i go to pimco for a fixed income mandate. pimco is not a natural home for an equity mandate. i think the messages diversifying when you are known as a specialist is essentially difficult. this is another example of that. there have been previous examples. jonathan: what about what we seem to have given up on. is that part of the move at pimco as well? bob: you could question whether pimco are doing this since we have had a rally for over six years. you have to ask where are equity markets going. is the rally over? i would argue the six-year rally is not over. the very large returns since the rally started in march, 2009. i think if you asked what are the projected returns for the next two years, three years, we are going to be looking at 3% to 5% annually. the returns are going to be significantly mediocre. jonathan: this is an asset management story rather than an asset class story. after the break mario draghi praises his qe program. what could go wrong? and then more on the outspoken greek finance ministers latest drivers it. embed that flicks. those stories and more comin

and when we say, why is this a big problem for pimco? well, they're losing tens of millions of dollars in fees. they get paid a percentage based on assets. when your assets go down, that percentage gets smaller. if you think about it, these things are usually paid in terms of basis points. 0.1% is a basis point. they usually get 40 basis points on portfolios like this. and, you know, if the portfolio -- 40 basis points on 250 billion versus 100 billion or less, that's a lot of money. that's where we are right now. liz: you make a great point. it may not be a cult of personality thing where people fled the funds. with bond yields at 2.2%, that's not a lot. other big names out there. master unlimited partnerships. charlie: based on our calculations, the total return fund has actually performed worse than the typical, you know, bond index. but listen, a lot of things going on. cult of personality does hit and come into play here. they're worried in pimco. remember, this was the biggest bond fund ever. it's gone from way up here to way down

investors continuing to pull money from pimco. thit was formerly the world's biggest bond for mutual fund but not anymore. pimco is suffering since bill gross left in september. total assets of pimco fell 5.4% in the first quarter to $1.59 trillion. when will the redemption -- this is a company along with many other insurers that is seen investment margins narrow up along with the movement and european bond markets. the ecb program pushing yields on bonds into negatives. lots of factors for the insurer to deal with. we will debate that with the cfo later. that is coming up just over an hour from now. stay tuned for that. anna: bonds are tracking a selloff in asia. it is a continuation of the same story. david is in hong kong for us. it is good to see you. david: good morning to all of you. what we basically woke up to in asia was the big jump in terms of 10 year yields. what i have for you here -- it is quite a dramatic scene. australia, south korea and japan. now japanese 10 year jgb's at 45 bits. that is the biggest single day j

stephanie: pimco -- erik: pimco is getting out of the stockpicking business. the company announced it will close three active stock mutual funds and focus on enhanced indexing strategies. pimco also announced its chief investment officer will be leaving as part of the retreat. for more on the new strategy is mary childs. good morning. glad you could join us. bill gross wanted pimco to get out of active equities before he was forced out of the farm. what does it say that pimco has made this decision? mary: i think it says they are retrenching. they have had record outflows for the last two years. they want to focus on what is working for them and what is profitable. they are doubling down on things they are doing. some of the products have not been attracting assets. some of the big ones have gathered less than a billion dollars in five years. that is not cutting it. the upfront costs of hiring and building infrastructure, if it is not justifying itself why keep it going? erik: is it just that pimco was too late to the equities game? there are lots of firms tha

liz: what's up with pimco? a lot of people have pimco funds. >> lot of people have pimco funds, and made a push about 2010 to diversify, they are known as a bond fund. they need to push and diversify into the stock fund, analysts research people, experts. money managers. today marks the day they're reversing that push into equities. here's what we know from the memo. news is out there. people are reporting it. we reported it first on fox business, closing two of the four funds, equity funds, that's one of the memos which talks about how the cio of the equity division is leaving and there are going to be layoffs. about 30% of the equity employees are going to be let go as part of this transition. what they're essentially going to do is this, closing down two of the four funds, planning to open another equity fund, they're not going to do that, and morer less farming it out. they have a subadviser. liz: did they misread the market? i don't understand, we're hitting record highs today. >> i know, if they decide to

pimm: well done, julie hyman, avon and pimco changes to start. and just how accurate are those targeted facebook ads? ♪ pimm: welcome back to the bloomberg market day, i am pimm fox. let's begin some of the top stories that are crossing the terminal right now. it is one more thing for the federal reserve to consider when they debate raising interest rates. inflation at the wholesale level and effectively fell 4/10 of a percent last month. lowering food and energy prices are responsible for the decline. and a turnaround plan for jcpenney. first-quarter sales growth missed estimates and the ceo has tried to stabilize jcpenney by bringing back promotions and reviving private brands. but yet, the chain has yet to consistently post profits. and maybe american viewers are getting tired of reality tv. amazon is dropping several programs, including "mob wives" and "teen moms." they will buy it shows from other suppliers. other networks that rely heavily aboutse programs are down -- are down. executive hasief left the firm. childs is taken over -- has t

