pimco's 18 billion dollar question involves mutual funds and counts the money going in and out. notthose of us who do follow mutual funds that closely, why is this so important? >> there are a couple of utilities. engage how investor sentiment is shifting. mutual fund flows are a fraction of the overall market. you have is, sovereign wealth fund, banks taking on a bigger portion, but this is the best real-time, or only real-time gauge of where money is going. is it going to bonds, stocks, risk on, risk off? david: the sentiment? >> exactly. and you have the specific point of view as an investor. you want to make sure that you are not getting a ton of money withdrawn which put your investment at risk those of the legitimate reasons. and then there's the popularity contest reason. tracy: tell us why we are talking about them right now on this rainy monday afternoon. why have we decided to talk about mutual fund inflows and outflows? >> we wrote a great story talking about how pimco changed the way that they counted their floats starting at the beginning of last year to include rei

growth dominated the bond market, in pimco 2014.own from day to day management. overseeing market groups. the new investment officer will be so berg. they will have a back to emerging markets after years of declining values. that is the bloomberg business far --. ofncine: he is really one the names that you associate with emerging markets. the other one. we have seen peaks and troughs in emerging markets. when you look at emerging markets, they are linked to commodities. a small but robust commodity rally. can they continue? we have a dovish fed and weakness in the u.s. dollar, but it is not certain the rally will continue. robert: the one that is standing out now is oil. , or back above $40 a barrel. oildollar has weakened, but prices are working lowered. the fundamentals are starting to show through in the oil market. they may show through in some of the other markets. growth, aave global lot of that growth is in the consumer sector in the services sector. production around the world is actually quite week. that is what drives the

guy: it was instinct to see what pimco said as well.y advised you want to get into credit as a result of that. is that the right trade? gianluca: it is something that we are recommending. we are recommending exposure to for corporate, basically the reasons. spreads are quite attractive. in an environment where you are not expecting a u.s. recession anytime soon, there is potential. in, on thecan jump german side of the story, you get other german boones and you moving to german corporate debts, because it doesn't look like a recession on the rising in germany. , you make a economy similar play in germany. gianluca: we are more cautious -- again, a few weeks ago, you had the perfect storm of mobile pressure coupled with hedge risks coming from ireland and spain. coming from the flareup of a brexit story. it looks to be quieter now. we are expecting to get something positive from draghi in the next few days. guy: do you think he keeps those spreads cap? jill: that is a difference -- gianluca: that is a difference from places like japan. e

going back to pimco. a lower probability. we saw the bank of england do it in 2008-2009.here is a historical precedent for it. -- the swiss national bank buys equities. it is a well-known equity investor as part of its reserves. i wouldn't be surprised if they bought berry little corporate bond related to this date. if they wanted to get darwin going and make it easier for corporations to borrow and get the corporate spread narrow, let us see. this is his ammunition. cut theu think you will deposit rates and increase font purchases? allen: that has all been discounted. the issue will be to keep dying government bonds. the negative yields. talking about low and negative yields. that is a big component. running out of bonds to buy in the government space. anna: maybe corporate. allen: if it happens, i will come in on friday. anna: up next, sticking to the central banking being. mark carney weighs in on the brexit debate. what can we expect our head of his parliamentary testimony. ♪ hey how's it going, hotcakes? hotcakes. this place has hotcakes. so why aren't they selling l

in our next hour, we will be joined from pimco.ct time to speak to them about global growth and tepid u.s. growth as yellen speaks today to the economic club. ♪ francine: i'm francine lacqua in london; tom keene in new york. we are looking at markets, at janet yellen.let's get straight to the bloomberg business flash with vonnie quinn. vonnie: thank you. barclays is warning that commodities may drop. the bank says that oil and copper are at risk for steep declines. commodities are headed for a quarterly after moving 11% in the first quarter and 14% in the third quarter. in london, there is growing concern that the housing market is oversupplied. lenders have started charging higher rates for development loans. home prices in london are at the most in almost seven years. and it is the beginning of a new era in virtual-reality; the first oculus rifts has begun shipping. it cost $600 it cost $600 and requires a powerful computer to run games. that is our latest bloomberg business flash. francine: thank you. this is what we are watchin

bill gross is going to get his day in court, and a wrongful terminations against pimco.a state judge ruled that he has met the minimum requirements to proceed, he claims that he is owed hundreds of mine to dollars at being forced out of the firm that he cofounded some 45 years ago. pimco argued that bill gross phil to show yet any agreement with the firm guaranteeing his employment. rise,s are getting a pay lifting the base salary of iran more than three and a half thousand employees by an average of 2%. increase works out at $53 a month, and it takes effect from april, company says that it is aimed at younger staff in part of the prime minister's drive to create greater spending. concern of house prices in top-tier settings are rising too fast. raises pressure on the markets, bankers said to have asked china's biggest commercial and is to play closer attention to mortgage approvals at a meeting. chinese authorities are considering new rules banning homebuyers from taking out loans to cover down payment. before the debris, a look at pictures. i manned aircraft taken anot

