I have yet to see a hedge fund operator who knows anything about economics or the monetary system

This should be no surprise. I have been documenting how clueless these guys are for a long time here on this blog.

Whether it's Kyle Bass or David Einhorn or Bill Ackman or John Paulson or even Bill Gross or any of them, they don't know what the fuck they are talking about.

They got everything wrong: monetary operations, inflation, the dollar, interest rates, commodities, "stimulus," etc.

On the other hand, I (we) got everything right because of our understanding of flows and MMT.

(Which begs the question: why am I not managing $15 billion? Go ahead and ask, it's a good question. Probably because I suck at marketing myself.)

Anyway, you can do better than them. Start by signing up for a 30-day free trial to my weekly report, MMT Trader. Take the money from these loser hedgies.

No comment...

This is it? This is his strategy?

Gross: Reverse head & shoulders (yields) in all global bond markets. Necklines being broken by the hour. Bearish.

— Janus Capital (@JanusCapital) June 9, 2015

40 years in the bond business and he's reverted to doing chart patterns now. You get paid millions to trade this way? We all should be instant millionaires, then.

"Who's gonna buy them now?"

Bill Gross needs "Mental Game"

I know what you are thinking: it's incredibly presumptuous and cocky of me to even suggest that I can offer something to Bill Gross, particularly something in the "trading skills/attributes" category. After all, Gross is a billionaire, I am not. He founded, built and then ran, for a long time, the largest bond mutual fund in the world. I did not.

Yet, in the past few years we have seen him falter. We saw the bizarre, "Who's gonna buy them now?" tweet back in 2011 where he fretted publicly, on Twitter, that there'd be no buyers for Treasuries when the Fed stopped it's QE program at the time. Matt Franko and I started to think he was losing it. We referenced Gross's comments many times here on MNE.

Then we watched his losses and client defections mount while at Pimco. FYI that, too, was predicted here before it ever happened. After that the messy breakup with Mohamed El-Erian (who is no particular trading prodigy himself--"new normal?" Seriously?) and finally, the move to Jeffries (of all places) where he got an account to manage, which was about 1/200th the size of the one he was managing at Pimco.

Personally, I think Gross should have retired; stepped out of the game while still on top, maybe not performance-wise, but reputationally.

So in the past month or two he's made some calls: "Short the dollar is the best trade all year" and "Short the German bund is the best trade of a lifetime."

On both of these his timing was pretty good. He could have made some money. On the bund trade it was excellent: the moment after he said it there was a meltdown.

Now it turns out he lost money. He got the calls right (at least for a trade), but lost money.

You know what that is? That's mental game that just is not there. How do I know? Because I used to do it all the time early on in my trading career. I was always a great analyst, but never really made any money. I got the market direction right, the timing right...everything right, then ended up making nothing or worse, losing.

That's where Gross is right now. He's burnt. His mental game is nowhere to be found. It sounds like the height of arrogance and cockiness when I say that if Gross wants to stay in the game he has to re-sharpen his mental game. Who am I? I'll tell you who I am; I am a guy who's been through it, only on a smaller scale.

If Gross does not get his mental game back he will lose, lose, lose and suffer a really ignominious end. Trust me when I say this.

I teach mental game in my course. I have said to students that you can be the best analyst in the world, have all the best information, indeed...even have inside information, but if your mental game is not right then you won't make any money at all. You will fail as a trader.

On the other hand if you have the right mental game you can throw money at a dartboard and make money. I am being absolutely serious.

I've had fun making jokes about Gross, but now I am really sad for him. The guy had stature and he really made it big. He's not going to listen to what I say, that's obvious, but I wish him the best. If he doesn't get his mental game back  he's really going to go down in flames.

Let it be a lesson to all. No matter how big or successful you are or once were, the big guys can fail, too. And it's not that the markets are great humblers. The markets couldn't give two shits about you; they're not alive, they have no feelings or soul.

In the end, success or failure, we make it ourselves.

I'm really starting to worry about Bill Gross. No, seriously.

Bill Gross appears to be totally losing it. From his ignominious departure from Pimco to his improbable landing at Janus of all places (the "Bond King" got a desk and a screen and a few billion--crumbs--to trade?) and all his crazy rants before, after and currently...the former "Bond King" just seems to be losing it.

Check this out:

"Credit based oxygen is running out," Gross wrote in the outlook titled, "A Sense of an Ending," in which he compared the final stages of the financial market cycle with his own mortality.

"A 70-year-old reads the obituaries with a self-awareness, as opposed to an item of interest. Some point out that this heightened intensity should make the moment all the more precious and therein lies the challenge: Make it so; make it precious; savor what you have done – family, career, giving back – the 'accumulation' that (British author) Julian Barnes speaks to."

