we are with kalluum pickering of berenberg and anthony crescenzi from pimco.e of the year. deflation has been there since 2013 and we are finally lagging up. -- legging up. in goods prices is what we need. i don't see much evidence that nominal wage growth is accelerating in a rapid way anywhere. we will probably see goods prices rise. if trade war's breakout, it will not be because demand is high. francine: are economists optimistic or pessimistic about the world? anthony: appropriately, they are optimistic. if they were not, the stock market would not be where it is. credit spreads would not be as tight as they are. that is optimism. where one would have to start to aboutor start thinking central-bank policy going forward. what not a concern now but if inflation in 2019 picks up in such a way that investors are unnerved? that could rattle the world. the inflation stare -- the inflation story going into tent -- into 2019 will be important. francine: tom, on trade, getting some news from harley davidson implementing a plant shift. it was one of the companies t

joining us is joaquim felts, al econoser at pimco. good to chat with you again. the basis of this rude awakening concept, and what are the odds that what you are calling for will actually occur? >> yeah, well, brian, i think first of all, this is our secular outlook, so we're not log ahead at the next three to six months but for the next three to five years. and we think, in fact, investors are in for several rude awakenings, because we think the postcrisis environment isreall coming to an end we all got used to an environment where we had financial repression, where active central banks and regulators suppressed volatility we had largely passive fiscal policy we had relatively free trade and pital flows, and we had low-growth, low inflation, low volatility now all of that is coming to an end. we think that the next several years could bring quite a few rude awakenings for investors, and these rude awakenings could emanate either from the economy or from politics, and we think it's time to prepare for them. >> and then what is the sort of the outlying possibility

pimco's couple.a new era at pacific investment management, placing the prior one man role. australia's cartel case. heads under aher corruption probe. and rubenstein's forecast. the cofounder of the carlyle group says a slowdown is coming but he doesn't know when it will be or what will cause it. alix: joining us now is jason kelly. let's begin with pimco. this is all part of the bloomberg magazine talking about two people running some kind of investment company. what is the difference between these guys and bill gross? >> this is an absolute must-read. theget such a good sense of men running the firm. of course, the man that david did not say, probably goes unspoken every day inside pimco is bill gross. somewhat, shall we say, autocratic in running pimco. these guys came in from within. he came in fromtside and these are two very different guys. they sit alongside each other in the office. from: it is interesting what we discussed yesterday with carlisle. these two people have very distinctive roles

joining us is mike amey, managing director and portfolio manager at pimco. nice to see you. nted me. lots going on as ever but we wanted to talk to you about general electric, no longer in the dowjones industrial index? no, it will fall out on the 26th ofjune. it was one of the original members so just under... 1896. and a very innovative company. the aim of the dowjones is supposed to be an indication of how corporate america is doing and general electric for so long was the bellwether of corporate america, by market capital, it was the largest us company even in 1990. it's not just about how corporate america is doing but what it is as well, the changing face of the us economy that isa changing face of the us economy that is a part of this story. width yes, there are two challenges, one is the dowjones is there are two challenges, one is the dow jones is only there are two challenges, one is the dowjones is only 30 stocks so to some degree, you struggle a bit to get the full picture and of course you also have the big shift between obviously companies like amazon and faceb

mark: thank you for joining us, gene frieda of pimco.y leinz: russia's president says he's confident that the country's prospect for long-term -- he answered questions on a tv call in show. he says russia is moving in the right direction. he's of the country would not introduce a sales tax. it's his first live tv programs and he was reelected in march. -- since he was reelected in march. 99 people were killed in a guatemalan earthquake. 200 are missing. the volcanic material makes it dangerous for rescuers. the latest sign of a strong u.s. labor market. first-time filings front and plymouth fell slightly to a --r-week low last week first-time filings for unemployment fell slightly to a four-week low last week. job openings exceeded the number of unemployed workers for the first time in 17 years. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i'm kailey leinz. this is bloomberg.. has avoideda may a crisis for now. saying the backstop should end in december of 2021. m arrasus now,