he is with pimco in europe. drew matus with us. he is with u.b.s.i hear starkly optimistic, i would suggest pushing against the gloom out there. how big is the gloom? drew: pretty big. number one question i get is where in the economic cycle are we? what's the probability of recession? tom: i don't hear a single interview saying recession is on the horizon, even the gloom proof we have suggests there's no. a little itigroup bit. drew: look at the consumption numbers, jobs numbers, the wage bill going to the u.s. consumers am it's all really good. francine: inflation is going nowhere. true: well, inflation has been ticking up. core inflation is above two on a c.p.i. basis. and on p.c. it's close enough to two, where if you average the two, you're close to two. i use the word two about 100 times there, but -- francine: it's crucial. drew: two is crucial, but it's significant in the fact that everyone says there's no inflation, yet the data tells us there is. tom: how much in service, three, even higher? drew: yeah, somewhere around there. tom drew mat

pimco says there was no agreement with gross guaranteeing employment, but a california judge says the ahead. that is your latest business flash, let's check on european stock markets. stocks are rising for a second consecutive day after four consecutive weeks of gains, the longest winning stretch since march last year. the draghi stimulus boost still working its magic on europe's primary equity forces which are at the highest level since january the seventh. betty: it is looking not as great, a little bit down. abigail doolittle has the latest from the nasdaq. the secondsla is biggest performing at the nasdaq this morning. recent data checks suggest that model x production accelerated faster after a factory visit. he raised his price target to $300. this is in contrast to a bearish call from short seller andrew of citron research who just recently put out bearish comments on tesla, saying the stock is more likely than not to be trading close to $100 by the end of the year. betty: it is going to be interesting. there are others joining the rally. abigail: gw pharma is trading back abov

-- pimco says it will be value. -- devalue. is this a general assumption? >> i think so. we are in a similar camp where we see 5% or 6% reduction. the actual value of the yuan is lower. you have a very active central bank trying to make sure the currency is freely traded, to be included in the currency packet. you have a couple dynamics pushing down the value of the yuan. the big concern is why markets react so negatively when they do depreciate every so often. francine: the authorities keep on saying, we are not actively trying to devalue it. will keep stable at a balanced level. china is a responsible country and developmental fundamentals decide that the renminbi will not devalue continuously. we will push forward the inhange rate of the renminbi controllable manners. we will never stimulate with devaluation. francine: this goes back to trust. the markets get freaked out and exaggerate moves because they still don't have the confidence that the authorities won't do anything messy. do we need to trust the official

matt: pimco managing director joining us from california.till ahead, angela merkel's party suffered big losses on sunday in german state elections. what does that mean for open borders? ♪ bloombergare watching markets, i am mark barton in london with matt miller in new york. angela merkel says she will stick to her course on europe's refugee crisis despite her party's poor showing. candidates in her union party failed to capture two western states, the anti-immigration alternative one nearly one quarter of the vote. anxiety of europe's migrant crisis and merkel's response to it. tony, how much of a blow was this for merkel? tony: the event of the day was waiting for merkel to come out of her party huddle and go before the press in berlin. germans kind of like politics ground zero today. she came out fighting and said there will not be a confidence vote in parliament. i do not see an existential problem in these three elections that happen yesterday. yes, i recognize that voters need to be one back and there is a lot of anxiety out there, and

pimco says high-yield company debt and jump onto will offer better returns.mberg business flash." tom: sallie krawcheck is with us. we will talk about the future of wall street in a moment. this morning, dominic konstam is with us. he is with deutsche bank, writing exceptionally important research. weill not send it to you and protect the copyright of our analysts. i want to go to the ecb. you are looking at the distribution, the choice set of outcomes mario draghi has. how small of a corner has he backed himself into? dominic: he has backed himself into having to deliver something on the positive rate cuts, on the qe, expanding the program. i think where the big uncertainty is, if he is going down the road of the ragged -- of the negative refinancing rate , we discussed early about bank profitability, and we know there is a concern among investors. the issue is for the ecb, how much should they care about it going forward? banks beingng about able to function as a proper lending entity to help the european growth. a private really want banking system that is

tom: richard will be with us from pimco.ng forward to speaking to him after our conversation with alan greenspan. skip york, it has been too long. one of our most popular guests on oil. skip york. another hour of bloomberg "surveillance." ♪ tom: throw the year-end predictions out the window as the job predictions back in. ta of pimco will be with us. good morning, this is "bloomberg surveillance." it's thursday, march 3. did you survive super tuesday? francine: i did and now i'm looking at brexit? . its different than every other political race. it's very true of what we see in europe. tom: it's very cool you had a different view on the ballet of tuesday night. onto michigan and florida. we go to london with our news. >> hours after the security council approve more sanctions to punish the country for a nuclear test in a rocket launch, north korea fired back by firing off short range missiles into the indian ocean. the two most likely successors to david cameron will square off over the eu referendum. two days before the vot

