bloomberg, does the pimco the pimco income fund has been steadily growing month over month over monthg driver of not only this particular sector of investment at pimco, but frankly, funds overall, the a of the entire investment firm. how much is this also was signed that active management money comes to bond investing is here to stay and has sticky a lower -- sticky allure? john: that is what pimco argues, that their traders, their outlook on the economy, their technology, all of those factors can weave together and get you better returns than some algorithm on a computer or some index. it is especially true with bonds , because there are so many factors involved in a trade, it is a much less liquid, much more opaque market then stocks. and there are so many more bonds. one example that pimco put out in a paper earlier this year is that the s&p 500 has 4% turnover in its member companies. bloombergex like the -barclays index, that has 40% turnover annually. you have to keep finding out new information about all the area securities they will put into a fund. the pimco income fund has 5

libby cantrill is with us, head of public policy at pimco.have seen president trump embracing chuck schumer in the oval office. what did you make of that deal they brokered, and help us understand why the president would have bought into it. libby: fundamentally, this was a democratic feel that president trump simply signed on to. it really was a democratic congressional deal that president trump signed on to. i think we should because this in extrapolating too much from it. i think that it could make things like tax reform even more difficult because instead of ,ctually just clearing the debt you are putting the vote up in the spring, right when tax reform might be heating up and giving leverage to democrats. the approval ratings of president trump a monday -- as arats is very low and result, the bar for democrats to negotiate with him is going to be incredibly high. maybe we get some sort of bipartisan deal, but i think the bar is going to be high. david: i'm interested in what this says to you about who is leading and who you follow for in

jim keenan of blackrock, rachel golder of goldman sachs, and esel at pimco.l, bloomberg had a great article on the frenzy in your world of loans. describe how institutions by loans. -- buy loans. loans are seen as a higher-quality opportunity set, a safer way of getting yield. there has been a massive issuance in the last few years, but most of it has been refinancing, a lot of it absorbed by clo's. ferro would not have done that, what is clo? collateralized loan obligations. the bank loans have a floating rate. tom: we have jim keenan. explain floating-rate versus fixed-rate, and why you need to 2018?ow as you go into jim: it is around the duration risk. fixed income has a variability of rate risk associated with it. bank runs give you credit risk that are tagged to the front end relative to what you would get in fixed income. the bank loans, the secured market is giving you a good return profile. what we talked about before is the volatility has been low. whether you are looking at loans are high-yield or emerging markets, the underlying economy at low grow

carol: it is three years since bill gross left pimco.the performance at his new company has not been so headline worthy. john: this is the three-year mark coming up when he started managing the jannis henderson fund. that is like a traditional time to look and see how somebody's performance is. we look at bill gross. he has gone from being bond king, the guy who beat 96% of his peers, to being middle of the pack. julia: are his average returns over that time, and wife is three-year so important? john: they are about 2.3% at this particular fund. three years is a good gauge because at least there been a few different changes in the market. you want to see how it's going up at times. in the case of a bond fund, rates are rising and falling or rising and falling. he has been doing essentially a fund that is supposed to protect investors against rising rates. bond prices fall when rates rise. the rates really have not taken off. there was a spike at the end of last year right after trump was elected. then they kind of settled back down again

jim keenan of blackrock, rachel golder of goldman sachs, and mark kiesel at pimco.l, i really want you to give us some wisdom here. there was a great article on the frenzy in your world of loans. institutions buy loans. rachel: loans are seen as a higher-quality high-yield opportunity set, within fixed income and basically a safer way of getting yield. there has been a massive issuance in the last few years, but most of it has been refinancing oriented, a lot of it absorbed by clo's, which are doing very well. tom: what is a clo. rachel: collateralized loan obligation, it -- tom: jonathan ferro would not have done that, what is clo? rachel: collateralized loan obligations. the bank loans have a floating rate. tom: is it a floating rate? rachel the bank loans have a : floating rate. tom: we have jim keenan. explain floating-rate versus fixed-rate, and why you need to float now as you go into 2018? jim: it is around the duration risk or interest rate sensitivity. obviously fixed income has a , variability of rate risk associated to it. riskloans give you credit -- sen