the cio of pimco says yields are still pretty low, they have an underweight position on the italy debtit is political and market uncertainties, it says the new governments needs to -- is dangerous for long positions with the possibility of more forced selling and rating downgrades and capital outflows. joy lost the confidence vote and the socialist leader is the premier in waiting. betweenay, the spread italy and dramatic rose to about 135 basis point. it has come down since then to just 106. the difference in yield between spain, germany, italy and germany is significantly, highlighting the widely held view that italy is no spain. italy with a strong economic backdrop. if there is a government, which comes after maybe an election if sanchez's government does not last long. on the eu issue, data out of the eurozone, manufacturing losing momentum in may as the strength of the demand eased. vonnie: a little air coming up at the risk off sentiment. you can see that in the yen trade. weaker yen. june 1. this is interesting. wti --d plus a 66.38 on 66.38.on this is micro, macro, flow factor

with us now, pimco's words of warning from pimco's global economic adviser, joachim fels.ou for being with us. let's start with one of the risks you outlined as a potential recession and that the characteristics hat recession might be different. how high a risk is it and where are you positioning that as a likelihood? a recession is not a near-term risk, not for this year or next year. i think the interesting thing is this economic cycle for the first time really is getting more cyclical in the sense that we get major fiscal stimulus in the u.s. ofs raises the risk overheating, this year, next year. it raises the risk the fed will ultimately go above neutral with its interest rates. that means that we could face a recession in 2020. i think this is something that investors should start to prepare for. we are seeing why investors focus more on the flattening yield curve instead of the soaring yields that expecting would shoot up past 3%? how long will the seent linger? moment, i think at the most investors are torn between first of all, seeing strong growth and rick seller-

pimco says it's time to buy. lisa: emerging market -- vince: emerging markets in every good place to be in a trade war. i think we stay in this tense market flows right through the midterms. we will see how it breaks out after that. if republicans do well this will embolden trump to think he and his policies are right and will give him more power to push back on china. if they do poorly in the democrat stepping he may have to step back a little bit and the trade issue becomes easier for investors that are market players. alix: what was interesting is there was a wells fargo note that said pension bond portfolios may need to pare back 19 billion in equities and 14 billion in bonds, is there going to have to be some kind of rotation in the market? lisa: the question here is there's a lot of liquidity and a lot of money that needs to get invested. people are looking for steady income. if you look at relative value trade. particularly versus u.s. high-yield you are getting extra yields to own u.s. high-yield bonds ve

i am pimco. >> good morning. i am dave clark. steve paulson has what you need to know about your weather. >> i will do my best. >>> we have temperatures bumping up a little bit after yesterday's cool down. it is really tough in ukiah and clearly this time of year. hopefully they will get a handle on that before friday and saturday. the humidity will get back up there again. northwest-northwest, west- southwest, southeast, north, west, temperatures in the 60s, 50s and humidity is about 40%. we saw a little bit higher humidity yesterday. we will see if they can climb out a little bit. we have some low clouds and wound -- around. it is nothing compared to yesterday. 40s, 50s and 60s. 47 in novato, 57 fairfield, 60 for some, upper 40s for others. mill valley is also 47. the wind is onshore and there is hardly any fog. warmer temperatures translate into 60s, 70s, upper 80s to a few near 90 degrees. >>> sal castendo has some info when the traffic. >> it is quiet. the altamont pass has a little bit of slowing for a construction zone. we

portfolio manager at pimco. stephen gallo from imo stays with us.bno -- b we talk argentina as the peso slumps to record lows. i am also looking at some european stocks. moment, a lot of back and forth to try and understand what shop has or has not approved. china saying they plan a payback. what that means for the moment is unclear, but will play out in the next couple hours. this is bloomberg. ♪ ♪ francine: economics, finance, and politics. this is bloomberg surveillance. let's check in on what's trending across the bloomberg theaters. european leaders face off on the image -- issue of migration. head to twitter for more on that. glencore says they will restart royalty payments to sanction israeli billionaire in a bold move likely to test the company's relations with the u.s. and the most read stories. place, qualcomm's deal to acquire semi conductors has been approved by chinese regulators, and trump is set to place tariffs on $50 billion of chinese goods. let's get straight to first word news in new york. >> we are starting with that story. to c

with us is ed devlin at pimco. do think there is any way to advance the trade conversation in a meaningful way? won't it does advance, we know about it until later. the meetings are great where people can get together and air grievances in private and if that is what is going on, i very suspect -- it is a bad case scenario if we get a public airing because they have more productive outcomes. we lay groundwork now and hear about it later. amanda: we have retaliatory tariffs kicking in over the summer if they come to pass. how much damage does it do and how quickly? a lot of the tariffs and trade tensions are linkages do business and consumer confidence. , especially in an open economy where we will see it in canada and also in the u.s. that more so in mexico. those are the things we will see. in terms of the actual cost of the tariffs, they are not significant. what will be significant is if we cannot get ourselves in nashville out of the cycle of escalation. ourselves out of the cycle of escalation. shery: the gree

