become the culprit.
    24 May 2012, 09:17 PM Reply Like
  • Germany is the culprit?

     

    Excess debt is the culprit and that is global.
    24 May 2012, 10:56 PM Reply Like
  • Buy bonds when we're about to see inflation not seen since disco? (BOND) did well and now has 1b aum but its 4% return is no longer risk-free.
    24 May 2012, 09:36 PM Reply Like
  • Bill Gross did make a comment 3 weeks ago that it was time to exit treasuries. I will look it up.
    24 May 2012, 11:03 PM Reply Like
  • Found it
    This Is Why I Am Buying U.S. Bonds [View article] 7:48 AM "Not suddenly, but over time, gradually higher rates of inflation should be the result of QE policies and (endless ZIRP)," writes Bill Gross, the bond man turning goldbug (?) as he urges a higher allocation to real assets as a way to combat this. Gross also recommends shortish-duration fixed income as well as stocks offering 3-4% yields

     

    So is this code from the Bond King to start exiting the long Treasuries ASAP?
    24 May 2012, 11:07 PM Reply Like
  • In all fairness to Bill Gross things change and like everyone else he had better change with them. Three weeks ago the odds of a sudden Grexit weren't 50-50 like they are today.
    25 May 2012, 12:37 AM Reply Like
  • This market has not priced in a Grexit. It will be ugly as they default on all debts public and private. It will also cause a run on all PIIGS banks because once the sheep realize that Euros in Greek banks were devalued over the weekend they won't wait for it to happen to them. Best be ready because you won't get advance notice as it will be announced on a Friday after all markets and Greek banks have closed. Could be this weekend. Could be next weekend. Could be June or not at all. The element of surprise is key. The time to think about it is now. After the fact will be too late.
    25 May 2012, 12:28 AM Reply Like
  • So does that mean being long TLT on Friday's?
    How would that effect the Euro - Up or Down my guess is down or is it net zero if people put Euros in coffee cans out of banks instead of local currency?
    25 May 2012, 08:29 AM Reply Like
  • Greek exiting is a default of some sort and this will lead to an unravelling elsewhere. If Germany is the defacto bank we may see a run on the bank. This could be big and not much can be done about it as governments do not have the ability to deal with it and want to take actions to head it off. Votes are in spending rather than not spending.

     

    Ugly!
    25 May 2012, 08:55 AM Reply Like
  • TVP:

     

    If we see any "run" on German banks, it will be to put money in, not take it out.
    25 May 2012, 10:16 AM Reply Like
  • The flight to safety would probably be Switzerland, the US and Germany in that order don't you think?
    25 May 2012, 10:52 AM Reply Like
  • TVP:

     

    If there's a broad panic in Europe, money will flow firstly to where it always does, the good-ol' U.S. of A. Even Switzerland would be a distant second.
    25 May 2012, 11:06 AM Reply Like
  • So you are saying we are the highest deck on the Titantic so will go down last? LOL.
    25 May 2012, 01:23 PM Reply Like
  • Sell the EUO $21 ATM straddle on the JAN14 LEAPS.

     

    Use the cash to buy the EUO $21 ATM straddle on the JAN13 option.
    25 May 2012, 11:06 AM Reply Like
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