alix: here's what we're watching at this hour. stocks are sinking today will while the dollar trades near multi-month -- multi-month lows near the euro. economic growth rattling markets around the world. the lones may be bright spot in today's trading action. automakers saying the industry is on pace for the best april ever as americans continue to buy new cars at record levels. plus, insurance giant aig reports third straight loss on hedge funds. the chief executive peter hancock says the company is back on track. we have some breaking news for you. is projected to advise companies on hiring pay as well

as hr practices. summer suedck last the vc firm kleiner perkins and cal field. she said she was preyed on by male colleagues and denied a promotion when she complained about it. now, she is starting her own consultancy firm. she is starting a tech diversity advocacy group. advising companies on hiring hr pay practices. after she left kleiner perkins, she was the interim ceo of credit. she is also on the board of clipboard and lehigh technologies and is now starting her own consultancy shop. they'll miss an interview with the former kleiner perkins partner ellen pao about her new advocacy venture. that is one year after losing her discrimination lawsuit against the legendary the sea firm. catch that today at 3:00 p.m. eastern. we are halfway through a pretty brutal trading day. i want to head to the markets desk where bloomberg's julie hyman has the latest. it started in some areas of asia

, spread to europe, european banks, and now spreading to the u.s.. economic orders we got in asia, and then in europe, the sentiment shift that seemed to come into the markets, this risk off idea, concerned of global growth needs to come back into the market. we are seeing all three major averages have been hovering near the lows of the session and relatively high volume, more than 10% above the 20 day average. it is a sharp reversal from a we saw yesterday. remember, we saw frank throughout the day yesterday accelerating into the close of trading. if you look at the two day chart in the s&p 500, you saw it again near the .8% before the big gap down that we see in today's session. of course, yesterday session was itself a reversal of last week's selling. it has been a little of a whipsaw over the last few days. take a look at what is on the move. it is a broad-based selloff we're saying. energy shares trading lower, materials, financials, about

half of the groups in the s&p 500 are trading down by at least 1%. of thees down the least major averages. oil prices trading lower today ahead of tomorrow's inventory report. that is helping to pull down the energy stocks as our earnings out from baker hughes and halliburton and commentary on their failed deal. -- exxon mobil falling along with those group prices which are now below $44 a barrel. we are seeing the financials pullback today on, it looks like pushed out expectations for a rate increase with the big cap bank falling in today's session. thee we don't have those at moment, if you move on to what is going on with the 10-year note today, we're seeing a big move downward in yields on the 10 year. you see it, one point 79% at the moment. couple of more weeks, we have seen a lot of be done earnings estimates.

>> interestingly, if you go back to the beginning of earnings season, we're a .9% on the s&p 500. it definitely doesn't feel like it. it is interesting. today, in terms of winners and losers that we are watching, we have pfizer trading higher after those companies beat estimates. we still have 82 more companies to report this week. if you look at the bloomberg and ea, will we have been watching here, 353 of the 500 companies in the s&p 500 have reported earnings down a .9%. check -- check in on bloomberg first word news. mark crumpton has more from the newsroom. secretary ash carter says an american serviceman was killed in iraq from fire from an islamic state. it happened after an attack on iraqi kurdish positions outside of the city of muscle. it was the search -- the third death of an american servicemember in iraq since the

us-led coalition launched its campaign against militants in the summer of 2014. secretary carter was in germany where he has been consulting with european allies on fighting islamic state. secretary carter described it as a combat that -- that provided no immediate details. the czech republic defense minister says the united states has a right. are not members of nato spending enough on defense. officials say europe has an inability to come back some of the region's top security threats such as russia and the islamic state. ted cruz says today's indiana primary is make or break for him. wouldloses, donald trump be all but unstoppable in the race for the republican presidential nomination. rejuvenateory could chances for a contested than that -- can best -- convention. meanwhile, the democratic race in indiana is much closer, but hillary clinton has a commanding

lead over bernie sanders in the number of delegates. michigan number -- governor rick snyder will be president obama -- will meet president obama at the foot airport. they will discuss the city's drinking water crisis. governor snyder has blamed his own regulators for the city's lead contaminated water. he has also pointed a finger at the epa. news --global news 24 hours a day powered by 2400 journalists in more than 150 news bureaus around the world. i am mark crumpton. alex, back to you. alix: right now, we are going to e-mail can institute global conference in los angeles. bloomberg's erik schatzker is standing by with david solomon, cohead of investment banking edelman sacks. take it away. tell youdon't need to that the pace of dealmaking has been slow. it has been reflected in the first quarter results. the industry's results. what is a going to take for m&a

and capital rates to pick up? >> all of this has a lot to do with confidence. obviously, the volatility saw in the first part of the year shook confidence and slow down cop -- capital market activity. very little equity flown through the first quarter. i feel activity almost nonexistent and if -- ipo activity nonexistent in the first quarter. if you are looking at an environment where there is market volatility, you slow down. with respect to thinking about doing transformative or moving you out. stabilization of that is necessary to see activity levels. >> what are your clients telling you? how long do they plan to hang back and wait to see if a stable environment persists? >> i think i would trade in different. i think most ceos in this environment at a target list that they are actively looking at him a working at, thinking about. the reason for that is that you think about the overall

environment, shareholders actually want to see companies buying growth and deploying capital in a fashion. people are out there looking for those opportunities. there are a handful of things beside market volatility that , thegreeted headwind regulatory oversight run deals, we can talk about that. think is we see stability here, we will see that activity pick up again. maybe not to the degree that we saw the second half of last year, but even over the course of the last couple of weeks, we have seen it pick up productivity again. my guess is market stay the way they are operating now, it will continue. >> there was a time not so long ago when you thought tech valuations were getting frosty -- frothy. you seemed eager for discipline to return to the market. are we there yet? >> there is no question around private market valuations in particular. there has been a little bit of a correction. i think it is healthy.

