Market Movers: PIMCO vs. GoldmanSeptember 5, 2012 @ 1:40 PM EST
It was interesting yesterday as the market rallied hard off the day’s lows, with the SPX gaining about 12 points off the lows of the day and Dow about +90, before both settled back in a bit before the cash markets closed.
What exactly happened?
If press reports are to be believed, the rapid move up was all based off a tweet by PIMCO’s Bill Gross where he simply said:
“@PIMCO Gross: Draghi appears willing to write 2-3 year “checks” to peripherals. Very reflationary. Buy gold, TIPS, real assets.”
Gross also issued his September investment outlook today and here is the link:
For those lacking the patience to read it, the key points are that Gross reiterates his call that both bond and equity yields will not match historical returns in the near future, that he believes the individual investor must have some cautious exposure to equities, and that one should “Balance your asset mix according to your age. Own more stocks if you are young, but more bonds if you are in your 60s.”
Now once again, the folks from PIMCO have been all over the airwaves giving interviews and telling us they believe further global QE is a done deal and more or less saying get long riskier assets, at least in the short-term.
It continues to puzzle us here why PIMCO is being such a nice guy and telling us their strategy…but we continue to chalk it up to a heavy PR program aimed at getting more funds under management. (Or perhaps encouraging others to pile into positions they already own – a practice termed “talking your book”.)
On the other hand, Goldman has been telling clients just the opposite, focusing on the “fiscal cliff” and officially maintaining a 1250 target for the S&P for 2012.
And CNBC reported yesterday that GS equity strategist Stuart Kaiser had the following to say in a very timely note to clients:
“Kaiser doesn't think the Fed will embark on a third round of easing so soon, nor will the rest of Europe—namely Germany—support bold steps by the ECB to resolve its debt crisis. Bottom line: investors will be disappointed and dump stocks. In an unusual step for an equity strategist, Kaiser recommends clients purchase S&P 500 puts expiring on Sept. 14 with a strike price of 1375. The holder of this put—a contract to sell an asset at a set price in the future—would gain if the S&P 500 falls below that price before then.”
And so it goes and why the market, umm, has both buyers and sellers.
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