gi,just pimco, but she i -- 15 billion of inflows.hallenges in the capital markets, the performance we are bringing. if you look at performance in the pimco funds, over 90% of those funds were over benchmark. that is a strong indicator of the quality of the business. we are pleased with the performance of pimco and mgi. that is also reflected in our bottom line with asset management contributing 10% growth in operating profit. your outlookfirmed this morning. is there some risk to the upside around that outlook now, given the performance you have delivered? have confirmede the outflow, which is 11.1 billion operating profit. clearly, it looks like we have a very strong performance so we are encouraged by the numbers we are seeing. was up 20%,g profit and were net income was up 20% compared to last year quarter. the numbers are very strong and the underlying improvement in all lines of business is definitely really outstanding. from that point of view, we are looking to the fourth quarter with lots of confidence. anna: we have seen a l

we had tony from pimco on the short-term space expertise.tions from chairman powell. , idrag in somebody who said am not going to cash. hsbc securities, head of research and global equity. you are not going to cash. gloom, ais doom and pure market, get hsbc has an outlier view. >> the risk-rewards improve. expectations have been solid food valuations have come down a lot. -- have been solid. valuations have come down a lot. tom: revenues are going to come in as well. how do you read but? >> the cycle is moderating slowly. 13%, 14% profit growth this year . moderate slowdown comes still growing above trend. revenues superstrong. bleed into next year. you have a lot of visibility. tom: what makes you know -- francine: what makes you nervous about the fed rate path? >> the fed could go faster than the dots suggested. that is the risk to asset markets. the fed making their classic policy mistake. i don't think they will do that. the fed speak has suggested that maybe they will be more cautious this time than they have been over past cycles. eith

if you look at the performance in the pimco funds, over 90% of the pimco funds at benchmark.t is a strong indicator of the quality of the business. definitely a performance of pimco. in our bottomted line with asset management contributing 10% growth in operating profit. anna: let's come to ridgemont. what is the latest there? >> not such a good day for ridgemont and the rest of the luxury goods industry. ridgemont reported bad one h results that mr. cross several metrics. across several metrics. a pretty bleak outlook on the conference call about growth in china and investors are very sensitive to any negative comment on china growth. the key engine of growth for all luxury goods companies, so we expect the shares to open lower. hemont has-- ric -- probably down and other peers, as well. we will keep an eye out on that. anna: dani burger, telecom italia. dani: investors will get their chance to price in some bearish news that we learned yesterday. telecom italia is not only abandoning their debts target, but they are taking a $2.3 billion write-down. it has a lot of competit

of pimco andl jeffrey solomon of cowen, thank you for being with us.exxon mobil's ceo exclusively with bloomberg in singapore on dealing with international pressures. we find overtimes that those tensions, you see things move up and down across the has alwaysstrategy been to have a fairly diversified portfolio and basically manage the business for the long term. we pay a lot of attention to that. we are engaged with the opportunities we see in each country and make sure we are focused on the fundamental to manage through the ups and downs. we are meeting basic requirements in the countries where they need products we supply to make their life better. reporter: do you not worry about the potential downside? i think about the joint venture you announced a few months ago at the lng terminal in southern china. things changed in the months since that agreement was announced. into: i think when we went have that conversation with the chinese, we had a pretty good understanding of where things are at. we are consistent with where we are at today. we think the

there's a theory that pimco is doing this as a dollar hedge. it's just a rumor.point being there is a correlated best correlation to something like that. cameron: i think there are a few reasons why libor is going up. large u.s. banks are typically lending dollars to the rest of the world but they don't want to do so near the end of the year because they face regulatory charges on their balance sheet at the end of the year so they pull away. corporate treasurers have been been lenders for dollars. after-tax are from, they don't have the surplus cash sitting overseas. they have pulled away. you are sort of left with a shortage of people willing to lend dollars and non-us banks need to fund over the end of the year their dollar assets or dollar liabilities is where -- as it were. it is kind of how high can fluffy jump in terms of the borrowing rate. it is not necessarily something that will last forever. we would expect the rate of growth or appreciation of libor to pale off into the end of the year once we passed the turn, but for now, it is something clearly driv

yousef: we have the cio of pimco who will agree with your comments.r growth, higher rates, a trade war, but it is pressuring credit spreads. do you stay defensive in credit at the moment? yes, the worry in the markets is the widening of credit spreads is indicating more worries going for it. it needs to be closely monitored , especially supply coming to the market in the coming years. there are a lot of maturities coming, $500 billion of investment grade bonds that go to junk. spreads, they the are still low. it needs to be monitored closely. thanks for your thoughts on those markets. up next, emerging markets are showing signs of bottoming out. should investors stay cautious? this is bloomberg. ♪ ♪ manus: a falling oil prices, faltering dollar come and speculation the fed could soften its policy stance. however, deteriorating global growth driven by the u.s.-china trade war may hit the export-dependent economies hard. let's get more. rand, the ratean decision from them, raising rates for the first time since 2016. that is an interesting policy move.