that is a place where i think really, valuations seem to be running fast. if you think about that, people were willing to give people capital with the focus only on growth, not with an expectation as to how much capital. and ultimately, when you get a return. that is discipline that i think is healthy and productive. >> it has been a tough time for financial services in general. i alluded to that. more so, however, for sawyer competitors than for goldman sachs. how are you taking advantage? great global platform. we continue to believe the things we do, advising companies, helping companies raise capital, helping companies manage risk, serving our clients the market intermediaries, for people, these might have an flow across the cycle but they are not going away. we have a strong position in those businesses and we will continue. >> i'm thingy more tactically. are you taking people off?

i saw jacques who ran the investment business for deutsche bank lead to pg d partners yesterday. i am wondering if that means he turned down an offer from goldman sachs. >> jack is a terrific guy, a great friend, a good banker. jack is not interviewing a goldman sachs. we wish him lots of success at pgt. we are still hiring people. we recently made a -- we hired a terrific young woman, sara marie martin who will work in the area of financial sponsors. across the firm, we continue to hire people that we think it help us build on our client platform. >> if you want to those two firms which are under a lot of pressure, deutsche bank and credit suisse, how many people in each firm would you hire right now if you could? >> i cannot answer that question in a contest. erik: you can, you know who they are.

you know exactly who you like to hire. david: we have a list of senior people we dialogue with always. the process of senior people is the process that takes time. we're always looking at it and always looking for opportunity. >> whether it is in hiring or winning mandates, boutiques have become more competitive in the post crisis environment. what can you do more of two ensure that goldman wednesday mandate? >> there are no questions that those businesses have been interesting businesses that have played a different and evolving role in the investment banking landscape. we have looked very hard at our track record over the last decade with phenomenon, boutiques evolving have occurred. it has an change the fact that our market shares and strengthen. there is no question that the boutique may have taken market shares from certain players in the marketplace. they are basically two very fundamentally different models. we have a global footprint with broad resources across the

capital management that our clients need. not aoesn't mean there is role for the boutique advisory firm. there is. in any given situation, there can be competition, but it is fundamentally a different process for our clients. how often do you bring lloyd in over the deal? >> eastman's atomic time meeting with our clients be lloyd and gary's been a ton of time. >> no disrespect to gary, by the way. >> or richard or john. >> how often does -- can you give me an idea, how often does a happen that you feel that the participation of a larger gary was key to winning a mandate? >> it happens a lot. all of us, we are out talking to clients. basically, we divide up the world and try to put us -- ourselves in the position to let our clients, the executive leadership of the firm. i think it is an effective way to stay in touch with our clients needs and a great way for our clients.

erik: i have a specific question. how, you guys don't have a role in ranging the ipo? not aramco will go public and how that will proceed and who all the underwriters will be one develop over time. we are currently not involved, we have a dialogue with them on a regular basis. we will see how that abolished. >> i assume you would have liked to be there. >> we would have loved to be one of the few people around -- advising aramco. we have leading market shares and capital raising. leading market share and capital raising 10%. that doesn't mean you're in every single deal. we are very proud of our leading market share position. we are always focused on the biggest opportunity to serve our clients. erik: here is another human capital question. many goldman partners have been retiring lately. lloyd talked into -- talked in his letters about the benefit of

hiring younger and cheaper people. are these departures voluntary and canr first forced, you see those people on the relationships they have walk out the door? david: there is a long culture a goldman sachs of people working at the firm, leading our people, leading our relationships for clients, and then retiring so that other younger people can come up and have the opportunity to continue the legacy and that process. one of the things we work hard at it is having teams of people connected to an covering our clients. we, at times, are people that lead and we have to redouble our efforts. generally speaking, we have a long-term perspective of building relationships. a goes to back -- a goes back to what you said. about connecting lloyd, solomon, richard, michael. we are all out staying connected

with clients. it is a natural process for the organization that keeps our clients connected to goldman sachs. erik: it is great to see you here. >> always great to see you. thank you for having me. erik: david solomon of goldman sachs. back to you in new york city. alix: at the milken institute global conference in los angeles. coming up, can you name this stock? our mistry stock is cleaning up today as most of the market stays. earnings topping estimates after whitewashing its hands of the venezuelan assets. we will until the mistry stock after the break. -- the mistry stock after the break.

alix: it will focus on diversity in the technology industry. she made headlines in 2012 when she sued kleiner perkins alleging she had been passed over for promotions and excluded from corporate events because she is a woman. the venture capital film won the lawsuit and bloomberg west tanker emily chang will have an -- exclusive interview with ellen pao her self at record p.m. eastern time right here on bloomberg television. now, the moment that i have been waiting for, we are going to find out with the mistry stock is. julie hyman at the news desk.

the mistry stock is cleaning up today. even after whitewashing its hands of venice one assets. >> what is another word for to make something white? >> color? >> clean? >> bleach? >> clorox? i did talk to the electric clorox is the company we're talking about. it got rid of his venezuelan assets in the last year. you can see year to date, the stock is up 4%. it's out with earnings today. a lot of the gain we have seen this year is coming from today and in the run-up to earnings today. the company is raising its work as for 2016 after its earnings in its fiscal third-quarter beat analyst estimates. the company saw a decrease in shipments in its core bleach business. it saw an increase in burts bees as well as in its glad trash bag and disinfectant wipes business and is making an acquisition for $290 million in cash from a

company called her new life that makes probiotic and clinton products. that might be giving the stock a bit of a boost in today's session as well. looking at some of the other earnings related movers that we have an watching, there's clorox today, looking at the earnings related movers, we have been looking at the health insurers today, hospital companies. hca is lower after the company increased its provision for bad debt. that is overshadowing earnings that the -- beat estimates. similar story. tenant beat estimates. those shares are being estimate. >> think so much, julie hyman. much more coming up after the break. overall, the dallas of the and the nasdaq off by 1%. we will be right back.

