Institutional buyers have no more appetite for the debt or preferred equity of financial companies, the manager of the world's biggest bond fund said in an interview with CNBC's Erin Burnett. Bill Gross, who manages the $130 billion Pimco Total Return Bond Fund, added that he didn't expect retail investors had very many funds left to make further investments either.
After the interview Jim Cramer and Burnett speculated that Gross was trying to force the hand of Hank Paulson, who was authorized by Congress to use federal money to bail out government chartered mortgage giants Fannie Mae and Freddie Mac but has held back. If Fannie, Freddie and other financial institutions find themselves unable to raise money, the Treasury may believe it has to begin the bailout.
Gross this morning called for an even broader bailout of the housing market, calling on the Treasury to use funds to bail out mortgages as well as financial companies. And he seems to be betting on that bailout, saying that Pimco finds distressed mortgages an attractive investment.
Combined with word from HSBC that wealthy individuals are moving into cash and away from both stocks and bonds, this could put enormous pressure on the Treasury to act. Paulson colorfully explained that the authority to bail out Fannie and Freddie could be enough to forestall their collapse by saying that if you carry a pistol you might have to use it but if you carry a bazooka you probably won't.
Gross seems to be saying that it's time to take out that bazooka.
Posted by guest , Sep 04, 2008 3:16PM
MayoFirst
Posted by guest , Sep 04, 2008 3:18PM
is that a bazooka in your pocket... ~ Hank Paulson.
it was funny once, it will be funny twice.
Posted by guest , Sep 04, 2008 3:25PM
60% of his portfolio is in agencies, shocker.
Posted by guest , Sep 04, 2008 3:33PM
oooooooh Hanky I'm ready for your bazoooooooka........ turn up the Barry White
Posted by guest , Sep 04, 2008 3:42PM
"wealthy individuals are moving into cash"
Oh gee that sounds so scientific and definitive! not!
Posted by guest , Sep 04, 2008 3:44PM
@4 You are a star, shining star baby
Posted by guest , Sep 04, 2008 4:12PM
Hey Hank! I'm sitting on a pile of sh*t! Help a bro out!
Posted by guest , Sep 04, 2008 4:14PM
What is the deal with the mayo shit? Can someone explain this reoccuring meme?
Posted by Anal_yst , Sep 04, 2008 4:17PM
Congratulations to Gross, apparently he's gotten to the point of being too big to fail. While his moves may be far from 3l337, his strongarming of the gov't is classic
Posted by guest , Sep 04, 2008 4:25PM
What does Bazooka bubble gum have to do with Bill Gross?
Posted by guest , Sep 04, 2008 4:33PM
Cramer and Burnett are idiots. Gross doesn't have to force Paulsen's hand - the markets will do it for him. Fannie and Freddie will eat thru their capital in the next quarter or two. Even if they try to "manage" their losses - there just isn't enough capital there.
At that point, or maybe even earlier, institutional buyers will start pulling back from their debt in earnest, as foreign central banks are doing now, and the jig will be up. The Treasury will be forced into some sort of action that will be either an outright or quasi-nationalization. No matter which.
Gross knows it, the markets know it, every sentient financial analyst knows it.
Posted by guest , Sep 04, 2008 4:34PM
Carney's Work :: LEH Stock Price
Posted by guest , Sep 04, 2008 4:35PM
@8,
Some 'tard whose mom didn't give him enough Mayo as a child.
Posted by guest , Sep 04, 2008 4:37PM
#10
That bubble will pop all over your face and you will gave a Gross mess on your hands.
Posted by guest , Sep 04, 2008 4:54PM
Cramer's an idiot. Burnett is just a woman so at least she has an excuse.
Posted by guest , Sep 04, 2008 4:55PM
@13 good analysis of the Mayo guy. It all goes back to breast feeding.
Posted by guest , Sep 04, 2008 5:02PM
Thanks for finally answering my questions about Mayo.
-HEDGEmony
Posted by guest , Sep 04, 2008 5:20PM
@8
Ask Shamwow he has all the answers.
Posted by guest , Sep 04, 2008 5:23PM
Bat Wings and Mayo spells P-A-R-T-Y!
Posted by guest , Sep 04, 2008 5:25PM
It makes pretty much everything better, even a bad post.
Whitish-yellow in color, it is a stable emulsion formed from the oil and the yolks and is generally flavored with mustard, lemon juice or vinegar and salt. Numerous other sauces can be created from it by adding additional seasonings.
One explanation of the origin of the name is that the idea was brought back to France from Mahon, Spain, after Louis-François-Armand du Plessis de Richelieu's victory over the British at the city's port in 1756. Later, Marie-Antoine Carême made it lighter by blending the vegetable oil and egg yolks into an emulsion; his recipe then became famous throughout Europe. If this history is correct, allioli (the Balearic version of aïoli) would seem to have been the inspiration. The name mayonnaise is generally said to have been derived either from Mahon (Mayonesa) (giving mahonnaise), or from the French word manier (meaning to stir or to blend, giving magnonnaise).
Posted by guest , Sep 04, 2008 10:19PM
Cramer is busy banging Burnett.
you may wonder they don't have time to analyze or study the market.
Posted by guest , Sep 05, 2008 8:13AM
11, what % of analysts do you estimate to be sentient?
I've observed about 10% myself.
Posted by guest , Sep 08, 2008 10:20AM
Unbelievable. Just a casual glance at the terms of the deal tells me Paulson just took a massive bet on $200 billion (so far) of taxpayers' money for a paltry $1 billion in preferred and warrants? Uncanny how these great gov't bailouts always happen on the weekends when joe six pack is busy watching the game on his 52" inch plasma. What a nation of sheeple we've become.
Imrul