how does pimco use volatility? do you use the vix, or is that beneath pimco to even consider?at we tend to be bond investors more than equity investors. we do not actively use the vix. i think we find, to harp on bonds a little bit, we find the bond market is a wellspring for volatility. nextink this move in the emanates inm -- vix the move in the move. this is multi-decade lows being way out of whack. that is going to start to feed the equity market with more volatility. tom: how do you take advantage volatility?" patrick: it is a great hedge for us because we are long german volatility. there is a lot going on in the german banks. it was priced a month ago, implied volatility was very low. it is not going to double. that is et where you see the s getting blown out of the water. francine: thank you both. gene frieda of pimco and patrick armstrong of plurimi wealth both stay with us. coming up next, global director of research, raffaella tenconi. that is 6:30 in new york. this is bloomberg. ♪ bloomberg. ♪ tom: good morning, everyone. francine lacqua in london, i'm tom keene in

mike amey from pimco joins us again to discuss. hi, michael.y face bans. -- fast driving. the advertising standards agency has pulled up three of the major car brands for potentially, you know, selling an image that is not necessarily one that you would like, either driving very quickly or kind of in an aggressive way. and the challenge, of course, is that you want your car brand to sound exciting and something that people desire, but at the same time, you know, you have to recognise the fact that aggressive driving is something which i think we all struggle with. there are constant challenges for the coal industry at the moment. there are constant challenges for the coal industry at the momentm was really interesting the joys of ko im for the advert —— the choice of palin for the advert. it has the words, rage, rage. locala choice of poem. it is a poem traditionally read at funerals, it is bizarre!m is very unusual, i must admit. my understanding is that that particular advert was to try and encourage people to step out of their comfort zone a

ahead, the market is in a meltdown, the fed is under pressure, the pimco managing director joins us for a look at how all of this is playing out. next, tesla ships the gear with results that smash expectations. this is bloomberg. ♪ haidi: this is "daybreak: asia." tesla we now know why brought its earnings report forward, they made a profit last quarter, just the third time it has ever done so. shares have jumped in post market trading and remember that 13% job.off tuesday's tell us about the numbers. i've before i get to that, been listening in on the earnings calls for the last 45 minutes or so. just to contextualizes, remember that elon musk has been very combative over past earnings calls, calling out some analysts, but here he has , i'm notbeen chill sure there's any influence with of of missngs he might spoke in recent months or so, but everyone is saying he is confident, he's taking questions and seems like he knows what he is doing. of course we've seen the share price rise by about 11% or 12% in after-hours trading and the numbers on your screen be in terms of revenue and earni

with us is yacov arnopolin, emerging markets portfolio manager at pimco. good to see you.ed to win this second round but still, it's a radical change for brazil, tell us about his economic policies. we anticipate a political and economic transformation stop jair political and economic transformation stopjair bolsonaro was met main economic adviser is truly a free market programme, talking about privatisation, simplification of the tax system, as well as concessions for infrastructure. it's a big dealfor markets, i think we are wondering whether this will serve to reawaken spirits in brazil but also we will see what happens when the programme comes into contact with political reality. very polarising election, why rejection rate a0%, talk of cultural wars in brazil but nonetheless we see whetherjair bolsonaro wants to realign himself closer to the us, potentially have a free—trade agreement with the us, how much will that impact the economy, will it help lift it from the lull you describe? he has got most of the boats but as you say it was a polarising election but within t

. >> in your previous role commenting on fed policy, as you did in pimco and columbia, you were part of discussions about the desirability of potentially the fomc allowing some overshooting of the inflation targets, whether it is to make up for past under sharing or for the sake of allowing the economy to run hot. >> yes. >> how do you think of this possibility now that you are a member of the fomc? >> i really take a lot of wisdom and look hard at the academic literature on this -- it is a starting point. a classic, recent discussion of this is in mike woodward's textbook. some other theoretical work i have done and talked about. practice, in those situations that is one tool to get an economy towards price stability. the economy now was operating at price stability, so that at this moment is not a relative can's -- relevant consideration to me. at my first meeting, the fed was at that price stability goal. but again, i am aware of the theoretical literature and understand that argument, but i do not think that is relevant to me today. >> let me follow up on that. macroy a year ago

