related_results_labels({"version":"1.0","encoding":"UTF-8","feed":{"xmlns":"http://www.w3.org/2005/Atom","xmlns$openSearch":"http://a9.com/-/spec/opensearchrss/1.0/","xmlns$georss":"http://www.georss.org/georss","id":{"$t":"tag:blogger.com,1999:blog-7676161"},"updated":{"$t":"2009-12-16T01:00:20.406-05:00"},"title":{"type":"text","$t":"EF Hutton"},"subtitle":{"type":"html","$t":"...Are you Listening?"},"link":[{"rel":"http://schemas.google.com/g/2005#feed","type":"application/atom+xml","href":"http://efhutton.blogspot.com/feeds/posts/default"},{"rel":"self","type":"application/atom+xml","href":"http://www.blogger.com/feeds/7676161/posts/default/-/pimco?alt\u003djson-in-script\u0026max-results\u003d5"},{"rel":"alternate","type":"text/html","href":"http://efhutton.blogspot.com/search/label/pimco"},{"rel":"hub","href":"http://pubsubhubbub.appspot.com/"}],"author":[{"name":{"$t":"Bob DeMarco"},"uri":{"$t":"http://www.blogger.com/profile/14861703129474871916"},"email":{"$t":"rtdemarco@gmail.com"}}],"generator":{"version":"7.00","uri":"http://www.blogger.com","$t":"Blogger"},"openSearch$totalResults":{"$t":"4"},"openSearch$startIndex":{"$t":"1"},"openSearch$itemsPerPage":{"$t":"5"},"entry":[{"id":{"$t":"tag:blogger.com,1999:blog-7676161.post-3151460125210096448"},"published":{"$t":"2009-04-07T08:50:00.002-04:00"},"updated":{"$t":"2009-04-07T08:53:49.772-04:00"},"category":[{"scheme":"http://www.blogger.com/atom/ns#","term":"video"},{"scheme":"http://www.blogger.com/atom/ns#","term":"new normal"},{"scheme":"http://www.blogger.com/atom/ns#","term":"journey"},{"scheme":"http://www.blogger.com/atom/ns#","term":"pimco"},{"scheme":"http://www.blogger.com/atom/ns#","term":"El-Erian"},{"scheme":"http://www.blogger.com/atom/ns#","term":"ceo"}],"title":{"type":"text","$t":"PIMCO CEO  El-Erian on Journey to New Normal in the Markets (Video)"},"content":{"type":"html","$t":"Lots's of useful information and perspective. Worth watching to get a feel for the current state of affairs in the market and ideas about future trends.\u003cspan style\u003d\"font-weight:bold;\"\u003e Good look at the obvious and beyond the obvious.\u003c/span\u003e\u003cbr /\u003e\u003cbr /\u003e\u003ccenter\u003e\u003cobject width\u003d\"400\" height\u003d\"380\"\u003e\u003cembed name\u003d\"cnbcplayer\" pluginspage\u003d\"http://www.macromedia.com/go/getflashplayer\" allowfullscreen\u003d\"true\" allowscriptaccess\u003d\"always\" bgcolor\u003d\"#000000\" height\u003d\"380\" width\u003d\"400\" quality\u003d\"best\" wmode\u003d\"transparent\" scale\u003d\"noscale\" salign\u003d\"lt\" src\u003d\"http://plus.cnbc.com/rssvideosearch/action/player/id/1085546206/code/cnbcplayershare\" type\u003d\"application/x-shockwave-flash\"\u003e\u003c/embed\u003e\u003c/object\u003e\u003c/center\u003e\u003cbr /\u003e\u003cbr /\u003eThe markets are on a volatile journey to a \u003ca href\u003d\"http://www.cnbc.com/id/15840232?video\u003d1085546206\u0026play\u003d1\"\u003e\"new normal,\"\u003c/a\u003e says Mohamed El-Erian, Pimco CEO.\u003cblockquote style\u003d\"text-align: center;\"\u003e\u003ca href\u003d\"http://feedburner.google.com/fb/a/mailverify?uri\u003dEfHutton\u0026amp;loc\u003den_US\"\u003e\u003cspan class\u003d\"Apple-style-span\"  style\u003d\"font-size:large;\"\u003eSubscribe to EF Hutton via Email\u003c/span\u003e\u003c/a\u003e\u003c/blockquote\u003e\u003ctable width\u003d\"98%\" bgcolor\u003d\"#FFFFF0\" cellspacing\u003d\"1\" cellpadding\u003d\"1\" border\u003d\"1\"\u003e\u003ctbody\u003e\u003ctr\u003e\u003ctd\u003e\u003ca href\u003d\"http://www.flickr.com/photos/7283119@N08/3193476301/\" title\u003d\"Profile Shot by BobbyDelray, on Flickr\"\u003e\u003cimg style\u003d\"float:left; margin:0 10px 10px 0;cursor:pointer; cursor:hand;width: 75px; height: 75px;\" src\u003d\"http://farm4.static.flickr.com/3385/3193476301_1325afb2c7_s.jpg\" border\u003d\"0\" alt\u003d\"\" /\u003e\u003c/a\u003e\u003cspan class\u003d\"Apple-style-span\" style\u003d\"font-size: small;\"\u003e\u003cb\u003e\u003ca href\u003d\"http://efhutton.blogspot.com\"\u003eBob DeMarco\u003c/a\u003e\u003c/b\u003e is a citizen journalist and twenty year Wall Street veteran. Bob has written more than 500 articles with more than 11,000 links to his work on the Internet. Content from \u003ca href\u003d\"http://efhutton.blogspot.com\"\u003eAll American Investor\u003c/a\u003e has been syndicated on Reuters, the Wall Street Journal, Fox News, Pluck, Blog Critics, and a growing list of newspaper websites.  Bob is actively seeking syndication and writing assignments.