carlet: that was mark kiesel of pimco.bank wants to see an industrywide trading drop this year. herssa mayer hopes to keep job. a sneak week of her interview with charlie rose. plus, it has been a wild six months for valeant. details from a private meeting. ♪ ♪ you are watching bloomberg. i am scarlet fu. here is what we are watching. a warning from jewis deutsche bank. is the worst over four oil prices? the iea says market forces are working their magic. and arrest warrant has been issued for brazil's former president lula. we begin with more bad news for investment banks. is forecasting the revenue for the industry will shrink again this year. in a statement, the bank says the clients are refraining from doing deals. it would mark the fourth straight annual decline for the industry. meanwhile, it has cut its bonus pool by 11%. to show just how widespread troubles are, bank of america is cutting back in asia. it has fired 15 senior bankers. according to people familiar with the matter, they also cut junior positions and b

pimco has been telling investors to expect an acceleration this year. officials -- also note that costs are picking up. boss iser hsbc box -- among business leaders backing the push for the u.k. to leave the european union. from 2006 too 2010. more -- it would take -- it will send 1000 staff to london if voters decide to leave the eu. that is a bloomberg's business flash. manus. manus: our next guest is one man who wants to see the u.k. stay. joining us for a chat is juergen maier. nice to have you with us. we are going to get deep and dirty in just a moment. you run a sizable business. a manufacturing business. --ant to get your take good i want to get your take. saidmen have come in and it is fairly tortured out there. give us your perspective as a manufacturer. where are we? -- juergen: we're living in an uncertain time. a slowing chinese economy. in the u.k., the issue of exit -- of brexit is something that is concerning. are pouring things back that index here it -- that index. manus: has brexit caused you to delay, re-think any major business deci

a pretty big call from pimco.kuroda is still speaking in tokyo, saying to give the policy more time. i'm paraphrasing, of course. let's get more from our managing editor, brian fowler. he joins us from tokyo. you listened in. basically, defending his policy, saying we are ready to reconsider everything. brian: yeah. he's really been all over the place today. the comments are still coming out, that he has gone from wishful thinking -- he said the virtuous cycle has kicked into gear, which is a little hard to justify, to claiming that he thinks the negative interest rates will not affect bank profits. if you look at the stock market, the bank index is down 9.5% since a negative interest rate policy was first announced. he's also saying that all options are on the table. consider any kind of policy to further ease in coming months. the emphasis is that we will go forward; we will get the negative interest rate time. but in coming weeks and months, we will see further easing one way or another. anna: brian, as we get

says, is a pimco currency risk. goldman sachs, good old goldman sachs, will keep the dollar bulls happy. goldman says, stop worrying. value the dollar is already in the price. let's see how the strength of the dollar is pervading across markets. you are seeing a dropout of some of the commodity plays. you have oil coming back off of its recent highs. timesories are three what were projected. volume study percent below the overall average. you are back below $40. the psychology of breaking markets. it into perspective for you, gold is at a one-month low. emerging markets are also lower. the glory is fading in this global equity market rally. before easter, will we be bull or bear. yvonne? yvonne: really good morning to you. we are seeing optimism after the premier's speech. that resurgent dollar really weighing on asian markets. we are seeing energy and financial shares tracking down the market. china's stocks dropping the most in two weeks. we did get some earnings that were pretty weak. the theme seems to be low co

let's bring in libby cantrall with pimco. and larry kudlow. larry, what do you make of candidates versus corporations? it seems non-stop in this campaign? >> yeah, it does. i thought cruz had it right, i mean against corporate welfare, against cronies. that's a good.toic and an important reform we need to make throughout the government but i'm always a bit uneasy when you single out a particular company for a particular thing. >> cruz didn't, in that biyte. he didn't name a name. >> he didn't. others have. i'm uneasy about that. if you are not breaking the law why be singled out. if you want to change the law over a principle like corporate welfare i'm for it. but i'm not comfortable for taking a company to the wood shed because you don't like what they are doing. >> at pimco what are you telling everybody on staff about what is happening in washington what the electoral situation means in terms of investing and what they should be telling clients about it? >> we've been talking internally a lot about this. what i say it's really important to

although we have seen some investment houses, pimco and others -- manus: pimco and blackrock.nna: how concerned are you about inflation the u.s.? stewart: it is a very legitimate concern to have. it has been a concern and not a concern. during that period when it did not move at all, the fed was telling us do not worry. if we see any signs of emerging inflation, we will act. all you have had signs, and they have really given a very strong hint that they wish to act anymore. manus: a very significant market move, equities will we get all of the losses. in a new high. two-year note collapses, but this is the inflation expectation gauge. this is the difference between nd-year government bo and treasury protective policies. that has begun to go up. and there really is an absolute shift in the dial. i should also say, this is fascinating. the fed still has considerable scope, even if rates go back to zero. she did not touch on the negative rate argument. pushing is about expectations. this is what all of the central banks are worried about, pushing to five-year low. the break even