julie: stocks under pressure today. we can earnings, tepid growth in

the u.s. as well as china. take a look at what we have seen and stocks of the bloomberg. volatility for the s&p, the green line is a 1% swing from open to close. we saw a relatively subdued trading in march and april, but starting to pick up right now and may. for more on what is leading the market jitters, gabrielle is a global market strategist at j.p. morgan asset management and joins me now. why the discontent? >> overnight, the big piece of news we got was the chinese pmi manufacturing service coming in a little weaker than expected. that affecting the commodity complex. i think more than that, it is a period of digestion. we have come a long way since the bottom, february 11 for the s&p. we expect this one in market takes a breather. look at take a emerging-market currencies and stocks, getting hit hard today, is that a breather or the sign of a reversal here? >> we are having debates about emerging markets.

so far for this year, what has contributed to the rally idiom has been the balance and commodities, stability and china, and the come back in the dollar. we are having some questions around are these factors sustainable? so far, we haven't seen a fundamental improvement in the yen, and that is what we look for if we think about medium to long-term. the jury is out of it -- if this is sustainable or not. increasingation is -- coming at the expense of increased debt load and at the expense of structural reform. >> china has made it quite clear that their focus is on stabilizing growth and reform can come another day, let's say. at one point, they will have to deal with the buildup in credit. we don't think it is today. but further down the road, they will have to do without. alix: volatility in u.s. stocks make sense. the jury is out on the end. what -- out on the yen. what about brazil? it shows the investment rally,

the green channel, ever since the impeachment speculation has risen, we had the critical senate vote coming up that will secure the date of dilma rousseff. do you buy into this? >> i wouldn't separate brazilian for -- performance entirely from the yen. for brazil, specifically, it has been about anticipation of a change in economic's. >> are they overvaluing that? >> i don't 100% buy into it. it is not just do you have an impeachment or not, it is what is the government that comes after? do we and the political paralysis in brazil? that is a much harder job. alix: how concerned are you that the continued weakness in china presuming it will continue will overshadow any kind of change of government in brazil? >> for brazil, investors have understood that the commodity story isn't going to be able to help brazil in the future.

it isn't going to be about iron ore prices bouncing back. it has got to be about a change in economic model. it needs to be about new sources of growth in brazil. i think that is where investors should focus in the next few months in brazil. not so much china, but about the change in policy. alix: we will leave that their right there. you will stick with me. marketla, that will strategist at j.p. morgan asset management. we will be right back.

alix: this is bloomberg markets. i am alix steel. we are back with gabrielle asset management.

we were talking of brazil, and how the market is so optimistic about some change in the government. is it possible to the market is just reaction -- reacting to the fed and not just impeachment? >> i think so, absolutely. but, for us to justify brazil today, there has to be something idiosyncratic as well. i think that is the impeachment process. pretend we get an impeachment ruling from the useffe, you have ro out of office for six months, what happens then? >> that is what we should watch going forward. i think the market is betting 100% she will step down next week. what we have to watch is who will be nominated bank minister, etc. though, is thes

market real set up t for some kind of fall? think that expectations are quite high. if i were investing in brazil, i would be looking more at the fixed income market. i think that for an economy in a depression, it is tough to that on an equity market -- say you have high rates in brazil and the possibility of interest rate cuts in the second half of the year. i would be more interested in that aspect. alix: with the new government, the hope would be to get an interest rate cut to help the economy. talk about rates, i want to get your take on the fed. the fed has shifted to a slower rate hike scenario. what does j.p. morgan think -- when does j.p. morgan think they will reach the rate? >> the fed has been revising down -- close to 3% now. they think they will get there

may be around 2019. if we look at the market, it absolutely does not think we will get close to 3% anytime soon. what is important for markets is who wins out? does the fed get there faster? alix: out today, saying, the market is so pessimistic, it has to be pricing and negative rates if they are that pessimistic. what you think about that? market isink the overly pessimistic. we have the market down 1% today, for example. meanwhile, we have auto sales rebounding close to 7.5 million units. i think we will see greater growth from the u.s. alix: great stuff. good to have you. gabriela santos, global market strategist from j.p. morgan asset management. let's start with the headlines on bloomberg first word news.

mark crumpton has more from the newsroom. mark c.: thank you. this may be ted cruz's last stand in the race for the republican present shall nomination. the indiana in primary could make donald trump all but unstoppable. however, a trump defeat could increase the chance for a contested convention in july. for the democrats, hillary clinton and bernie sanders are in a tight race in indiana. still, hillary clinton has 90% of the delegates she needs to become the nominee. for corporations could scale back their plans to invest in the u.s. is billionaire donald trump is elected president. that is according to a survey january. injure it found that the election of a populace would want foreign companies to reduce spending in the u.s.

more than 500 companies with annual revenue of half $1 billion or more took part in the survey. russia says there could be a cease-fire within hours in the syrian city of aleppo. in the last two weeks, rebels and forces loyal to al-assad had traded rockets and bombs across the city. the russian foreign minister discussed a truce today with the un's special envoy for syria. nearly all detroit public schools are closed as mass teacher sick outs overpay go on for a second day. without funds from the state, teachers who have opted to receive their pay over 12 months will not get checks this summer. more than 45,000 newtons missed class -- students missed class. global news 24 hours a day, powered by our 2400 journalists in more than 150 news bureaus around the world.

i am mark crumpton. back to you. alix: thank you so much. we will go live now to scarlet fu, who is at the milken institute global conference in los angeles. she is standing by with vicki fuller. good to see you. take it away. scarlet: thank you so much. vicki manages the largest pension fund in the united states. welcome. >> good to be with you. scarlet: tell us about your comfort level with the risk .ight now investor, itterm seems to me that every year one risk replaces another. i think the biggest risk we are worried about is not so much the things you mention, but what is

happening with economic growth. slow growth in the u.s., declining growth in china, no growth in emerging markets. pairately, the way we pensions with the people we serve is investing in global economic growth. scarlet: you have been at the conference for two days. you have been attending these big picture somatic discussions on the outlook for different parts of the world. you come away with any sense of optimism about where we are headed in the world that may affect the way you allocate investments? >> unfortunately, in the last couple of days, i have heard nothing that has disaffirme what we are thinking. i think the only difference, in terms of the session, i have gotten some ideas about some themes -- cures for cancer, health care. for the most part, it is concerns. what we saw is the geopolitical risks. scarlet: given all of that,