the investors that have stuck with pimco have done quite well. stephanie: thank you, michael, for joining us and giving us your view on the health and status pimco. be sure to tune to "bloomberg markets" at 11:00 a.m. erik: wall street untamed. why bankers may not have put bad behavior behind them. you want to hear this, stick around. ♪ stephanie: welcome back to "market makers." we have a lot of great stuff ahead. the former chair flows claiborne and the founder of usa networks will be here to talk retail, including walmart's worse than expected earnings reports. erik: and the reaction to housing in the fate of the housing market. bloomberg television will take you to the peterson event in washington dc two discussed with a 16 hopefuls and a divided washington, and much more. eight years after the financial crisis spotlighted the more than occasionally murky practices of wall street, the industry liked to point out that bad behavior was behind it. that is not true according to a report that surveyed financial professionals abuse of their indus

mary: something of this magnitude is pimco specific. this is very bill gross and pimco oriented. it does reflect a larger trend people have been talking about for a while. the biggest bond funds now is an index tracking form -- fund at vanguard. you have seen that percolating over the years, and this is a very big manifestation of that trend, where you have money going from a famous and admired active manager. people, as they are making those choices of where to put their money now, they are more and more saying, why don't i pay lower fees and track an index? alix: fair point. thanks for joining us on breaking news that pimco has lost its title as the world's biggest bond mutual fund. still with me lisa tulio, and carl. lisa: on some level, this is not a bad thing for pimco. the total return fund had gotten too big to manage, especially as liquidity of the market, the ability to trade in credit markets, declined. if you are managing a smaller ship, it may enable them to perform better going forward. and frankly, it is better to's -- to slowly deflate in size rather than all at on

pimco says it will focus on enhanced strategies. greece's outspoken finance minister is at it again. yanis varoufakis is saying that the head of the ecb, mario draghi, was filled with fear giving greece a break on its debt. he also says he has had second thoughts about the euro. yanis varoufakis: i wish that we had the drachma. make no mistake this is not the statement i wanted to make. i think that deep down all member states of the eurozone would agree with that now. vonnie: yanis varoufakis has been moved -- has been removed from day to day handling of the crisis. a california man is suing huber saying that he cash is suing uber. he said that he came up with the idea and the technology. uber is in a new round of funding that may boost its valuation to $50 billion. the man who filed the lawsuit is a yoga practitioner and filmmaker who was -- who has previously sued two other tech companies. in the nba playoffs, a decisive game seven in the western conference semifinals. the rockets came from 19 points down to stun the los angeles

they missed the boat after pimco brought in so much money. they had turned things around but the equity -- active equity is lacking. they had fired people, shuffled offices trying to address that, but the flows have been pretty consistent over the past 20 one quarters. betty: so what is the plan then? >> largely, you put a fire under people and you hire the best talent you can find. you get the people in there that you need to do a good job and be strategic about who is where. they have gotten some big names in there. i think they are making a lot of moves in the right direction. it takes a while for these things to get traction. betty: thank you, mary. much more ahead, including staying all over the voting for the new fifa president. ♪ betty: it is 10:00 in san francisco, 1:00 in new york, and 1:00 in hong kong. presidential voting has gone to a second round. nobody got a two thirds majority. betty: what lessons do wall street veterans have four young guns facing their first rate hike? and the convicted mastermind of the silk road website

bill: i didn't like how i left so to speak, pimco. and i didn't care for the aspersions that somehow i might have lost my touch. i don't think i've lost my touch. i am in the seven days a week, 18 hours a day believe it or not. that speaks to interests. i hope the performance numbers speak to confidence. erik: how do you define success for yourself a janus capital? bill: moore by performance than by assets. i will love the assets to grow. when i came to janus, it was not the intent of creating a pimco two. erik: is there a point where big b comes to the best big b comes to bed. -- is there a link where big b comes too big? bill: other institutions are big too. it is easier with $2 billion to move money. the liquidity is obviously better. it is less onerous in terms of organizations and decision-making. it is definitely a situation here where i can do things that that i think will make money a lot quicker and in a larger frame. stephanie: is it really bill gross needing to end on a high note? how old is he? erik: 71. stephanie: he is b