steve, hang around for just a minute we're going to now bring in libby, head of public policy for pimcowant to talk about the way out of this trade collision between the u.s. and china to the president of the united states, appearing strong and being strong and not backing down, says tom petty, is pretty important. and to the chinese, being publicly pushed and berated is pretty serious offense they do not like to lose face in this way what's the way out >> yeah, i mean, it's a good question i think, you know, at the heart of these issues, there are two, you know, big issues one is obviously the trade deficit, which we know the president is very focused on he believes that sort of the scorecard of success with other countries. the other issue, though, with china is this issue of intellectual property and technology transfer. and that is the much -- i think the bigger issue here and that's an issue that there's a lot of political support on capitol hill for the president to sort of drive hard on china so i think if you're just talking about the trade deficit, there's probably an easier wa

do we see evidence of this or did pimco suggest 18 months or two years? the actual tariffs into the data is not hard evidence yet but with some tariffs that have been put in place, we're on a predistant course for an effect to happen. and at a very high level, that effect will probably be slightly slower economic growth and probably upward pressure on prices as the one off impact of the tariffs is passed through to the end user and maybe domestic consumers switch to domestic production rather than imported goods as a result of the tariffs. placeary but it's slightly upward pressure on consumer prices. francine: we're expecting a crumb in opec in vienna to start but how do you look at the price of oil? what's your range price to model your economic forecasts on? andrew: we didn't really have any big difference of opinions to what was in the forward. we tended to view the likely outcome of an agreement with opec to put downward pressure on prices but obviously that's contingent on that decision which is about to come out or e confirmed. tom: we look again a

pimco equally cautious.dowto the political uncertainty and fiscal uncertainty that is facing the nation. haidi: what are the biggest worries? ruth: there are quite a few of them. a fiscal deficit. how are they going to talk with -- tackle that? you have mohammed in a surprise , fueling political uncertainty. on the debt sid there are worries about malaysia's credit rating. there may be potential downgrades for the nation, and that's all combining to weigh on rishaad: tell me about fund managers. are they seeing the selloff a an opportunity to buy malaysian debt? is i where they would not touch it with a barge pole? ruth: now that you say that, many of them are negative, but there are some who see this as a buying opportunity. one money manager fits into that camp. currency of the asian nation have been sold off. they are moderately overweight the nation with a chance to buy in. rishaad: thanks for that. ruth carson joining us. in an analyst who reduced his earnings and recommendations from malaysian banks fo

coming up, geraldine sundstrom of pimco europe. she will be joining at nine clock a.m. london time.. thank you, the bank of japan has left its monetary policy unchanged. downgraded its assessment of inflation. as expected it maintained its control program and asset registers did it now sees the consumer price index in a range of half of 1%. the boj falls behind its global peers. rose on the prices most in 19 months in may even if the government pressed ahead with a two-year campaign to curb property speculation. prices in seven cities gained 81% from a month earlier compared to a .527% in april -- .57% in april. argentines at a bank is getting a new chief. failed to stop the peso's plunge. peevishly the finance minister will take over the post following federico stirs in a surprise resignation. he needs to curb volatility in the currency. senior eu officials have informally discussed whether the u.k. might need to stay on the bloc past march 2019 if negotiations don't accelerate. officials in brussels have questioned whether they can finish on time. that comes as theresa may faces a

. -- pimco global head of sovereign credit. global markets really seem to be taking a hit on this.e any recovery in sight? there arek opportunities in emerging markets but one has to be selective. em fundamentals are strong but em is a beta to global growth and also to the dollar. all of those factors are actually posing headwinds to the em story right now. we think the current selloff has resulted in some value being created in selective pockets, so we think now is the time to be very selective in where to take em positions rather than writing the em data -- beta. david: if emerging market tied toes are a beta, projections of overall growth, does that mean the fx market is telling us these trade disputes will curtail level growth? >> what we are seeing from the markets is increased concerns not just about trade tensions but also in terms of a potential for the fed to be a lot more hawkish than the market is pricing. essentially, this is a strong dollar story, which is affecting the rest of e.m. valuation. julia: if we go back to the imf meeting a few months ago, there was consensu

