Pimco favors US Investment Bank bonds over US Gov. bonds

Discussion in 'Wall St. News' started by makloda, Jun 4, 2008.

  1. Interesting considering the recent new panic in IBs

    http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aqkUfaAII6xs

    Gross Says Bernanke's Dollar-Emphasis Was for Oil, CNBC Reports

    By Daniel Kruger

    June 3 (Bloomberg) -- Bill Gross, who manages the world's largest bond fund, said on CNBC that Federal Reserve Chairman Ben S. Bernamke's decision to say the central bank will ``carefully monitor'' the dollar was intended to stabilize the relationship between oil and the currency.

    ``He did that mainly to avoid the downward draft of the dollar and oil,'' Pacific Investment Management Co.'s Gross told the financial news network from Newport Beach, California. ``He spoke up to sort of put a little verbal support underneath the dollar, but it's not significant in terms of what he can do.''

    Pimco is avoiding U.S. government debt and is instead investing in bonds sold by ``banks and investment banks that have come under the guarantee -- quote, unquote -- of the Fed's discount window,'' Gross said. ``It's best to avoid Treasury securities at 2 and 3 percent because they don't even compensate for headline inflation.''

    With speculation about the cash needs of Lehman Brothers Holdings Inc. unfounded, Gross said the securities firm's real problem is what deleveraging will mean for profits.