ahead, could goldman and up at kodiak go -- end up at pimco? -- erik: ourng reporting suggests that pimco considered the president of goldman sachs after mohamed el-erian left a ceo. what might have been different. gross ended up flooring with his colleagues at pimco. money flowed out of the total return fund. now he is at janice. i don't know how different it would have been with gary cohen. he is fascinating nonetheless. on that note, i did you farewell. have yourself a fantastic weekend. scarlet is still with you. straight to's get this morning's top headlines. america feeling less optimistic about the economy. the consumer confidence index fell to a six-month low. the decline from april to may was the biggest since the end of 2012. at the start of the year. just a few days ago the president of soccer's governing body was an overwhelming favorite to be elected. vote. may be a closer sepp blatter was waning. much of year and that much of europe will vote for a jordanian press -- jordanian prince. not always be easy but it is for this reason w

still to come pimco loses it's title as the world's largest bond fund. find out who stole the crown. that's coming up next on worldwide exchange. >>> a warm welcome to all of you joining us. you're watching worldwide exchange and here are your headlines from around the world. a stellar start to the year for ubs. first quarter profit jumps near nearly 90% after a strong performance. pimco loses it's crown as the world's biggest bond fund. they pulled $9.6 billion last month. a break down for mcdonald's. but credit suisse with a higher target price. >> saudi arabia's oil minister isn't blaming anybody in the collapse in the price of oil and has no fear about future fluctuates. >> i'm not worried about crude. nor will i try to predict what the price is. if i was to predict i would be somewhere else gambling. despite that move to the upside in yesterday's trade following the big gain on friday we're looking at a muted session on wall street. at least at this hour the s&p 500 down fractionally. we're in negative territory for the dow and nasdaq when looking a

w goldman summer to could have ended up with pimco. that is next. ♪ scarlet: when pimco went looking for a new ceo it told to group -- goldman sachs. was according to people with knowledge of the matter. mary childs joins us now for more. how far did these discussions get, was it a real conversation or it is this more of a wish list? mary: they were saying who could be the right person, who could take us, mohammed money to go or bill might need to go. with are going to need someone who is a strong leader in who can take us forward and who might that be? it -- gary ended up being on the list because he is -- has a strong ratings background. if you have credibility with traders, you can lead. mark: is that why he could have been a good fit? ofy: you need that kind bulletproof credibility to say i understand your world, i know how it goes. and then you can do your job. if you do not have that credibility, i am sure they will chew up -- you up and spin you out. scarlet: what prevented this from happening? do we know? ofy: there were a lo

we talk about why he decided against retiring after leaving pimco last september. what is he going to do with his $2 billion fortune. olivia: and why he is being so shy about it. also coming up, we are watching the global bond selloff. highest levels of the year. the german 10 years have doubled in 10 weeks. it is an incredible move and we will break it down for you. plus, elizabeth warren is taking on president obama. she in new york city mayor il de blasio are unveiling a new progressive manifesto and you can expected to be at all its with a lot of the president's policies and ideas. olivia: we have to get back to the huge tech story of the morning. verizon is buying a well of for $4.4 billion. it was a shocking announcement even though our own alex sherman said it may be in the works back in january. with us is kevin smith who is in analyst. also with us on set is mohammed. thank you very much for joining us. kevin, let us start with you. why does the deal makes sense for verizon? kevin: verizon has been trying to diversify from mobile broadband access. they hav

pimco's total return fund 110 billion. >>> as we reported a bit earlier in the broadcast cisco's john chambers is stepping aside as ceo, but he's not going away. he'll remain as chairman of the firm he ran for 20 years. his continued presence may soothe some investors, but as our mary thompson reports, it will also pose challenges for chambers' successor, chuck robbins. >> for two years john chambers served as chief evangelist and architect of a firm whose stock climbed 1400% under his waf. by stepping down as ceo and staying on as chairman he can now provide important cover and counsel to his successor chuck robbins. >> there are all sorts of aspects of the job that he's going to have to learn. and the advantage is having a great teacher around. >> still, chambers' continued presence at the firm could create problems according to professor joe bauer. >> when the stays on, it always makes it harder for the new ceo to make changes, particularly if the new ceo has in mind dramatic changes. >> cisco! >> as executive chairman chambers will likely be in the office every day. and unless he

