Place in his new disinflation is the new wildcard. We will examine the bill gross departure from pimco and we begin with julie hyman and the latest of elements at pimco and Janus Capital. Good afternoon. The financial world is reeling and trying to figure out what was behind the departure of bill gross from pimco. One could argue that perhaps some of the warning signs or flags were there. The firm has been in tumult for the last year or so following 16 trade months of redemption to its flagship ones which is the Worlds Largest bond fund. That was downk of 200 33 billion and now down to 22 billion in assets. Bill gross is leaving the firm he founded back in 1971. There had been some infighting as well at pimco and there was the departure of his top lieutenant, Mohamed Elerian who went to the Parent Company alley ons as a Global Economic adviser. That is the background here we have seen. Hass going to janus which struggled to get its fixedincome business up and running. We talked to jack vogel at vanguard earlier about the no gross legacy for the mutual fund industry. Its a big loss to the mutual fund industry. He has been a pioneer. He is in many respects changed the world of bond investing and there is more focus on it. Is surely one of the great men of the business. If hes out of the Mutual Fund Business, we are all impoverished the best. Impoverished a bit. He will be in the Mutual Fund Business of at janus managing a fund that was started in late in late may but who will be his successor . Speculation and people inside the firm have indicated that perhaps Daniel Iversen who has been there for years might indeed be his successor. Said there would be an announcement of his successor in the coming hours. We are waiting for confirmation that its ivascyn or perhaps someone else. As a look at the personnel changes and potential changes, we have to think about the effect on the markets. There has been a Ripple Effect on people have been looking at the total return fund and what is it invested in . Will there be more redemptions because of his departure and will they sell the various assets in which they have invested . Treasuries are falling today in part linked to this. We have seen spanish and italian bonds fall in part linked to this because bill gross has said he liked those investments. Thank you. For more on the the partner of bill gross from pimco, i am joined by tom keene and sheilacolhatcar. Wrote todaystein that William H Gross appears to have jumped before he could be pushed out at pimco. You spoke to him at length a few months ago. Was there any hints that Something Like this was coming . Its pretty clear to me at that time that he was quite deeply unhappy. Something had happened to him that happens to a lot of Great Investors just that he was so successful at his core talent and skill which was investing that he suddenly found himself in charge of running an enormous company with many employees. That was not part of the oriness that he was good at that he wanted to do. He really wanted to spend his time investing. It has been a struggle for him to find the right partner to take on those management duties so he would be freed up to do what he does best which is look at his screens and invest in treasuries and other bond products for his investors. Steer that mercedes down the Pacific Coast highway with his knees tom, the chief executive Douglas Hodge put out a statement that read what were the differences . There were major differences between a gentleman 70 years old who has been doing it for years and years. Mba and out of uc delivered the goods at pimco. To sustain that not that we would talk about the Pittsburgh Steelers but there are challenging times for any great franchise. Bill gross has been through that before. 2004 of a him about tough moment for him there and the recent six or seven months. The performance is not been there with his challenges. There were some sniping comments today from people. The critical thing is mr. Gross moves onto a much smaller platform where maybe gets reinvigorated. Sheila, you talked about that reinvigoration and looking at his screen, doing what he does best without all of this ancillary disturbance around him. By his own admission, he said i am not mx divert. He said. Iman introvert and a f habit i like to go home and watch game shows on tv with my wife. He has his obsessions and one of those is investing and he wants to spend most of his energy on that and not doing hr, management, meetings can the kind of things you have to to run an organization. What about the talk that there was increasing tension between gross and pimco. That did that affect the returns . I think it was a major distraction for him and for other people at pimco. I think that is one of the issues. There are reports that mr. Gross did not necessarily handle dissent in a very tactful fashion. Some people do with that better than others. Why are you looking at me . I do not mean that when mr. Gross was on the air, i believe trish regan interviewed him and she asked about those whispers that maybe his style was authoritarian. There was a collegial note about the backandforth which is soap opera. I suggested happens at a minor level in every single shop and maybe here it was accentuated with the performance. I would go back to the professional aspects. Every jobsjoins me day. We have gone back and forth for years. He has a fed call. I dont think its a small idea that we have this news as we have a four pointx gdp number. Bill gross has been calling for a subdued, tempered, new neutral and many a pimco collegially disagree on that core theory. This plays into fed policy and we are doing this within a boom economy at least in the Second Quarter. Can we draw the ark