The really big guys like PIMCO are moving away from treasuries. They say the jig is up.

Peter Schiff, CEO of Euro Pacific Capital, said earlier this month that the U.S. bond market and dollar were headed for a collapse due to the inability of the Federal Reserve to service the nation’s debt with “artificially low” interest rates.

Ya, Schiff got it wrong as people rushed to the dollar when the EU thing got stupid but at least he admits it. The problem now is the continued negative real return for protection is wearing thin. The big guys are waiting for the smaller ones to try it again and then they will stampede out the door.

To guard investments from rising inflation, Gross recommended investors shift their focus to short-term bonds and dividend-paying stocks.

“Focus on bonds with maturities in the five-year range and stocks paying dividends that offer 3 percent to 4 percent yields,” he said in his note in May. “In addition, real assets or commodities should occupy an increasing percentage of portfolios.”

There will be temporary pain for us. I look at where the really big money has to make its final stand and the space for the high ground looks very limited. We should see a sharp decline in June but will that be the real bottom? I think that will be answered by Spain. We have to watch for PIMCO's moves. They will lead the pack.