\u003c/span\u003e\u003c/td\u003e\u003c/tr\u003e\u003c/tbody\u003e\u003c/table\u003e\u003cbr /\u003e\u003cbr /\u003e\u003cdiv\u003e\u003ccenter\u003e\u003ca href\u003d\"http://www.amazon.com/gp/product/1416533125?ie\u003dUTF8\u0026amp;tag\u003dfelix00-20\u0026amp;linkCode\u003dxm2\u0026amp;camp\u003d1789\u0026amp;creativeASIN\u003d1416533125\"\u003e\u003cimg style\u003d\"margin: 0px 0px 10px 10px; width: 220px;\" alt\u003d\"\" src\u003d\"http://ecx.images-amazon.com/images/I/51xwYLIgYZL._BO2,204,203,200_PIsitb-sticker-arrow-click,TopRight,35,-76_AA240_SH20_OU01_.jpg\" border\u003d\"0\" /\u003e\u003c/a\u003e \u003c/center\u003e\u003c/div\u003e\u003cbr /\u003e\u003cdiv\u003e\u003ccenter\u003e\u003ca href\u003d\"http://www.amazon.com/gp/product/1416533125?ie\u003dUTF8\u0026amp;tag\u003dfelix00-20\u0026amp;linkCode\u003das2\u0026amp;camp\u003d1789\u0026amp;creative\u003d9325\u0026amp;creativeASIN\u003d1416533125\"\u003eBold Endeavors: How Our Government Built America, and Why It Must Rebuild Now\u003c/a\u003e\u003cimg src\u003d\"http://www.assoc-amazon.com/e/ir?t\u003dfelix00-20\u0026amp;l\u003das2\u0026amp;o\u003d1\u0026amp;a\u003d1416533125\" alt\u003d\"\" style\u003d\"border: medium none  ! important; margin: 0px ! important;\" width\u003d\"1\" border\u003d\"0\" height\u003d\"1\" /\u003e\u003c/center\u003e\u003c/div\u003e\u003c/span\u003e\u003cdiv class\u003d\"blogger-post-footer\"\u003e\u003cimg width\u003d'1' height\u003d'1' src\u003d'https://blogger.googleusercontent.com/tracker/7676161-3151460125210096448?l\u003defhutton.blogspot.com' alt\u003d'' /\u003e\u003c/div\u003e"},"link":[{"rel":"related","href":"http://allamericaninvestor.blogspot.com/2009/04/pimco-ceo-el-erian-on-journey-to-new.html","title":"PIMCO CEO  El-Erian on Journey to New Normal in the Markets (Video)"},{"rel":"edit","type":"application/atom+xml","href":"http://www.blogger.com/feeds/7676161/posts/default/3151460125210096448"},{"rel":"self","type":"application/atom+xml","href":"http://www.blogger.com/feeds/7676161/posts/default/3151460125210096448"},{"rel":"alternate","type":"text/html","href":"http://efhutton.blogspot.com/2009/04/pimco-ceo-el-erian-on-journey-to-new.html","title":"PIMCO CEO  El-Erian on Journey to New Normal in the Markets (Video)"}],"author":[{"name":{"$t":"Bob DeMarco"},"uri":{"$t":"http://www.blogger.com/profile/14861703129474871916"},"email":{"$t":"rtdemarco@gmail.com"},"gd$extendedProperty":{"xmlns$gd":"http://schemas.google.com/g/2005","name":"OpenSocialUserId","value":"02937219926706406775"}}]},{"id":{"$t":"tag:blogger.com,1999:blog-7676161.post-8642361239262974543"},"published":{"$t":"2009-01-30T22:35:00.000-05:00"},"updated":{"$t":"2009-01-30T22:36:10.047-05:00"},"category":[{"scheme":"http://www.blogger.com/atom/ns#","term":"bailout"},{"scheme":"http://www.blogger.com/atom/ns#","term":"2009"},{"scheme":"http://www.blogger.com/atom/ns#","term":"crisis"},{"scheme":"http://www.blogger.com/atom/ns#","term":"stimulus package"},{"scheme":"http://www.blogger.com/atom/ns#","term":"economic"},{"scheme":"http://www.blogger.com/atom/ns#","term":"pimco"},{"scheme":"http://www.blogger.com/atom/ns#","term":"investment outlook"},{"scheme":"http://www.blogger.com/atom/ns#","term":"gross"}],"title":{"type":"text","$t":"PIMCOs Gross: Find ways to prop up the Values of Assets"},"content":{"type":"html","$t":"To PIMCO, the remedy for this deflationary delevering and mini-depression is simple and almost axiomatic: stop the decline in asset prices.\u003cbr /\u003e\u003cbr /\u003e\u003ca onblur\u003d\"try {parent.deselectBloggerImageGracefully();} catch(e) {}\" href\u003d\"http://www.pimco.com/NR/rdonlyres/F399418E-1E67-4A61-8F02-EB1FA3168202/6904/chart2.jpg\"\u003e\u003cimg style\u003d\"display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;width: 400px; height: 320px;\" src\u003d\"http://www.pimco.com/NR/rdonlyres/F399418E-1E67-4A61-8F02-EB1FA3168202/6904/chart2.jpg\" border\u003d\"0\" alt\u003d\"\" /\u003e\u003c/a\u003e\u003cbr /\u003e\u003cspan id\u003d\"fullpost\"\u003e\u003cbr /\u003e\u003cblockquote style\u003d\"text-align: center;\"\u003e\u003ca href\u003d\"http://feedburner.google.com/fb/a/mailverify?uri\u003dAllAmericanInvestor\u0026amp;loc\u003den_US\"\u003e\u003cspan class\u003d\"Apple-style-span\"  style\u003d\"font-size:large;\"\u003eSubscribe to All American Investor via Email\u003c/span\u003e\u003c/a\u003e\u003c/blockquote\u003e\u003cbr /\u003e\u003ca onblur\u003d\"try {parent.deselectBloggerImageGracefully();} catch(e) {}\" href\u003d\"http://www.pimco.com/NR/rdonlyres/F399418E-1E67-4A61-8F02-EB1FA3168202/6900/Gross1May_08_140.jpg\"\u003e\u003cimg style\u003d\"float:left; margin:0 10px 10px 0;cursor:pointer; cursor:hand;width: 100px; height: 140px;\" src\u003d\"http://www.pimco.com/NR/rdonlyres/F399418E-1E67-4A61-8F02-EB1FA3168202/6900/Gross1May_08_140.jpg\" border\u003d\"0\" alt\u003d\"\" /\u003e\u003c/a\u003e\u003cbr /\u003e\u003cspan class\u003d\"Apple-style-span\" style\u003d\"font-weight: bold;\"\u003eInvestment Outloo\u003c/span\u003ek\u003cbr /\u003eBill Gross | February 2009\u003cbr /\u003e\u003cbr /\u003e\u003cspan class\u003d\"Apple-style-span\" style\u003d\"color: rgb(102, 102, 204);\"\u003e\u003cspan class\u003d\"Apple-style-span\" style\u003d\"font-weight: bold;\"\u003eBEEP BEEP!