let's get back to jerome schneider from pimco.th risk reversals, and it is highest since 2009. it is actually only just above zero, which could suggest u.s. has further to run, but ultimately, who is in charge of where this goes -- draghi or yellen? jerome: ultimately, it should be yellen -- whoever is leading the fed, we should say -- whoever is leaving the normalization process. indicating itb is has agreed to maintain optionality within the construct that was basically the statement yesterday. with that, you could be very opaque initially but how they process will occur, how much qe will be removed, but the timing of uncertainty. leading that charge, though, is obviously going to be what the fed does in that normalization process. tom: certainly leading the charge, but we saw mario draghi do that it back. the ecb, super numbers, core inflation number. this is 10 years ago, this is the disinflation on average, and we just cannot get it going here. we see that society to society. jerome: one of the things that went under the carp

core strategies at pimco.el yesterday talking about some of these global goals, things that they would like to see happen by 2030 like ending hunger and poverty big, lofty goals we'll talk about that in a minute and how you think we can reach those. first, let's talk about what steve was just mentioning. where you come down on this panel in ermz it of pimco and how quickly you think the balance sheet is going to shrink, how quickly the fed may raise rates. >> yeah. we think it is going to be like watching paint dry that's what's going to be very slow that's why the market is not very upset about it. we sort of suspect relative to your survey that the ending size of the balance sheet is much larger than 2.4 trillion it could be as much as 3 trillion the timeline is probably pretty close to correct it's going to take -- >> forever >> yes, forever. three to five years. it gets underway tomorrow, and then you get probably a 50-50 chance for a fed hike in december, but after that, you know, they really -- they're r

us, we havewith what team felt of pimco and -- of pimco and sebastian page.t was a huge surprise. i think he is right. i think this is a lagging announcement. i would not reach too much into this. i think the key is that china this year really dampened volatility by tightening the screws on capital outflows by doing something about the excessive buildup of leverage domestically. this is why china has been very contained. it has not exported volatility as it did back in 2015, 2000 16. i think what we have seen from china this year is that they really help this globally synchronized economic expansion that has had a calming impact on the rest of the world. i would expect that at least in the near term that stability will continue. it is a big question after the party congress, what happens after president she has consolidated his power and strengthened his power base? that i could see a scenario where they can get tougher on reform, and you might see a sharper slowing of growth next year. but that is a story for 2018. alix: would you agree? there was that story

on our said, richard clarida of pimco.ut we continue our conversation with james woolsey, the former cia director and his public service with the navy over two decades ago. for anyone who is ever put on a uniform, it must be stored in every to see the death and injury of these two ships of hours in the pacific ocean. is a modern austerity of the military caused an exhaustion to the sailors? james: i was there and the aftermath of vietnam. ofwere starting to come out the fact that everything had been channeled dealing with the vietnam war. wonsituation now is, having the cold war, a lot of people have felt that the government and the congress, you know, you don't really need a navy that much anymore. let's take several billion away from them and put it here on that. what the navy and doesn't peacetime, the closest to what any service does in wartime. the navy gets right up to the point of dropping the bomb from the aircraft carriers. everything else operates as if they are at war. they have a very difficult time allocating

pimco's managing director joining us with the latest reaction from pimco regarding the german electionore from berlin. in brussels today. in an amazinguss speech on friday. we talk about brexit next. this is bloomberg. ♪ so new touch screens... and biometrics. in 574 branches. all done by... yesterday. ♪ ♪ banks aren't just undergoing a face lift. they're undergoing a transformation. a data fueled, security driven shift in applications and customer experience. which is why comcast business delivers consistent network performance and speed across all your locations. hello, mr. deets. every branch running like headquarters. that's how you outmaneuver. ♪ ands: live shot of tokyo the emperors palace, a little bit of a selling and dollar-yen, yen down by .8%. waiting to hear from the finance minister in japan. he is expected to start speaking in osaka. of apeculation is that will go for this snap election and could be seeking ¥2 trillion in an economic stimulus package. we will see how that is attacking the markets. nejra cehic is standing by. nejra: that means the nikkei is buting the tren

