what does unconstrained mean to you? mr.ss: for five years ago it was a word that was a solution -- bonds were about to have a bear market. investors wanted to say, hey, if i'm going to buy something that is going to go down in price, i need a different alternative to duration space and that is where unconstrained came from. let's talk about credit, about volatility, about liquidity, in terms of the filling relative to the pie. if you can have 300 or 400 basis points, and not lose any money. erik: how far are you prepared to go with the freedom that it offers you? how far up the risk curve is comfortable for you? mr. gross: we have a lot of junk in the unconstrained font -- not a lot of duration. on the other side, it is only levered a two to three times. how did it all come together? hopefully it comes together with a price volatility that is close to a low duration bond fund, but not necessarily. erik: what are we going to see bill gross buying stocks? mr. gross: oh. the unconstrained fund has some stocks and it. there are

across portfolios that said the areas where we thought that a review was critical was with the unconstrained bond fund where mr. gross had a day to day responsibility so all assets and more focused strategies like credit and duration strategies review it from a business prospective but get comfortable with the total return we suggest you had a review of the landscape of competitors i'll say our whether or not i see went 50/50 with the replacement and city of chicago with our company we didn't want to box the clients in and say terminate by the way, we didn't think there was a run for the doors and plenty of liquidity to manage the challenges. >> okay. i notice it doesn't count for liquidity so can you deal with that number one and number 2 crisis is a stated destruction a major summation. >> there's not normally distributed they're not we recognize the flaw that several of our tools not just me but risk budgeting and scenario analysis rely on price movements as the risk measure or the metric to derive risk and recognizing that blind spot we built a separate tool to perform the liquidity anal

if i were unconstrained, that is something that i would say. in a more practical sense i will first say that you all have been great partners. within the environment that we are operating here in washington dc, you all are employing really great and sometimes clever dedicated ways to partner with cities to move the agenda forward as best as possible including recognizing that we are nimble enough to try strategies that work or don't work and we have some hands-on experience with the issues we are facing. to have a willingness to invest in parents. people i find this with youth violence prevention. it is really sellable and appealing to invest in kids but there is no way to invest in kids without their parents and investing in kids who are parents. at the city we have a parenting program and support groups, we have resources for people who are parenting adolescents in particular and i would say this to all leadership, philanthropic, governmental, other kinds of investments, to be willing to invest in parents. that will help us invest in kids and

dan roberts reveals the unconstrained bond fund in an interview next on consuelo mack's "wealthtrack." >>> the main stain family of mutual funds offers retirement solutions so you can help your client keep good going. >>> additional funding provided

they have been continuing those actions unconstrained and often without intrusive inspection, and ourr this agreement that we are burr suing with the iranians, that program will be rolled back and face significant limitations that it doesn't currently face, and there will be the most intrusive regime that we have ever had. in that context, we will be able to verify that iran is not using for anything but a peaceful process. and that they are abiding by the limitations that are in the deal. in the context there would be no need to see the arm as race that would make an already volatile part of the world that much more unstable and insecure. and in fact -- >> i think the leaders -- i will let them speak to it, but i think first of all from any of these countries. they are intending to pursue what would raise concerns. we actually have cooperation with these countries. their concerns are focused on what iran is doing across the region. and their concerns have to do with whether or not even in the con tex of a nuclear deal we are still cooperating with them to counter those destabilizing

shorter maturities and also consider if you're not one who's buying individual bonds look for unconstrained bond fund. that's something a lot of financial advisors say may be a good one to give some flexibility and delve into different aspes of fixed income that you may not be able to do yourself. >> quick answer here. people are saying in bonds, favor those with short ma turties, right? >> yes, shorter maturities higher yields. that's where you want to go with the bond market. >> sharon thank you as always. our expert. sharon epperson. and for more money tips on at nbr.com. and that does it for "nightly business r for tonight. i'm sue herera. thanks so much for j oondand i'm tyler mathisen. have a great evening everybody. we'll see you right announcer: a kqed television production. woman: it kind was, like the bang that set off the night. man: that is the funkiest restaurant. man 2: the honey-walnut prawns will make your insides smile. woman 2: more tortillas, please. man 3: what is comfort food if it isn't gluten and grease? braff: i love crème brûlée. sobel: the octopus should've been li