plus, we will be speaking with pimco is a cio to cut treasuries. -- the cio of pimco about cutting treasuriesng bell, and this is bloomberg. once a 24 hours in this market. stephanie: how about the last two months? back and forth. talk about volatility. let's check in with our own matt miller. i love it when the markets are green. matt: a big rally. yesterday was a strong rally at the end of the day. we came down pretty hard, and rallied up to unchanged at the end of the day. refresh start we are seeing 1% gains in futures almost. take a look at europe, a similar picture. big gains in the ecb decision, then selling off, and now buying g back in. take a look at the stocks 15, which is a broad measure of european stocks, and it came .own yesterday and rose the euro was in interesting picture, up and then down. to one dollar, 1125. no more diversions. look, right now i have it loaded to g-20 countries. you would not normally seen moves in the south korean debt market that are such strong moves. i can look at moves that are 1.5 standard deviations away from the mean. it is a much smaller universe

pimco's economic advisor was thinking at the challenges facing policymakers. >> central banks are constantly learning and trying new things all the time. they are the only game in town and fiscal policy is not helping, so they have to try new things. they have discovered it is probably not the holy grail. this is why the impetus -- the emphasis is shifting. vonnie: joining me now is the equity manager for funds management. it seems to always prop up equity markets. guest: i like it when stocks go up and that's not the point. the point is to help the economy. i think that is where the help comes from. julie was talking about the call for an interest rate increases year. how would you rate that? probably backed off from where we thought before. it's like taking an airplane trip. you don't get off the airplane early if you don't arrive on time. we have been getting high-frequency data that hasn't been terrible. didn't have yields dragged down by other economies into negative territory. with the fed be able to go in march? they might be able to. i can make all sorts of hypotheticals up. means th

pimco has turned constructive on emerging markets. morgan stanley has as well.view by many that the worst markets,er to emerging does that give opportunity? emerging markets are the tail and china is the dog. there is a complete autonomy to that decision make it -- making at this point. the issues of leverage, excess capacity, rebalancing, political issues emerging -- those will not be turned around. the only positive is that they have the ability to stabilize over the short term. the balance sheets of the public sector are quite pristine and they have the ability to control capital. short-term, the ability to stabilize is there. long-term, the challenges are quite severe. alix: it sounds like your on the same page longer-term, but shorter-term you see more of a pop. >> exactly so. fixed income has value in that. carrie in the emerging markets is quite attractive. alix: what would make you more constructive on emerging markets? like to see improving policies capable of implementation on the ground. we spend our times looking at companies in the relationship betw

scarlet: the rebound in oil prices is real according to a former pimco ceo. ♪ carol: i am carol massar miss? an optimistic outlook on oil. it was shared earlier today. a month ago, i said you cannot justify oil prices being so low on the basis of supply and demand. the problem was the market was .ot finding its feet now the market has found its footing and we are getting supply destruction. i think the rebound in oil is real. it will remain volatile, no doubt about that, but we are seeing the bottom forming. had someone on recently to talk about this and he predicted where it's going to go. let's play a little of that. oil probably did hit the bottom when a jiggled around $30 a barrel. on a given day, given the amount of speculation, it could go anywhere. i don't see it going much below $30. is oil the symptom or the disease? we spend so much time on oil. the it really underline fundamentals of the global economy in growth? is thereason why volatility that comes with low oil prices. 3%-seven percent moves daily and oil have become common. oil is a widely traded commodity. thatu get 3%-

some of the bond markets biggest names, including pimco and goldman sachs, went into that fed meetingfident that policymakers would outline at least three rate increases. whereas if you look at what citigroup is saying, the world's biggest fx trader, you should have been expecting the dovish reaction. guy: ashok, let's talk a little bit about how the dynamic of this one works its way through the dollar. how will inflation fit into the u.s. curve? how do you see the curve developing? ashok: first, we need to look at what happened when the bank of japan took possession and the yen strengthened. the same thing happened when the ecb took action. tellwere already tale because there was expectation. the u.s. was hardly going to start tightening. that meant there was less room to support this. we would have to expect a weakening trend in the short-term, until the market digests the fact that fed expectations are going to go nearer to the markets, rather than being externally hawkish upfront. what you have are very strong bullish positions on the dollar. the interest rate cycle will be much m

mark keisel of pimco joining us now. we're going to get to your views on markets and where to invest in a second. given everything going on, when you go into your investment meetings, how much do politics and the presidency play in any strategy perspective? >> well, i think it matters, brian, and i think there is a lot of uncertainty now with what is happening with clinton and trump and who the republican nominee will be. i think this will play out over time. and right now what we're focused on is a big opportunity in the credit markets where we see equity returns with a lot less volatility than equities. we think given the risks, given the political risk, we think that actually bonds and corporate bonds are the best place to be today. >> in any scenario, you don't say, well, if clinton is the nominee or wins by this or if trump is the nominee or wins by that, you think bonds overall are the better place to be in the corporate side? >> we do. there will be winners and losers depending on whether it is a democrat or a rep