equally you have got large funding such as pimco and others who are cautious, and a lot of it boils downnd political uncertainty gripping the nation. ramy: what is the top concern with elation debt? -- malaysian debt? comes from theit budget deficit front as well as political uncti from the very surprising political win last month. trillionng off that $1 one mbd debt would cause 3% of the nation's gdp. that is weighing on iestor' minds. you have got a potential downgrade maybe to the soreign, the nation's sovereign rating, and that is weighing on investors' minds. ramy: are there any fund managers that are seeing this as a buy opportunity? got: absolutely and we have money managers li one bas in london who are pointing to the malaysian economy which is humming along nicely. the government may get things under control in the budget deficit front, and that is prompting this to go a modest overweight on t nation's bonds right now. ramy: bloomberg fx and rates reporter ruth carson, thank you very much. yvonne: we are counting down to the market open here. japan, south korea and australia, lo

more encouraging with the central bank being allowed to hike quite aggressively into the election pimcon period. david: why do we think president erdogan is going to be more responsive to the market? shamalia: we don't know. that is what the market will be looking for. over the past years, the president has been trying to gain an executive presidency. he has achieved what he wanted to do. that should give him the opportunity to have a change in policy. equity side, we seen equities selloff in turkey. in some measures, much much worse when it comes to global equities. you want to buy on the dip? mehmet: we have been buying equities for some time because turkish equities have been depressed for a year or so. if you look at the 30 year history of the turkish stock market, every year you have a negative year, you are sure to get a positive water two years following that. this is a very strong emerging market. in light of this history, we been buyers of turkish equity. david: talk about what equities you are buying. we will put up a chart of how you allocate your equity fund. it shows your h

is suffering from, quote, paranoid delusions joining us at post 9, pimco's portfolio manager tony, alongit suisse chief u.s. equity strategist jonathan good morning where do you think we are in this whole discussion? are we watching a white house that's doubling down and is trying to gauge how much pain we sustain versus our trade rivals? >> i think the big question you have to ask is, are we really going to go into a massive trade war? the answer is no in a year from now, are we going to still be focused on these issues if the answer is no, that means that any headwind to the market is going to be relieved and you're going to pull that back up so while, you know, we hate to -- we were uncomfortable with the stock, we're overemphasizing in terms of market event >> we've been saying rhetoric only for a while now but customs is going to start collecting tariffs on july 6th when does the rubber start to meet the road? >> let's put the numbers into reality. there are tariffs being put on $50 billion worth of goods 25%. what is that $12.5 billion impact how much will the global economy -- how

andreas: i cannot speak for pimco because i'm the ceo of allianz global investors.mists believe it is possible to unwind in an orderly fashion. clearly there are political events and other events that can cause enormous problems. the other thing i have to say, this is an experiment that has never been seen before or attempted before. i studied monetary economics, i did not think qe would be possible the way that we did it. it is anybody's guess if it can be unwound in an orderly fashion. the fed is showing the way. it looks to be working to a reasonable degree, but if you look to japan, they're the situation is different because the government debt is so high. it is difficult to see how that can happen. tom: when you look at negative interest rates, how they affect and how theyday affect deutsche bank day-to-day? -- andreas: is interest rates that are the real problem. you can imagine negative interest rates and positive real rates. this is the core of financial repression, it is causing the wage compression and causing some of the populism. it is affecting us polit

advantage of >> mohamed, recently when you've been on, you've thrown off the shackles, the socialist pimcockles yet you've been pretty optimistic about tax reform, deregulation, and what it means for growth are you at 3% now? you're able to say it now. you're able to say it. are you there for 2018 >> so joe, you love minterpreting what i said earlier. i'm in the 2.5% to 3% -- >> you're not 3% you were very positive about that >> yeah. no, no this is relative to the rest of the world. the u.s. is the economy that has legs to it it's the economy that's being driven by pro growth policies. i'd like to see infrastructure plans to get us there. >> you're an infrastructure guy, yeah you're like part keynesian and part deregulation anx reform that's the missing element to get to 3.5% in your view is infrastructure >> i'm pro growth. you've heard me say over and over again, we have the ability to grow faster we have the skills, the entrepreneurship wsh and most importantly there's still a ton of cash on the sideline that's not being channelled to productive investments we have all the capability t