bill gross, the founder of pimco, adopted a meritocracy.ery flat structure at pimco where any voice can be heard. last night i was combing through 250 pages of a book we call the three best ideas. 250 individuals submit quarterly. every rank.rom everyone has a voice. tom: this is great. whoever thought of that is a winner. coming up next, we speak to martha drew at credit suisse on the impact of finance. we speak to her about investment and philanthropy. this is bloomberg. ♪ week. busy our global business forum on wednesday. united nations with a meeting yesterday. the black limo traffic in midtown is always extraordinary. we say good morning to all of you worldwide. president trump will be in new york in the early week. francine? francine: later on, i think david gura sitting down with the colombian president. they will touch on a couple of things, including copper and some of the drug cartels that the president has had to deal with. credit suisse has named maurice advisingo head up companies. she will oversee the impact advisory and finan

jim keenan of blackrock, rachel golder of goldman sachs, and mark kiesel at pimco.you to give us some wisdom here. article on theat frenzy in your world of loans. describe how institutions by -- buy loans. rachel: loans are seen as a higher-quality high-yield opportunity set, within fixed income and a safer way of getting yield. there has been a massive issuance in the last few years, but most of it has been refinancing oriented, a lot of it absorbed by clo's, which are doing very well. rachel: collateralized loan obligation, it -- tom: jonathan ferro would not have done that, what is clo? rachel: collateralized loan obligations. the bank loans have a floating rate. tom: we have jim keenan. explain floating-rate versus fixed-rate, and why you need to flow now as you go into 2018? jim: it is around the duration risk. fixed income has a variability of rate risk associated with it. bank runs give you credit risk -- senior secured credit risk that are tied to the front end relative to what you would get in fixed income. i do think it is important -- the bank loans, the

heol: when he was at pimco had a lot of institutional investors putting money with him.they think about bill gross now as an investor and money manager? john: the first thing people do is look at performance. there another many people who are moving money into his fund. he also has a separate total return fund with a separate manager in europe. the old mutual total return fund, which is also middle of the pack. that is only $276 million. the current fund has $2.1 billion. half of that money is from his personal family funds. there is another $800 million. people pulled more than $300 billion from pimco when bill gross left. this is a fund in turmoil. i don't trust them with my money. not very much of that money followed bill gross. carol: of next, weight nestle -- the way nestle makes a mint with bottled water. this is "bloomberg businessweek ." ♪ julia: welcome back. carol: still ahead in this week's issue -- julia: a troubling check of the community health systems. in the chest guru on wall street. carol: all that had on "bloomberg businessweek." ♪ carol: we are back w

joining us now is added develin, ed devlin of pimco. conditions are not as healthy as the numbers suggest. what is everyone missing? littlehink it is a premature talking about this recovery starting to expand into business and exports. the surprise, about 1% of gdp that we got last year, one third of it was in inventories and two thirds of it was in consumers who are over indebted and continuing to spend. the uncertainty of nafta, the appreciation of the dollar, i think it was a one-time transitory effect in there, as well. us that, in a world where the u.s. is growing at 2% canada at 3% is just unsustainable. we are going to come back down to earth. yes, the economy does have some momentum. bump up now, but we think it is just a bump, and we don't think the trajectory has changed. a you think the confidence among businesses and consumers is pretty fragile. and if the numbers turn south will be shifting gears strategy, they will start to clamp down. >> absolutely. and minister morneau alludes to consumers are spending because the govern

pimco has become dependent on him. he attracting a lot of their money. he is the key man.e know a lot about the processes. ivascyn, is his the biggest voice in the room? charlie: an interesting question. i don't 100% know the answer. to what people listen he has to say. i think he is not as forceful personality. i'm sure when you've got a track record like he has managing as much money as he has, people take notice when you open your mouth. vonnie: we take notice when you open yours too. great story today on an ivascyn -- on dan ivascyn. a look as some of the biggest business stories in the news now. google is taking its fight over an antitrust fine to deq court. that is the legal challenge back at take years to conclude. in june, google was fined $2.9 billion and ordered to stop it they will conduct over shopping search results. european field -- according to people familiar, savvy and wants the dashed teddy and wants the german company to do this to split itself off. apple unveils its latest mobile phone tomorrow. -- therating systems plus or, the iphone 8 x.e iphone imp

