Black day for Geithner, Bernanke and Fed

[Skybird]

Many German media report today PIMCO is abandoning all its dollar-based bonds, kicking them out of its portfolios completely.

Speaks for itself. PIMCO is a daughter of Allianz group and the world's biggest bonds trader.

Behind the closed doors in Washington everybody knowing even a minimum about this stuff must feel like sailing on the Titanic today. PIMCO's move I rate as extremely alarming.

[mookiemookie]

This has more to do with the QE2 bid going away in July than anything else.

[Skybird]

It means that traders and investors rate US bonds so negatively now that no rises and interests can be won anymore with trading them. In other words: traders like PIMCO do not find interested buyers anymore.

Bonds from emerging economies and even third world economies are more interesting already. Pimco, so they report, has shifted its business from US bonds to these other bonds in the recent year. To completely abandon trading of US bonds now is just the consistent and final step.

[mookiemookie]

It means that traders and investors rate US bonds so negatively now that no rises and interests can be won anymore with trading them. In other words: traders like PIMCO do not find interested buyers anymore.

Bonds from emerging economies and even third world economies are more interesting already. Pimco, so they report, has shifted its business from US bonds to these other bonds in the recent year. To completely abandon trading of US bonds now is just the consistent and final step.

I think you misunderstand what's going on here. PIMCO is not a broker/dealer. They don't market securities to investors. PIMCO is a mutual fund company - they are money managers. They market their expertise in making prudent investment decisions. They don't inventory bonds for sale and trade like a broker/dealer would. They buy for their investment portfolios. Bill Gross is a fund manager at PIMCO and makes investment decisions for those funds. His belief is that the market is going to face a correction when the Fed removes their support of the market in July.

In other words: traders like PIMCO do not find interested buyers anymore. If that were true, then they couldn't very well have sold off their positions, now could they? Every sale trade has to have a buyer on the other end.

[Onkel Neal]

Bam! :D

[Skybird]

You seem to underestimate the signal impact when a giant like Pimco turns its back on a certzain type of bonds and exclude them from their planning for portfolios, recommendations and and trading patterns. The simple message that is written in big letters on this move is: FED YOU'RE BROKE. And it will be read by many in the business, with other nations loosing more billions and billions due to the US money printing machinery, concerns over inflation and devaluing of national reserves, and now that the Chinese have openly, though silently started to attack the dollar's global position just a week or ten days ago.

The dollar madness indeed must come to a final crash, because just printing dollars does nothing to solve america's immense structural problems, and all it causes is that America pulls everybody right with them into the abyss. It is collective suicide in rates now.

As if we have no financial worst case scenarios of our own looming just below the horizonon over here in Europe! Especially Germany, due to the Euro bailout and redistribution frenzy! With China set to establish all its trading in Yuan and no longer ion dollar, doing your investements in Yuan now is by far the less dangerous option, compared to Dollar and Euro. Due to the Chinese move, nations holding dollar reserves will need to think about getting rid of most of these much earlier than I expected. It will not hgappen from one day tro the other - but many years earliert than thought. if one looks close, one can see that it already has started.

It is this situational context - China taking over and America not adressing its structural problems - that gives the PIMCO move it's real meaning. It aims at the medium- and longterm financial strategy planning, and is not a short-termed reaction only.

[August]

Poor Europeans. Two centuries of hoping for Americas imminent doom without seeing that wish realized. The ultimate case of blue balls! :DL