where in the world do you see valujet go where do you go to put some of that money to work? >> we will continue to have significant overweight in the u.s. we are also looking very interestingly at europe. we started to put some money there. scarlet: fixed income? equities? >> really equities. on the emerging markets front, things we're looking at is whether or not there is a way that we can participate in china. whether the growing role of the consumer is something we can look at. in other emerging countries, we are trying to figure out for example how to invest in india. should we be looking at private equities and india -- in india? last not least, we're looking at sub-saharan africa as a frontier

market where we hope we can put a little money to work for a long-term return. scarlet: that has to be difficult. york meansn in new even a small percentage of your assets would move the needle in a huge way. primaryave hit on the difficulty for us. what we have done is we have told our partners who are in the market -- we have made some small investments. we are patient. five orit may take us so years to move the needle, but in 30 frontier markets, if you are right about what you are investing in, a little goes a long way. scarlet: let's talk a little bit about returns. h have an annual

overturned of 7%. is that reasonable -- i don't want to say a dismal world, but we just described a world in which the prospect for pickup is not immediate and clear. recently lowered it from 7.5% to 7%. it will be a challenge because of slower economic growth year and are looking at some adjusting things that we think will help us. we have a somatic focus where we are putting more money into the markets, where we think we can access that. scarlet: can you give me an example? >> health care. growing city states. growing consumerism. scarlet: and this is not through equities or fixed income? you have to go through private equities? maybe, realquities, estate. we find that certain strategies, particularly if they are n

ewer or more frontier, we are more conjugal doing those with our private market strategies. as the market develops, we are more comfortable putting liquid money in the strategies. there is no doubt, there are couple of other things we have to do. we are negotiating strongly with our partners to make sure that it is win-win. that when we are paying the fees, we get return. we are also looking to pair staff together, to hire more staff. myfact, if i were to some of perspective on the environment we will be in in the next 5-10 years, it will be one where we believe skills will be required, and there will be a competition for power. we need to be in position to access that power. scarlet: you mentioned fees, and i'm glad you brought that up. that has been a bit conversation on the sidelines of the milken institute conference.

what is your take? 3% allocation for hedge funds. ig?rlet: is that b >> we don't think so. we use it as a modest strategy. there is no doubt in my mind that the model has to change. in the low return environment, where there is no total -- in other words, they get 20% whether or not we make money -- that has to change. we have invested with some hedge funds that do a great job of mitigating risk and providing returns. where we funds are not

invest in the market -- we invest in them because they are not equities. scarlet: vicki fuller, thank you very much. >> it has been a pleasure. scarlet: at the top of the next hour, i will be speaking with .ondo hanley more just ahead. ♪

alix: you are watching bloomberg. i am alix steel. this is your global business report. here is what we are watching. the blow to the british economy

as manufacturing shrinks in april. that is causing firms to cut jobs. getting closer to its ipo. the saudi arabia stock exchange is ready to announce its bank advisors. apple loses in india. it rejects plans to sell cheaper refurbished iphones. we begin with the surprise blow to the british economy. for the first time in three years, manufacturing in the u.k. inink in april -- shrank april. it is estimated that 20,000 jobs were lost over the past three months. today, saudiier

arabia expects to carry out the ipo in 2018. a big load to apple's plans to go over price conscious consumers in india. to produceas denied cheaper, refurbished iphones. fell afterbs reporting earnings. first-quarter profits plunged 64%. market turbulence hurt earnings. bloomberg spoke with the ceo. if you look at the kind of market conditions we have been resilience.t shows achieving probability in those -- profitability in those environments is not easy. he has been shifting qb as

ubs' focus away towards wealth management. david: time now for our bloomberg quicktake, where we provide context and background on issues of interest. china's pile of public and private debt is a threat to the global economy, or buyback is a manageable . here is the situation. china's total borrowing soared of270% of gdp at the end 2015. it is faster than the increase ,n the u.s. and the u.k. running up to the 2008 financial crisis. the problem could be a good because the pace of new lending makes it hard to know how many new loans are not being paid. $1 trillion of new credit was

granted in the first few months of 2016. aking in 2019.g peekin here is the background. beijing ordered public works to keep the economy pumping. before.s seen busts in the 1990's, credit soured after a bailout of public banks. the latest build up comes with lowest economic growth and 25 years. here is the concern. pessimists say the problem is not self-correcting. options include cutting interest rates, expanding debt swaps and clamping down on non-bank lending. there is a concern that the risk

could remain o a drag on global markets for a decade. for more stories, visit bloomberg.com. and, aig.l ♪

alix: this is bloomberg markets. i am alix steel. in theis a little green sea of red today in the s&p. the company reporting beatt-quarter earnings that th estimates. let's see what the numbers say in today's the numbers don't lie. they generate a 6% of sales in the first quarter. thanks to the merger falling apart with allergan, the spinoff of this group will be revisited

and could come by the fourth quarter of this year. of this business has increased. the blue and orange lines combined had more than $7 billion of sales. both established and innovative topping estimates. the main driver of pfizer's business are the pharmaceutical drugs and vaccines, whose sales growth -- the blue line -- really sold last quarter, but it is over 10%. is outside of two drugs, the pipeline does not .ook so exciting to analysts there are drugs to fight

cholesterol, diabetes, and meningitis -- not necessarily sexy drugs that will give a lot of juice. treasury rolls could slow things down. last thursday alone, there was $40 billion in new deals announced. billion this year, choice of a percent higher than last year. pfizer might jump in. it is among the firms considering an offer for .edivation turning to another country that reported earnings yesterday. aig. shares are down after the company reported the third straight unprofitable quarter. revenue dropped to $28 billion. ceo peter hancock encourages investors to look beyond the headline. goodactually feel pretty

about the first quarter. the headline obviously is disappointing to people. i think it is focused way much on the investment income, which we are shifting away from to more underwriting. i'm very pleased in the improvement in the underwriting strategy. it is a good step in the direction of the six-point over the next two years. we have been able to return $4 billion of capital to shareholders, and have improved expenses. it creates a nice platform foundation for longer-term ambitions. betty: let's talk about areas that are not improving. hedge funds, for instance. how are you looking to exit some of these hedge fund over strate? let's keep the hedge fund

strategies in proportion. it is about $10 billion in a portfolio of $300 billion. we gave notice to about half of the hedge funds last year that we wanted to exit. over the course of this year, we will be exiting as the lockup period expires. these hedge fund cannot be redeemed at the end of the month like mutual funds, but when the lockup expires. that frees up capital an that can be deployed in underwriting the business risk. betty: will any of the b deployed in promote private equity, for instance? >> we already have a sizable remote private equity that we will probably not be shrinking as much as hedge fund investments.