shery: up next, a pimco advisor says emerging markets are the trade of the decade.his is bloomberg. ♪ shery: i'm shery ahn in new york. haidi: i'm haidi stroud-watts in sydney. you're watching "bloomberg daybreak: australia." a dive into the latest u.s. stocks slide, raising an essential questions about whether the seller's resume control in the friday session. s&p 500 slotting back toward its 200 day moving average, the dow losing more than 300 point. su keenan joins us now. we saw volatility making a return as well. we came in on weak footing because of the selloff in china the week before. we saw the intensification of selling after treasury secretary withdrew from the saudi arabian conference. just another layer of geopolitical concern. let's take a look at the way the market closed. you see the dollar rising but oil fell to a one-month low in the regular session. gold moving higher, selling off a bit in extended trading but there were strengthen the regular session as a safe haven play. the real question with support the s&p 500, the 200 day moving average bein

i'm happy to say we're joined by the global head of financial research from pimco. thank you very much for being with us. it looks like deutsche bank has not seen profits for the quarter shrink as much as some analysts had predicted. they're down a lot year-on-year. do you think that deutsche can be profitable for this year? does that speak volumes about their business model, the german economy or both? >> i think they'll be profitable this year. the issue -- i think what's not the problem with deutsche, it's no longer a stability problem. the previous management team has done a good job restructuring the balance sheet. i think that's been the focus the past two years, to de-risk the bank, delever, raise capital. so from a balance sheet perspective they're in good shape. however they're at a stage where now they're struggling to generate profitabilities, where the franchise earnings potential has been hit badly that's a battleground for those shares we need to prove they can deliver on the top line. and, you know, the jury is open and the numbers keep disappointing

let's discuss markets in more detail with our guest from pimco. good morning to you, gene. want to start by looking at that international picture we have chinese pmi data, a bit soft but the currency always in focus. how much are they feeling this heat of the trade war? >> i think they're feeling it quite a bit. it's been unusual over the last two years to be the closer you get to beijing, the more pessimistic people seem to be. it's affecting sentiment in a material way coupled with the fact that they started tightening policy well before the onset of the trade war. they're only starting to feel the heat of the credit tightening now >> does the midterms make the catalyst perhaps to improve negotiations >> i think there's some home of that when you look at the political dynamic in the united states it's not obvious why one would expect a material thaw or some material progress towards a deal this is a bipartisan issue in the u.s. it's an existential one. a challenge to the chinese growth model >> what about the midterms back in the u.s.? we're focused on things like interes

that is according to research affiliates and divisors to money managers, including pimco, which is divingproductions it made back in 2016 went called emerging markets the trade of the decade. we will dive into some specifics in a moment. emerging markets, trade of the decade? >> from a debt perspective, they tend to be pretty volatile. if you hold them for a decade, you will be pretty happy. you will go through a volatile ride in the meantime. it is still one of the highest yielding asset classes for the quality that you get. , 6.7 or 7%,t today for some decent quality sovereign paper, that is good value. matt: people are concerned. the hedging costs seem to be a bigger concern for the equities rather than the debt. how do you deal with that? firm, we dot of the have local currency debt. that tends to be in funds which are based in those countries. we have got big operations in china and singapore, all of which are looking at local currency debt. you do have a hedging costs problem. they take the fx risk as well. as you say, it is a hard currency decision and hedging the dollar is cheap.

