PIMCO ‘Large Overweight’ on China, Short US Treasuries,

Interesting stories about PIMCO are abundant these days...

April 13 (Bloomberg) -- Pacific Investment Management Co., manager of the world’s largest mutual fund, is buying Chinese stocks because it expects earnings to grow as monetary tightening policies ease.

The emerging-market equity fund has a “large overweight in China,” where financial and property stocks are attractive and Pimco has a “favorable view of the yuan,” said Maria Gordon, who was hired last year to manage the fund. [...]

[...] Credit Suisse Group AG boosted its 12-month forecast for the Hang Seng China Enterprises Index, HSBC Holdings Plc increased its rating on China to “overweight,” and Macquarie Group Ltd. said investors should lift holdings. Citigroup Inc. advised buying options to bet on gains.

“This is the space wherein companies trade at a significant discount to their net asset values,” Gordon, formerly a portfolio manager at Goldman Sachs Group Inc., said in an interview with Bloomberg Television. “We look for companies that may have been affected by cyclical adversity, where the earnings story is likely to be better once the story is normalized.”

The recommendations, which follow bullish forecasts last month from Goldman Sachs Group Inc. and Deutsche Bank AG, signal confidence that Premier Wen Jiabao’s government [...]

Emerging-market countries have “very significant structural growth opportunities” and “strong-trend earnings growth” in comparison with developed-market peers over three to five years, Gordon said. “Bubble and risk have faded partly because of the worries about the mid-cycle rebalancing,” she said. [...]

The fact that every bank is overweight China and recommending to buy doesn't seem to worry anyone. Moreover, the fact these self proclaimed capitalists are worshiping a communist government doesn't worry anybody neither.

Finally, how can you know the "net asset values" of these companies when there's so much fraud? And when all the assets are so much overvalued anyway?

PIMCO bets against U.S. government debt

NEW YORK (Reuters) - The world's largest bond fund began betting against the United States last month by taking short positions on its debt on expectations the nation's shaky finances will drive interest rates higher and imperil its triple-A rating.

Bill Gross, PIMCO's oft-quoted co-chief investment officer, in January warned that "mindless" U.S. deficit spending could result in higher inflation and a weaker dollar.

He has also been raising alarms about a lack of buyers for Treasuries once the Federal Reserve ends its own bond purchase program, also known as quantitative easing, in June.

The portion of PIMCO's $236 billion Total Return Fund held in long-term U.S. government debt, including U.S. Treasuries, declined to "minus 3" percent in March from zero in February and 12 percent in January, according to PIMCO's website.

Finally, Bloomberg is running a report about how Bears have failed, except Bill Gross.