it does not create quite as much volatility. it is slightly less liquid. as we look at the overall portfolio, it declines in significance in theit does not h volatility. results going forward relative to underwriting. the focus of the company is to improve sustainable earnings which comes from improved under biting -- underwriting and improved cost efficiency. billion is part of a 22 $25 billion plan over the next two years. we are shifting investments into more defensive investments. ♪

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>> is 1:00 p.m. in new york. welcome to bloomberg markets. ♪

alix: good afternoon. here is what we watching at this hour. stocks are down and limp economic growth around the world is sparking retreat from riskier assets. the s&p toying with the low. financial shares falling after ubs mrs. estimates. sergio says the issue plaguing the bank in the industry are not disappearing anytime soon. blackstone chairman steve joins us live from the global conference in los angeles, where we will talk markets, economy, and how big blackstone can get. let's head over to the markets desk where julie hyman has the latest looking at the dollar today. julie: mixing it up. we have seen an interesting move on currencies as well as interest-rate.

it looks like this is a safety move on the part of investors. they see the u.s. dollar as perhaps less risky. the sentiment definitely seems to be ruling. take a look at individual currencies versus the u.s. dollar. we see the dollar decline a little bit versus dn, also viewed as an area of relative safety. the euro is falling relatively slight to the dollar. that shows an unexpected contraction as well as manufacturing data out of china showing weakness, and those have been a couple of the things that hurt these concerns about global growth. dennis lockhart reminded investors that june federal reserve meeting is a live meeting. investors do not appear to be buying it today. take a look here. this specifically is looking for

the probability of a rate increase at the june meeting. we are only looking at 10% probability. been going steadily downward and that did not change much today. you are seeing a decline in yields. yield on the 10 year today. atx: we had a weaker you key -- u.k. pmi all of that on global assets. >> yes, global assets in stocks as well. that is really affecting the u.s. in today'session. up very slightly off the lows of the day. volume is heavy today. expecting large-cap stocks across different industries. from financials that have been mostly moving higher when we see yield going up.

the fact they are going down today is putting pressure on ,ompanies like bank of america jpmorgan, exxon mobil, microsoft participating in a selloff we had -- we are seeing in technology. the declinesnt out in automakers, which came out with the u.s. monthly auto sales numbers today. general motors sales falling more than anticipated. even toyota, which beat estimates in auto sales last month is falling as we see concerns about global growth weighing on stocks. alix: thanks so much. let's check in with mark crumpton for more on the newsroom. marco: the emergence to and has been identified as a navy seal. the u.s. official says the seal was killed during an attack by the islamic state on the iraqi kurdish positions. the third death of an american servicemember in iraq's the u.s. coalition launched a campaign against militants.

medical personnel, hospitals, and facilities being protected from violent attacks. granted by five council members, new zealand, spain, japan, and uruguay. it was set every country must to do more than condemn the act, they must act to punish those responsible for the violence. indiana passes election officials say 98% of voters who requested absentee ballot for the state's primary have returned them. more than 286,000 completed outlets have in received by indiana county officials by this morning. 53% of the absentee ballots requested or republican. an airplane powered only by sunlight arrived at a phoenix suburb after completing the

latest leg of its global trip. it landed shortly before midnight eastern time at phoenix goodyear airport after a 16 hour flight from mountain view, california. the plane will make two more u.s. stock -- stops. global news 24 hours a day powered by our 2400 journalists in one of 150 news bureaus around the world. i am mark crumpton. back to you. to tentacle back to the west coast for the global conference in los angeles. there, the ceo of global advisors, one of the world's's investment managers. scarlet? scarlet: thank you. ron, as you know, a massive shift from active to passive investment and it is a new reality for mutual fund managers and shops like gift shops.

is this a golden age? i think of etf's as whether or not it is a golden age, it is still very early in the evolution. with about where we are lot of products proliferating, it is much like the late 80's. mutual fund markets started, direct distribution, a lot of different products. terrific pointing out new products. that is a little bit of where we are now. think the next stage we will move into is how do you use them and how do you employ them. we are starting to see them with etf models. uselet: speaking of how to them, a lot of advisors and gift shops come up with smart data. can you explain what that means and how big a deal it is to the future of the business? >> if you think about the spectrum, passive to private

what we have had occur over the last several years is, let's take what used to be called active, pull apart the aspects of it which is just data exposure, isolate it, and deliver it cheaply. it is just another way of taking the remainder of exposures and say, i can take those apart, isolate them, they sure you're getting exactly what you want, whatever factor, though it might be you have a strong belief in value, i will deliver you large-cap value at a lower cost. continuinga evolution of what we are in etf and passive investment. do regular investors understand the data? is there a chance they are getting burned by etf? >> is do they understand, probably not the cause it is a complicated topic. are factorsng there

called value and growth and momentum. those are technical terms. that investors might say, i think this is a good time , let me pile into that. i do notto anything, think they understand it. it is probably confirmed they will not be able to return expectations. liquidity in etf, there are different views. hinder liquidity? >> bundling underlined securities into a single security and creating and trading those. very least, the etf has the liquidity to underline and in the case of larger etf's, like big etf's where what is actually happening every day is the etf itself is trading back-and-forth and that is new

liquidity for the market. we would argue etf's in most markets -- people would argue it is so much more heavy than the underlying securities itself, and that makes them worry that if it falls apart, they cannot get out. >> right. that is in fact liquidity. it means someone is in the market wanting that exposure and to get it at a better rate and a better liquidity in terms of going into the underlying. scarlet: one of your products is meeting close this year but a lot of us worry the gold will not be there if there is a major crisis. what do you say to those concerns? >> there are physicals behind it. anyone wants to see a picture, we work with the world council on that, a terrific partner.