they also say the weaker dollar is going to favor emerging-market equities. , pimco the one i love, cat it may be the trade of the decade they are so cheap. this is a really important chart for european investors. you can find my chart at g#btv596go. david: we have a very good entry from alix. alix: i'm looking at the spread between the two yield and the 10 year yield. this is the difference between those yields. currently it is 100 basis points. we are sitting right there. it went below it briefly for a few days. that's the lowest level we have seen since 2008. why do we care? why does this matter for the fed? typically as the yield suppresses it could point to a weakening global economy. that may be a recessionary risk. the reason that we care about this today -- why is this happening? there are two particular options. one, it's foreign. the fed can go ahead and raise rates because of other reasons. if it is domestic, if it is because of global slowing in the u.s., the fed is going to have a very difficult time raising rates when this spread is at 99 basis points. potentiality in th

betty: a new report coming out from pimco, reducing their outlook for growth in 2016. simplified measures are becoming increasingly ineffective. earlier, we talked exclusively with james miller, who says there is only so much central banks can do -- james bullard, who says there is only so much central banks can do. james: there is a business cycle. monetaryn a good policy, there is a business cycle, but it is not as big. it is driven by factors like technology, human capital. what the u.s. needs is a better medium-term growth strategy. we need everyone to get on board with that growth strategy. betty: ok. felsll compels -- joachim cowrote today's report on global growth. he might have a difference of opinion. now fromus exclusively newport beach, california, where they are headquartered. before we get your growth prospects around the world and the three c's you are talking about, what do you think about what jim bullard just said? you downgraded your forecast for how many rate increases we are going to see this year, right? joachim f.: that's right. we downgraded our

joining us from pimco, the portfolio manager for germany. guest: hi. mark: how do you explain this turnaround in the markets? initially a sense of jubilation. we have seen a 180 degrees split. why is that? my head onscratching that a little bit, too. i do not think it is the rise in the euro. they of signal to the markets that they believe inflation is going to surge. it is a signal of economic strength. clearly, i think it is dominated by the interest rates, using interest-rate is one of the tools has effectively come to an end. draghi has given the signal that interest rates as a tool is exhausted. i really think we will see -- quantitiessignaling of what it buys, government bonds, nonfinancial or print bonds -- that will be the heavy lifting on easing going forward. i think that those quantities will dominate. i do not see the signs that growth and inflation are bouncing back. what about the decision to find non-bank, corporate debt? it was not predicted by many. has that taken you a back? mark: -- guest: it's a logical rates.on of interest it's ope

you have been it pimco for a decade. how did this new job come about?arol: -- john: again, if i analyze what's going on right now, with stocks that could be potentially overpriced, you have a market that is being unserved. ,here are a number of companies institutions, organizations and the market that cannot get bank capital. not because they are not credit ofthy, but because noneconomic reasons. a process reasons. so, in analyzing their value could come from in the next few years, i was very attracted to that market. in looking for a firm to join with, i was looking for someplace that was very client centric. that had a lot of experience in this space. our team of investors arguably has one of the best track and history of investment in these assets. so, it kind of came together in that way. as life usually does. sounds like there's a fair amount of demand out there. it's mid to small. in $5are not interested million loans to $10 million loans. they are asset taste. we get them based on receivables, inventories, or hard assets. the 30%,alue is in 40%,

tony crescenzi is a market strategist and portfolio manager at pimco and he joins us from newport beach, california. hey, tony, good to have you here. you feel like things are starting to come down and make more sense. tony: you listed the trifecta of positive news on very big macro factors. china communicating better its policies, meaning on the foreign-exchange rate, many market participants didn't know the depths of the moves that wanted in terms of the , thisn-exchange movement beat or even the direction. that has been communicated better of late particularly by the pboc. jobless claims, for example, the lowest of the past 43 years, -- third lowest of the past 43 years. and the three points are all in the past year, suggesting strengthen the market best strength in the labor market. -- suggesting strength in the labor market. it does seem that the recession talk was quite premature. finally with oil, which royal markets in part because of the high inclusion of energy price names in the high-yield indexes, etc., it has stabilized, of course, with a big move them $26 a barrel to $38 n

because there was a great story on bloomberg today talking about how blackrock is joining others like pimco warning investors to seek an inflation hedge. based on what janet yellen said, that would seem to not be the case. what do you do as you try to navigate what the fed may or may not do, what may or may not happen in our economy? jeff: the fed has many, many important impacts in terms of financial markets. that is an understatement. inflation expectations in the financial markets certainly got to a level in mid-february when we had oil prices at their lows aree inflation expectations pricing in virtually no possibility of stabilization and we certainly saw an opportunity there. we have had a big rebound there in inflation expectations. janet yellen acknowledged that could inflation expectations, market-based expectations were low, but there was a recent rebound. that has changed some of the near-term outlook for inflation. certainly if the fed is wrong in terms of this firming in inflation, and certainly if we continue to see a stabilization in oil prices, then inflation -linked bonds a

i made that statement jokingly when i was in iowa, and the " morning register pimco a terrible paper, they called up and said that is a terrible statement -- the "des moines a terrible paper, they called up and said it is a terrible statement. my store is worth much more than him. it is on 5th avenue. gucci, a gucci store. they said, we do not believe a store is worth $150 million. they actually went out and got three appraisers him and they said that store is worth some $400 million to $1 billion the review can check your local "des moines register," if it is still open. but i build an amazing company. one of the reasons you know it is amazing, the hottest probably in the history of the general services administration, the gsa, the government service, is the old post office site where the post office is billed in washington, d.c. an entire block fronting on pennsylvania avenue. so if i do not get there through the white house, ion getting there anyway, folks. one of the most beautiful buildings in the country, incredible, a landmark building. the gsa, for many years, has owned it. th