still with us is pimco's head of public policy.e have to get to trade and what happens after midterms. china,s when it comes to it does not matter if it's democrats or republicans -- there seems to be consensus there is this unity against china. think that's exactly right, and honestly, it has been brewing for more than a decade. what's most interesting in my conversations with folks behind closed doors is when democrats say they may not totally agree with the tactics in terms of what president trump is pursuing, but for the most part, they do agree with trying to rectify the economic relationship with china. i would underscore this is bigger than trade. it has to do with global technicalnd superiority. i think there is a lot of bipartisan consensus, especially support among democrats. evennot think this changes if democrats were to control both chambers. i think there is a lot of support with president trump to rectify the relationship with china and pretty wide latitude to use whatever tactics he thinks is appropriate. >> so far,

pimco. this was surprising. they did well. $11 billion of flow? the cfo -- we just performed well. given the reports about the total reform fund. bond funds are not performing well now. most of them managed to beat the benchmark. this interesting to see amount of money rushing in. we were talking about this before we came on. >> [laughter] >> [laughter] >> they are focused on high net worth individuals, it seems to be paying off. >> basically they are collecting their rich friends and asking them to give them a lot of money for a longer time. that swells your assets under management. they cannot be doing well overall. bond yields have doubled in the last year. that does not bode well for bond market. part of it could be a rotation into fixed income, as we have not seen great times for equity markets. they have wondered month. we will see how they go forward. -- one good month. >> the strategies they are piling into asset classes, enhanced cash, high yield, investment-grade -- which seems a weird position to take. high yields and investment-grade, there is a risk their given, if you

case for pimco? you can look for weaker u.s. equities and a weaker u.s. dollar. libby: in terms of our base case for the election outcomes, the big caveat here that polls may have led us astray in 2016, but if you are looking at the polling and nate silver's prediction, for instance, it looks like the house will flip democratic and it looks like republicans will keep the senate. perspective, that probably means we mostly get gridlock, but unlike other divided congresses, i think we would argue or more policy tail risks with this split congress in that the more -- there might be some more upside, infrastructure. this expansion could be further extended. on the downside you can see a rise in impeachment risk. vonnie: there is one thing to get the results for the midterms and immediately we will see campaigning for the next presidency. risksrings its own set of , including the idea that president trump might want to enact something through executive order to gain in the polls. .ibby: that is exactly right it is hard to believe that we are already talking about presi

could it affect president trump of his overall plans for growth to --on mark we will talk of pimco.hat is next and this is bloomberg. ♪ ♪ there's no place like home ♪ argh! i'm trying... ♪ yippiekiyay. ♪ mom. ♪ this is balance of power. i'm david westin. now we're going to mark crumpton. >> world leaders arrived in buenos aires today for the g20 summit. heads of state from many countries were among the first joining the french president and the saudi crown prince who arrived at the president -- previous day. president trump will arrive tonight. canada has announced sanctions on saudi nationals after the death of the journalists. canadian foreign minister announced the sanctions today after arriving for the summit in buenos aires. --the murder is a boring abhorring. we continue to call for a completeand international investigation. this case is not over. mentioned trade, saying the u.s., canada, and mexico are on track to sign a workeal on friday but that remains to finalize the text. president trump invited the incoming president of brazil to visit the u.s. new. invitation the durin

we understand it was with pimco but that has not been confirmed. sized europeant institution that is now placing six times the cost of capital that it did at the beginning of the year coming europe will face some really tough times going forward if those are the numbers they have to deal with. michael: certainly not a great indicator for the european bank, but it is specific to the italian bank. they are trying to lock in some funding, given some of the macro concerns about the fight between italy and the e.u. over those budget concerns. i think this is a little bit of a one off. you may not see this with other european banks, but the cost and the funding is significantly higher than in the past. vonnie: we are seeing a whole new cost -- cast of characters. are there any more places that can be filled at this point? michael: we have seen a number of turnovers across the european banks over the last few years. deutsche bank is not done. they have replaced a couple of people on the market side, and they are looking at replacing some of the key execut