there is no derivative there. goes up and down depending on the level. >> ok. -- they areat about cheap but market share from the money in a real hedge fund? >> what you're referring to hear is liquid alternatives. bey are just now starting to put in etf form. it has also been around for a is a liquidat it is version of an alternative structure. rather than putting your money year,for a quarter or a you can get it quickly. many of the strategies work better if in fact the money is not subject to being taken out. the return expectation should be lower. scarlet: how much lower? >> depends on the underlying strategy to you think about right now, there are a couple of

private equity industry's out, and they are distracting the private equity index but not forever and you should not expect the same kind of return from that. whether it is 70% or 80% of the return, you should expect a lower return. scarlet: we have got a lower turn environment. we talk about china and the u.s. and europe, they have to go farther out in duration for the cap yield at overturned targets. how do you think the etf has evolved to me that demand? where does it go next? >> he should think of etf as a vehicle. we will see more and more as far as putting -- etf's. we should be very conscious of why we are doing this. we are doing it to get the

liquidity and be able to move in and out of the markets. if you do not need that liquidity, in some cases, it does not make sense -- we should not forget the purpose. scarlet: got it. finally, we're talking pe real estate. what areas are you looking to expand to and is this the beginning of a spree? >> i do not think so. we talk about our strategy and we will make selective positions to add to the capabilities when we need it. a terrific set of investment capabilities, active equity, and as you noted, private equity and real estate. more importantly, they have managed the pension plans for 80 what and really understand it is like to be on the other side of the table. as we serve other pension plans, outsource pi oh market, to have the expertise and be on the other side of the table is really good. scarlet: thank you for joining

us today. i will send it back to you. you so much. coming up next, gold keeps shining but why are hedge funds missing out on the party? gold is a little mixed today. why they are coming back on the precious metal. ♪

alix: time for the bloomberg business flash, a look at some of the biggest business stories in the news right now. freddie mac says it will not make a dividend payment to the u.s. treasury this quarter. this comes after the company's first-quarter results.

it will not have to draw on its government line of credit. it is selling the revenue from rooftop solar. they retain ownership of rooftop systems and will still be responsible for servicing them. -- into a new public we traded company. to focusallows biogen on neurological disease and alzheimer's disease. by early 2017. that is your business flash update. time now for the metal bulletin. we will head over to julie hyman. julie: we talked a little bit about the safety trade.

in the case of goals, that is not the case. gold usually catches a bit when there is risk off of sentiment overall in the market. down about .5% today. also, if you look at the miners today, they're pulling back chemical ingenuity. actually trading higher but it has to do with valuations for these companies. in many cases, we are checking about triple digit percentage gains for the company. this is what they're talking about when they make the downgrades for evaluation. take a look at the bloomberg here. the run we have seen your to

date now is about 23% despite today's pull back a little bit here that is an enormous gain and is already been seen dust far this year. the biggest are to the year we have seen for gold going back to the 80's. alix: and unbelievable chart. thank you. despite gold passes fall, up 20% on the year. they come to us from chicago. an article out on bloomberg. what have hedge funds done as gold rallies? >> they were betting on the decline. the most recent week ended on last tuesday. cut a little bit of -- about 2%. interesting.

you said a lot of short positions. in your research, what has actually led gold to the last leg of its rally? >> 20% come one of the things that has been driving is the outlet for delay in the u.s. amid lagging economic growth. it also seemed to surprise the market by doling out its expansion of monetary stimulus. on the added to pressure dollar, gold and precious metals. they become more competitive on assets that do their interests. hard time finding a big bank that will be bullish on gold. what are the big guys paying? has had a bearish view going forward. they're forecasting gold the $1000 a year from now. they think a strengthening u.s.

labor market could spur the fed to boost interest rates. a few times this year, which could lead to gains in the dollar. one of the money managers i spoke with in the story said as long as domestic economy continues to charge along and we have a fragile global economic landscape, goal should be a safe bet here for the time being. >> is inflation winds up running faster, those real rates could wind up staying low. what about silver? have hedge funds been dealing with silver? >> yes. their best boosted on silver. it may have been an all-time high. either way, pretty high. silver has had a big gain. i think last week was trading the highest in more than a year. let's thank you so much, megan. still ahead, top investors think hedge funds fees -- we will dig

into this $2.9 trillion industry. ♪

alix: the chorus of global financial leaders criticizing hedge funds is getting bigger. investors attending the institute global conference became the latest to lend their tough words on hedge fund fees and retirements. the model is broken. su can charge too much for a good strategy. it.hey cannot do if they charge too much, they really idea. >> investors are going to go with their feet. they will redeem the hedge funds they do not feel is giving them something worth, and that will either force hedge funds out or force them to lower their fees. members said board

we are counting across the board. >> i think they should, they deserve it, but it is too much now. i feel like i have been hearing about this for like 20 years and why is this different? >> markets are so bad and hedge funds are doing badly. guys, thehe bigger more famous guys, doing worse than everybody else. popping up again, why may paying you this much money to lose my money. that is where the question is coming from. why is the underperformance? you mentioned these are noted hedge fund commanders who made a lot of money for people over the years. >> absolutely, there are a few things going on here when a the market is doing well, they say

it is harder to get the edge. you need to find someone who has got some edge on the market to outperform it. folks are of these crowded and some of the same traits, and those are some of the ones doing badly. of these are the ones that are hedge fund hotels and they have been doing really badly. tobe the bigger guys need the in the most liquid things in order to make a dent in their portfolio and some of these are positions that are really driving them down. >> i like you'd thought this up. saying he found a stocky life but all his other hedge fund buddies are in it and he will not own a stock because if you want to get out, there would literally be no one to sell to. >> exactly in that is what we're seeing. smaller emerging managers who do not have such a large book and therefore could build in smaller

