Two posts in one day is unusal but called for today. First on the market. The news over the weekend out of Europe was horrible on top of poor performance out of the US on Friday despite a rescue plan from the Government. The deleveraging trade is continuing, both institutional and retail. Credit makes the world go around, and right now it is just not flowing. The list of problems continue to add up. Banks are not lending to each other as indicated by the high inter bank rate, and until that stabilizes and comes down, the whole system continues to be at risk. The commercial paper market continues to shrivel, which is the lifeblood of corporations around the world. Munis took it on the chin today, as retail investors continue to flee due to worries about liquidity and decreasing tax revenues. I could go on but you get the picture. Are we close to a bottom in equities? I continue to not have the answer to that one. There are a lot of things that need to happen likely before that happens, but that is the subject of a longer piece.
Now I just wanted to highlight a new piece written by Bill Gross, one of the world’s largest bond investors and now Washington Insider. Given his now buddy buddy relationship to the big guys who were just written a $700 billion dollar check to start buying stuff, it is a commentary worth reading. I am looking hard at buying some of PIMCOs funds.