What Does This Tell Us?

PIMCO's Bill Gross is widely believed to be inside the loop as it relates to Fed policy, he's made some pretty amazing predictions about Fed actions in the past that seem more insider knowledge then market sage. Rumor? Yes, but as the world's biggest fund, PIMCO is an economic policy setting entity in its one right and Bernanke would be stupid not to keep Bill Gross on his side of the fence, so unlikely? Not at all.

Looking at PIMCO's latest holdings we see a couple of interesting developments...

First of all their T-bil holdings (government related) has dropped off a cliff, this is a huge change for the fund. As I've been saying, it seems like something is changing in the market and fast. Could it be the Fed's actions are creating unintended foreign policy consequences that aren't exactly appealing? In any case, Treasury holdings have dropped way off and the chart appears as if they are not done selling.

Actually almost every class of holding has dropped way off except marginal increases in high yield and "other". Their cash position has increased to the extent there's a positive cash balance in their flagship account as opposed to the margin they had formerly been on. Mortgage securities and emerging markets for the most part are also trending down. It looks like PIMCO is getting out of MBS/Treasury, decreasing their overall exposure to the market (all classes) and de-leveraging.

Something is most definitely going on in terms of a radical shift in mentality toward various asset classes.  This is yet another warning that we are approaching some kind of a shift away from the crowd consensus-the "Buy the dipsters" and other self promoting market-mavens.