\u003c/span\u003e\u003c/span\u003e\u003cbr /\u003e\u003cbr /\u003e\u003ca onblur\u003d\"try {parent.deselectBloggerImageGracefully();} catch(e) {}\" href\u003d\"http://www.pimco.com/NR/rdonlyres/F399418E-1E67-4A61-8F02-EB1FA3168202/6902/WileECoyoteCliffSkySoft3small.gif\"\u003e\u003cimg style\u003d\"float:right; margin:0 0 10px 10px;cursor:pointer; cursor:hand;width: 200px; height: 270px;\" src\u003d\"http://www.pimco.com/NR/rdonlyres/F399418E-1E67-4A61-8F02-EB1FA3168202/6902/WileECoyoteCliffSkySoft3small.gif\" border\u003d\"0\" alt\u003d\"\" /\u003e\u003c/a\u003eThe current financial and economic crisis is difficult to appreciate, not only for the drop in elevation, but because of the swiftness of the declines. It’s been a Wile E. Coyote 12 months – straight down like a dead weight. A year ago, global equity prices were nearly twice today’s levels and recession was only a whisper on the lips of the gloomiest of economists. Today, descriptions drawing parallels to the Great Depression make it obvious that a major shift in economic growth and its historic financial model, as well as policy prescriptions for its revival, are underway. Most of the world’s connected economies and its citizens are in shock, conscious but not fully aware of the seismic shifts that will unfold in future years.\u003cbr /\u003e\u003cbr /\u003ePIMCO’s thesis for several years has held that the levered global economy long ago morphed from a banking-dominated regime to one that hid behind securitized lending and structures resembling a “shadow banking” system. SIVs, hedge funds, CDOs and increasingly levered mortgage and investment banks fueled asset appreciation in all investment markets, which in turn propelled real economic growth and employment to unsustainable levels. But, with U.S. housing prices as its trigger, the delevering process did a Wile E. Coyote and headed over the cliff in mid-year 2007, dragging down almost all asset prices except government bonds. The real economy followed shortly thereafter, not just in the U.S., but globally, proving that linkages work on the “down” as well as the upside. To PIMCO, the remedy for this deflationary delevering and mini-depression is simple and almost axiomatic: stop the decline in asset prices. If that can be done, the real economy will level out as well. When home prices stop going down, newly created households will be more willing to take a chance on ownership as opposed to renting. If stock prices consolidate, recently burned investors will be more willing to invest, as opposed to stuffing their 401(k) mattresses with Treasury bills. Business investment, jobs, and profits should follow quickly behind.\u003cbr /\u003e\u003cbr /\u003eThe simplicity of the solution, however, is not easily achieved once deflationary momentum takes hold. Animal spirits, once dampened, are hard to reignite; “fear of fear itself” dominates greed. Under such circumstances, the benevolent hand of government is required and Keynes is reincarnated in an attempt to plug the dike via fiscal spending and imaginative monetary policies that support asset prices. PIMCO has recently been contracted to assist in several publically announced programs which have helped in that effort: the CPFF, which has benefitted commercial paper yields, and the Federal Reserve’s purchase program for agency-backed mortgage loans, which has lowered 30-year mortgage rates to 4.5% and fostered the affordability of new and secondary housing prices. These two programs, in our opinion, have been the major policy successes to date – not because of our involvement – but because they have supported and increased asset prices whose decline has been the major deflationary thrust behind the real economy. Stop asset prices from going down and with a 12-month lag, unemployment will stop going up, and President Obama’s targeted three million new jobs will have a fighting chance of being achieved.\u003cbr /\u003e\u003cbr /\u003eBut stopping the decline of asset prices can be and has been attempted in numerous, seemingly uncoordinated ways. Recapitalization of the banks has been the major thrust, in the hopes that banks would extend credit which would reinvigorate asset pricing. Those who argue strongly for a recapitalization of the banking system, however, may be missing the distinction between the banking system as we once knew it, and the “shadow banking” system that superseded it. Jim Bianco, who heads up the research tank bearing his own name, brought the difference to mind in a recently produced piece entitled, “When Will The Banks Start Lending?” His conclusion was that banks already were – lending – but it was the “shadow system” (my words) that was holding up the parade. According to his analysis, shown in Chart 1, securitization has for several years exceeded bank loans as a percentage of private credit market debt. In contrast to recent headlines, however, banks have been picking up their lending, but it has been the “shadow banks” that have faltered. That makes sense. While banks may have tightened their lending standards, fresh capital from the TARP has made it possible to make new loans. The shadow banks, however – hedge funds, investment banks, and structured financial conduits – have been forced to delever as government funds have been directed to more visible institutional lenders. Granted, Goldman Sachs and Morgan Stanley have been TARP recipients, but only under the conditions of downsizing and