did you hear scott mather from pimco. he said the sell-off is over he didn't seem too bother by it. >> your viewers should be fully aware that scott mather and everybody who appears on cnbc talks their own book. one of the world's largest bond managers is not going to come on and say, guess what sell-off has only just begun. >> they have unconstrained funds where they can short funds. >> there's no way -- i just told him, everybody comes on and talks their 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 p

this was a time of intense problems at pimco. bill is not there. when it have saved pimco? would it have guaranteed gary a much fatter paycheck? the gross got paid $290 million. stephanie: it would have guaranteed him a fatter paycheck that year. i'm not saying he should stay at goldman. he has been there 25 years. he started when they were 6000 people and now there are 37,000 people. he's been through the ipo and the financial crisis. erik: it's not clear if they were ever reaching out to them. gary is a logical choice. stephanie: he is a logical choice for uber or one of these tech companies that want to go to the big stage. i don't know that anthony noto has the experience. he doesn't have experience dealing with regulation and the overall financial crisis and the media. gc does. there is so much to talk about in banking. there are a few headlines this morning. jeffries was able to have the ability take on higher risk levels. which bank is upping their number -- deutsche bank -- they are hiring. erik: it's effectively the same sides of the same coin. stephanie: they are

i am a part-time adviser to a parent company of pimco. i write for bloomberg. it is wonderful to discipline my thoughts. i have the privilege of sharing president obama's global development council. i got involved in a startup which has been an eye-opener. i am a dinosaur, so being with people who have the passion for startups is amazing. and i'm spending more time with my daughter. it has been a privilege. charlie: you can be a good thing. -- it can be a good thing. mohamed: i have been privileged. i know many people cannot. charlie: mohamed el-erian thank you for joining us. ♪ rishaad: this is trending business. a look at what we are watching with sharp falling off a cliff in tokyo. they are withdrawing from some television markets and seeking a lifeline. there are reports that chinese banks are being told not to offer high deposit rate despite the ceiling being raised. another sign that chinese reforms are struggling. some harsh words for noble. there are reports that they are "a very bad company took of --." the jakarta session will be in focus. but here

but it pimco reaching $68 billion year on year. bloomberg has been speaking with the bond king and asking why he is still active. >> one of the reasons i am still doing this is to prove i still have got it. like a quarterback who still has an arm. it feels great. that is my problem. i understand intellectually not many people care. she has to put up with me at night. it is an obsessive thing that has informed me. even though you can figure it out intellectually you don't necessarily lose it. >> you must get there are people who wonder why after building a track record as the most successful bond manager ever doing this. >> i didn't like how i left pimco. i didn't care for the aspersions i might have lost my touch. i am in this seven days a week. it speaks to confidence. >> let's deal with the equity markets. the ftse 100 trading lower by 1%. we are looking out. we will deal with easyjet after the break. ♪ jon: good morning and welcome back. i am jonathan ferro in the european headquarters right here. j etsy capital -- j etsy capi

more h mark: we have seen him at pimco, thenuman. lisa: there has been a shift to unconstrained funds. as investors 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 th

pimco's i get never regressed beyond conversations. not commenting and is considered a possible successor to lloyd blankfein. in japan, a volcano erupted on a small island sinning smoke and ash miles into the sky. the video showed clouds of dust exploding from the peak. more than 100 were evacuated. it is the second time it has erupted in 10 months. the island is located about 620 miles southwest of tokyo. those are your top stories of the morning. it is dÉjÀ vu all over again for greece. with the greek government beginning to exhaust its cash reserves, there is no indication a deal to unlock more bailout money will be agreed. hans nichols is at the summit in germany. give us the latest. is financeatest ministers left with nothing but recriminations and harsh words for greece. in some ways, he was perhaps the strongest arguing a case for european unity might mean they need to keep firm and fast with their rules, which would mean a greek exit. jack lew is the u.s. treasury secretary. he talked about shifting the date. he seemed to be

even when you take into account the pimco view, low interest rates. let's not forget the power of qe. we have the central bank with 60 billion of assets of month. essentially, bonds are being drained from the market. the selloff is probably not far from over. francine: as terms -- in terms of eurozone growth, your exciting growth to be sustained? when you look at the reality with such a weak euro and low oil prices, is this just a little bit of a blip or do you think the trend is towards slow growth? >> we should not get overexcited. 1.5% growth is not extremely exciting. it is sustainable. trend growth in the eurozone is probably 1.2%. i think we can have it for a while. we have had such a depression for so long. we had ecb qe coming to an end. as you said we have oil prices the weaker euro which will probably be sustained thanks to the qe. i think we can grow at this pace for a good couple of years. maybe three years if no shocks. francine: no big shots. -- shocks. here is a look at what else is on a radar. ryanair year earnings of jumped 66%. profi