and smaller assets, they may not be doing so badly because they are not in these situations. reductionsabout some -- redemptions? >> $16.6 billion have been pulled out from the hedge fund industry in the last quarter. we keep seeing more and today we saw aig pulling 4 billion from hedge funds. we saw the new york pension fund. is definitely out there and not necessarily something that will kill the industry, but we will see some closures. alix: good to see you. we will be right back. ♪

alix: from bloomberg world headquarters in new york, you

are waon. mark crumpton has more from our yesterday's indiana primary is the one thing between him and plummeting over a cliff. if he loses, donald trump would be all but unstoppable in the race for the nomination. it could rejuvenate chances for a contested convention. polls show trump with a double-digit lead. the race in indiana for democrats is much closer, but hillary clinton has a commanding lead over senator sanders in the number of delegates. the governor'spokesman says they will discuss the city's drinking crisis p or governor snyder has blamed his own regulators to the contaminant water but he has pointed a figure also at the u.s. environmental protection agency. dozens of people are dead or wounded after rebels fired rockets into the northern city.

one rocket reportedly hit a hospital, killing four. more than 50 bill -- died in the last few weeks. --opean members of nato money on defense. an official says europe has inability to combat some of the region's top security threats, such as russia and the islamic states. global news 24 hours a day powered by our 2400 journalists in more than 150 news bureaus around world. i'm mark ronson. back to you. ubs reported first-quarter profit that fell 54% compared with a year ago. the numbers highlight how much the wealth management business has suffered. ubs has been falling less than european peers and is known for delivering rising dividends, high returns, and discipline when it comes to raining and costs. what is behind the rocky

corridor? today, at the company presses headquarters in switzerland. conditions of market , in terms of the ability in those kinds of environments, it is not easy. most importantly, we have been keeping thehile opportunity and the possibility in the more normalized environment to deliver stronger results. course, -- ill, of would say considering the environment, i am pleased to see how we operated. things would be tough to the u.s., you should have been more clear at that point. >> i think i was pretty clear. responsibilityur

, and our results are reflecting that. volumes, transaction the lowest recorded ever for q1. clients are terrified right now. how will that change? >> we definitely enter into a new territory in the first quarter. if you go back in the last 3-4 years, you would have served weeks or months during any quarter of strong market conditions or in case, some kind of positive pick up. the first quarter, and environment with only one constant. risk aversion at the end of the quarter. >> last year started off brilliant, this year started off horrible. you think it will get better? >> i hope so.

it looks like we are in a challenging environment because the issues in last few quarters, are disappearing. ofhink the cocktail macroeconomic issues, geopolitical issues, they are and we will soon ate on grexit and we see de-escalation coming from the u.s. elections. you intentionally see a lot of factors that may reflect market sentiment. , you seeense volatility but not the kind that is translate to client activity. it is paralyzing. >> as good as it has been since 2008, sustainable, yes or no, and are you surprised that given the cocktail of horrible things you just laid out, that number is as good as it is? >> it is a function of wealth creation.

the workout collies have been doing in the last couple of quarters, we look at the quality so i am happy with the results not because of the quantity because i know the quality is coursed strong, and of we retain our target of 3% growth. 6.5% in the first quarter for wealth management and 5.3% for wealth management in the range will be 2%. i think we should expect a more moderate growth. alix: that was the ceo of ubs. of bankingthe topic blues, canadian western banks tumbled the most in seven years after the lender said it would take about 26 nine dollars in

provisions thanks to oil and gas loans. amanda lang joins us now from toronto with more. the bank is in good company when it comes to hear and the u.s. as well. moneyhey put aside enough to cover those loans? >> the question is that. the canary in the coal mine of how bad this could get, canadian western bank is pre-announcing. it took the trouble to say it would set aside more. on annual basis, double what it had previously guided two. the name actually tells the story. it is a relatively small bank based in alberta. it has developed deep ties in the region. that has meant for great success. 40% of its loans have exposure to the weak price of oil. we see it show up here in the numbers. the question will be, is it conservative enough, what are the assets looking life -- looking like?

works hardank that to diversify regionally. it knows this is a problem and let's face it, it is a microcosm of the problem at canada faces. you have got your eggs in one basket. alix: absolutely. what does this portend for other canadian banks? lexus is a big question. some have said it is overdone. banker relatively small was downgraded today as well. hsbc canada reported his numbers and there is a lot of health in its data. it increased loan-loss but analysts will point out it is lower than it was in the fourth quarter and some of the loan quality is improving. take big question. we have seen them say we will have to get higher on our loan-loss but here's something i thought was interesting. u.s. banks have four to five

times than canadian banks. the u.s.ion is, are banks more conservative on the loan-loss side conservative to begin with on the loans they were willing to give? the banks werel, made pretty profitable, healthy, and it is worth noting, canadian western says it will still report a profit and that is its 112 quarter of profit. alix: the question i'm trying to of how the any sense banks will lend to oil and gas companies in the future? >> this is interesting. trades that and gas you access to capital. they want to make acquisitions themselves. they are finding their lenders partly driven by capital requirements. they are finding their lenders are not really is open to letting them use the timing that would be advantageous to them. it is one of those interesting

and vicious cycles that small companies finding themselves in trouble, they are getting pressure to lenders -- from lenders to sell things rather than get additional credit to expand. and one of theng consequences of behind regulatory environment in the capital. we will see how it shakes out here with a lot of capital, a lot of opportunity. alix: good stuff. thank you very much. ahead, we will speak with live from the ceo global conference, do not miss it next. ♪

alix: we want to get back to the global conference in los angeles. by. schatzker is standing erik: he is just putting away his iphone now after setting off what was no doubt an important e-mail. let's take a high-level view of the startup. with phones like yours, apsley no trouble raising money. seems difficult is capital deployment. >> it is difficult to do it smartly. example avoids a lot of capital.