of a $90 billion says return -- pimco -- there will be better returns in riskier debt.n metals opportunity for bearish investors. analysts say demand growth for metal and china is unlikely to be sustained. shares of burberry surging today. there is speculation that they are setting up defenses against a possible takeover offer. it asked advisers to prepare for a bid after a mystery investor took a 5% stake. stephanie: as we have brought you all morning, we have a very strong lineup of gas in honor of international women's day. we face a strong possibility of our first female president in the united states. i asked melinda gates what impact that would have on our society of hillary clinton was elected. melinda: we want to see female role models at all levels of society. you want to see them in board rooms, and government, in nonprofit. , when you of the day are electing the next leader, you have to elect them based on your platform and what you believe in them. i've seen the prime minister of canada, he does amazing things for women right now. i see a prime minister like

we are back with richard clarida of pimco.pt thinking about this monetary divergence aim playing out over the last couple of months. the markets are obsessed with it. everyone is talking about the divergence between the european central bank and the fed. given the moves in the japanese government bonds, you could argue that it is a bigger deal. yield fell to 46 basis points, below the treasury yield. both at 69 basis points today. that is the white line in the blue line. what does that tell you? monetary divergence globally, two big central banks into negative rate territory and doing massive quantitative easing programs, both were late to the qe religion. bernanke and mervyn king at the ecb got going on this in 2008, but they now have major programs in place with the get rates. absolutely, monetary divergence. other countries are cutting rates as well, so you have a handful of countries that are in a hiking mode, although gradually. monetary divergence, what has been fascinating, looking at currency markets my entire career,

pimco may not win a click and by cofounder bill gross. after he was allegedly forced out. no agreement it is guaranteeing, but the california judge says the page can go ahead. now to matt miller with a look at stocks. matt: let's look at big movers starting with starwood group. i want to make a little bit of a correction. i was looking at a group earlier. 28% by john malone. they are not part of the buyout a spinoffe is starwood holders would get a steak and even if it goes with marriott. group, aacation timeshare kind of thing, and it will be 550 per share for each share you on no matter which deal goes through. it has not named the group of bidders. that is why there is confusion you see the shares of the premarket trade. now valued at less than $64. it says it supports the marriott bid. we will see how they reconcile the price difference. let's take a look also at the apollo group making the purchase. it is a grocery store chain, a premium and about 25% trading up to that. maybe he will mention this as well. i want to talk about tesla. he downgraded in october because h

the backdrop and pimco saying they believe they will see -- yellen is front and center. they do see upward pressure and inflation on the horizon. i think we need to listen to janet yellen your she is the most important voice in the room. will see if she is able to snuff all of this out. really, that was we story after she gave that super dovish speech a couple of weeks back. guy: let's bring another voice into the conversation. you are focused on asset classes. you look at the big picture stuff. she is the most important such a banker in the world. everybody is hanging on to every word. that is paying too much attention to these changes in data. it is really the longer term trend that is more instructive. both modestimes inflation in the u.s. headline inflation and core inflation is up every five years. average hours, you're starting to see wage inflation close to cpi there. after that starts to look, the economy is still moving robustly. although it is slower than we would like. try to figure out how to get the big calls right. dollar has been the story with what is bee

. >> reporter: el-erian popularized the term "the new normal" while helping run pimco, the world's largestook, "the only game in town," argues that the new normal may be coming to a bitter end. >> how long will central banks continue to experiment? because, at some point, when you experiment too much, the collateral damage and the unintended consequences exceed the benefits. >> reporter: the experiment of near-zero interest rates, that is, which might have induced not just investments but risky investments with cheap borrowed money, which could lead to market bubbles that then begin to burst. >> like, for example, we all wake up and we find that the stock market is down 10%. >> reporter: or, it's down 20% percent, or it's down 30% percent. >> and then we become more cautious, and we drag the economy down not just low growth, recession. >> reporter: and that's why they've raised interest rates, even a little bit? >> absolutely. and that's why they haven't rushed in earlier in the year, when we had financial volatility to calm everything down immediately. in the past, they always used to rus

david: that is the pimco view. there are other views. be based on global challenges like china. how concerned should we be about the continued growth in china? they are borrowing too much. sean: the authorities are doing a lot of reforms, loosening policy. they've had to do the same thing. they are committed to removing 6 million workers, that will need to be underwritten by quite a large debt burden. the authorities have recognized the old model is redundant. looks like quite a big number at the moment. it's all about supply-side reforms. the previous month was one of the biggest months for china on record. are they not going to play the credit channel again to boost growth? >> part of the domestic credit growth was because they've been reducing the foreign currency loans in the system. if you see the reserves dropping, there's been an -- the domestic banks have had to go back and lend rnb . a substantial amount of the outflows was just that, paying down dollar-denominated debt. the trade numbers showed of imports into hong kong from ch

