Two Separate Takes At Pimco

It's getting confusing to listen to the pundits, without thinking that is. Now Pimco has jumped into the Two Separate Takes ring. Bill Gross, in his latest note (on Zero Hedge) was carefully bolded for ease of reading by the Bunker Boys.

Gross said, in reference to the relative dearth of delevering going on, "What delevering there is, is most visible with household balance sheets in the U.S. and Euroland peripheral sovereigns like Greece."

He then goes on to say "The total amount of debt however is daunting and continued credit expansion will produce accelerating global inflation and slower growth in PIMCO’s most likely outcome."

Out on a limb here but, like it or not, we live in a world based on a consumption model. With delevering "most visible on household balance sheets" how do you get inflation when housholders cross off new iPads and cute yoga pants and plane tickets while trying to budget things like food and TP?

If the "total amount of debt is still daunting," how do you get "continued credit expansion" to "produce accelerating global inflation"?

Gross is brilliant, so I do not for one second think he doesn't get this stuff. With trillions of dollars under management, the propensity to talk one's book occasionally becomes a necessity I'd imagine. But who knows, maybe cognitive dissonance is running rampant.

I'll talk my book for a second. I just had to hedge some SPY 140 puts in the pre-market. Took a shot in the 1412 area and was wrong. I have a Fibonacci expansion target at 1417.58 and there is a trend line going back to January 3rd at around the 1421-1423 zone.

There is marked divergence on the %SP500 issues above the 50-day and 20-day moving averages. There is also marked divergence between SPY and IYG vs. JNK and HYG, with the latter not confirming the former since 2/29. I also note from the Twitterverse that the VIX had its lowest close since 6/21/07 and the TRIN closed at .55 one of the lowest of the year.

If the S&P wanted to fake out and freak out some people, here and now would be a great way to do it.