degearing on their way to becoming regular banks, which have cut their holdings of assets significantly in percentage and actual dollar terms. It should not surprise, therefore, that with the exception of specifically directed government programs directed at commercial paper rates and 30-year mortgage yields, past policies have been unsuccessful. Banks have been recapitalized – yes – and banks have cautiously started to lend. But shadow banks are still delevering due to disappearing and unavailable fresh capital and, as they do, they continue to drag asset prices with them. PIMCO’s Ramin Toloui has produced Chart 2 which correlates the contraction in household debt to the decline of the securitization market. He estimates that there is a one trillion dollar hole that needs to be filled by policymakers in this area alone.\u003cbr /\u003e\u003ca onblur\u003d\"try {parent.deselectBloggerImageGracefully();} catch(e) {}\" href\u003d\"http://www.pimco.com/NR/rdonlyres/F399418E-1E67-4A61-8F02-EB1FA3168202/6903/chart1.jpg\"\u003e\u003cimg style\u003d\"display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;width: 400px; height: 304px;\" src\u003d\"http://www.pimco.com/NR/rdonlyres/F399418E-1E67-4A61-8F02-EB1FA3168202/6903/chart1.jpg\" border\u003d\"0\" alt\u003d\"\" /\u003e\u003c/a\u003e\u003cbr /\u003e\u003cbr /\u003e\u003ca onblur\u003d\"try {parent.deselectBloggerImageGracefully();} catch(e) {}\" href\u003d\"http://www.pimco.com/NR/rdonlyres/F399418E-1E67-4A61-8F02-EB1FA3168202/6904/chart2.jpg\"\u003e\u003cimg style\u003d\"display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;width: 400px; height: 320px;\" src\u003d\"http://www.pimco.com/NR/rdonlyres/F399418E-1E67-4A61-8F02-EB1FA3168202/6904/chart2.jpg\" border\u003d\"0\" alt\u003d\"\" /\u003e\u003c/a\u003e\u003cbr /\u003e\u003cbr /\u003eStressing the importance of the shadow banks is not the same thing as suggesting that they should be next in line for government largesse and bailouts. Lord knows, the Obama Administration is not going to bail out hedge funds, CDOs, private equity firms (Cerberus?), or Donald Trump. There are levered risk takers that will be, and should be, allowed to fail. But in permitting failure, policymakers must still be cognizant of the need to support asset prices – hopefully by inducing confidence and trust in private investors, as pointed out by Robert Shiller in a recent Wall Street Journal op-ed, but if need be by the financing or purchase of assets themselves. It’s not so much that the stock market needs to go back to 10,000. That would be nice for millions of 401(k)s that have been cut in half over the past 12 months, but it is not likely. Rather, asset prices securitizing commercial real estate and credit card receivables, as well as plain old-fashioned municipal bonds, must stop going down if the real economy has any chance to revive by 2010.\u003cbr /\u003e\u003cbr /\u003eExample: CMBS or commercial real estate mortgage-backed securities are now priced to yield over 12% vs. 5% in recent years. As real estate financing comes due and rolls over in the next few years, it is imperative these yields return to mid-single digits if shopping centers, retail malls, and office buildings are to remain viable. How best to bring those yields down is debatable: another CPFF-like structure with self-insurance and contributed fees as its equity backstop? A generous portion of remaining TARP billions providing a reserve cushion for Federal Reserve funding? A good bank, bad (aggregator) bank structure? All three are being debated by policymakers and we should have clarity within a week’s time. But one thing is certain: an economic recovery is dependent upon commercial real estate prices stabilizing and most retail stores staying open for business in the months and years ahead.\u003cbr /\u003e\u003cbr /\u003eSimilarly, municipal yields are now trading at nearly twice their Treasury counterparts, implying that municipal bonds are trading at 80 cents on the dollar instead of 113 cents like the average Treasury. To enable states and cities to return to normal functioning, those bonds must return to par. Modern day capitalism depends on the successful refinancing and issuance of securities at a price and yield level not significantly divorced from past experience. That is the same thing as saying that current yields must come close to matching the economy’s embedded cost of debt if default is to be avoided. Not only municipalities, but the efficient operation of hospitals, nursing homes and even universities depend on the leveling and returning of municipal bond prices to higher levels. Similar arguments can be made for corporate bonds as well.