pimco's return fund has lost its crown as the largest mutual fund. pimco has suffered more than $110 billion in outflows. since bill gross left on september 25. the european central bank is considering delegating more power to avoid monetary policy makers becoming entangled in low-level details. according to people familiar with the matter. mark: we will round them all up with our next guest after the break. stay with us. ♪ caroline: can -- equity markets had a good day, once again hovering near their all-time highs. wonderful to have you in this morning. give us a sense of how you feel earnings season has kicked off this far. the u.s. seems to be outperforming. it always tends to. guest;: the benefits of the weaker euro is stirring to feed through. it is slow but it is coming. the size of the move over the last 12 months, 14% is a big swing factor for european industries especially against those who manufacture outside europe. we are seeing that slowly feed through as well as some of the periphery. in spain, unemployment is starting to come down.

stephanie: could he see pimco people in the parking lot? erik: for sure. stephanie: it's like a jets versus sharks showdown. erik: it would not be too hard to figure out who they were. it's sunny california and it's not like new york. it's an empty parking lot. stephanie: we have to go to breaking is but i have to ask -- how amazing would it be to have that kind of job and make that go and live in newport beach? we do have to get to breaking news. michael mckee is in the

number one, pimco losing its crown. two years of client with draws and total work funds have crossed the title of the world's biggest bond mutual fund. a little over a hundred $10 billion. funds fell behind the index tracking vanguard total bond market which had $117 billion as of april 30. one for jack bogle. julie: the irony is that the pimco is doing better than the vanguard year to date. the three managers running the pimco fund have actually improved the system to an extent. they have the cash they have been 70% of the peers and vanguard has been 71%. in theory, if they continue with that performance and people are actually making investment choices raised on performance, they will be able to get some of that back. betty: but there is so much around passive or active investing. it depends also on the fees and if that performance is enough to get them out of the cheap index bonds. all right, that is the bill there. not the opening bell but the delta say goodbye to jay. thank you so much. former ceo of cachet. former

pimco is out with an important note -- there optimism on mexico. we will look forward to the job economy in friday's report. ian shepherdson is with us this morning. olivia? olivia: disney is on deck for reports later this morning. between "the avengers: the age of ultron" and "star wars," would appear that mr. eiger has jumped light speed. he is a self-confessed marvel freak. what are investors looking for in the results? brendan: let me take you -- >> let me take you to the numbers. 600 million more than this time last year. in terms of net income, 1.87 billion dollars for this quarter, and in terms of earnings per share 1.10 versus 1.11. just off a penny. brendan: dougan -- olivia: guggenheim has raised their price target citibank has raised their price target. is it all about the movies? ramy: it is all about the movies. brendan: you used the word thrusters. amazing and awesome. ramy: disney is apt over ads movies and parks. you talked about movies -- they brought in $15 billion in revenue just in the past year. of course, marvel lucasfilm, we

allianz are the owners of pimco. bill gross left, and that cause them problems at the backend of 2015 when they sign at exit is of funds from the pimco brand. allianz are confirming their full-year operating profit at around the 10 billion to 10.8 billion euros this year. that is above last year's, which was 10.4 billion. management of third-party assets under management 1.4 one billion -- 1.41 billion euros. they will publish full first-quarter details on may 12. that is the bottom line for them. they are confident in achieving a full-year profit target. everybody is focused on the devil in the detail, pimco. those are your corporate stories. let's tell you some of the other stories making the agenda. oil extended its advance above $60 in a sign that the u.s. supply glut is easing. futures gained as much as 1% in new york rising to the highest close since december. inventories fell by 1.5 million barrels. that is the first drop in industry data in eight weeks. today is the deadline for the israeli prime minister ben

he took a consulting job with pimco and he is a fellow for the brookings institute as well. >>> here in omaha it's all about berkshire hathaway and buffett. they had notably under performing but buffett says things are looking up. >> if you look at the first quarter, you'll see a big, big change relative to the union pacific which is our yardstick. so that is -- it turned around even faster than i thought it would. >> that is good news for burlington northern chairman matt rose. they are the second largest freight rail system. they haul half of the freight in the united states. that is nearly $70 billion worth of consumer goods and commodities. we sat down with him to find out what he thinks. >> the overall economy is fine. it's not great. i think we're in a weird transition. the oil energy renaissance had such a spillover effect. it was creating heat in terms of inflationary things. people were paying people a lot of money. they were buying ford pickup trucks. the effect of the energy renaissance was really strong. and we take that away, and now that impact of lower oil prices shoul