Oxygen running out? Obituaries? Time running out?

Wow...wow wow wow wow wow. That's all I can say, is wow.

And he drags his personal darkness into his analysis now, too. Stocks are going down. The dollar is going down. Treasuries are going down. Bunds are going down.

The end...of everything?

Somebody better keep an eye on this guy. I'm worried about him. Seriously.

Jeff Cox — Bill Gross: German bunds are 'the short of a lifetime'

Here he goes again.

Then he qualifies: "The only question is timing."

CNBC NetNet
Bill Gross: German bunds are 'the short of a lifetime'
Jeff Cox

Bill Gross might be saved after all. Jim Rogers LOVES the U.S. dollar

Bill Gross has been a wonderful "fade" for the past few years. He got everything wrong in the bond market and with respect to rates and QE. We've been pointing out every time he makes a major call and I hope you made money on it by fading it.

On Monday you may recall that I posted, here, that I was thinking of shorting the dollar, but then heard that Bill Gross is short and calling it his "trade of the year."

So I looked to fade the guy once again.

Today, however,  I saw this:

Jim Rogers take the cake as "The World's Greatest Fade in the Universe of All Time."

So now it looks like Bill Gross will  make out pretty well on that dollar short and we should all be shorting the dollar, too. (No, seriously.)

P.S. Don't worry about that little "for now" rejoinder at the end of Rogers' comment about loving the dollar. All charlatans do that: that's so if it goes the other way he can declare he was right even though he was wrong. It's like when Schiff says interest rates are going to spike, I just can't tell you when.

I was thinking about shorting the dollar, that is, until I saw this...

I was thinking about shorting the dollar, after all, it's had a good run. Then I saw that Bill Gross is going short the dollar and calling it his "trade of the year."

Not everyone thinks the dollar will keep on climbing. Billionaire Bill Gross of Janus Capital Group Inc. called his contrarian bet against the greenback “the trade of the year.” His short is premised on the spread between U.S. and European interest rates narrowing. Read more.

Gross has been a tremendous "fade" in the past few years and I don't think that has changed. His performance at Janus since he left Pimco has been not that great. Check it out:

On the other hand, the analysts note, Gross’s Global Unconstrained Bond Fund, flat year to date, ranks in the bottom quintile of similar funds so far this year. Its total assets slipped slightly to less than $1.45 billion at the end of February from more than $1.46 billion at the end of January, data compiled by Bloomberg show. The fund also has a flat return since Gross took it over in October, ranking it almost exactly in the middle of the pack compared with similar funds, according to data from Morningstar Inc.

So, probably no dollar rally for at least a while. I do think that the euro will hit parity against the greenback. Euros are definitely not getting "harder to get."

I'm taking bets on how long Bill Gross lasts at Janus

I am taking bets as to how long Mr. "Who's gonna buy them now" remains at Janus. (How long Janus will have him, that is.)

As if right on cue, Gross pens his investment outlook on the Janus website right at the moment when every asset market was hitting rock bottom. Gross said that when 2015 is done there will be "plenty of negative signs in front of returns for many asset classes."

 Let's face it, Gross is as cold as ice. One of my most effective trading strategies back in my days when I was a floor trader was to fade the guy in the pit who was cold. All the savvy floor traders knew of this tactic.

 And no one has been colder than Gross.

 Who knows? I could be wrong. Maybe the Republican controlled Congress bails out Gross's bearish bets by not raising the debt ceiling in March. But I'm even starting to think that's not going to happen either. Bill Gross...I give him 10 months at Janus. Then he'll be out; working for some no-name hedge fund.

My podcast for Tuesday, Jan 6, 2015

Today's podcast.

Some topics: Market decline, bond yields, Bill Gross (again), euro, oil. Enjoy.

Bill Gross — The Trouble with Porosity and Prosperity

Bill Gross waxes philosophical again.

Janus Capital Group — Investment Outlook by Bill Gross
The Trouble with Porosity and Prosperity

Joe Weisenthal — The Bill Gross Blunder That Led To His Demise

In early 2011, Bill Gross completely exited the Treasury market on the premise that interest rates were going to surge and hit bonds.

The reason he thought interest rates were going to surge was that the Fed was ending QE2 in the summer of 2011. In a note written to investors in March, 2011 he asked: Who will buy Treasuries when the Fed doesn’t?… 

So Gross was using a flawed economic model (as were the deficit hawks who insisted that the US had to get its spending down to avoid a Greece-like bond spiral).… 

Folks like Bill Gross (and Republicans politicians) thought the Fed was distorting the market, and keeping interest rates from surging, and that turned out to be wrong.