\u003cbr /\u003e\u003cbr /\u003ePIMCO’s advice to policymakers is as follows: you can’t bail out everyone, yet economic recovery is not possible unless certain critical asset sectors are not only reliquefied, but rejuvenated in price. The prior Administration’s focus on the banks has been critical but unidimensional. The shadow banking system with its leverage and financial innovation, powered a near 25-year global economic expansion, but it is the delevering of those hidden quasi-banks that is now threatening its petrification. Policymakers should not focus entirely on one-off bailouts of large real estate developers, municipalities, or even credit card issuers like they have with Citi, BofA, and AIG. Rather, they should recognize that supporting critical asset prices such as municipal bonds, CMBS, and even investment grade corporate bonds is a necessary step towards eventual economic revival. Capitalism at its philosophical and practical center depends on credit, and while new loans can be and are being advanced via the banking system, it’s a much more difficult task to force shadow banks to lend. That lending depends on securitization which in turn depends on stable and eventually higher asset prices than currently exist. The original focus of the TARP was on asset prices, but the prior Administration quickly lost its way or perhaps its nerve. Like his Road Runner nemesis, Wile E. Coyote must now extend some infrequently used figurative wings to avoid the deflationary precipice below. Support asset prices. Beep Beep!\u003cbr /\u003e\u003cbr /\u003eWilliam H. Gross\u003cbr /\u003eManaging Director\u003cbr /\u003e\u003ca href\u003d\"http://www.pimco.com/LeftNav/Featured+Market+Commentary/IO/2009/IO+Feb+2009+Gross+Beep+Beep.htm\"\u003eInvestment Outlook\u003c/a\u003e\u003cbr /\u003e\u003cbr /\u003e\u003ch\u003e\u003ca href\u003d\"http://allamericaninvestor.blogspot.com/2009/01/pimcos-gross-find-ways-to-prop-up.html\"\u003ePIMCOs Gross: Find ways to prop up the Values of Assets\u003c/a\u003e\u003c/h\u003e\u003cbr /\u003e\u003c/span\u003e\u003cdiv class\u003d\"blogger-post-footer\"\u003e\u003cimg width\u003d'1' height\u003d'1' src\u003d'https://blogger.googleusercontent.com/tracker/7676161-8642361239262974543?l\u003defhutton.blogspot.com' alt\u003d'' /\u003e\u003c/div\u003e"},"link":[{"rel":"related","href":"http://allamericaninvestor.blogspot.com/2009/01/pimcos-gross-find-ways-to-prop-up.html","title":"PIMCOs Gross: Find ways to prop up the Values of Assets"},{"rel":"replies","type":"application/atom+xml","href":"http://efhutton.blogspot.com/feeds/8642361239262974543/comments/default","title":"Post Comments"},{"rel":"replies","type":"text/html","href":"http://efhutton.blogspot.com/2009/01/pimcos-gross-find-ways-to-prop-up.html#comment-form","title":"0 Comments"},{"rel":"edit","type":"application/atom+xml","href":"http://www.blogger.com/feeds/7676161/posts/default/8642361239262974543"},{"rel":"self","type":"application/atom+xml","href":"http://www.blogger.com/feeds/7676161/posts/default/8642361239262974543"},{"rel":"alternate","type":"text/html","href":"http://efhutton.blogspot.com/2009/01/pimcos-gross-find-ways-to-prop-up.html","title":"PIMCOs Gross: Find ways to prop up the Values of Assets"}],"author":[{"name":{"$t":"Bob DeMarco"},"uri":{"$t":"http://www.blogger.com/profile/14861703129474871916"},"email":{"$t":"rtdemarco@gmail.com"},"gd$extendedProperty":{"xmlns$gd":"http://schemas.google.com/g/2005","name":"OpenSocialUserId","value":"02937219926706406775"}}],"thr$total":{"xmlns$thr":"http://purl.org/syndication/thread/1.0","$t":"0"}},{"id":{"$t":"tag:blogger.com,1999:blog-7676161.post-6673099328436675654"},"published":{"$t":"2009-01-11T23:28:00.004-05:00"},"updated":{"$t":"2009-01-11T23:44:49.667-05:00"},"category":[{"scheme":"http://www.blogger.com/atom/ns#","term":"TIPS"},{"scheme":"http://www.blogger.com/atom/ns#","term":"protected"},{"scheme":"http://www.blogger.com/atom/ns#","term":"treasury"},{"scheme":"http://www.blogger.com/atom/ns#","term":"bonds"},{"scheme":"http://www.blogger.com/atom/ns#","term":"muni"},{"scheme":"http://www.blogger.com/atom/ns#","term":"pimco"},{"scheme":"http://www.blogger.com/atom/ns#","term":"gross"},{"scheme":"http://www.blogger.com/atom/ns#","term":"inflation"}],"title":{"type":"text","$t":"PIMCOs Gross likes Muni Bonds and Treasury Inflation Protected Securities"},"content":{"type":"html","$t":"\u003cblockquote\u003eMunicipal bonds are among the best buying opportunities now as states line up for billions in federal aid from the incoming Barack Obama administration, said Bill Gross, chief investment officer of the giant bond firm PIMCO.\u003cbr /\u003e\u003ca onblur\u003d\"try {parent.deselectBloggerImageGracefully();} catch(e) {}\" href\u003d\"http://tbn0.google.com/images?q\u003dtbn:EoDwMBhe6n0RkM:http://money.cnn.com/2005/08/11/markets/bondcenter/bond_shortage/gross_bill.03.jpg\"\u003e\u003cimg style\u003d\"float:right; margin:0 0 10px 10px;cursor:pointer; cursor:hand;width: 106px; height: 79px;\" src\u003d\"http://tbn0.google.com/images?q\u003dtbn:EoDwMBhe6n0RkM:http://money.cnn.com/2005/08/11/markets/bondcenter/bond_shortage/gross_bill.03.jpg\" border\u003d\"0\" alt\u003d\"\" /\u003e\u003c/a\u003e\u003cbr /\u003eOther strategies offered by Gross in his January investment newsletter were buying Treasury Inflation Protected Securities (TIPS) and certain investment-grade corporate bonds.