PIMCO Total Return Fund, the world’s largest bond fund, increased its U.S. Treasuries holdings to the highest in over a year in April, data from the firm’s website showed on Thursday.

 The fund, which has roughly $292.9 billion in assets and is run by Bill Gross, increased its holdings of U.S. Treasury securities to 39 percent in April, up from 33 percent in March.

Treasuries “are better than the alternative (cash) as long as central banks and dollar reserve countries (China, Japan) continue to participate,” Gross said in his May investment letter to clients.

Gross, a founder and co-chief investment officer of PIMCO, said in the letter entitled “There Will Be Haircuts,” that while Treasuries are a better alternative than cash, they still face a loss of at least 2 percentage points in the interest payouts after accounting for inflation. >> Read More

Two former high-ranking executives at JPMorgan Chase faced tough questions from senators Friday about why the bank played down risks and hid losses from regulators when it was losing billions of dollars.

The hearing was held a day after the Senate Permanent Subcommittee on Investigations issued a scathing report that ascribed widespread blame for $6.2 billion in trading losses to key executives at the nation’s biggest bank.

Douglas Braunstein, the former chief financial officer, and Ina Drew, the former chief investment officer overseeing trading strategy, were pressed to explain why bank executives gave federal examiners in April information that significantly understated losses for the first quarter of 2012.

“The number I reported (to the regulators) was the number that was given to me,” said Drew, who resigned last spring after the losses became public. >> Read More

With its prior record of 14164.53 left in the dust, the Dow Jones Industrial Average is ready to move on to its next target: 15000.

Whether stocks can reach that peak depends on the pace of economic growth, corporate earnings and the future of intervention by the Federal Reserve and other central banks, strategists say. But with the market—when viewed in relation to company earnings—still trading at a discount to previous peaks, some money managers remain bullish.

“The market could go higher on earnings, and I think we may. If monetary pressure stays positive, that could drive us higher. And if nothing bad happens in Europe, that could drive us up,” said John Manley, chief equity strategist at Wells Fargo‘sWFC +0.47% funds unit, which manages about $200 billion in assets. “If you start from that notion that everything’s going to fall apart, the gradual erosion of that thinking can drive the market higher.”

While many of recent years’ problems remain unsolved—such as a slow recovery in the U.S. economy, and debt issues in the euro zone—individual investors finally seem to be “coming out of their shells,” said Art Steinmetz, chief investment officer at OppenheimerFunds Inc., which oversees $205 billion in assets. >> Read More

Adam Grimes (Chief Investment Officer of Waverly Advisors) prefaces his 2012 book, The Art and Science of Technical Analysis: Market Structure, Price Action, and Trading Strategies, by stating: “This book…offers a comprehensive approach to the problems of technically motivated, directional trading. …Trading is hard. Markets are extremely competitive. They are usually very close to efficient and most observed price movements are random. It is therefore exceedingly difficult to derive a method that makes superior risk-adjusted returns, and it is even more difficult to successfully apply such a method in actual practice. Last, it is essential to have a verifiable edge in the markets–otherwise no consistent profits are possible. This approach sets this work apart from the majority of trading books published, which suggest that simple patterns and proper psychology can lead a trader to impressive profits. Perhaps this is possible, but I have never seen it work in actual practice. …The self-directed trader will find many sections specifically addressed to the struggles he or she faces, and to the errors he or she is likely to make along the way. …[Institutional] traders will also find new perspectives on risk management, position sizing, and pattern analysis that may be able to inform their work in different areas.” Using example charts for many assets from different times over different time frames and from different markets, he concludes that:

From Chapter 1, “The Trader’s Edge” (Page 7): “Every edge we have, as technical traders, comes from an imbalance of buying and selling pressure. …we do not trade patterns in the market–we trade the underlying imbalances that create those patterns.”

From Chapter 2, “The Market Cycle and the Four Trades” (Page 45): “When buying pressure seems to be strongest, the end of the uptrend is often near. When the sellers seem to be decisively winning the battle, the stage is set for a reversal into an uptrend. This is why it is so important for traders to learn to stand apart from the crowd, and the only way to do this is to understand the actions and emotions of that market crowd.”