Clusterstock

The Bill Gross Blunder That Led To His Demise
Joe Weisenthal

With Gross's departure maybe Morningstar should upgrade Pimco, not downgrade it

Morningstar downgraded Pimco's Total Return Fund today, from a gold rating to bronze, because of the departure of Bill Gross.

But wait...wasn't Gross doing poorly? Didn't he get pretty much everything wrong over the past few years with respect to his trades and bond outlook? We documented a lot of his comments on this blog.

Wasn't it Gross who tweeted, "Who's gonna buy them now?" suggesting that there would be no one to buy Treasuries once the Fed ended its Quantitative Easing that it had been doing at the time?

It almost seemed like Gross became very dogmatic in recent years, like a Peter Schiff or something, with a questionable lack of understanding of the bond market, the Fed's role and sovereign money. (Recall his misguided, "America is like a spendthrift family" analogies.)

If that's the case, why downgrade Pimco? Maybe some better performance is in store.

I take nothing away from Gross; he's compiled an amazing long-term track record and his marketing savvy when it came to building Pimco was amazing, but...

Let's not mistake a 30-year bull market in bonds for genius and let's also take into account that the guy was saying some pretty wacky stuff.

Hey Morningstar...maybe you got this all wrong.

Bill Gross — For Wonks Only

“For Wonks Only” Speed Read 

1. Cross your fingers, credit growth is a necessary but not sufficient condition for economic growth. Economic growth depends on the productive use of credit growth, something that is not occurring.

PIMCO INVESTMENT OUTLOOK — September 2014
For Wonks Only
William H. Gross | Managing Director

McCulley returns to Pimco

Reminiscent of Jobs return to Apple after near disastrous results?

Bond manager Pimco lost one familiar face this year but is seeing another return.

The Newport-Beach, California-based firm, which manages just under $2 trillion for clients, said Tuesday it has re-hired Paul McCulley, who has held a variety of positions for Pimco but now will serve as managing director and chief economist.

CNBC Jeff Cox
Pimco to turn to an old hand to steady the ship
Jeff Cox | Finance Editor

Bill Gross — Monthy Letter

Bill Gross takes an interesting position on a permanently low interest rate that is similar to Warren Mosler's "the natural rate of interest is zero," although for different reasons.

PIMCO Investment Outlook
Achoo!
William H. Gross

Epic confrontation between Bill Gross and Mohammed El-Erian at Pimco (*Corrected)

Note: I am making a correction to this post. Pimco did not have a "terrible year." According to the firm it beat its index so one could say it simply had a bad year relative to past performance. In addition, the firm claims that outflows were due to "rotation." The main point of my post, however, is that Gross fundamentally misunderstood the fact that the funds to buy Treasuries come from government spending itself and he continues to mischaracterize the United States as a household that can run out of money.

I have extended an open invitation to Bill Gross to discuss these topics on my show that I do at the NYSE for Hard Assets Investor or, right here on Mike Norman Economics.

I've said for a long time that Bill Gross doesn't know what he is talking about. We've cited examples on this blog, like the now-infamous, "Who's gonna buy them now" comment that Gross tweeted back in 2011. With that comment the "Bond King" displayed to the world that he had no understanding of sovereign fiat money systems.

Gross went on to have a bad year relative to his past performance and we also predicted large capital outflows from his fund and that's exactly what happened.

And Gross wasn't the only one on the receiving end of our scorn. There was Mohammed El-Erian, the Pimco CEO and former IMF economist who spoke in riddles when it came to the economy, perhaps to hide his own ignorance.

Now there's a story out today in the Wall Street Journal about an epic internal clash between these two behemoths. To me it seems like a battle between two partners who basically ran their firm into the ground (maybe that's too harsh) or, we can say at least, damaged its Tiffany reputation.

Check this out from the WSJ piece:

Mr. Gross—by his own admission, a demanding boss—had long showed respect for Mr. El-Erian and indicated that the younger man eventually would take over the world's biggest bond firm. But one day last June, the two men squared off in front of more than a dozen colleagues amid disagreements about Mr. Gross's conduct, according to two people who were there.
"I have a 41-year track record of investing excellence," Mr. Gross told Mr. El-Erian, according to the two witnesses. "What do you have?"
"I'm tired of cleaning up your s—," Mr. El-Erian responded, referring to conduct by Mr. Gross that he felt was hurting Pimco, these two people recall.

Pretty uncivil if you ask me. And don't forget, this is a "white shoe" Wall Street firm. Anyone who's ever worked at a top of the line, white shoe, Wall Street firm, knows that discussions, conversations, indeed, even arguments, are all conducted in the most civil, low volume, non-confrontational manner that you can possibly imagine. You're NEVER going to see two co-CEOs out there trying to tear each other down in front of the hired help. If daggers are to be thrown they get thrown quietly, usually behind backs, but never EVER out in front for all to see. That's what makes this confrontation so amazing. They were really going off the rails.