\u003cbr /\u003e\u003cbr /\u003eBy contrast, in the Treasury market, \"low yields offer little reward and increasing risk,\" given ballooning federal budget deficits, he said.\u003c/blockquote\u003e\u003cbr /\u003e\u003cblockquote style\u003d\"text-align: center;\"\u003e\u003ca href\u003d\"http://www.feedburner.com/fb/a/emailverifySubmit?feedId\u003d815120\u0026amp;loc\u003den_US\"\u003e\u003cspan class\u003d\"Apple-style-span\"  style\u003d\"font-size:large;\"\u003eSubscribe to EF Hutton via Email\u003c/span\u003e\u003c/a\u003e\u003c/blockquote\u003e\u003cbr /\u003e\u003cspan id\u003d\"fullpost\"\u003e       \u003cbr /\u003e\u003ch1\u003e\u003ca href\u003d\"http://uk.reuters.com/article/ousiv/idUKTRE5076PK20090108?pageNumber\u003d2\u0026amp;virtualBrandChannel\u003d0\"\u003ePIMCO's Gross says muni bonds and TIPS \"attractive\"\u003c/a\u003e\u003c/h1\u003e\u003cbr /\u003e\u003cbr /\u003eBy Ros Krasny\u003cbr /\u003e\u003cbr /\u003eCHICAGO (Reuters) - Municipal bonds are among the best buying opportunities now as states line up for billions in federal aid from the incoming Barack Obama administration, said Bill Gross, chief investment officer of the giant bond firm PIMCO.\u003cbr /\u003e\u003cbr /\u003eOther strategies offered by Gross in his January investment newsletter were buying Treasury Inflation Protected Securities (TIPS) and certain investment-grade corporate bonds.\u003cbr /\u003e\u003cbr /\u003eBy contrast, in the Treasury market, \"low yields offer little reward and increasing risk,\" given ballooning federal budget deficits, he said.\u003cbr /\u003e\u003cbr /\u003eGross noted that requests for aid from municipalities and states total nearly $1 trillion \"and to think California or New York City would be allowed to fail is, well -- unthinkable.\"\u003cbr /\u003e\u003cbr /\u003e\"Municipal bonds ... selling at historically high ratios relative to U.S. Treasuries, offer attractive price appreciation potential, or at the very least a defensiveness with high carry that a 2 1/2 percent 10-year Treasury cannot,\" Gross said.\u003cbr /\u003e\u003cbr /\u003eAccording to Municipal Market Data, top-rated 30-year munis now yield 161 percent and 10-year munis yield 133 percent of comparable Treasuries.\u003cbr /\u003e\u003cbr /\u003eTriple A rated munis started 2008 yielding a more normal 85 percent of 30-year Treasuries and 79 percent of 10-year government bonds.\u003cbr /\u003e\u003cbr /\u003eMeanwhile, Gross said he doubted the U.S. economy was in for the type of deflation that markets are forecasting, making TIPS a good buy.\u003cbr /\u003e\u003cbr /\u003eCurrent ultra-low Treasury yields \"cannot possibly be maintained unless deflation, as opposed to inflation, becomes the odds-on favorite,\" he said.\u003cbr /\u003e\u003cbr /\u003eMarket-based break-even inflation rates now point to a consumer price index averaging negative 1 percent for the next 10 years, which Gross termed \"possible, but not likely.\"\u003cbr /\u003e\u003cbr /\u003eOn the corporate bond side, yields of 6 percent or more for intermediate maturities are still common, Gross said.\u003cbr /\u003e\u003cbr /\u003e\"Investors should recognize the value of high-quality, investment-grade corporate bonds in many markets.\"\u003cbr /\u003e\u003cbr /\u003eOtherwise, PIMCO continues to maintain a strategy of buying assets that are under the federal bailout \"umbrella.\"\u003cbr /\u003e\u003cbr /\u003e\"Shake hands with the government ... their checkbook represents the largest and most potent source of buying power in 2009 and beyond,\" Gross said.\u003cbr /\u003e\u003cbr /\u003eGross said investors needed to be vigilant about higher inflation over the long term, given the \"near certainty of future budget deficits approaching 6 percent to 7 percent of GDP.\"\u003cbr /\u003e\u003cbr /\u003e(Additional reporting by Karen Pierog; Editing by Kenneth Barry)\u003cbr /\u003e\u003c/span\u003e\u003cdiv class\u003d\"blogger-post-footer\"\u003e\u003cimg width\u003d'1' height\u003d'1' src\u003d'https://blogger.googleusercontent.com/tracker/7676161-6673099328436675654?l\u003defhutton.blogspot.com' alt\u003d'' /\u003e\u003c/div\u003e"},"link":[{"rel":"replies","type":"application/atom+xml","href":"http://efhutton.blogspot.com/feeds/6673099328436675654/comments/default","title":"Post Comments"},{"rel":"replies","type":"text/html","href":"http://efhutton.blogspot.com/2009/01/pimcos-gross-likes-muni-bonds-and.html#comment-form","title":"0 Comments"},{"rel":"edit","type":"application/atom+xml","href":"http://www.blogger.com/feeds/7676161/posts/default/6673099328436675654"},{"rel":"self","type":"application/atom+xml","href":"http://www.blogger.com/feeds/7676161/posts/default/6673099328436675654"},{"rel":"alternate","type":"text/html","href":"http://efhutton.blogspot.com/2009/01/pimcos-gross-likes-muni-bonds-and.html","title":"PIMCOs Gross likes Muni Bonds and Treasury Inflation Protected Securities"}],"author":[{"name":{"$t":"Bob