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swag Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Jul-13-06 02:51 PM
Original message
PIMCO's Gross sees Fed cutting rates by Jan 2007
http://yahoo.reuters.com/news/articlehybrid.aspx?storyID=urn:newsml:reuters.com:20060713:MTFH19181_2006-07-13_19-43-36_N13237067&type=comktNews&rpc=44

. . .

Gross, who runs the world's biggest debt fund for Pacific Investment Management Co., or PIMCO, said U.S. gross domestic product growth should slow to 2 percent "very shortly," prompting the Federal Open Market Committee to begin cutting interest rates by January.

The U.S. economy, heavily reliant on financing, cannot long endure the current flat shape of the yield curve, Gross said in an interview with Reuters. "Banks, hedge funds, even GE (General Electric Co. (GE.N: Quote, Profile, Research)) depend on a positively sloped curve, and we will get one pronto."

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OrangeCountyDemocrat Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Jul-13-06 03:03 PM
Response to Original message
1. Pass The Bong Please....
And if you think rates are actually coming down, I've got a bridge to sell you.
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swag Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Jul-13-06 06:44 PM
Response to Reply #1
10. I'll pass the bong when you explain the reasoning behind your conclusion.
Until that happens, I would venture that you have had enough.
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still_one Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Jul-13-06 08:00 PM
Response to Reply #10
15. I personally don't think fed fund rates will get above 6%
I think the economy is too fragile, no matter what the talking heads say
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still_one Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Jul-13-06 03:03 PM
Response to Original message
2. It will hit 6% before that happens
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swag Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Jul-13-06 06:22 PM
Response to Reply #2
7. Have you placed that bet on a futures market?
Just curious.
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still_one Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Jul-13-06 07:55 PM
Response to Reply #7
14. no, but I do have Dec puts in QQQQ, DIA, and SPY
my other positions are short term treasuries, and oil stocks

I do not know what will happen any more than anyone else
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swag Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Jul-13-06 08:52 PM
Response to Reply #14
16. Best to you.
I hope you rake it in.
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still_one Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Jul-13-06 10:25 PM
Response to Reply #16
26. thanks swag, and it might protect me some
but I am not very happy with the situation both geo-political and otherwise

I wish you the best also
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OrangeCountyDemocrat Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Jul-14-06 09:44 AM
Response to Reply #2
30. So It Will Go To Exactly 6%?
In one post you state that you don't think it will go above 6%. In another you say that it will go to 6%. So, it will go to 6% before they lower rates, but it will not go above 6%? That is your prediction?
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Master Mahon Donating Member (621 posts) Send PM | Profile | Ignore Thu Jul-13-06 03:39 PM
Response to Original message
3. Hmm
The choices:
1. Continue raising rates to prevent dollar collapse and wholesale dumping of treasuries.
2. Cut rates to delay our sliding into a depression and economic collapse.

Either way, we lose!
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CountAllVotes Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Jul-13-06 03:44 PM
Response to Reply #3
4. or you can invest with PIMCO!
of course! :sarcasm:

:kick:
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AX10 Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Jul-13-06 09:22 PM
Response to Reply #4
18. rofl
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ozone_man Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Jul-13-06 03:50 PM
Response to Reply #3
5. Between a rock and a hard place.
That's exactly where we are. I think a depression is probably inevitable. Some things like oil look inflated, but the amount available for consumer spending is shrinking steadily. The real estate market is beginning to tank. All markets going down together. No escape like in 2000 - 2002 when SM money funneled into real estate and gold.
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swag Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Jul-13-06 06:43 PM
Response to Reply #5
9. Even Steve "Economic Tsunami" Roach
has backed off that scenario.

On other points: the residential real estate market has started to level off, though it has hardly started to tank, not that it won't eventually go into the dumpster in some localities.

Also, what is "SM money?"

Thanks.
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ozone_man Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Jul-13-06 09:12 PM
Response to Reply #9
17. Stock Market.
Just saying that a lot of folks bailed from the market to sink money into real estate thinking it was a safe haven. Some invested in gold and gold stocks. With all of the refinance borrowing done, there is no more fuel to keep the economy going. All of these markets are moving down now, more or less in synchrony. No too many places to run or hide anymore. I think the next two yeasr will see a wild ride down from here.
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swag Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Jul-13-06 09:38 PM
Response to Reply #17
20. Nice thoughtful post,
but I disagree about the downside. Charles Biderman, among others, has pointed out that the small investors are bailing out of stock funds, but the companies, seeing value, are on an aggressive campaign of stock buybacks.

The chumps are being flushed and the inside money is buying back its own cheap stock.
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Copperred Donating Member (554 posts) Send PM | Profile | Ignore Fri Jul-14-06 12:56 AM
Response to Reply #3
29. Patience.....
Personally I think they will continue to gradually raise rates....BUT VERY VERY Slowly. At a minimum they will just hold where they are.

Actual cuts, I don't yet foresee.....would let too many back into the game.
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the other one Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Jul-13-06 04:03 PM
Response to Original message
6. NOT going to happen. The Fed is protecting the assets
of the very wealthy. In brief, those assets are the system itself. They would much rather have the lower, middle and lower to middle-upper classes lose their wealth via recession then risk the top-level losing its assets via inflation.