. >> good morning i'm pimco. thank you for joining us.are talking about the wind and the red flag warning. some people are weighing in on twitter. they said it is a little breezy. >> yes, for some, not all. if you have the breeze it is very warm. if you don't it is in the 30s or 40s. in morgan hill it is 35 degrees. 10 miles away near san jose it was 56. 51 and breezy and south san jose on highway 85. keep an eye on your car thermometer. you may see some wild swings. in campbell it is 42. on our observation morgan hills is 38. cupertino 55. a red flag warning at northeast males and santa cruz mount. it will take us through friday morning. but tonight it will taper off. high pressure and the next system is in nevada and that has cranked up the breeze for some. certainly out to the valley -- 20-30 miles an hour. at the napa airport it is mild and warm and 59. also in oakland hills and east bay hills and above caldecott and oakland to mount diablo to the northeast. very dry air and warm but the coast today. 30s to 50s and almost 60. 18 degre

. >> also with us, the head of public policy for pimco, libby it has about an 85% chance on the democratsaking the house. if that happens, are we going to see an opportunity for the fed to slow down rate hikes? some say the republicans keeping the house means more spending, more stimulus, more aggressive growth >> and it is a good question i think in some ways, i look at the markets positioning for this, if the democrats sweep the house and senate, the likelihood for fiscal stimulus increases significantly because then chances for a big infrastructure package that diana alluded to increase if there's a split congress, then i would agree there will be a push for infrastructure among democrats. they want to show they can govern but deficit concerns will weigh on senate republicans. in some ways i think you see less fiscal stimulus if you have a republican sweep it is counter intuitive in terms of what markets are positioned for. >> if we got infrastructure with the discussion of what workers we find, would that be part of it you can barely operate the economy we have with workers we have >>

pimco pricedrned the $3 billion sale of five-year bonds and it was not cheap for the italian banks to bond is more than seven point it percent compared to similar bonds in january. trade, merchant banks got worse in the third-quarter. they lost $41 million, bringing losses to the year $136 million. one of the most high-profile wall street's jumps into the -- galaxy holding. alix: what is interesting is the why behind it. inaxy digital says they are a lot of volume. it is not front and center but no one wants to be in it anymore. david: remember we had that chart that showed bitcoin was worse? something that struck me about this, it has gone down. the fair value of its digital assets, $91 million and they have a cost $173 million. alix: there is a gap they have to work out. david: it is time for our weeklong series, the race for africa. a look at the developing climate in the world's second-largest continent. we take a look at payments. tomorrow we're going to look at the u.s. china race for resources and today we are looking at loans in africa. alix: the bank secured $1 billion to ena

cite tighter financial conditions joining us, the portfolio manager and executive vice president at pimcolobal chief investment officer at wells fargo asset management happy monday guys. goldman's point is trade is not pinching too hard but they are looking for five more hikes and they say this is a way to extend the life span of the recovery overa overall. what are your thoughts >> as ben bernanke said, 2020 is a wile e. coyote moment. it's a wile e. coyote moment because the collisions of the forces at that goldman sachs the referring to more rate hikes to come and the fiscal drag. now this drag meaning there's a 0.5 boost to gdp from the fiscal side next year the same then it drops off to a four tenth drop it might get legislated away it's an election year but it won't be as positive so it may be a good thing. we want to be like australia which had an economic expansion since 1991 not likely but it will be the longest expansion ever dating back since recordkeeping began in the mid-1800s at over ten years next yuan. >> the fact that we've been a little bit on watch for the potential end

. >> i'm like to welcome jerome snyder from pimco. what a wild couple weeks we've had.ly firm we have $83 billion in threes, tens and 30s a supersize package. what can you tell me that investors should pay most attention to when it comes to fixed income and interest rates? >> two things. fixed income markets poised for growth. we have seen that triangulate to higher rates in one to two years. investors should be prepared for high rates to come forward in the next year or so as growth continues. we had fantastic economic numbers the past few days. investors need to be poised to embrace those numbers and understand while financial conditions are tighter, stock markets are wavy the past few weeks, ultimately it leads to confirmation that the fed raises rates in december and probably two times next year. they need to prepare for higher rates in the next year, and number two, slightly higher inflationary pressures whether due to wage pressure or not. that's not necessarily derailing the fed focus for the near term future next, supply that has implications for term premiums t