DeMarco"},"uri":{"$t":"http://www.blogger.com/profile/14861703129474871916"},"email":{"$t":"rtdemarco@gmail.com"},"gd$extendedProperty":{"xmlns$gd":"http://schemas.google.com/g/2005","name":"OpenSocialUserId","value":"02937219926706406775"}}],"thr$total":{"xmlns$thr":"http://purl.org/syndication/thread/1.0","$t":"0"}},{"id":{"$t":"tag:blogger.com,1999:blog-7676161.post-6313120350505022770"},"published":{"$t":"2008-05-15T08:46:00.009-04:00"},"updated":{"$t":"2008-05-15T10:06:43.999-04:00"},"category":[{"scheme":"http://www.blogger.com/atom/ns#","term":"bonus bucks"},{"scheme":"http://www.blogger.com/atom/ns#","term":"On May 14"},{"scheme":"http://www.blogger.com/atom/ns#","term":"May 15"},{"scheme":"http://www.blogger.com/atom/ns#","term":"Thursday"},{"scheme":"http://www.blogger.com/atom/ns#","term":"cnbc"},{"scheme":"http://www.blogger.com/atom/ns#","term":"answers"},{"scheme":"http://www.blogger.com/atom/ns#","term":"pimco"},{"scheme":"http://www.blogger.com/atom/ns#","term":"Pimco's Mohamed El-Erian warned that the Fed is"},{"scheme":"http://www.blogger.com/atom/ns#","term":"fed"},{"scheme":"http://www.blogger.com/atom/ns#","term":"2008"},{"scheme":"http://www.blogger.com/atom/ns#","term":"mohamed el-erian"}],"title":{"type":"text","$t":"CNBC Million Dollar Portfolio Challenge Bonus Bucks Answers Thursday, May 15, 2008 (1)"},"content":{"type":"html","$t":"\u003ca onblur\u003d\"try {parent.deselectBloggerImageGracefully();} catch(e) {}\" href\u003d\"http://1.bp.blogspot.com/_UUEwElMfh90/SCwz7rjQsOI/AAAAAAAAAsg/fhcHxDkqboo/s1600-h/Squawk+Box.jpg\"\u003e\u003cimg style\u003d\"margin: 0pt 0pt 10px 10px; float: right; cursor: pointer;\" src\u003d\"http://1.bp.blogspot.com/_UUEwElMfh90/SCwz7rjQsOI/AAAAAAAAAsg/fhcHxDkqboo/s200/Squawk+Box.jpg\" alt\u003d\"\" id\u003d\"BLOGGER_PHOTO_ID_5200588770101997794\" border\u003d\"0\" /\u003e\u003c/a\u003e\u003c!-- sphereit start --\u003e\u003cspan style\u003d\"font-weight: bold;\"\u003e\u003cspan style\u003d\"font-size:130%;\"\u003eSquawk Box--Question #1\u003c/span\u003e\u003cbr /\u003e\u003cbr /\u003eOn May 14, Pimco's Mohamed El-Erian warned that the Fed is:\u003cbr /\u003e\u003cspan style\u003d\"font-weight: bold; color: rgb(153, 0, 0);font-size:130%;\" \u003eAnswer: \u003c/span\u003e\u003c/span\u003e\u003ca href\u003d\"http://efhutton.blogspot.com/2008/05/cnbc-bonus-bucks-answers-for-wednesday_15.html\"\u003e\u003cspan style\u003d\"font-weight: bold; color: rgb(153, 0, 0);font-size:130%;\" \u003eparticularly challenged\u003c/span\u003e\u003c/a\u003e\u003cbr /\u003e\u003cspan id\u003d\"fullpost\"\u003e \u003cbr /\u003e\u003ca href\u003d\"http://www.cnbc.com/id/24617126/for/cnbc/\"\u003e\u003cspan style\u003d\"font-weight: bold;font-size:130%;\" \u003ePimco: Tricky for Fed to fix economy bind\u003c/span\u003e\u003c/a\u003e\u003cbr /\u003e\u003cbr /\u003eBy Jennifer Ablan and John Parry\u003cbr /\u003e\u003cbr /\u003eNEW YORK (Reuters) - Bond fund leader Pimco's Mohamed El-Erian on Wednesday said the Federal Reserve's monetary policy may not help the economy to escape a severe recession caused by falling home values and rapidly rising consumer prices.\u003cbr /\u003e\u003cbr /\u003eThe co-head of the world's largest bond fund company said U.S. policy-makers \"do not have good policy tools to deal with the destabilizing combination of asset price deflation and goods inflation.\"\u003cbr /\u003e\u003cbr /\u003eEl-Erian added that the Fed is \"particularly challenged\" because of its dual mandate that calls for maintaining solid employment and low inflation.\u003cbr /\u003e\u003cbr /\u003e\"This comes at a time when regulators are trying to play catch-up with a financial system that has morphed into something that does not fit neatly into existing frameworks and mindsets,\" El-Erian wrote to clients after Pimco's quarterly economic forum at its Newport Beach, California headquarters.\u003cbr /\u003e\u003cbr /\u003eOn Wednesday, lawmakers listened to former Fed Chairman Paul Volcker discuss what role the U.S. central bank could now play.\u003cbr /\u003e\u003cbr /\u003e\"The Federal Reserve ought to be the principal financial regulator. Because of its independence, it is in a better position to resist the political pressures of regulation,\" former Volcker told lawmakers. But he warned that the central bank is not currently in a position to take on that role.\u003cbr /\u003e\u003cbr /\u003ePolicy-makers can, however, tackle inflation: Despite a tamer-than-expected U.S. April consumer price index released on Wednesday, many bond market participants are still concerned that rising food and energy-fueled inflation may push yields steeply higher and force the Fed to start hiking interest rates as soon as the end of this year.\u003cbr /\u003e\u003cbr /\u003e\"Inflationary pressures will continue to increase over the secular horizon,\" said El-Erian, who helps oversee $750 billion in assets. As commodity prices continue to rise because of higher demand accompanied by higher wages in emerging economies, \"especially from the perspective of the U.S., look for inflation to become more sensitive to foreign factors,\" he wrote.\u003cbr /\u003e\u003cbr /\u003eThat is not only issue facing the U.S. economy.