the feds meet, pimco is bearish on treasuries.he manager says the u.s. 10 year will climb of 2.5% as inflation accelerates. the fed will eventually hike rates again. if you want to convince people in the world there is no test the world is not come to an end, and you want to do that soon, you just hike rates. it seems like like the right .hing to do it hans: you do it now if you want to get a second one in. it will be hard to do it in the middle of an election season. i can't get out of this riddle where in december they said they're going to try for four rate hikes and no one believes that. either they got to hike or they've got to live with a credibility problem. fredrik, the question is do we believe the central bankers anymore? kuroda was saying the economy is all roses and sunshine. in december, we had the fed talking about four rates. at what point do we have to start discounting prognostications from central bankers. fredrik: if i look at what is happening in sweden and japan, following negative interest rates, if i look ac

pimco may not get a quick and to would have which them pay over a million dollars.h us. get us ready for this meeting. where do you think the fed is going to head this time, and into the rest of the year? >> i would be really surprised if they pulled the trigger. i expect interest rates to hold. having said that, i expect the statement to be balanced. i think the last thing the fed wants is to validate whatever concerns that are left regarding the turmoil. at the end of the day, things have been normalizing. anna: you think central banks need to be seen to keep their heads? in times of volatility, they have to not respond? >> they have to. did sets the tone. anna: i just pulled up the work function. a 77% chance of a rate hike by the end of this year. -- willyour expectation be get further insight? will we still end up with this divergence between what the market thinks and what the fed meeting?ter this >> i think the market has got itself really complacent about the possibility of more rate hikes this year, as opposed to just one. having said that, i don't think it

pimco in has joined a warning that costs are due to pick up. february,rose 1% in half of the 2% target. where does janet yellen said on this debate about upside risk to inflation in your mind? >> i think they desire upside risk to inflation. that is what all of these policies are designed to create. i think to get a little bit excited because tip break events have risen a little bit is a little much. they are still trying to generate inflation. the fed and most other central banks think the risks are on the downside. >> how can john williams talked data mighthis cpi be a mirage? we're not seeing much energy to the inflation pressures that are there. >> they look a lot at the core pce. that is kind of in the ballpark of 2%. i think they are looking for cover to begin to raise the fed funds target rates again once or twice more this year. they are out of sync with the other central banks. those other banks are cutting rates into negative territory and providing liquidity in the system. jonathan: what i found fascinating was the argument that the

this is what pimco decided.ough you can get 2.9% on a chinese 10 year debt, we are not willing to take that risk because you can't hedge against the depreciating lines. hans: is there any chance for kerrcarry trade in china then? at what point is there any sort of carry trade? caroline: when people start to decide whether the risk is appetizing or not, that is what is interesting. the philippines' credit rating is actually five rates below that of china. but the credit default swap paints a different picture. the cost of insuring chinese debt is far more than the philippines. it is less risky than china, though moody's does not seem to be singling that. guy: up next, we're going to talk itv. ♪ guy: half past the hour. will come back. it is the banks that are leading eses by the 6/10 of 1%. caroline: wanted to focus on those miners. these stocks are on the higher side today. anglo-american is having his best day for the month. we are at our highest levels since november for anglo american. the reason seems to be

pimco says the case should be thrown out because gross failed to show he had any agreement with the firmnteeing his employment. as your -- that is your business flash. the: let us pick up on political story. decisions over angela merkel's refugee policy was laid bare at the cdu failed to win two western states. good to see you. what does this tell us about angela merkel's position. thate election tells us there is a splintering of the vote and it has not only affected merkel's party, the christian democrats. in all three of the states, the governments that have been there will have to regroup because the alternative for germany party which is a new anti-immigration party that has been running for merkel's policy has made inroads. and that is the takeaway from these three elections. although, of course, clearly since merkel is in charge in berlin and the federal government, it is also a setback for her, very much so. anna: a setback for angela merkel and her party and a triumph for the anti-immigration party, particularly in one state where they have not stood before. how much long-term i

the asx 200 led higher by the commodity producers, particularly pimco.00 closing higher, above that 5000 point level as gdp impressed the market. it has been a very positive session in the region. having a look at the yen, it is wilting a little at the start of the european session, but during most of the day's trade it was pretty flat. the yen now down one third of 1% against the greenback. a very positive day once again in the asian region, stocks now at their highest levels since january 8 on the regional benchmark index. anna: thank you. juliette saly from hong kong. let's talk u.s. politics. donald trump and hillary clinton were the big winners. the two turned their attention to each other, offering what is perhaps an insight as to what might lie ahead. clinton took aim at trump's divisive rhetoric. >> it is clear tonight that the stakes in this election have never been higher. and the rhetoric we are hearing on the other side has never been lower, trying to divide america between us and them is wrong. we're not going to let it work. back, referring

