Bill Gross

[winston]

If you win, u get US$71m. If you lose, u pay US$8.1b. It does not sound like good odds to me. But who am I to argue with Bill Gross....

Bill Gross' $8.1 Billion Bet By Dr. Steve Sjuggerud

"Bill Gross's PIMCO made an $8.1 billion wager," Bloomberg news reported last week.

Bill's bet is simple: He's betting inflation will return to the U.S. in the next 10 years. And he's willing to risk billions on the idea.

Bill Gross is known as the Bond King. He's probably the most famous and successful bond-fund manager in history. He manages the PIMCO Total Return Fund – the world's biggest bond fund, with a quarter-trillion dollars in assets. It makes sense to pay attention to Bill's bets…

Bill is betting on inflation. Actually, more specifically, Bill is betting that DEFLATION won't happen.

Today, I'll show you why Bill's bet is a smart one. And I'll show how to make your own bet on this idea. But first, let me explain what exactly Bill is up to…

The mechanics of Bill's bet are a bit complicated. In short, he took the other side of a bet on deflation.

Bill received $70.5 million now… If deflation occurs over the next 10 years (if the consumer price index is lower in 2020 than it is today), Bill is on the hook for up to $8.1 billion. If deflation does NOT occur, he simply gets to keep the upfront $70.5 million.

"We think the possibility that the U.S. goes 10 years with stagnant or falling prices is remote," a PIMCO portfolio manager told Bloomberg news.

Fears of deflation have increased dramatically this year. We've seen a huge shift in the mindset of the U.S. consumer. We've gone from a "conspicuous consumption nation" to a nation of savers. Deflation is simply defined as "falling prices" – and the U.S. consumer has surely seen that… Exhibit "A" is the price of their home.

But Bill has an ace in the hole for PIMCO's anti-deflation bet… Ben Bernanke.

Bernanke is the chairman of the U.S. Federal Reserve. He is a student of the Great Depression. And he is determined to prevent the destructive deflation we saw in the 1930s from happening again today.

In a now-infamous 2002 speech, he said:

…The U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost… Under a paper-money system, a determined government can always generate higher spending and hence positive inflation…

…Prevention of deflation remains preferable to having to cure it. If we do fall into deflation, however, we can take comfort that the logic of the printing press example must assert itself, and sufficient injections of money will ultimately always reverse a deflation.

Bill Gross has made a career out of taking calculated risks. A bet on inflation, when Ben Bernanke is at the helm of the Fed, seems like a smart one. While the fears of deflation are high, the chances of sustained deflation are slim in a paper-money society.

If the Fed does "crank up the printing press," the simple investment you want to hold is gold. The Fed can print dollars, but it can't print gold.

Gold is particularly attractive today… Since the Fed has cut interest rates essentially to zero, gold is more attractive than money in the bank… You earn zero percent on your cash in the bank, and earn zero percent on your gold. You don't give up any "opportunity cost" – you don't give up any interest on your cash – by holding gold today.

If you believe Bernanke is telling the truth – and the U.S. government will print money as needed to prevent deflation – you should hold at least some of your savings in gold instead of paper money. You'll be on the same side of the bet as the Bond King.


Source: Daily Wealth

[winston]

Pimco's Gross Likes Brazil, South Korea Over US

Bill Gross, manager of the world’s biggest bond fund, said developing economies such as Brazil and South Korea offer attractive investment opportunities as growth in developed markets including the U.S. has slowed.

Brazil offers real interest rates of 8 percent to 9 percent, Gross, 66, said an interview today on Bloomberg Television’s “Surveillance Midday” with Tom Keene. The Korean won is representative of “strong emerging-market currencies to stand in contrast to the U.S. dollar,” Gross said.

Gross and Mohamed El-Erian, co-chief investment officers of Pacific Investment Management Co., coined the phrase “new normal” in 2009 to describe the decreasing role of the U.S. in the global economy.

They forecast developed-market growth that is below historical averages in the next three to five years as economies struggle with mounting budget deficits and increased regulation after the 2008 collapse of credit markets.

Gross, founder of the Newport Beach, California-based Pimco, runs the $252 billion Pimco Total Return Fund. The fund has advanced an average of 8.4 percent in the past five years, beating 98 percent of similarly managed funds, according to data compiled by Bloomberg.

http://www.moneynews.com/StreetTalk/Pim ... /id/372490

[winston]

ON CNBC:-

Bill Gross did not extend any loan to WB and Charlie Munger when they were starting out.

He also did not lend US$10m to Sam Walton when he was trying to start his first Walmart store.

Instead Bill Gross chose to lend money to a company called Itel, that went bankrupt 6 months later.

[winston]

Bond king Gross: Keep your eye on 10-year Treasurys

Bill Gross, manager of the world's largest bond fund at Pacific Investment Management Co., said a rise in 10-year Treasury note yields would signify success by the Federal Reserve in reviving inflation and economic growth.

"If it does work, here's why the 10-year goes down in yield then back in yield, it's because the out years, five, six, seven, eight, nine, and 10 are vulnerable to inflation and higher policy rates in those particular years," Gross said in an interview today on "Bloomberg Surveillance" with Tom Keene.