from january from when Mohamed Elerian left until today . Absolutely, all of the pieces were in place. From pimco management perspective, although this seems to be a bit of a shock to everyone, they have been planning for this eventually happening since at least january. They have promoted a number of people to nude to beauty cio positions. Everyone knew that one way or another, mr. Gross removing on at some point. He is 70 and is reached the point where he was considering how he wanted to spend the rest of his career so this cannot be a total surprise. I think this is very important every Mutual Fund Company faces these challenges whether it is pioneer of boston years old, at 80 youve got to have a ballet of succession when your core capital goes up and down the elevators every night. Enson. K to me about dan is thats a large successful platform joined owned byalllianz. This is an Aircraft Carrier going through the water and a got a wide body. Someone said they have a deep bench. Dan is very impressive and has been with the company long time in maine is name investing in morse and Mortgage Securities postfinancial crisis. The issue now is they have a number of very talented people. How are they going to manage perhaps disappointment among someone who does not end up with the successor role he or she may want. That will be a delicate ballet, as tom puts it, for the company to manage. To be continued. Thank you both. Coming up, u. S. Secondquarter gdp was revised upward. We will take a look at whats behind the fastest rate of Economic Growth since 2011. Michelle girard rajoy mate when we continue in just a moment. Welcome back. Investors are betting on the feds forecast for rate increase in mid2015. Michael mckee says there has been a quiet change in the economy that may mean a change of plans at the central bank. How quiet . Many people of not notice because we have been watching the labor market but fed officials are growing quietly concerned about inflation or the lack there of. It is falling again. Over the last couple of months, prices that were rising out of the danger zone have started to fall again. This is the pc core index. The factors that influence prices are still pointing down the tories them. First the dollar up more than seven percent over the past six months against the world most traded currencies. That makes imported goods like christmas presents cheaper. Partly tied to that is a collapse in commodity prices. This is an index of industrial commodities them of the roma taylors desarrollo to rose the goes into the things we make or import. Pricen on the farm, huge drops will depress food prices and meet in particular, even with the drought ravaging california. At the same time, we see a big drop in oil and gasoline prices. And food andnews gas are not part of core inflation. This matters to you. Ultimately, thats what the fed is worried about the danger of deflation is it becomes embedded in psychology and people stop spending. What is happening to expectations . Unfortunately for the fed, they are starting to fall again as well. Investors can rate the data. This is the feds own measure of expectation. You can see it is down to the lowest since december of 2011. At that time, the economy was be recovering and expectations were going in the other direction. What does this mean for the central bank . If it continues lower for longer and of the fed will hold off until we get close to the two percent target, analysts calculate that based on the falling inflation so far, a fed great move should be pushed back by about six weeks and that gets pushed back even farther if the disinflation or impulse continues. Beanything, it seems to getting stronger as growth slows in europe and china with lower Global Demand which means lower prices ahead. Thank you. The u. S. Economy grew in the Second Quarter at the fastest rate since 2011. The Commerce Department revised gdp to 4. 6 from 4. 2 in line with estimates. Michelle girard is the chief inconomist at connecticut. Good afternoon. Business investment and x ports were they the main drivers of that surge we saw last quarter . We are rebounding in those areas to be sure. This story was an offset to the weak First Quarter numbers. We talked about it and you mentioned it, it was the strongest since 2011 on the First Quarter was the weakest since 2009. I think its best to average the last two or three quarters together. Even that is disappointing. Many people came into the youre looking for rope. This would be the year we get three percent , but we were not going to get that in the first half even looking through the noise. The economy performed more disappointingly than that. Which way is the momentum pendulum swinging . Thats the important point here. I think we are looking at an economy that is being able to pick up some momentum in the underlying pace of growth. I was not one of those people who came into the youre expecting that things would feel a lot different than they do it in 2013. For the first time, i actually am expecting that there is the potential for growth to approach the three percent mark sustainably in the second half of the year and beyond. That has to do with the consumer better position now than it has in at any point in the expansion. If we can get Consumer Spending to kick in closer to 2. 5 or three percent, that is what you need to be able to talk about the underlying trend in growth to move up or toward the three percent mark. You mentioned the consumer but not all growth categories saw an upward revision. Consumer spending was unchanged at 2. 5 . As the consumer decided to take a breather . Terms is pretty good in of what we have seen over the last couple of years. We have been trending between two percent2. 