. >> announcer: the bond report is sponsored by pimco >>> fed chairman jay powell is forecasting continuedrowth for the u.s. kpee that sounds like good news for the travel industry usually first to feel the pain during a economic downturn backup but our next guest isn't worry let's bring in the ceo for the americas intercontinental hotels group. great to have you with us. >> thank you melissa. >> where are you seeing the most demand in terms of the kind of the traveler you are accommodating this these days. >> melissa, if you look at rising gdp in the u.s. and globally, low unemployment, rising wages, these are really good tailwinds for the travel industry and hotel business especially at intercontinental hotel group in the u.s., europe and asia and china we see rising demand look, in this benign economy we are executing our strategy growing our business we are over 5,500 hotels open around the world today, another 1,800 under development. over 7 now hotels welcoming travelers around the world and i think that that's exactly how we are going to continue to scout our traeg. >> are you seein

one of the reasons is he has just been in academics but also with pimco he's very in tune to what's happening>> excellent point. >> in the markets. and i get your point that they've got to watch the data over the markets but i think everyone is trying to figure out post yellen how sensitive this fed is to markets and how big of a fit the stock market would have to throw to get them to change their course and blame financial conditions. >> you pose it in an excellent way, sara, in the sense that there's back and forth going on, a chess match, something a little stronger, if you will, between the markets and the fed. the fed has put this goal out there, which is to get to what it sees to be neutral. and i think the market is testing its resolve to getting there. rich clarida, comments by powell we'll have to listen to the fed and watch the data if inflation were to fall or -- i don't think it has to -- it cannot rise but if it falls, that might dissuade the fed. if the unemployment rate starts to tick back up, the fed could take a pause september, pretty close to a lock not quite. next year, th

tom: this is along the lines of -- when he was at morgan stanley and now at pimco. we thiseading, where there is core of europe doing battle with concentric periphery? i think that is one way to put it, but at the moment, you have a situation where the periphery, if you count spain, portugal, and greece, have been the core. the particular ricky is italy -- the juliette saly is that -- the peculiarity is that italy has been singled out. this time, you don't have spain and greece going with italy, but rather staying with the core, the view of brussels. francine: talking about oil, one of the biggest movers today, if you look at wti falling for seven straight weeks. we saw brent at a psychological level, preaching that level. ching that brea level. does lower oil helped the economies or does it make the ecb transaction possible because they are not seeing inflation? christian: the supply and demand question is never fully solved. you have models by the imf, models by new york. that what wet now had believed earlier when we talked about oil going to 100, there would be

francine: is pimco short on italian bonds?nk our expectation is that this continues to get worse. we don't see particularly good value in italian debt at this stage. francine: we also have this uneasy partnership. as soon as he can, well salvini go at it? like: and italy, it is not the prime minister can call for new elections. that is completely different from the u.k. are most countries. salvini, if he could, would do that exactly, but he cannot. remember that there is a possibility in parliament of a different majority. if today, he were to say, i'm not part of this government anymore, there's a possibility especially, the democratic party would cooperate. it is very dangerous for him to play this game. tom: i'm so glad that this item came up. let me show a chart which really speaks to all of the professor's research on try to figure out capitalism. here is a really successful italy manufacturing and gdp going up. a huge middle surge of the last decade. it is absolutely stunning to me how far italy has to go to get back to

how is pimco changed its definition of changes for investment given this news flow?rue institutional three-year or five-year view, or is there a change? gene: i think there has been very little change. like most investors, we are trying to weed through the political noise and decide what is signal and what is noise. a lot of this has been noise. i think the set up to this g20 is one where, a little bit like the fed, we have created a low bar for success. the market is set up to rally on something that is probably pretty marginal and not really game changing. we continue to look at the same old ranges on treasuries and other fixed income assets and think, they are not particularly attractive after the rally. let's see what comes out of it, that we are expecting it to be a very long road with a few bumps along the way. tom: what is so interesting here is every houses call hinges on dollar direction. summarize your conviction on u.s. dollar into 2019. >> we have a pretty bearish view on the dollar. that is largely predicated on two things. first of all, we think the fis

manager for the last 12 mince, of anyone in the world stand in great company top 10 guys, goldman sachs, pimcoat is working. >> active management. >> but what particular funds. >> since volatility since the current administration, since taking out regulations or limited them since tax cuts things have changed markets have changed people are trying to navigate through them. >> um-hmm. >> when we have people dealing with this firms over 41 years old conservative, have been, very, very great track records over the long run it would. >> where are you seeing performance right now you mentioned, liquid alts. >> we are seeing. >> where is performance what is working now. >> what is working liquid al.t. books out performing equities and bond market some are bond -- use them instead of bond funds, some of them are just -- alternatives to straight growth equity funds. >> what about straight growth equities do you still like growth see sentiment on part of your customers clients wanting apple, growth funds that have seen volatility. >> we're seeing a slowdown in that particular market. because when you s