this week, people are just bidding up everything the alix:right, the black -- big guys, black rock and pimco, it's distarting -- distorting the markets because there is not enough to go around. >> right. and eau fascinating point, the financial industry it elve is a -- is fundamentally a bubble creating machine the all the managers have their bench marks they have to hit and to hit that you have to hit best performing stocks, apple or whatever, and that drives the stock prices higher and that pace -- claces them to hit their bench marks -- alix: they mentioned sectors like retailing, consumer durables, services, food and beverage. one of the top five was consumer additioncretionary. 736 million worth of inflow year to date. the leader are the energy sector. the energy e.t.f., $2 billion worth of not- -- in flows. >> the money keeps rushing in. the hundred -- funny thing about citigroup, they said all these bubble factors, yet you have to keep buying. they said it's still too early to fight this bull plarket. the bubbly sector is like health care and discretionary. the fed isn't going to hike

spoa youso you mentioned i'm part time for pimco. i write for the financial times. i have the chij of sharing president obama's dplobl development council. i've got involved in a start-up which has been an eye opener for me. i'm a dinosaur, so being with people who have the passion of start-ups is amazing. and most important i'm spending more time with my daughter, going on hom holliday with her. it's been a privilege -- >> parenting can be a good thing. >> it's been wonderful incredibly fulfilling and i feel very privileged took able to do it and i know many people cannot. >> rose: thank you for coming. mohamed el-erian, thank you for joining us. captioning sponsored by rose communications captioned by media access group at wgbh access.wgbh.org >>> the following kqed production was produced in high definition. ♪ >>> calories, calories, calories! >> wow, it rocked my world! >> it just kind of reminded me of boot camp. >> i don't know what you had, but this is great! >> it almost f

the market that have the potential to move because the assets are not being traded that much, like a pimco, a blackrock, and something lisa abramowicz, our debt reporter, talks about. joe: the fourth driver is the of wall streeton as a perpetual bubble making machine. every but he is trying to make the benchmarks, whether it is their fund benchmark, whatever it is, and to me, benchmarks, you have got to buy. tocreates for everybody invest in the big companies, whether it is apple, european bonds, that inflates new bubbles. alix: talking about where the retail, consumer durables, consumer services, food and beverages, kind of what we have been seeing. anddata has been so lumpy, that is where they are identifying the bubble. they are also saying emerging market sectors are really cheap, like banks, cars, energy, and in the u.s. is a little hotter. what we are looking at here is corroborating what citigroup is saying. looking at energy, consumer discretionary etf has seen more inflows this year, $2 billion aboute energy sector, and 730 $6 million for consumer discretionary. huge inflows, the

stephanie: could he see pimco people in the parking lot? erik: for sure. stephanie: it's like a jets versus sharks showdown. erik: it would not be too hard to figure out who they were. it's sunny california and it's not like new york. it's an empty parking lot. stephanie: we have to go to breaking is but i have to ask -- how amazing would it be to have that kind of job and make that go and live in newport beach? we do have to get to breaking news. michael mckee is in the newsroom with the headlines. mike: we have been waiting for improvement in the manufacturing economy. it's not getting any worse of that could be taken as good news. 51.5 for the eye is some figures for april which is the same as it was in march. it's a little disappointed because we were looking for a 52. that was the consensus of analysts surveyed. michigan sentiment comes in exactly as it was the prior month at 95 .9. a little bit down for what happened forecast at 96. the fed wants to know what people think about inflation. they have looked at inflation expectations as part of their ga

this one as a consultant to investment giant pimco. here in omaha, it's all about birk shire hathaway and warren buffett. they own 100% of the rail giant bsf, who had been underperforming. now buffett says things are looking up. >> they've improved dramatically. if you look at the figures in the first quarter in terms of train ve loss si, even in terms of earnings, you'll see a big, big change relative to the union pacific, which is our yardstick. so it's turned around even faster than i thought it would. >> that's good news for burlington northern checktive chairman matt rhodes. the company is the nation's second largest freight rail system and hauls half of all the freight in the united states. that's nearly $70 billion worth of consumer goods and commodities. that gives him a pretty good view on how the economy is doing. we sat down with him to find out what he thinks. >> the overall economy is fine. it's not great. i think we're in a weird transition. the oil -- the energy renaissance had such a spillover effect. it was creating a