"It's not an end from the standpoint of over-the-cliff or over-the-edge," Gross said. "It's not a Columbus thing where he thought he was sailing off the ocean and may fall off the edge. It's an end from the standpoint of recognizing that certain maturities can't go much lower in yield."

The yield on the 10-year Treasury note dropped from a 2010 high of 4.01 percent in April to a low of 2.33 percent on Oct. 8, according to Bloomberg data, as investors purchased Treasurys in anticipation of further asset purchases by the central bank. The record of 2.04 percent was set in December 2008.

"They have to buy assets and at some point, if inflation starts to get to their target, whether it's a 2 percent target or a price target, then they begin to raise the cost of those reserves, and therefore tighten monetary policy," Gross said.

Source: Bloomberg

[winston]

Pimco’s Gross: Dollar May Drop 20 Percent on Fed Easing

The dollar is in danger of losing 20 percent of its value over the next few years if the Federal Reserve continues unconventional monetary easing, said Bill Gross, the manager of the world's largest mutual fund.

"I think a 20 percent decline in the dollar is possible," Gross said, adding the pace of the currency's decline was also an important consideration for investors.

"When a central bank prints trillions of dollars of checks, which is not necessarily what (a second round of quantitative easing) will do in terms of the amount, but if it gets into that territory — that is a debasement of the dollar in terms of the supply of dollars on a global basis," Gross told Reuters in an interview at his Pimco headquarters.

"QEII not only produces more dollars but it also lowers the yield that investors earn on them and makes foreigners, which is the key link to the currencies, it makes foreigners less willing to hold dollars in current form or at current prices," Gross added.

http://www.moneynews.com/StreetTalk/Pim ... /id/375604

[winston]

So who do u trust, Meredith or Bill ?

Bill Gross Bullish On Munis By Prieur du Plessis

Bill Gross, co-CIO of Pimco, tells CNBC why he thinks muni bond yield returns are attractive.


http://www.dailymarkets.com/stock/2010/ ... -on-munis/

[winston]

Pimco's Gross: Debt-Limit Debate May Spark Bond-Market Crisis

The world's largest bond investor says the fight over raising the country's borrowing limit threatens to throw the debt market into a tailspin.

"It's the wrong way to do it," says Bill Gross, manager of the $241 billion Pimco Total Return Fund, the largest mutual fund. "Obviously, I'm all for a move to a balanced budget over time. But this is like imposing the death penalty for shoplifting."

In arguments over lifting the federal government's $14.3 trillion debt limit, both sides have used bond investors as a bogeyman.

http://www.moneynews.com/Headline/DebtC ... /id/384189

[winston]

PIMCO's Bill Gross blasts U.S. culture of money and greed

NEW YORK (Reuters) - Billionaire bond maven Bill Gross in a February report says America needs new priorities and blasts a culture that worships money and greed.

Gross, in remarks called "Devil's Bargain", blames money managers for failing to allocate capital wisely.

He criticizes a culture that lives off ill-advised financial innovation such as securitization.

In the comments on the website of Pacific Investment Management Co. Gross even points a finger at himself and says he is a member of this rogue's gallery.

"I know one thing for sure. This is not God's work -- it has the unmistakable odor of Mammon," says Gross, a founder and co-chief investment officer at PIMCO in Newport Beach, California, where he helps oversee about $1.1 trillion in assets.

Gross says financiers have lost the high ground and the list of financial blow-ups -- from the S&L debacle, the Asian crisis and the demise of Long Term Capital Management and Lehman Brothers to the dot-com bubble and subprime mortgage mess are major sins for the money-changers of Wall Street.

Gross warns that holders of U.S. Treasury debt will earn negative returns because the U.S. Federal Reserve's policy of keeping real interest rates low for an extended period will inflate the price of other, unnamed asset classes.

Investors must analyze other yields and assets, Gross said. He said credit spreads, emerging market returns and currencies with positive and high real interest rates are more attractive than UK gilts or U.S. Treasury bonds.

"It is still possible to produce 4 to 5 percent returns from a conservatively positioned bond portfolio -- you just have to do it with a different mix of global assets," he said.

Source: Reuters US Online Report Business News

[winston]

Bond King Bill Gross has dumped ALL U.S. Treasurys

Bill Gross, who runs the world’s biggest bond fund at Pacific Investment Management Co., eliminated government-related debt from his flagship fund as the U.S. projects record budget deficits.

Pimco’s $237 billion Total Return Fund last held zero government-related debt in January 2009. Gross had cut the holdings to 12 percent of assets in January, according to the Newport Beach, California-based company’s website.

The fund’s net cash-and-equivalent position surged from 5 percent to 23 percent in February, the highest since May 2008.


Source: Bloomberg

[LenaHuat]

There is no thread on PIMCO and so I thought I would post it here. Maria Gordon, the ex-GS strategist, who was hired to kickstart PIMCO's equity funds spoke on Bloomberg TV 2 days ago. She's buying China (banking ?? and property tickers) and Russia. Hordes of international investors are placing their deposits in RMB and the banks are hastily arranging RMB bonds for Chinese corporations. Will these Chinese corporations be a wall of worry?