pimco is now buying government bonds. and the ecb is buying corporate.o not see a real reaction out of the ecb carryings mario draghi a bazooka or a water gun? these gentle men are going to weigh in. francine: the bazooka -- we had a great guest on monday saying they were carrying a bazooka. stephanie ruhle with "bloomberg " shortly. tom: jim, i want to go quickly to you before francine brings in dr. hooper. i do not hear much discussion ramifications if britain exits. do you stay off at night worrying about your scotland? jim: i do not stay up worrying about it, but i am increasingly concerned about the economic impact of this kind of disintegration. i think a lot of the wealth of the western world was achieved on trade, and i think anything gets in the -- i think anything that gets in the way of free trade like rex it is very bad. having said that, the sentiment on brexit, it is like larry lindsey was talking about, it is anger at the elite, which is highly understandable. but if you go beyond that and have a brexit, you and up with a period of dif

pimco was brilliant yesterday, moving to 2.0 on his global gdp.n the next hour, how all of it dovetails into the agitation in the volatility in the market. looking forward to the new interview. stay with us. bloomberg "surveillance." ♪ francine: these are pictures of -- isn't that pretty? we have to talk about brings it. -- about brings it. brexit. there's an interesting read about how all their polls are wrong. we picked out some inc. for the morning must read -- picked out something for the morning must read. he talks about janet yellen, and her remarks. he goes on to list one of them, being that politicians aren't taking advantage of the fed giving them a little bit of the lunch. our guest is still with us. you are one of the only ones calling for a lower dollar. others were talking about divergent. what does it mean for mario draghi? >> it probably puts more pressure on mario draghi to do more. euro will probably rally. but remember, the ecb looks at the euro on a trade weighted basis, and the biggest component now is renminbi. business changi

mark: you heard with a set of pimco, central banks declaring a not good for the globe if it is too strong. though one might have assumed that it would fall on the back of the ecb's stimulus, it didn't. it's that rising. -- it's been rising. there was this deal where they didn't want the dollar to be too strong. in the beste interest of everybody? flex i think they are concerned about the dollar just continuing to rise inexorably. that's probably what worried people. a slightly stronger dollar for now does make sense. the euro likely needs more support. scarlet: at the end of this week what will we find out about how coordinated it is? to respondbanks tend to the fundamentals driving their own economy. lightly pointing to the need for further monetary loosening in europe and in japan they may well announce additional easing this week or next month. on the other hand, the u.s. economic fundamentals justify higher rates. everyone is watching everyone else because of the interconnectedness of currencies and bond markets. is this bank of england meeting the biggest no meeting in the history of

pimco has been realistic and you have set an expectation this year. it's been a tough few months. get there? bruce: who knows. we don't try to project movements, soket we're probably not built for tv. we are a long-term investor and what we have found is when we signal a return in the 3%, that was before alpha, before the value add. what we were trying to signal as we thought we were in for a more difficult environment. we are required to make an annual projection. when we look at, we never get our annual projections right. half the time we come in too low, half the time we come in too high. we are free much delivered on what we indicated we would. you share the view that longer-term, those returns are going to be harder to find? bruce: we do think -- it depends on your definition of longer-term. we are and in perpetuity endowment. my job is to make sure we are around for hundreds more years. think the earth is an ongoing and there are incredible pockets of opportunity across the spec the room -- across the spectrum. medium-termover the , maybe as long as a decade, we are in a cha

. >> announcer: the bond report is sponsored by pimco. (patrick 1) how about a 10% raise? (patrick 2) how about 20? (patrick 1) how about done? (patrick 2) that's the kind of control i like... ...and that's what they give me at national car rental. i can choose any car in the aisle i want- without having to ask anyone. who better to be the boss of you... (patrick 1)than me. i mean, you...us. (vo) go national. go like a pro. >>> welcome back to "power lunch." i'm melissa lee. right now, stocks are sitting at session highs. the dow jones industrial average up by almost 2%. s&p 500 up 39 point a full 2%. wti up by 1.8%. due to stronger than expected manufacturing data. fed funds futures are pointing to a high leer likelihood of a rate hike in december. 65% chance right now, versus 30% chance seen on monday. pet codown 6.6%. med tronnics down. and first solar done by 4% at this hour. let's get to sue herera. >> backed by iraqi forces paramilitary troops we pelled and attacked by isis militants in the outskirts of baghdad. they describe the situation as under control. 20 milita

more about this and why you should care with the executive vice president and market strategist with pimco. i'm an easily confused guy, tony. not as smart as you and please help us figure this out. janet yellen honestly confusz me. i understand there's some big macro problems we have with the economy. i get that. they have been around for years. they will probably stick around for years. home prices up 7.5%, joblessness down and job openings up. what is she seeing to be so things are still terrible in the economy? i don't get it? >> well, it's not necessarily this, brian. look at the 15 references that yellen has in her speech and the 12 footnotes. look at number nine, reference number nine to a speech from charlie evans, one of her colleagues on the fomc, a paper from march 2015. it speaks to risk management for policy at the zero bound, and what calls for as it says in the conclusion of the paper the idea that the fed should be especially cautious, words that the fed chair used today when the federal funds rate, target rate is near the zero bound because if the fed makes a mistake, if it