Scenario: Rising fuel costs lead to greater demand for dollars. To avoid the inflation that would inevitably follow the fed must raise rates to moderate the demand for dollars. They will continue doing this as long as they have to. I think it unlikely this will happen by 2007. The Peak Oil scenario suggests that rising interest rates will be a fact until the dollar itself is priced out of reach. DEPRESSION!
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swag Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Jul-13-06 06:39 PM
Response to Reply #6
8. Some impressive non sequiturs, there.
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hatrack Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Jul-13-06 06:50 PM
Response to Original message
11. PIMCO's Gross Sees Desperate Need To Sell Bond Fund Shares
Yeah, no bias on HIS part . . .
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swag Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Jul-13-06 06:57 PM
Response to Reply #11
12. I heard the same thing from fixed income managers when Gross
was championing TIPS. TIPS turned out to be a good investment.

And Gross has no problem selling fund shares.

I also like PIMCO because he and Paul McCulley can't stand the Bush administration or the fiscal incontinence of the Republican House and Senate.
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Jackpine Radical Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Jul-13-06 06:57 PM
Response to Original message
13. There were stories about Cheney's investments recently.
Edited on Thu Jul-13-06 06:58 PM by Jackpine Radical
All I remember is that it looked like he was betting on bad times. But which kind--inflation or recession--was he betting on? I'm sure some of you Street sharks have that info at your fingertips, & itr seems like the best way to read the future. Chney is the ultimate inside trader. (Or did I mean "traitor?")
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tom22 Donating Member (240 posts) Send PM | Profile | Ignore Thu Jul-13-06 09:30 PM
Response to Reply #13
19. what Bill Gross is saying
(and he is one of the smartest money men I know) is that the country is headed for a recession this fall and I agree. For the people who know nothing about money Bill Gross wrote a couple of nice columns at the time opposing the misadventure in Iraq. Bill Gross is the Warren Buffett of bonds, very smart about money, very wealthy because he can manage money (the largest bond fund in america) and has a very good heart. Buy some bonds, the recession in that area is over (always happens when rates go up). the economy has been badly managed and hard times are hitting this year.
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tom22 Donating Member (240 posts) Send PM | Profile | Ignore Thu Jul-13-06 09:40 PM
Response to Reply #19
21. again: what he is saying is that long term money will get
more expensive and that the fed will react by making short term money cheaper. which means bonds go up and stocks that fund growth through borrowing will take a hit. historically this means recession. and the real estate market ain't seen nothing of the down side they are about to see. Real estate has long long cycles: Its been ten years up in many parts of the country. don't be shocked if it is more than five years down.
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Jackpine Radical Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Jul-13-06 09:56 PM
Response to Reply #21
22. Thank you, Tom.
In my own naive way, I've been expecting a bursting of the real estate bubble for some time, but I gues it'll really happen when people start needing to get liquid & there are no buyers.
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tom22 Donating Member (240 posts) Send PM | Profile | Ignore Thu Jul-13-06 09:59 PM
Response to Reply #22
23. IMHO, people who have listened to Bill Gross
over the decades have rarely lost money. maybe you care, maybe you don't.
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tom22 Donating Member (240 posts) Send PM | Profile | Ignore Thu Jul-13-06 10:02 PM
Response to Reply #23
24. PS Pimco has a website and Bill Gross writes a monthly
column that you can find on it. read a few columns and make your own conclusions.
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tom22 Donating Member (240 posts) Send PM | Profile | Ignore Thu Jul-13-06 10:09 PM
Response to Reply #24
25. jackpine: I live in New England, for years in the 90s and 2000s
Edited on Thu Jul-13-06 10:11 PM by tom22
you never saw a for sale sign. Now they appear in droves. Real estate prices can not out pace incomes (which they have for many years) without a reckoning. that time is at hand, at least in my part of the country. Inventories are buildng and sellers don't want to face reality. some day soon they will, and with the refinances cashed out consumer spending is going south and that is how you create a recession. always has, always will. If you want to read a good history of the last serious one and a good basic treatise on economics try Bill Grieder's Secrets of the Temple. A very good history of the how the Fed operates.
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Jackpine Radical Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Jul-13-06 10:51 PM
Response to Reply #25
27. Thanks again. You've turned me on to a new bunch of information.
I'm digging into the PIMCO site & educating myself.
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Sven77 Donating Member (645 posts) Send PM | Profile | Ignore Fri Jul-14-06 12:19 AM
Response to Original message
28. im in cash now
Edited on Fri Jul-14-06 12:23 AM by Sven77
getting 4.98% on fidelity select money market. with israel going crazy, and US probably attacking iran, the market is headed for a downturn. i see for sale signs on houses everywhere. i dont think housing prices in new england are going down, houses are just staying on the market longer. i think helicopter bernake will keep printing money and raise interest rates far above 6%.
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CountAllVotes Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Jul-14-06 09:50 AM
Response to Reply #28
31. I agree
I have nothing to do with the stock market. It's been a going nowhere thing for over 5 years now.

Cash is King.

:dem: :kick:
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woosh Donating Member (383 posts) Send PM | Profile | Ignore Fri Jul-14-06 09:59 AM
Response to Reply #28
32. prices are going down
check out zillow.com
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