PIMCO plays (or PIMCO’s play)

I’ve listened to this for the nth time and still can’t figure it out. So I must be very dumb. Gross is saying easy money will backfire (why I can’t tell), and fiscal policy can’t be relied upon because of politics. It leads to a story of double dip. But with bond yields already low, and PIMCO supposedly holding cash, they want you to think they will prop up stocks.

It could be a soccer play. They want you to buy stocks as they sell short; then later get you scared so you sell back as the economy tanks.

I suspect they also have a way of betting on interest rates falling some more without having to hold bonds. And when they think interest rates are as low as they can sell, they will short bonds while also publicly knocking them with an inflation scare story.

But what if stocks don’t fall, and bond yields rise “too soon”?

… Will PIMCO get bailed out just like LTCM?

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