5 . I dont think the performance and the Second Quarter was terribly disappointing. I think was a pretty solid performance. Its not what you need if you want to be talking about growth moving higher. The Third Quarter may be somewhat similar but i think the Fourth Quarter will get better and i think it will be able to be sustained and the first part of next year. Wages and salaries in particular are growing that are than 3. 5 and theres a high savings rate and the fact that consumers are willing to borrow a bit. Theinted those things for outlook for Consumer Spending being better next year than it has been in the last year. Michelle, how will the rough start to the year especially that harsh Winter Weather we saw in some parts of the u. S. Going to affect the overall world forecast . I think we are moving beyond that. We are seeing better numbers. The question on everyones mind will be is this just another head fake . We see false starts were things are coming together and then it fades. Think this actually will not be a head fade and we will be able to hold at these better levels going forward. I think that will be the real question. Even if we get stronger third and Fourth Quarter numbers, everyone will wonder if its just an offset from the weather and the weakness in the first half or is there something more going on . I think that will end up the way that breaks will end up influencing the outlook for fed policy. How does janet yellen read these tea leaves . Is she saying the same thing you are seeing . I think she has to be encouraged. I think the fed is more confident about the expansion. I think thats why you see these dots moving gradually higher. When you are talking about the disinflation trend, i will say we pushed back against people extrapolating the high numbers in the spring too far forward, i would do the same in terms of the lower readings you see over the last couple of months. Once again, we got special factors like airfares which is another issue that has weighed on these inflation numbers. I dont think that is something we will see extended. I think the disinflation trans will evaporate and ease in the months ahead like the high readings in the spring gave way. I dont we have to worry about that but this is a fed bias to be slow and patient. The strong dollar and the inflation readings give them the ability to stand pat for longer even if the data looks better. In about 20 seconds, what is the growth trend look like for the end of the year and into next year . Ive got better than three percent growth slightly in the third and Fourth Quarters and that extends into 2015. I think we are going to be able to move to a better growth trajectory than we have seen. Michelle girard is a chief u. S. Economist at rbs securities joining us from stamford, connecticut, thank you so much. Have a good weekend. Up next, julie hyman returns with an on the markets of date and more reaction to the bill gross decision to leave pimco and bottom line returns in a moment. Welcome back. This is bottom line, on Bloomberg Television, streaming on your phone, your tablet, and bloomberg. Com and now available on apple tv and amazon fire. S rogue ramming reminder we are only a few weeks away from the debut of our new Bloomberg Politics broadcast with all due respect. Mark halperin and john heilman will launch on october 6 at 5 p. M. New york time on them bloomberg. Were approaching 26 minus is past the hour which means Bloomberg Television is on the markets. Here is julie hyman. Thanks so much. We see stocks rebound today after the worst drop since july yesterday. Three Straight Days of declines and we have not seen four Straight Days down for this year and we are not seeing it today as stocks are back up. Energy, technology, discretionary shares are leading the gains but its a broadbased rally, all 10 Industry Groups in the s p 500 are higher at the moment. We had the gdp revision for the 4. 6 asuarter to expected by economists but nonetheless better than the initial read so that is helping and we had a couple of earnings reports from the likes of nike and micron. In terms of other individual stocks, Janus Capital shares are soaring because of our top story. They poached bill gross from pimco to run an unconstrained bond fund. Bill gross has had a tumultuous year at pimco after the former ceo Mohamed Elerian announced his abrupt resignation. We are still awaiting an announcement of who will take over for him. A person can lay with the matter said the firm was considering Daniel Ivascyn who is at the firm presently and we have been discussing the Ripple Effect through the market of this including a selloff in treasuries. We will have more on the markets in 30 minutes and more on the pimco etf specifically. Stay tuned. Welcome back to oak vote bottom line. Return fund has suffered 16 straight months redemptions as the worlds Biggest Bond Fund faltered in performance. Dan wieners chairman and ceo of advisor investors which is 3. 2 billion under management and he is the editor of the word winning newsletter independent advisor for vanguard investors. He joins in the studio and welcome back. Thank you. Why is this a good move at this time for bill gross . Bill gross does not need the money. He does not need the headaches of pimco. Andan go off to janus essentially rebuild the reputation that got him to the place where people called him the bond king. He will be able to take a zero asset fund and he will be able to build it in positions that he likes. It is not have to worry about being part of some big committee. They will give him free reign. The big question will be who will he bring with them . Who will leave pimco after him . In hindsight inevitable after Mohamed Elerian [january . Remember,