I've long said that ever since Paul McCulley left Pimco in 2010 that was teh end of their dominance. McCulley was not only Pimco's brilliant and ecclectic chief economist, but he was also an MMT adherent. You can't say that about Gross.

I remember back in 2003, when I had Gross on my radio show, he brought up his now very well known, but incorrect, anaolgy of the United States as a household. When I asked him how he did not recognize the distinction between a currency user, like a household and a sovereign government that is a currency issuer he seemed baffled and even bothered by the question. He said to me, "At the end of the day, they're really the same."

That's the thing, Bill. They're not. They're just not.

Some great guys to fade are just now getting bearish on stocks

Well, one of my favorites, Bill Gross, is out there telling everyone to "be careful." Gross says that the economy could tank because of debt and taper, bringing stocks down with it and that's why he's buying bonds.

Gross has been as cold as ice as, well, forever. Or, at least since Paul McCulley (Pimco former chief economist) retired in 2010. McCulley was/is an MMT guy. How 'bout that?

Since McCulley left Gross has been selling bonds when he should have been buying them and buying bonds when he should have been selling them. Pimco has lost a ton of clients as this blog predicted way before it happened.

I can tell you this, one of the best techniques I learned during my days as a floor trader was to fade guys who were cold and they don't get any colder than Gross, so I'm planning on fading him.

Next there's Tom DeMark, some technical kook who bizarrely has this huge following (as I scratch my head) many of whom are big time hedge fund guys. Personally I find his analysis to be about as rational as the practice of voodoo.

DeMark was on CNBC (where else?) today where he says that there may be a 40% stock market crash in the next three days. He goes into some crazy explanation that talks about 1929 and the number of days leading up to that crash and then tries to use that as a basis for his call now. All crazy talk. You can see why, if you know what you are doing, you can really make money as a trader because there are just a bunch of crazies out there making calls on the market that have absolutely no clue as to what the hell they are talking about.

(Take my Forex course! You'll see how to make money!!)

Anyway suffice it to say I'm seeing a lot of hysteria from people who are either colder than the polar vortex that is currently invading half the United States or just plain crazy. That's why I'm buying stocks down here and although I wasn't planning on selling bonds, since Gross is saying he wants to be a buyer then, ahhh, what the heck, I'll sell the damn bonds, too!

Bill Gross's Pimco no longer the largest mutual fund

We kind of predicted that here at MNE. Bill Gross has shown some shocking degrees of misunderstanding when it comes to economics and the monetary system. It was only a matter of time before clients started pulling out.

For the record, we have been painstakingly pointing out Gross's terrible calls over the years and some examples are here, here, here, here, here, here, here, here and there are even more!

A lot of people may not know this, but ever since Pimco's former Chief Economist, Paul McCulley, left in 2010, it was the beginning of Pimco's slide. Paul McCulley happened to be in agreement with much of MMT.

It's no secret, people...you understand how the economy works, you make money. MMT! (And just as an aside, maybe that's why there has not been one single losing trade in any of my Forex courses so far...MMT!)

Pimco's current co-CEO, Mohammed El-Erianwas Chief Economist at the IMF before coming over and he was also managing the Harvard Endowment just prior to joining Pimco in 2007. Harvard Endowment got killed in the financial crash.

Let it be known that he was no MMT guy either.

P.S. I got an email today from a guy who told me that he was a Peter Schiff client and his account was murdered. Surprise, surprise.

Another loser: John Taylor's FX Concepts now pretty much dead as he preached gold, "bought" hyperinflation and followed all the loser Austrian/Schiff views

Kyle Bass, Bill Gross, John Paulson all the other idiots trapped in a totally misinformed view of the monetary system and now you can add to that, John Taylor of FX Concepts, whose once $14 billion fund is down to practically nothing.

And that should be no surprise.

Listen to Taylor on CNBC telling everybody over a year ago to invest in gold because "they're gonna start pumping" and he uses all of the same, incredibly dumb arguments of morons like Peter Schiff, Nassim Taleb, etc.

(Of course, CNBC constantly puts these guys all over their air and that's why CNBC's ratings suck and are plummeting. Hello, CNBC????)

These guys--all MMT detractors--are losing their ass in the current environment. They're so, so, wrong. I, for one, am elated to see them stripped of their money.

Bill Gross — There Will Be Haircuts

Bill Gross reflects on money and admits that the central bank sets the interest rate and controls the yield curve as it wishes, and he doesn't like it one bit. He would much rather be a bond vigilante.

...central banks are doing the same thing with near zero-bound yields and effective caps on higher rates via quantitative easing.

PIMCO Investment Outlook
There Will Be Haircuts
William H. Gross