From Chapter 3, “On Trends” (Page 95): “…many outstanding trades come in trending environments. Market structure in trends is often driven by a strong imbalance of buying and selling pressure, it is often easy to define risk points for trades, and some of the cleanest, easiest trades come from trends. However, markets do not always trend.” >> Read More

Jeffrey Gundlach, one of the world’s leading bond fund managers, has reversed his once-bearish stance on government debt, saying he has bought “more long-term Treasuries in the last month” than in the last four years.

Gundlach said he started buying benchmark 10-year U.S. Treasury notes in the last month after yields popped above 2 percent, because he sees value there relative to other asset classes, including stocks, which he said are “overbought.”

“I bought more long-term Treasuries in the last month than I’ve bought in four years. I am a fan of Treasuries now. I wasn’t a fan of Treasuries in July,” said Gundlach, chief investment officer and chief executive officer of DoubleLine Capital.

His Los Angeles firm manages $56 billion in assets. >> Read More

The Pacific Group Ltd., founded by a former PaineWebber Inc. trader, is converting one-third of its hedge-fund assets into physical gold, betting that prices will go up as governments print more money to pay off debt.

The Hong Kong-based asset manager plans to take delivery of $35 million worth of gold bars that can be traded on the London Bullion Market Association and other international markets, William Kaye, its founder and chief investment officer, said in a telephone interview on Jan. 18. It has secured vault space at Hong Kong International Airport to store the gold, he said.

Investors disillusioned with government money printing to service “insurmountable” public debt may seek alternatives to fiat currencies, Kaye said. Asset managers, including Soros Fund Management LLC, Paulson & Co. and Sprott Inc., are betting on the precious metal even after a 12-year rally has cemented the longest bull market in at least nine decades.

“Gold, the way we look at it, is anywhere from being undervalued to being seriously undervalued,” Kaye said. “We’re in the early stages, in our judgment, of what would likely be the world’s largest short squeeze in any instrument.”

Fiat currencies have no tangible backing, such as gold or silver, except governments’ good faith and can become worthless due to hyperinflation or loss of public faith.

Pacific Group’s $95 million Greater Asian Hedge Fund, which started trading in 2001, returned 2.8 percent last year, taking the cumulative net return since its February 2000 inception to 195 percent. It suffered two down years in 2008 and 2011, according to its December 2012newsletter. >> Read More

One of the UK’s top equity traders is leaving Soros Fund Management, the hedge fund founded by billionaire George Soros.

Robert Donald, who headed up investments in European equities as a portfolio manager from SFM’s London office, is to leave at the end of the year.

A spokesperson for Soros declined to comment on the move.

Mr Donald, who specialises in trading industrial companies and basic materials, is widely regarded as one of the leading equity traders in the UK. >> Read More

Gold’s 12-year rally, the longest in at least nine decades, is poised to continue in 2013 as central bank stimulus spurs investors from John Paulson to George Soros to accumulate the highest combined bullion holdings ever.

The metal will rise every quarter next year and average $1,925 an ounce in the final three months, or 12 percent more than now, according to the median of 16 analyst estimates compiled by Bloomberg. Paulson & Co. has a $3.62 billion bet through the SPDR Gold Trust (GLD), the biggest gold-backed exchange- traded product, and Soros Fund Management LLC increased its holdings by 49 percent in the third quarter, U.S. Securities and Exchange Commission filings show.

Central banks from Europe to China are pledging more steps to boost growth, raising concern about inflation and currency devaluation. Investors bought 247 metric tons through ETPs this year, exceeding annual U.S. mine output. While both sides said talks Nov. 16 between President Barack Obama and Congress over the so-called fiscal cliff were “constructive,” the Congressional Budget Office has warned the U.S. risks a recession if spending cuts and tax rises aren’t resolved. >> Read More

These are times that try an asset manager’s soul. The world’s economy is a soft-paste porcelain vase set on a wobbly plant stand in the heart of an active earthquake zone. The Middle East is sending out foreshocks of war. The South China Sea is a smoking caldera of tension. Social unrest in the EU threatens tidal waves. And, according to the agitated rats and snakes of the financial press, China is headed into a recession.

Meanwhile, in the U.S., where the economy is climbing from its financial crater like an underoxygenated mountaineer, congressional miscalculation threatens to topple the weary cragsman back into the abyss. >> Read More