Pellegrini Says Shorting U.S Debt ‘Attractive Bet’

[Slimprofits]

http://www.bloomberg.com/apps/news?p...d=aS3Jyipn3hYo

By Tomoko Yamazaki and Bernard Lo

Oct. 27 (Bloomberg) -- Paolo Pellegrini, the former Paulson & Co. hedge-fund manager who helped make more than $3 billion with bets on a U.S. housing crash, said shorting long-term U.S. debt is the “only attractive bet” for investors.

“I always like to think about assets that are likely to experience a breakdown; the only thing I’m pretty comfortable with right now is U.S. Treasury securities and U.S. agency mortgage-backed securities,” he said in a telephone interview from Beijing today. “I think that those are overpriced so they are attractive shorts.”

Mortgage-backed securities issued by U.S. agencies including Washington-based Fannie Mae are also attractive shorts, he said.

[..]

Pellegrini disagrees with the U.S. Federal Reserve’s monetary policy, claiming it is cheating savers to pay for the aftermath of the financial crisis, adding that the devaluation of the dollar is a “particular concern” for investors like himself who hold dollar assets.

“The dollar has depreciated more than it should for the short term,” Pellegrini said in a Bloomberg Television interview in Beijing. “And if you ask me where am I putting my money now, I am on the sidelines.”

direct link to interview with on Bloomberg television:

http://www.bloomberg.com/avp/avp.asx...D=511273799&A=

[halcyon]

Re: Pellegrini Says Shorting U.S Debt ‘Attractive Bet’

Marc Faber, David Einhorn, Julian Robertson... all saying the same thing.

Mind you, Robertson's curve cap puts are 5+years from now.

[Down Under]

Re: Pellegrini Says Shorting U.S Debt ‘Attractive Bet’

Mind you, Robertson's curve cap puts are 5+years from now.

Do you have any evidence of this?

[goadam1]

Re: Pellegrini Says Shorting U.S Debt ‘Attractive Bet’

I have friends in high up finance. Connected. They say that they know for a fact that the Fed's idea is to export deflation by printing and we will magically restore our manufacturing base while the old debts are washed away. Not a good moment for going long anything but gold.

[cjppjc]

Re: Pellegrini Says Shorting U.S Debt ‘Attractive Bet’

I have friends in high up finance. Connected. They say that they know for a fact that the Fed's idea is to export deflation by printing and we will magically restore our manufacturing base while the old debts are washed away. Not a good moment for going long anything but gold.

the Fed's idea is to export deflation by printing and we will magically restore our manufacturing base while the old debts are washed away.

How?

[Quincy K]

Re: Pellegrini Says Shorting U.S Debt ‘Attractive Bet’

Betting against Bill Gross?

I don't think so.

[metalman]

Re: Pellegrini Says Shorting U.S Debt ‘Attractive Bet’

Betting against Bill Gross?

I don't think so.

Pimco's Bill Gross has been grossly off - BusinessWeek

Why am I so entertained by Gross's predictions? Because if you look at Bill Gross's track record as a market prognosticator, the reaction to the PIMCO don's ...

Even Bond Guru Bill Gross Can't Escape - TIME

Sep 18, 2008 ... PIMCO chief investment officer Bill Gross ... But while Gross has one of the best track records in the business, even he has not been able ...

[halcyon]

Re: Pellegrini Says Shorting U.S Debt ‘Attractive Bet’

Do you have any evidence of this?

His Oct 15 FT Interview. Look it up.

[halcyon]

Re: Pellegrini Says Shorting U.S Debt ‘Attractive Bet’

I have friends in high up finance. Connected. They say that they know for a fact that the Fed's idea is to export deflation by printing and we will magically restore our manufacturing base while the old debts are washed away. Not a good moment for going long anything but gold.

I think you mean export inflation, right?

Well, that's something one can try.

But it depends on the market's willingness to buy US nominated debt (government and agency). If they don't, well who could buy the debt? If Fed would print money to monetize government debt, it would just kill the dollar. If they killed the dollar, commodities and imports would go through the roof, no? A rapid price-inflation in food, imported goods (more than 70% of the stuff @ Wall-Mart?) could ensue. Also, investment assets would fly away from the USA to safety into safer currencies.

Civil unrest is not a good base to build one's political support on.

I think Treasury is between a rock and a hard place. They must close the fiscal gap, cut future spending, install a believable plan about reducing future liabilities and still try to keep the economy afloat.

Fed has similar issues: how much to keep on it's base? How much risk the growth of the supply? How not to kill the markets and 'recovery' signals by raising too fast/too soon? How to avoid the biggest dread of all central bankers (monetary deflation), without destroying the credibility of Fed and the US/USD?

I think that simplistic models that call for US wantonly and unipolarly inflating away their USD nominated debts are just that: too simplistic.

Why would the world bond markets that dwarf the US allow for that? Why would they pay for somebody else's bills?

I'm sorry, but I don't believe this. USD doesn't call the shots on this one. The world markets do and they bow to no single sovereign state, only to the altar of profits.

[Raz]

Re: Pellegrini Says Shorting U.S Debt ‘Attractive Bet’

I think you mean export inflation, right?

I think he did mean export our deflation.

Devaluing our currency makes our exports cheaper, thereby lowering the prices in Europe and elsewhere that the local currencies aren't pegged to the Bernanke Peso. The cost of course is the raping of everyone who holds the Dollar, especially those who inventory them for long periods of time, i.e. the Bond market. Our domestic prices rise -especially import prices - yet the prices of our exportable goods fall in other countries.

I agree with your points, Halcyon. Why would everyone else stand by and watch us ram a golden fid straight up their posterior?
This is really an old movie, the last grand showing was during the 1930s: "beggar thy neighbor". It's one of the reasons that Bretton Woods was hammered out in 1944-45. The experience of the 1930s proved that all it did was further diminish world trade.

We're going to have to put together a coalition of paleoconservatives and classic liberals who are willing to set aside differences on social policy in order to take back our government from these criminals like Bernanke, Geitner, Paulson, Summers, Dodd, et al.

Otherwise we risk losing everything when it ALL collapses.

[Down Under]

Re: Pellegrini Says Shorting U.S Debt ‘Attractive Bet’

His Oct 15 FT Interview. Look it up.

Very good. Thank you.

[MulaMan]

Re: Pellegrini Says Shorting U.S Debt ‘Attractive Bet’

Anyone have opinions on the best vehicles to short U.S. Treasury securities and U.S. agency mortgage-backed securities?