Bill Gross Tells Bloomberg To "Avoid Dollar Denominated Government Debt" – When Nassim Taleb and Marc Faber say that US government debt is a suicide investment, one can be allowed some skepticism. After all, they are likely just talking their book. On the other hand, when the manager of the world’s biggest bond fund, whose flagship fund Treasury holdings amount to almost $80 billion goes on Bloomberg and says to "avoid dollar-denominated government debt" better known as US Treasuries, and instead recommends viewers invest in "stable" currencies like the Peso, the BRL or the CAD, then you know the bottom in bonds is in. So in addition to dumping fixed rate bonds (which means Pimco will again be able to buy on the cheap ahead of QE3, which as Larry Meyer has by now likely advised Pimco is a sure thing), Gross also told Bloomberg that his other two strategies are to buy floating rate debt (over fixed), and lastly recommend credit spreads over interest rate duration risk. For those who find something troubling with a $1 trillion fixed income manager talking down his investments, and are still wondering whether or not QE3 is coming, we suggest putting one and one together. And while at it, they should also consider that Pimco now holds over $100 billion in MBS: a notional amount last held just as QE1 was announced.
Australians Sinking Under Debt Burden - According to the Reserve Bank, Australians have added almost $220 billion to household debt levels since the beginning of 2008, taking our borrowings to a record $1.3 trillion. Despite more cautious spending in recent months, household debt is still up by 5.8 per cent on a year ago and a recent survey by Westpac found only about 20 per cent of people thought paying off debts was the best use of their money. Most households in the US, UK and much of Europe are still busily paying down their borrowings, particularly unsecured debts such as personal loans and credit cards
China Dec Manufacturing Eases On Tightening Moves – A survey says China’s manufacturing boom eased off slightly in the last month of the year, reflecting tightening policies taken by authorities to keep inflation in check. The state-affiliated China Federation of Logistics and Purchasing said Saturday that its purchasing managers index, or PMI, dipped to 53.9 last month from 55.2 in November and 54.7 in October. It was the first decline in five months but the 22nd straight month that the reading has stayed above 50, the benchmark for expansion. The survey covered 820 companies across a range of industries and is an indicator of future trends.
Beijing Residents Rush to Register New Cars to Meet China’s Quota System – Residents in Beijing, the city ranked as having the world’s worst traffic, rushed to apply for new vehicle licenses under a quota system started Jan. 1 as China’s government seeks to ease the congestion. A total of 53,549 applications were made on the first day of the year, more than double the number of license plates to be available each month, the Beijing News reported yesterday. The government said on Dec. 23 it would set a monthly quota of 20,000 new vehicle licenses in the Chinese capital. China surpassed the U.S. last year to become the world’s biggest car market as tax cuts and government subsidies aimed at spurring auto sales fueled a surge in traffic. Beijing tied with Mexico as having the world’s worst traffic, according to a survey by International Business Machines Corp. last year.