one of the interesting thing in today passes environment that interest rates are so low that the reason we can attract huge amounts of money and we now have -- $300 billion of management growing rapidly. world or negative interest world, about 30% of the world's gdp. there is a desperate need for return. returns change somewhat. if there is no net return the year, in many places, it was negative, the need for investors, particularly large pensions and funds and other places like that, and regular investors, actually make money

drive to the asset classes. >> that is why it is as easy as it has ever been to raise my. . -- younot feel at all would like to be deploying it as a faster rate. >> it depends on private equities. today, a little harder. certainly in the first quarter. where everything basically stops around the world for most financial businesses. we are seeing a pickup in opportunities. they finally look like there will be some energy opportunities. as companies actually get into real trouble despite energy pricing. we are able to find interesting

things. the rate of deployment last year was actually quite high. erik: many people have been talking about it for more than a year now, if it is about to happen, if you ballpark how much u think blackstone will be repaired -- >> we have large amounts of money that should go into the area. the question is, just doing the smart things. ,e have a number of things now particularly in the equity area where companies need money to , or some companies cannot -- >> this would be more akin to what you did with when. we did not do anything with flynn. >> you made a commitment that was never drawn. was the idea to provide them with equity capital.

>> also starting new companies to take advantage of low prices. >> i was talking to one of your largest competitors today who told me you cannot see leverage buyouts happening. really difficult. do you share that view? >> it has only been 30 years so far. it is a cyclical business. size, that is the good .age finance has a habit of , so it would not surprise me in the future. >> does it feel like a big leap

today? >> i do not think of it is a big leap. it is doable. order to do 80 p, apollo has to kick and a lot of equity, set up a fairly complex capital structure, is that what it will take to do something meaningfully larger? today, when the rally really occurred, it blew out in the middle of the deal, very difficult to finance. done. creative job was it is a little easier. just as a matter of principle, do you find in order for the discussion you're having, that it will require more equity?

>> unless you are paying prices that are very high, we have to fill it up with equity. not about finance ability, it is about return. goes -- what discipline you want to keep. erik: there are leverage limits .n banks to affect the buyout. first of all, is that having an impact on volume? are you becoming more comfortable? >> the limits are about 6.5 to seven times the leverage. that is not abnormally low. many times in our firm passes history we have been offered more and we turned it down

because it is not conservative. look on an on leveraged basis. if we could get around 10% on we could turnds, that into a 20. we do not get confused by financing. you can generate slightly different returns with more money and that becomes unsafe at a certain level. we are interested if we create something had a leverage yield. it is a really good prospect. we put whatever the available leverages more or less on top of that. we will have very good return and certainly compared with equity markets. about conservatives

debt? >> we are one of the biggest sources of alternative financing in the world. we will continue to expand in the area. restrictions that have come into the system have made it harder what happened is deals will occur but the cost of money may be a little higher, but our business is in its capacity and others, i think it will go into an accelerated growth. because the credit cycle will return we will see more than a higher default rate? >> it is because of the structure of markets. dodd-frank issues and haveations being proposed

actually, in the junk market alone, there used to be 30 market makers and there are now five. do not know whether that is an achievement of sorts. it will make it over time a little more difficult for financing, but other financiers such as ourselves will step into that. dan loeb last week talked about a washout in the hedge fund industry. that is a business in which the hedge fund has been growing. >> and large part when you hedge equity for example, sometimes everything goes up, and your

short and it goes up and then , too fewounded that really interesting opportunities that many people were in, so their positions, stocks went up 100%, 200%, 300%, just for technical reasons. stepping back, the rates of return in the hedge fund business and the fee structure has discouraged some investors. it is highly probable the asset classes will shrink a bit. we will find out. for firms like ours, it is very interesting. it stands to reason because we are the largest in the world in allocating money to hedge funds. we arerprised me is getting good-sized flows because

what is watching out our number of our competitors. there is apening is move to quality. there is a move to performance. the people who will be left in the business will do very well. the people who are marginal performers will not hear it in a normal environment, in a normal environment, 20% of hedge funds go out of business every year. that is a normal environment. we are looking at a slightly abnormal environment. as an allocator of capital, you are focusing on quality. how aggressively are you redeeming from those who cannot deliver the results you want. >> we have been doing this since we are prudent in

.erms of taking money away let's look at it this way. we started with no assets and now we have 67 billion in that business. about who wel choose. that is the most important thing. --something is wrong, >> a changing strategy, to develop its own multi-management business in-house, which has its own struggles as of late. >> we have not rethought the decision. i cannot talk about results because my lawyers do not let me do that, but we had a very successful business our first year and this year, just in the first quarter, that business was affected by the crowded trades.

we are sanguine about the prospects of the business because when those short positions normalize, performance should come much further back and we should end up with a good outcome. erik: part of finance involves quarterly reporting. i'm not aware any of us, we have usually marked birthdays, not quarters. this is a time of real dislocation. that fund of ours, which is quite small, got hit with that. but that is not a forever situation. your patients about your business, our u.s. patient about the clinical environment? the same prison we mentioned said he cannot see himself

voting for anybody but hillary clinton come november. do you find yourself in the same position? >> this has been a wild period. specificd for a very reason. to run out ofbout time. >> i am sorry because this is a fun topic there we will do it another time. erik: do you see your cell phone for hillary? >> i don't think i will be doing that. is thing that is important the country itself is going through a difficult time, with half of the people in the country -- erik: i afraid we have to leave it there. ♪

>> 2 p.m. in new york, 7 a.m. in hong kong. welcome to "bloomberg markets." ♪

david: from bloomberg's world headquarters in new york, welcome. how strong is the u.s. economy? interview with john williams, president of the federal reserve bank of san francisco, just moments away. stocks are slumping with the s&p hitting a three-week low as surge and fear is back in the market. investment opportunities in pakistan, the country has not yet been upgraded to emerging market status. our guest is the former prime minister of pakistan. breaking news, the governor of the bank of japan is in frankfurt right now, saying that they are closely walking -- watching the impact on prices and will take additional steps of needed.