here is the article which sort of of shows how much money can be made when you are pimping for the fed.
http://www.reuters.com/article/2013/09/27/us-usa-qe3-pimco-special-report-idUSBRE98Q0E620130927
....
ON THE MONEY
A Reuters review of more than 14,000 trades by the Federal Reserve Bank of New York and Pimco over the past five years shows that Pimco has consistently been on the money in anticipating the Fed's actions in the agency MBS market.
Gross and other Pimco executives credit their success to the Fed's transparency in announcing its intentions and to their own expertise in buying assets when they are cheap and in analyzing the broader economy. "Anticipate, then buy what they buy, only do it first," as Gross put it in the January 2009 installment of his monthly "Investment Outlook" on Pimco's website.
The Reuters analysis of quarterly Pimco Total Return Fund holdings and of Fed actions suggests that Pimco's expertise was augmented by other factors: its size, the Fed's choice of an intervention program perfectly tailored for Pimco to exploit, and a close relationship with the Fed.
The firm had brought in former Fed Chairman Alan Greenspan as a consultant in 2007. Gross's top lieutenant, Mohamed El-Erian, serves on an advisory committee to the central bank's most important branch, the New York Fed. Pimco's global strategic adviser, economist Richard Clarida, has known Fed Chairman Ben Bernanke for three decades and was reported to be in the running for a seat on the Fed's board of governors in 2011.
Pimco, a unit of German financial-services firm Allianz SE, was one of four firms the central bank hired to help it buy agency MBS in 2009 under the first phase of quantitative easing, called QE1. In essence, these firms collaborated with the Fed on writing its playbook for the program. The aim was to stimulate lending and spending by driving down interest rates through mass purchases of bonds, flooding the market with cash.
Two of the other three Fed helpers - Goldman Sachs Group Inc and BlackRock Inc - also scored big returns on bond funds during the program. However, they didn't bet on agency MBS to the degree Pimco did. Reuters was unable to determine whether the fourth contractor, advisory firm Wellington Management Co, was advising any funds trading mortgage securities at the time.
RARE CONFIDENCE
Pimco, by contrast, exhibited a rare confidence in its agency MBS trading. At one point in March 2009, for example, 91 percent of the Total Return Fund's assets were in agency MBS, according to data from investment research firm Morningstar Inc. That level was unusual for the fund and far exceeds that of any comparable fund at the time. By contrast, agency MBS accounted for 38.7 percent of assets in the Barclays U.S. Aggregate Bond Index, the industry benchmark.
In his January 2009 web posting, Gross said Pimco's aim was to "shake hands with the government." And in an interview with Reuters in February this year, he said: "It is a good strategy to anticipate what the Fed is going to do, and when they do it, to cooperate with them. ⦠So that is what we've been doing."
"Pimco knew the policy that the Fed was attempting to achieve, and it could readily stock up on those types of securities," says Anthony Sanders, professor of real-estate finance at George Mason University. "Buying for the Fed in the volumes that the Fed was buying would almost certainly result in price increases in the specific MBS. So why wouldn't Pimco build a quick portfolio of these securities and take advantage of valuation increases or cash returns?"
Doing so was perfectly permissible under the Fed program. The central bank allowed Pimco and the other three firms to continue trading in agency MBS while some of their employees were seconded to the central bank. Contracts that the firms signed with the New York Fed prohibited the firms' traders or employees from discussing their work.
...
.
