Monday, March 4, 2013

Pimco’s Gross culls Bernanke speech for bad news on Treasurys

Bill Gross tweeted about Federal Reserve Chairman Ben Bernanke's speech on Friday, noting projections for 10-year Treasurys showed negative total returns over next few years

PIMCO’s Bill Gross is not impressed with total returns for the 10-year U.S. Treasury note.

Gross tweeted on Monday about Federal Reserve Chairman Ben Bernanke’s comments on current monetary policy at a Fed research conference on Friday.

Bernanke warned that a premature exit from the Fed’s program of asset purchases could actually extend the period of low long-term rates. Those remarks came after two days of testimony to Congress ended Feb. 27 in which Bernanke reaffirmed his support for the Fed’s current bond-buying program. Read more: Bernanke says hasty end to easing could backfire.

Bernanke explained that long-term interest rates are composed of expected inflation, expected real short-term rates and a term premium. The low expectations for inflation and real short-term interest rates are fueled by central-bank mandates and the weak recovery of the so-called advanced economies, respectively.

“This weakness, all else being equal, dictates that monetary policy must remain accommodative if it is to support the recovery and reduce disinflationary risks,” said Bernanke.

Gross, who runs the world’s largest bond fund, said in December his bond picks are mostly outside of the Treasury market. Read more: Bill Gross, others look past Treasurys for 2013

The Total Return Fund PTTAX 0.00% held 26% in Treasury debt as of Dec. 31, an increase from the 20% it held at the end of September, according to PIMCO’s website.

Gross has been known to take the other side of the Fed trade in the Treasury market. He bet that there wouldn’t be a Treasury rally in 2011, only to watch as yields fell 147 basis points that year, pushing prices higher. Gross’s Total Return Fund performed poorly among its peers in 2011 and faced redemptions for the first year since the fund began in 1987.

Why Doesn't Yahoo! Want Employees to Telecommute?

Is water cooler conversation the means to company success? If you're Yahoo! CEO Marissa Mayer, the answer is yes.
Mayer has told her work-at-home employees to re-start their engines, hit the highway, and get back into the office. 
Recently, a confidential memo sent out by the Sunnyvale company's Human Resources 
Department to employees spelled out her strategy. It was revealed by AllThingsD's Kara Swisher:
“To become the absolute best place to work, communication and collaboration will be important, so we need to be working side-by-side. That is why it is critical that we are all present in our offices. Some of the best decisions and insights come from hallway and cafeteria discussions, meeting new people, and impromptu team meetings. Speed and quality are often sacrificed when we work from home. We need to be one Yahoo!, and that starts with physically being together.”
The change in policy runs counter to national trends. According to Reuters, "About one in five workers around the globe, particularly employees in the Middle East, Latin America and Asia, telecommute frequently and nearly 10 percent work from home every day." In India, over 50% telecommute. In Indonesia, 34%.
One study released over five years ago suggested that if all Federal employees who are eligible to telework full-time were to do so, the Federal Government "could realize $13.9 billion savings in commuting costs annually and eliminate 21.5 billion pounds of pollutants from the environment each year."