Pimco is a Literal Vampire Potbelly Goblin.
The rules are simple: they lie to us, we know they’re lying, they know we know they’re lying but they keep lying anyway, and we keep pretending to believe them.
- - Elena Gorokhova, A Mountain of Crumbs: A Memoir
THIS is our pundit class:
Get ready to bail out Pimco again! Investors pull $30 billion out of Pimco as inflation fears bite
Fed’s No. 2 Clarida resigns amid trading scandal
Pimco hires Alan Greenspan as consultant
Pimco shook hands with the Fed—and made a killing (2013)
The firm had brought in former Fed Chairman Alan Greenspan as a consultant in 2007. Gross’s top lieutenant, Mohamed El-Erian, serves on an advisory committee to the central bank’s most important branch, the New York Fed. Pimco’s global strategic adviser, economist Richard Clarida, has known Fed Chairman Ben Bernanke for three decades and was reported to be in the running for a seat on the Fed’s board of governors in 2011.
Pimco, a unit of German financial-services firm Allianz SE, was one of four firms the central bank hired to help it buy agency MBS in 2009 under the first phase of quantitative easing, called QE1. In essence, these firms collaborated with the Fed on writing its playbook for the program.
…Pimco, by contrast, exhibited a rare confidence in its agency MBS trading. At one point in March 2009, for example, 91 percent of the Total Return Fund’s assets were in agency MBS, according to data from investment research firm Morningstar Inc. That level was unusual for the fund and far exceeds that of any comparable fund at the time. By contrast, agency MBS accounted for 38.7 percent of assets in the Barclays U.S. Aggregate Bond Index, the industry benchmark.
In his January 2009 web posting, Gross said Pimco’s aim was to “shake hands with the government.” And in an interview with Reuters in February this year, he said: “It is a good strategy to anticipate what the Fed is going to do, and when they do it, to cooperate with them. … So that is what we’ve been doing.”
…The central bank allowed Pimco and the other three firms to continue trading in agency MBS while some of their employees were seconded to the central bank.
Pimco hires Bernanke as senior adviser
Giant US bond managers suffer March bloodbath (April 17, 2020)
Pimco, the largest bond investor in the world, bled a net $27bn in March, its highest monthly redemptions since the departure of co-founder Bill Gross in October 2014.
The outflows were equal to 6.7 per cent of Pimco’s total mutual fund assets at the end of February, according to data from Morningstar covering US long-term mutual funds and exchange traded funds…
Pimco and Lord Abbett’s outflows were larger relative to their overall mutual fund assets…Pimco’s Income fund, one of the best-selling strategies of 2019, had the second-highest outflows of any fund in March, bleeding $12.6bn..
Pimco said its “defensive positioning and liquidity management” helped it navigate the “unprecedented market volatility in March that impacted virtually every segment of the asset management industry”.
Maybe some inside info from the Fed also helped them navigate.
Neel Kashkari’s Quiet Path to Pimco
The financial crisis did not produce many stars. One of the few was Neel T. Kashkari, the former Bush administration bailout chief.
A onetime investment banker at Goldman Sachs, Mr. Kashkari became an instant celebrity in October 2008 when he was tapped by Henry M. Paulson Jr., then the Treasury secretary, to run the Troubled Asset Relief Program for banks. He was christened “the $700 billion man” for overseeing such a huge amount of banking aid.
Power attracts attention. People magazine called Mr. Kashkari, a 35-year-old with a hawk nose and a shaved head, one of the sexiest men alive. When he resigned his post as assistant Treasury secretary on May 1, a few months after the transition to the Obama administration, he seemed to be a highly marketable commodity.
Shortly after leaving government, he was a guest on the Charlie Rose television program on PBS.
“What’s the chance,” Mr. Rose asked pointedly, “you are going to go back into the financial sector and make a ton of money?”
…Then on Dec. 14, he went to work as head of new investment initiatives at the Pacific Investment Management Company, or Pimco, the powerful bond investment company based in Newport Beach, Calif., whose top executives have boasted of their access to government officials. Alan Greenspan, a former chairman of the Federal Reserve, is among its consultants.
…Mr. Kashkari’s career move raised eyebrows. Bloggers joked about how — in their view — he had all along been doing the company’s work in Washington.
During the crisis, William H. Gross, the founder and co-chief investment officer of Pimco, who is known for his witty letters to investors and his appearances on CNBC, frequently offered advice to the Treasury about how to handle the bailout.
At the same time, Pimco’s publicly stated strategy was to invest money in areas that would benefit from the government’s rescue efforts. The company called this its “shake hands with the government” plan.
The strategy paid off.
Pundits ponder why Kashkari quit PIMCO
Two months before his unexpected departure in January as head of global equities at Pacific Investment Management Co., Neel Kashkari told top California Republican Party officials he was giving up the asset management business because he wanted to run for governor.
But investment management consultants and executive recruiters speculate that Mr. Kashkari left in part because he had a tough time building an equities business at a huge player in the fixed-income world.
Despite a three-year effort that began in early 2010, shortly after Mr. Kashkari's hiring, equity assets under management totaled only $9.9 billion as of Feb. 15, not even 1% of the firm's $2 trillion in assets.
Of that amount, about 20% is in institutional strategies. The remainder is in six equity mutual funds, whose performance mostly has been less than spectacular.
…Mr. Kashkari wouldn't comment on whether job frustrations or the difficulty in building an equity business contributed to his departure.
In an e-mailed response to questions, he reiterated the statement he made when he quit PIMCO — that he wanted to return to “public service.” He said his tenure as former assistant Treasury secretary for financial stability in charge of the $700 billion Troubled Asset Relief Program, which bailed out banks and insurers during the financial crisis, was the most rewarding job he's had.
…But one former high-level PIMCO official, who spoke on the condition that his name not be used, said he never believed Mr. Kashkari planned to spend a long time at PIMCO because of his political background…
Data from mutual fund tracker Morningstar shows PIMCO's largest equity mutual fund, the almost $2 billion Pathfinder EqS fund, ranked in the bottom decile of all global stock funds for 2012…
One former PIMCO employee said Mr. Kashkari's celebrity status helped him cut a deal to get managing director rank and partner status, allowing him to share in the firm's profits.
Mr. Kashkari was the first non-CEO at PIMCO to earn that status without coming up through the ranks, sources say.
Some PIMCO employees were surprised by the Kashkari hire because he had never picked stocks for a living.
I don't know how house prices can keep spiking 20% a year with this sort of draconian Federal Reserve fire-sale of mortgage assets. Heck, Fed MBS holdings are now only up a measly $332 Billion from a year ago, and just $2.717 TRillion from 2008. So hawkish.
Maersk said Wednesday that it expects a slowdown in global shipping container demand in 2022 amid weakening consumer confidence and supply chain congestion.
The Danish shipping and logistics company — a barometer for global trade — said it loaded 7.4% fewer containers onto ships in the second quarter versus a year earlier.
It comes as Maersk confirmed forecast-beating second-quarter results Wednesday as freight rates soar.
Wars would in general be more speedily concluded, and less wantonly undertaken. The people feeling, during the continuance of the war, the complete burden of it, would soon grow weary of it, and government, in order to humour them, would not be under the necessity of carrying it on longer than it was necessary to do so. The foresight of the heavy and unavoidable burdens of war would hinder the people from wantonly calling for it when there was no real or solid interest to fight for.
- Adam Smith on war finance
As always, perfect highlights of the inherent corruption in the system
Hi Rudy, is your account enabled again on twitter?