\u003cbr /\u003e\u003cbr /\u003eThe 10-month-old credit crisis, which has already forced banks to write off hundreds of billions of dollars for bad investments in riskier assets and recapitalize balance sheets, will now force households and consumers to scale back and save, he expects.\u003cbr /\u003e\u003cbr /\u003e\"The world has been going through a sequential secular recapitalization process,\" over more than a decade, he wrote.\u003cbr /\u003e\u003cbr /\u003eThis happened during the Asian, Russian and Latin American financial market crises between 1997 and 2002, in the United States with troubles at Enron and WorldCom in 2002-2003 acting as catalysts and now with banks.\u003cbr /\u003e\u003cbr /\u003e\"The U.S. household will inevitably be the next part of this process in the period ahead,\" he said, characterizing consumers as being overwhelmed by \"debt exhaustion.\"\u003cbr /\u003e\u003cbr /\u003eThe major concern El-Erian has is that consumers have yet to recapitalize their balance sheet notwithstanding mounting pressure from sluggish employment, high energy and food prices, less ample access to credit and, most importantly, a housing price correction \"that is still far from complete.\"\u003cbr /\u003e\u003cbr /\u003e\"The longer the delay out of Washington, D.C., in implementing fiscal measures to stabilize the housing sector, the greater the risk that the higher collateral damage on Main Street will induce a politically driven regulatory over-reaction with unpredictable economic outcomes,\" he added.\u003cbr /\u003e\u003cbr /\u003eEl-Erian also said the Fed's move to let securities firms borrow directly through its discount window will likely evolve into a permanent facility.\u003cbr /\u003e\u003cbr /\u003eInvestment banks, forced to unwind years of huge leverage, will seek ways to secure a deposit base that can reduce their cost of funding, including through merger and acquisition, El-Erian added. \"This process of deleveraging and, if done properly, de-risking will have a number of implications for investors,\" El-Erian said.\u003cbr /\u003e\u003cbr /\u003e\"And by creating an initial vacuum in the more highly leveraged space vacated by investment banks, it will entice new entrants, some of which will come from the current generation of private equity and hedge funds.\"\u003cbr /\u003e\u003cbr /\u003ePimco's forum included its economic consultant, former Fed Chairman Alan Greenspan, as a participant.\u003cbr /\u003e\u003cbr /\u003e(Reporting by Jennifer Ablan and John Parry; Editing by Jonathan Oatis)\u003cbr /\u003eCopyright 2008 Reuters. Click for restrictions.\u003cbr /\u003e\u003cbr /\u003eURL: http://www.cnbc.com/id/24617126/for/cnbc/\u003cbr /\u003e\u003cbr /\u003e\u003ca href\u003d\"http://www.feedburner.com/fb/a/emailverifySubmit?feedId\u003d815120\u0026amp;loc\u003den_US\"\u003e\u003cb\u003eGet Notification of CNBC Bonus Bucks Answers via Email\u003c/b\u003e\u003c/a\u003e\u003cbr /\u003e\u003cbr /\u003e\u003ca href\u003d\"http://technorati.com/tag/bonus%20bucks%20answers\" rel\u003d\"tag\"\u003eBonus Bucks Answers\u003c/a\u003e\u003cbr /\u003e\u003cbr /\u003e\u003ca href\u003d\"http://technorati.com/tag/cnbc%20million%20dollar%20portfolio%20challenge\" rel\u003d\"tag\"\u003eCNBC Million Dollar Portfolio Challenge\u003c/a\u003e\u003cbr /\u003e\u003cbr /\u003e\u003ca href\u003d\"http://technorati.com/tag/cnbc%20bonus%20bucks%20answers\" rel\u003d\"tag\"\u003eCNBC Bonus Bucks Answers\u003c/a\u003e\u003cbr /\u003e\u003cbr /\u003e\u003ca href\u003d\"http://technorati.com/tag/on%20may%2014,%20pimco's%20mohamed%20el-erian%20warned%20that%20the%20fed%20is:\" rel\u003d\"tag\"\u003eOn May 14, Pimco's Mohamed El-Erian warned that the Fed is:\u003c/a\u003e\u003cbr /\u003e\u003c/span\u003e  \u003c!-- sphereit end --\u003e\u003cdiv class\u003d\"blogger-post-footer\"\u003e\u003cimg width\u003d'1' height\u003d'1' src\u003d'https://blogger.googleusercontent.com/tracker/7676161-6313120350505022770?l\u003defhutton.blogspot.com' alt\u003d'' /\u003e\u003c/div\u003e"},"link":[{"rel":"replies","type":"application/atom+xml","href":"http://efhutton.blogspot.com/feeds/6313120350505022770/comments/default","title":"Post Comments"},{"rel":"replies","type":"text/html","href":"http://efhutton.blogspot.com/2008/05/cnbc-bonus-bucks-answers-for-wednesday_15.html#comment-form","title":"0 Comments"},{"rel":"edit","type":"application/atom+xml","href":"http://www.blogger.com/feeds/7676161/posts/default/6313120350505022770"},{"rel":"self","type":"application/atom+xml","href":"http://www.blogger.com/feeds/7676161/posts/default/6313120350505022770"},{"rel":"alternate","type":"text/html","href":"http://efhutton.blogspot.com/2008/05/cnbc-bonus-bucks-answers-for-wednesday_15.html","title":"CNBC Million Dollar Portfolio Challenge Bonus Bucks Answers Thursday, May 15, 2008 (1)"}],"author":[{"name":{"$t":"Bob DeMarco"},"uri":{"$t":"http://www.blogger.com/profile/14861703129474871916"},"email":{"$t":"rtdemarco@gmail.com"},"gd$extendedProperty":{"xmlns$gd":"http://schemas.google.com/g/2005","name":"OpenSocialUserId","value":"02937219926706406775"}}],"thr$total":{"xmlns$thr":"http://purl.org/syndication/thread/1.0","$t":"0"}}]}});