pimco's chief investment officer mark keisel is with us to tell us where the rates go now. plus an upgrade from dow underperformer and a major storm at america's oil infrastructure. "the halftime report" starts now. >>> good to have you with us on this tuesday here to debate, joe terranova, stephanie link, jon and pete najarian and reporter steve liesman. we do begin with the markets for good reason. stocks fairly volatile as concerns over rising interest rates continue to reverberate through global markets is there a new worry that is a big question and questions now about whether the booming u.s. economy is suddenly at a tipping point. pete, the s&p is trying to break this three-day losing streak, trying to figure out where rates are going and if we can handle it where are your thoughts? >> and mike wilson from morgan stanley has the article about the tipping point. i think the acceleration is something we talked about for the last week and a half or so in terms of the rates and it has been an incredibly fast run in the last couple of days even take a look at the rates th

flashing the buy signal according to research affiliates , a sub advisor of the money managers including pimco. was made backhat in february 2016, that called emerging markets the trade of the decade. the advice proved pressey and. stocks -- proved prescie nt.stocks surged 80%. that is a heck of a call coming through from research associates -- research affiliates in terms of emerging markets. i want to get a sense from you in terms of what the indonesian central banker has been telling jerome powell at the meeting, which is you need to be mindful that a spillover of your policies is real for many countries. do you think the messages from the indonesians and others will be heard at the feds table? >> i think policy -- fed policy is very much targeted on what is happening in the u.s. economy. , that gradual tightening, we do not think that's going to change. for emerging markets, the risk is if there were to be a sudden acceleration in fed tightening, if the fed were -- found itself behind the curve, we do not think that is the case. we think there is going to be a clear flagging of further tig

pimco's chief investment officer mark keisel is with us to tell us where the rates go now.pgrade from dow underperformer and a major storm at america's oil infrastructure. "the halftime report" starts now.

we don't believe we get to 4% at pimco, but we believe in a steepening yield curve.iums increasing. and you have increasing supplies. is due to physical need -- fiscal need. be theyields will motivating factor to incentivize new divans in the marketplace. it is to be relatively void at this time. over $1 trillion in incremental financing that needs to be done over the next 1.5 years, but reality is we need to find buyers. the steepening yield curve does seem to be the -- questions, for more fundamentally look at the fact that normalizing monetary policy ultimately impacts liquidity conditions. what we are talking about for the past two weeks is changes in liquidity conditions and what goes on in the market. share, earnings comes into play, political statements, to play, but those sentiments are the underlying theme that liquidity is changing from an easy monetary policy to one that is slowly maturing to a tighter when. -- tighter one. alix: inflation is not accelerating. we know it is around 2. oil, falling. jerome: that is a risk-off trade. slack is being reduced in

here is what you and of pimco had to say this morning. credit generally are overvalued, so we want to be cautious with this. you are at a point in the cycle when you should see volatility go up that is bad for credit. on the other hand, on the emerging markets side, that is where you see a lot of these risks better discounted. that does not mean p.m. is cheap, per se, but it is discounted for the risk at hand. i looked at emerging markets credit that dominated in dollars from the end of august will now versus high-yield credit. if you take a look at the chart, you can see that despite hiccups we have seen in the past few weeks with high-yield, a emerging markets has remained -- oddly resilient. that is the higher bond yield index of u.s. bond credit. emerging markets dollar bonds has flattened out, even as we have seen the plunge in high-yield bonds. that is interesting to see this da'slience and to gene frie point, more risk might have been priced into emerging markets, allowing to -- allowing it to remain more stable. as investorslly co

pimco says i am cautious. who haveve seen people stepped in and made a conviction call one way or the other get roasted in this process. alix: yes. >> trading italian bonds has not been helpful to anyone. think it would be a greece convergence, but it is good to see that back away. u.s. traders need to pay attention to this. we have seen that embed it in the 10 year. that has tracked the german-italy spread since mid-may. good job ofa explaining the u.s. 10 year to some extent. it is sad that u.s. investors have to pay attention to these twists and the of time political saga. alix: which leads us to the other drama in the u.k. there was a survey by economists that says if you have a no brexit deal, and 8% decline in sterling. so far theresa may has not talked about it. she made fun of the show, apparently, called the bodyguards. we are hearing more from traders on how to price this in. it feels like a different conversation than three or four months ago. >> you have to markup your odds because you have seen it