optimism is diminished as the months passed by. ,ibby cantrill with pimco experience on wall street willa former senator from connecticut, joe lieberman also with us. ♪ david: long-awaited details from the speaker of the house on tax reform, a process that's -- that has been spearheaded by a group known as the big six, a group of lawmakers led by the chairman of the house ways and means committee, congressman kevin brady. >>

julie: i was looking at one of funds andcross asset it has various weightings of other pimco funds andhe biggest is emerging-market currencies. that some of a human goes in and say we will wait it in a particular way for a strategy you are going by that determines if the waist? weight? chris brightman: it is primarily model driven and we like to use a process at that ensures we do the right thing even when uncomfortable and we started adding substantial amount of assets to emerging markets stocks, bonds and currencies as they were extraordinarily cheap over the last couple of years. it is the right thing to do but emotionally difficult. you read horrible press about russia. there's political scandal and recession in brazil. crackdowns in china. it is these sort of scary conditions that create the bargains that pay also handsomely if you have the discipline to be a contrarian investor and that model gives us at the discipline. julie: and also presumably if you have the time, what is the time horizon you are looking at? chris brightman: we try to operate the longer term than many other q

she will talk about how they need more help from the private sector we have scott mather who is the pimcohief investment officer he is rising up to meet some of those challenges he will talk about new bonds they hope to develop that will do just that, fund investments in things that are making sure they make progress on some of these goals the u.n. is focused on that's one issue also we have jeff daily, the farmer's group ceo he will join us to talk about what's happening with both hurricanes harvey and irma and the after-effects. stle 9,0 they have 9,000 claims in from florida. 40,000 claims from texas we'll talk about the impact of this how they are making sure that they follow through on some of these claims and what it will mean for the bottom line >>> we are also joined by ray dalio, the hedge fund guru, founder of bridgewater associates he has new plans about how they can take what they learned and export that, make sure other people can learn from it we'll talk to him about all of those things today hey, like i said g day to , gooe in new york getting around >> becky quick, thank y

up, the pimco cio will be joining us. is this is good as the global economy gets?s is bloomberg. ♪ what did we do before phones? they save us from getting lost, getting hungry, and getting tired of places like this. phones changed everything - shouldn't the way pay for them change too? introducing xfinity mobile. where you can pay for data by the gig, and share it across all of your lines. no one else lets you do that. see how much you can save when you pay by the gig. xfinity mobile. it's a new kind of network designed to save you money. call, visit, or go to xfinitymobile.com. alix: it is the end of the month, the week, and the order. if european stocks are flat area the the dax is getting a little bit of a boost as unemployment continues to fall. that is is up here in the weaker pound story. the pound is weaker against the dollar as it prices in some more negative data we got today. euro-dollar is on the front foot. yields are shocking. we had a 19 aces move. that is getting a little bit of downdraft. a monster quarter for crude, back in a bull market it comes t

pimco founder is raising its fees when most money managers are slashing costs. $92 billion fund willfive cents per $100 in october for most share classes, institutional class shares are brought up to 50% of $100. investors are moving into their money to low fleets, raising pressure on money managers to compete by reducing costs. billionaire is a valuing possible bid for consilium and alaris. aluminumto grow operations overseas. consilium -- constantly am sales ium sales havell increased considerably. they do not reply amy lee to email queries. -- immediately to email queries. those are your major headlines on first word news. cernobbio.k to great to see you this morning, jim. i hope you had a good time in cernobbio. theerday i waxed on about market and there was new low after low and the brunt of the market is something we should be worried about. are you worried about the breadth of the market in the unites states of america? guest: not really and it's great to be with you. i think the variation of returns between different securities with the market hitting new highs but still quit