lisa: there has been a shift to unconstrained funds.vestors start to think, this 30 year bull market bond is ending. what does it mean if you cannot get solid 8% returns annually by just investing in regular bonds? of those days, for most people, they believe they are over. going forward, what does that mean? how does he establishes legacy now in this new regime? global bonds have lost $456.4 billion of value in about three weeks. you mention that it sounds exciting, but is it? lisa: just it with that in perspective, i looked on the terminal to find out what the equivalent for the gdp would be. venezuela's economy is smaller than the market value lost. that is monumental. really being not realized. these are just yields picking up where however many basis points which is resulting in these massive losses. investors are finding it difficult to exit their positions. lisa: the markets are becoming more volatile as trading stalls. after central banks pushed investors largely into the same sudden, ifll of a there's some shift in the market.

express when i came out to see you in newport beach month ago, you talked about taking the global unconstrained bond fund and putting it into equities -- i took it to mean you were thinking perhaps of m&a arbitrage opportunities. not that you are arbitrage and the u.s. stock market. bill: i think that you can do both. prices are nearing and ending ifterms of the bull market, i told you we were going to have a crash, it does mean to me that we are going to end with a whimper as well as a bang. canhe united states, you sell strangles or sell call against a strong move in the united states. markets that are expected to be stronger, you can follow a different strategy. expect interest rates that go down much further, the same type of strategy i spoke to a few minutes ago can be employed. newof this depends on the neutral policy rates not only in the united dates but most countries. as i have talked about before and as fed officials have talked about frequently, it's a subjective number that we are just going to have to find as we move along. erik: what about bond market volatility? your view is tha

if i was unconstrained by current politics, that is something i would say. [applause] in a more practical sense, i will say you all have been great partners. thank you. within the environment we are operating here in washington dc, you are employing really great sometimes clever, dedicated ways to partner with cities to move the agenda forward as best as possible. that includes recognizing that cities we are nimble enough to just try strategies. we have some hands-on experience with the issues that we are facing. the one shift i would make within this is to have a willingness to invest in parents. people are really eager to invest in kids. i found this on the early childhood and, and childhood prevention, it is really appealing to invest in kids. there is no way to invest in kids without investing in their parents. particularly kids who are parents. in the city we have a parenting program, support groups that we support. we have resources for people. king adolescents. -- we have resources for people parenting adolescents. to be willing to invest in parents,

the unconstrained world, dabbling in bets on german bunds, for example. the short of a lifetime. brendan: he called it, but he did not make it. erik: that story has yet to play out. tobias: why would you want to go into things you do not know about, that you do not have the experience? i would have gone courtney howell anyway, a little older than 38. [laughter] brendan: erik's full interview begins tonight at 8:00 p.m. eastern on a special bloomberg encore. this is "bloomberg surveillance." it is may 12. good morning. ♪ tom: good morning, everyone. "bloomberg surveillance." futures -16 dow futures -7. our veronica quinn is checking out the market moves. what do you have? vonnie: in the premarket, it is up more than the app price, $50 up 18%. yahoo! was down as much as 1.8%. now it is higher by about .1%, so looking good for both groups of investors right now. tom: there we have a, vonnie quinn, thank you so much. cory johnson with us from "bloomberg west," and 10:00 in the morning with the lovely carol. one does it start a bidding war for mr. armstrong an

. >> they have unconstrained funds where they can short funds. >> there's no way -- i just told him,own book. i do think it's significant. for viewers out there, they should keep in mind the following. first of all, there doesn't need to be an exact reason for bubbles to be popped. i do believe we've been in a bond market bubble for some time. >> all right. >> second is things can happen really fast as the last couple weeks have shown people. the third thing i would advise people to really understand what it means to hold the long-term bonds and what the exact nature of the risk reward tradeoff is. people don't really understand that. >> we'll come back to that last point in a sec, kenny. i'm interested what effect this upward move in yields that we're talking about is having on stocks. >> obviously this morning it had a big effect. it was initiated by the dudley comments and the goldman sachs note on all of a sudden there was an excitement overexuberance cause be stocks around the world to sell off. i think there's a short-term effect. i think the minute they bring it up, it creates