US Bond Market Crash
Dennis began the presentation with a report from PIMCO founder, Bill Gross. Bill Gross is commonly known as the bond king as he was an expert in bond investment and he had made a lot of money from it. His view was that the US bond market would crash. He reasoned that with QE 1 and QE 2, the Fed has been buying 70% of US government bonds. What happens after the Fed stops buying? The demand for US bonds is not sustainable. He had sold all US$28.6 bn worth of US bonds in his PIMCO Total Return Fund and he is actually holding a 4% short position on US bonds. He has 37% of the portfolio in cash which is unprecedented (less than 20% in the past).
How will it lead to a financial crisis in 2012
Dennis added that the US government had ......