the portfolio manager of pimco is chuckling. should it? >> the only people that can default to it is the institutions. they don't need to default. it depends on how you wanted to find default. in terms of a disruptive default, i don't think there's any -- francine: what do you make of the noise we have heard from the french finance minister? how do you default accidentally? michael: you default accidentally if you run out of time in negotiations. francine: but that is not an accident. michael: it is if you don't intend to. you could argue they run out of time and people are worried about the greek negotiations running out of time. none of us know when they actually run out. we could all speculate. most of us would speculate that is early next month. if they are going to do something, they've got to do it in the next few weeks. we don't know that. there's no guarantee. we know they've got these payments to the imf and the european institutions, but they've got pension payments as well. our expectation is, they can make it through this month

pimco's ciot was for global credit. alix: coming up, hillary clinton finally seeks to reporters on a trade deal, but she has more problems coming up with state department e-mails. scarlet: that's not going to go away, is it? alix: we are going to find out. ♪ scarlet: let's go straight to julie hyman with a look at the markets. it's like they are losing steam. record,o much for the looks like we are not going to close at a record unless there is a last turnaround area have already seen a couple of turnarounds today, but the dow jones and s&p did touch intraday records today. here is the balancing act we have been playing all day when it comes to the s&p 500. on the one hand, financials, on the other, energy stocks. right now energy stocks are winning out, down as a group trading in at a one-month low with the financial index at its highest level of 2015, moving higher along with rates today, along with treasury yields. if you take a look at the individual movers moving lower along with oil prices for the fifth straight

here is what former pimco ceo told us. >> we can assume they will in september. not 100%, but probable. then, they will have shifted the market to worrying less about the starting point and focusing more on what will be a shallow pot. now let's talk about what will happen with the economy. the federal reserve raised interest rates, let's find out from an economist. a professor at the ross school of business at the university of michigan. thank you for being here. you heard what he said about interest rates and the relationships with the federal reserve 2% inflation target. what is your thinking? >> they are ready to go, lift off is here. this statement in late april was spot on. go back and take a look -- and they say that if they are reasonably confident that the economy is moving forward, labor market conditions are moving ahead, they are ready to go. 15 out of the 17 f onc committee participants, we are ready in 2015 to go. they have laid the groundwork, the economic data is coming in in their favor. betty: inflation came in hot today. it is easy to discount o

the interview i'm looking for two is the big guy from pimco. guy: do you say is inflation the back? is that what the market is pricing in? was it a blip? you have to star by the big story of what is happening in greece right now and the u.s. economy and the latest issues need to get factor in. and the u.k. as well. today is a non-event. it will not deliver much. wednesday, i think listening to mark carney will be generally fascinating. when does this guy raise rates? jonathan: and tighter fiscal policy? do you think it will be 15? do think it will be 16? the market seems to be pushing. guy: at the end of the year, talking about that was a meaningful impact on a pickup. jonathan: do not miss "the pulse " coming up in four minutes free a busy day and a busy week. a reminder of what we will watch. the bank of england non-decision, the rate decision later. nobody expecting any action today. later on at 2:00 p.m. the u.k. time, the eurogroup versus greece over in brussels. tomorrow, greece has to make the payment to the imf. a lot of people expecting they can. then of course on wednesday

the pimco total return fund falling behind the vanguard total index fund after two years of client withdrawals. meantime it is the beginning of the end for the bull market, an investment group predicting stocks and bonds will soon run out of steam. a phase that a monetary policies and they say credit-based oxygen is running out. google is buying as software startup. terms of the deal were not disclosed. it will help users organize items by understanding scheduling and habits, and it could be used to improve the google gmail, calendar, and other services. and interest -- pinterest is opening up their revenue model two companies. the main goal is to drive traffic to its site. the company was valued at $11 billion in a march fundraising route. now to our lead. after leading cisco for two decades, john chambers is stepping down as ceo, naming chuck robbins as his replacement. robbins has been with the computer networking giant for 17 years most recently leading the global sales and partners team which they say generates 47 billion dollars in business. they shared information about the transition t

the cheese and -- chief investment officer at pimco is going to depart after helping liquidate three investment strategies at the farm. -- firm. ceo says he will direct the transition and oversee and orderly liquidation. investigators are planning to talk to the engineer who was at the throttle of that amtrak train that crashed. investigators say it was going over 100 miles per hour when it crashed, which is over double the speed limit. trying toer recalled reduce speed before being knocked out by the crash. crashsb says this highlights the need for positive train control. >> we have called for positive train control for many, many years. it is on our most wanted list. to bess has called it installed by the end of this year, so we are very keen on positive train control. based on what we know right now, had such a system that installed in this section of track, this accident would not have occurred. takingthe automatic technology has already been installed on most of the rail line between new york and washington. president obama meets with the leaders of six persian gulf countries, a

