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Bill Gross: Treasury investors will 'get cooked'
CNNMoney ^ | 6/8/2011 | Hibah Yousuf

Posted on 06/08/2011 8:11:30 PM PDT by Signalman

CHICAGO (CNNMoney) -- Pimco founder Bill Gross reiterated his warning to cash out of Treasuries Wednesday afternoon.

Investors who have been betting on Treasuries are destined "to get cooked like frogs in an increasingly hot pot of water," the well-known bond bear told attendees at a Morningstar Investment conference in Chicago.

Gross, who manages the $235 billion Pimco Total Return Fund (PTTAX), said real interest rates, which remove the effect of inflation to measure the actual yield an investor receives, have fallen into negative territory.

He pointed out that Treasury inflation-protected securities with a maturity of 5 years are trading at a yield of -0.5%. In October 2008, the 5-year TIPS' real interest rate stood at 4%.

(Excerpt) Read more at money.cnn.com ...


TOPICS: Business/Economy
KEYWORDS: billgross; bond; collapse; default; economy; treasurybills

1 posted on 06/08/2011 8:11:34 PM PDT by Signalman
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To: Signalman
Yesterday it was USA Today. Now, CNN? Some of these folks must actually be paying attention and realizing that the Obamanomics Marxist Utopia will crush their nest eggs.

Pigs are officially flying.

Gross gets it. He got it months ago when he ordered PIMCO to dump their US holdings. Glad he driving the point home, just in time for QE3.

2 posted on 06/08/2011 8:20:05 PM PDT by TheWriterTX (Buy Ammo Often)
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To: Signalman
Pimco founder Bill Gross reiterated his warning to cash out of Treasuries Wednesday afternoon.

Then it's too late for me, since I didn't read this until Wednesday night. Although I have a degree in math, not journalism, I did go to public school so long ago that they actually taught basic grammar there. Let's try:

On Wednesday afternoon, Pimco founder Bill Gross reiterated his warning to cash out of Treasuries.

3 posted on 06/08/2011 8:31:48 PM PDT by TruthShallSetYouFree (If you can read this post, the world did not end on May 21st.)
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To: Signalman
I have a 401 at my work....they play games constantly and change to different companies...UNUM, Principal,Lincoln, and now Fidelity...they even went so far to close out many selections and choose new ones for us that were "similar" in strategy....

but before the crash I had put most in the only "safe" investment that they offered....US Reserves....there is no other option...

any advice?....if I could park it in a savings account, I would if they offered one...

4 posted on 06/08/2011 8:34:16 PM PDT by cherry
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To: Signalman
I have a 401 at my work....they play games constantly and change to different companies...UNUM, Principal,Lincoln, and now Fidelity...they even went so far to close out many selections and choose new ones for us that were "similar" in strategy....

but before the crash I had put most in the only "safe" investment that they offered....US Reserves....there is no other option...

any advice?....if I could park it in a savings account, I would if they offered one...

5 posted on 06/08/2011 8:34:39 PM PDT by cherry
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To: Signalman

bump


6 posted on 06/08/2011 8:38:23 PM PDT by Freedom56v2 ("If you think healthcare is expensive now, wait till it is free"--PJ O'rourke)
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To: Signalman

Bill’s right, and it will be a circular collapse. Yields will go higher, as risk goes higher. Prices will fall. Remaining investors will be skinned. The rising yields will signal the spread of interest rate hikes to the rest of the economy. Markets will fall, decreasing revenues further. Layoffs of employees will further shrink revenues. Repeat. Repeat again.


7 posted on 06/08/2011 8:39:17 PM PDT by familyop (Shut up, and eat your brains!)
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To: TheWriterTX
Obamanomics

Good word.

8 posted on 06/08/2011 8:45:37 PM PDT by GOPJ (In times of universal deceit, telling the truth will be a revolutionary act. - - Orwell)
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To: TheWriterTX

YUP...my husband TODAY finally said...he’d read something in a publication he gets that some financial people are warning people to get out....I’ve been warning him for 2 years....now he’s saying can’t buy gold, it’s too high...I’m thinking about buying lead.


9 posted on 06/08/2011 8:48:15 PM PDT by goodnesswins (...both islam and the democrat plantation thrive on poverty)
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To: TheWriterTX

>>>Gross gets it. He got it months ago when he ordered PIMCO to dump their US holdings. Glad he driving the point home, just in time for QE3.

And since he dropped US Treasuries, the yield on the 10-year has dropped about 75 bps. He may have just been early, but to date that move hasn’t paid off.


10 posted on 06/08/2011 9:10:05 PM PDT by nc28205
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To: Signalman
Deflationary Depression In America: The Double Dip Economic Recession
11 posted on 06/08/2011 9:15:48 PM PDT by blam
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To: Signalman

The implications of US Treasury holders getting “cooked” is that Mr. Gross expects a sovereign default by the USA...or hyper inflation followed by total dollar destruction...negating the value of all dollar denominated financial assets.


12 posted on 06/08/2011 9:20:16 PM PDT by Mariner (War Criminal #18)
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To: cherry

“any advice.....?”

Canned Goods and Ammo.


13 posted on 06/08/2011 9:56:32 PM PDT by Crossfeed
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To: GOPJ
I'll huff and I'll puff till I blow your economy in.

Leaning towards collapse1

14 posted on 06/08/2011 10:13:15 PM PDT by BobP (The piss-stream media - Never to be watched again in my house)
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To: cherry

Self direct your investments as they try to swap 401k providers hoping you don’t bother to change their default recommendations as each new fund plays games with your money.

Great if they have a precious metals fund but I doubt it. Look for commodity funds first, dealing in foods then cotton then miners or minerals. Then look for emerging markets funds invested in South America, India, Australia, Canada. Then look for foreign country bond investments fund like Canada, Australia, Swiss, India, China. Last look for US companies in a fund that are primary overseas ventures (cheap labor) or companies that engage in supplying the war machine (planes, guns, bombs, etc.)

Or stop investing money in the 401k all together and take a loan out and buy precious metals starting with silver. Of course you will be paying yourself back in the long run while parking that payback money hopefully in a 401k fund listed above. After paying the loan off, get another loan and reinvest outside the 401k. An investment in silver coins (rounds) or gold will all by itself hold value while the US dollars falls. And it will, too much debt pending.


15 posted on 06/08/2011 10:42:40 PM PDT by Razzz42
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To: Signalman

Lately, I find myself often wishing that economics didn’t sound very much to me like a combination of Chinese and Greek.


16 posted on 06/08/2011 11:03:35 PM PDT by Jack Hammer
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To: Signalman

For some reason the CNN article errors when I try to expand it in my IE browser so I cannot read the whole thing.

It seems to be saying that one should only get out of fixed treasuries.

Inflation Protected ones are fine because the return fluctuates with inflation.

Am I understanding this correctly?


17 posted on 06/09/2011 12:30:13 AM PDT by wizkid
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