based on what you are saying, we are seeing the likes of pimco talking about investing in mortgage fundsmove into those assets are considered even before the financial crisis. talk about those 2 things. start with energy. dan: i think energy, unfortunately, as much as it seems like it was on a relative basis of buying opportunity, they really not that they really did not get to places anywhere close to where it bottomed out. we were never able to make it work on a valuation basis. alternatively, we were able to go into the private markets where banks were caught flat-footed and suddenly receded , and put ourselves in a position to do what i would call a special situation negotiated transactions, where we were able to get paid considerable rates of return without actually taking on commodity risks because we were able to force borrowers to hedge. julia: you were able to where others weren't. dan: correct, which is what we do most of the time, particularly in markets like this. given that you are not really going to -- not taking less risk in terms of the provision of liquidity in the mark

what investors perspective, short-seller of pimco associates will be with us.look at the tax plan president has proposed, 20 percent corporate tax rate and a writeup of capital spending for five years and three tax brackets for individuals, this is the starting point and things will get water down. do you think that congress will buy it and do you buy it? >> it will be a hard sell. senator corker may be right, i pland the gop health care gop stalingrad because it was symbolic and just a morass. i do not know if it will be better, i do not know what they are trying to accomplish, still campaign promises. corporate tax rates while 35% nominally, effectively are much lower for the s&p 500 in the high 20's. overall corporate profits, public and private, high teens. you are not on a test basis point to get a lot of help -- on a cash basis going to get a lot of help. gary cohn said that maybe they get $1000 for a family with $100,000 in combined income. maybe. doubling the standard deduction but eliminating the personal exemption, for a family of three or four, offse

he has been a thoughtful writer on numerous books, he was with pimco for years thinking perceptively-term paper and of course said policy, we will do that in a moment -- of fed policy. are the markets and artificial construct of policy? >> to matter what we're facing there is always a central bank put. we had a lot of uncertainty about korea, but the fact that banks took an accommodative stance, they make sure they can reengage once policy appears. tom: there is no question the doom and gloom articles come out, and then on and upward. does it lead to revenue growth? expectation we will see more gdp coming. tom: that is not the reality strong gdp, not a but it is driven by a monetary policy that allows for the economy to continue to strengthen as we go, but it will a morere to get to mobile gdp than wayne we are used to -- than what we're used to. we are struggling with explaining inflation, right? we struggle with the phillips curve, but what you think is the right metric for central banks to look at? great question. the phillips curve model has been questioned by a lot of people, no

the pimco income fund will $.50 per $100. according to morningstar, feared twice that much.bout who will be chancellor that with party will be called to govern the country. there are plenty of options here. speculation over possible outcomes include a combination isrank coalition, which merkel and schulz, which is what or thee at the moment, colors of the jamaican flag, the free democrats, and the green party. all of this is interesting. risks will soon emerge from the political story here in europe. matt miller spoke with the sep leader who gave his later on the possibility to make -- his opinion on the muslims to make a coalition. of theis opinion possibility to make a coalition. >> it is likely. we ask for a maximum of conditions because they obviously do not have any momentum as president. on the contrary, losing support. a bigger questions like migration, the greens are stuck in 2015. guy: matt miller joins us now from berlin. what should international investors listen to these fourth, fifth parties? matt: for one thing, they could be vital to the new government. the cd

joining us is mike amey, managing director and portfolio manager at pimco. hello. what magem hello. let's talk about insurers. what fisggefiefi to i hello. let's talk about insurers. what. fié’éééfiéfi to their share what has happened to their share prices, the ripping the caribbean? you §ejtti a you hi") at—~~r= ,, 'a' " " whole, if you look at the main insurance indices, they are down 2% of 3% over the last couple of days, about 10% on the peek at the beginning of august. that year to date, flat or slightly up. there are some that have done worse than that, but, generally speaking, as you were saying earlier, the market has taken it relatively well. they had a very, very good years before this. they've got a lot of capital? yes, that is what the markets are focused on. you have the hit two innings this year, but it is not an event that is putting serious pressure on the insurance industry. let's talk about the ecb, the big meeting that happened yesterday. what headlines came out of it? the ecb is still spending money. it is one of the few central banks trying to put mo