he is funded by pimco. >> allianz. >> yes. other thing interesting are these air pockets that keep emerging. no apologies for discussing it again. you have this huge amount of money from qe and ultra-low interest rates that we'll skate through the door. there isn't the trade inging volume to handle it. >> that is absolutely kroekt. the bond market appears far less licked than it normally would. they are having a disproportionate impact. >> and sovereign debt. >> it's stuff ordinarily you would think, besides the corex market the next deepest has been the treasury market. it's not showing that liquidity everybody is hoping for. >> where does the next move come from? does it come from what's happening in the german bond market? we are still getting retail earnings. what are you going to be watching? >> i'll be looking at retail sales. i don't think the economy is that strong. i will begin to look for more indications in the labor market. while everybody thought the payroll number was somewhat goldilocks it might have been partia

. >>> it's perceived to be another set back for pimco. they said they would start exit strategies. she will leave the firm after less than a year and a half. pimco tried to portray itself or sell itself as having expertise in equities and the people that have run that department have had no expertise or success and one thing about this individual the very thin skinned pr people at pimco, i think we may have mispronounced, not naming names but her name and they got all you don't know this person she's in charge -- she had only been there for six months. so no we didn't necessarily. the reputation wasn't that big. they have never been able to actually sell themselves. >> this is them throwing in the towel. >> or just deciding it can't be a growth area. but first of all, it's 50 beside in equity assets under management. it's okay. it's not big relative to the rest of the firm. >> what's the return. >> actually over various periods they had desen returns but theo me my takeaway is the inflows into the dominant bill gross run fixed income franchise subsidized everything else they wanted

the chief investment officer of global credit at pimco joins us now from california. good morning and thank you for joining us. great numbers this morning on housing. it is fantastic and we are happy to see it. yesterday, homebuilder confidence fell. a report, wells fargo and sales of new homes falling to a four-month low. how strong is the housing market and why are you now so bullish? >> i think it is very strong. the facts are that over the last three years, housing starts have grown 12-15% here the overall economy has only grown at 4%. we have got record low inventories, at 14 year lows. we added 2.9 million jobs in the last year. you have got a million more job openings. importantly, the 25-34-year-old almost that has added 800,000 jobs, the strongest in 15 years. there is significant pent-up demand coming into the housing market. we are still bullish after having been for the last three years. if you could give us a little more detail about why you believe the housing market is strong. if you look at new construction plus spending on furnishings and furniture, t

when pimco was looking for a new ceo in 2013, it turned to goldman sachs. a report that gary cohen was on the short list to succeed mohamed el-erian. it never progressed beyond informal conversation. cohn a possible successor to lloyd blankfein. alix: the former home of pop star michael jackson is on sale for to $5 million. the estate once known -- $425 million. jackson bought the property in 1998 and turned it into a combination amusement park and zoo. he stopped visiting after it was searched by police investigating allegations of child molestation. jackson died at the age of 50. kind of a creep factor there. scarlet: that might be why they are having trouble selling it. alix: bingo. the biggest outbreak in u.s. history for the bird flu. piper jaffray says 30% of the egg product supply will be wiped out. how that will impact the bottom line of restaurants. scarlet: tesla shut out of the lone star state. alix: an inside jaffrey's global expansion plans. scale backlooking to annual requirements for ethanol in gasoline. it has a few in the ethanol industry u

this guy here the pimco one is more like a half percent. fee-wise, it's going to be a big deal. >> these numbers that we are looking at here in terms of total returns, those are number one. the net of fees. that takes that out and normalizes it for the differences. are the 10-year numbers and the-year numbers averaged annualized total? >> total returns for the 12 months and through april 30th in the-year trailing and five years trailing and-years trailing. not annualized. >> those are gross total returns. >> in the one-year going into april 30th. >> all right, thank you very much. interesting number work there. >> yeah. very interesting. in the meantime it is becoming the biggest bird flu outbreak in u.s. history and the numbers keep on getting bigger and bigger. we have three governors declaring states of emergency. sorry. right behind me. >> i'm photo bombing you. cnbc bombing me. several companies have been impacted. >> morgan brennan with the latest. morgan? you can walk in front of us if you need to. >> from bonds to birds. >> we need