decotelli of dxa investments and yacov arnopolin of pimco. our future of money series.♪ is bloomberg. ♪ >> this is bloomberg daybreak. coming up later, an exclusive interview with the alexandria real estate chairman. this is bloomberg. david: it is time for our regular monday feature on the future of money where we look at how the digital world may be affecting the future of money. moneygram, the global provider of payment transfers operating in over 200 different countries. they are the second largest provider of my transfers in the world. this year they are down year-to-date 70%. welcome. good to have you with us. >> thank you. good to be here. david: give us a sense of what drives your business to the positive or negative side? what gives you success? alex: the global money transfer industry is moving money from country to country around the world, a $600 billion industry. one in eight people in the world are migrants. 700 million people move around the world looking for opportunity, and they need to send money home. the global economy helps drive the industry and th

pimco head of public policy is with us and market strategist also with us welcome. what's the most important for q4 >> look, there's a lot of good in terms of the nafta headlines. obviously gives the president a victory in the short term at least. in ways, vindicates his approach, in his mind his approach in terms of using tariffs to get concessions and good for republicans i think the bad, though, is that, of course, this now just focuses, clears the dexa and focuses the administration's efforts on china and keeps auto shares in the mix. good in terms of the nafta agreement, but also negatives. >> discussion of the language in the agreement that basically says if you're going to deal with a non-market economy, basically china, you've got to let us know. there's ramifications if you do. >> right >> is that an isolated front >> yes not only need to let them know, the u.s. has the a lot to actually withdraw from the trilateral agreement yes. then also the side letter on auto tariffs as well again, there's good here reduces uncertainty regarding nafta, but means that t

." >> announcer: "the bond report" sponsored by pimco so they say that ai will put the future in the palm of our hands. that's great. but right now you've got your hands full with your global supply chain. okay, france wants 50,000 front fenders by friday. that's why you work with watson. i analyzed thousands of contracts and detected a discrepancy. it works with procurement systems you already use to help speed up distribution without slowing down your team. frank, tell fred full force on those french fenders. fine. fine. fantastic. for ai that knows your industry, choose watson. hello! the best ai for the job. >>> will the bulls continue the run? the world's largest money manager readies investors for the fourth quarter blackrock releases its global outlook first on "quosquawk box tomorrow. >>> elon musk and tesla agree to settle with the s.e.c. did mr. musk accept the deal worse than the one he could have had last week or roughly the same >> maybe a smidge worse than one he could have been signing off on on thursday of last week but, look, at the end of the day he still remains ce

have him senior fellow and adjunct professor at cornell law school and the former chief economist at pimco paul, always good to see you i want to sort of fillet the conversation three ways, if i might. one is to ask your view of fed policy two is to ask your view of whether the fed's primacy as the ultimate arbitrator of what's going on in the economy is advisable. and three, get your reaction to president trump. let's take the first one is the fed crazy or is it doing the right thing, given the metrics in the economy right now? crazy or right >> i don't think -- i don't think the fed's crazy at all i think the fed's done an absolutely fantastic job over the last decade. i think they're at a transition point. i think they've concluded, correctly, that the economy can stand on its own feet now, without super accommodatining monetary policy. and i think they've also concluded that the stock market should land to stand on its own feet, as well. so i think that that is purposefully stepping back from forward guidance that is, you know, for a child. and is basically now, you know, planning goin

participate in the ex issuance, and the world were not to come to that vushgs that's different than pimcove to self-fund it anyway >> well, i think this is among the places if two great powers were to have a fight, it can escalate >> do you remember when people would put money into something where they'd get actually less money back, just because they'd get their money back >> return of capital >> yeah, return of capital >> they didn't care if they got interest they just wanted to park it somewhere where they knew it would be where are the chinese going to be >> so, they have other options, european risk-free rates german rink-free rates there are economic actors and there are political actors and in the bottom market, we need to think about them differently >> because they may do something that is counter to their own interests if they think it's going to advance their public interests? >> they know, yields would go up, they would suffer large capital losses but this is a fight not over the next day or the week this is a broader fight. and again, i suspect that will there need to be betw