Youre watching Market Makers here on bloomberg television. Friday in new york city. Im eric schatz sker. Im stephanie ruhle. This bill gross news is huge. No other way to describe it. An earthquake hit the bond market this morning. The bond king himself, bill gross, is leaving pimco, the Money Management powerhouse he cofounded which turned him into a billionaire. Hes moving to january us in Janus Capital to work for his former colleague. Pimco said fundamental differences led to the departure. Gross says he wanted to spend more of his time managing client assets. Bill powers is a former pimco managing director who has built his own property investing bills since leaving the firm four years ago. He joins us from nantucket. Great to have you on the show. Glad you could take time out for us from nantucket. Tell us, what seems to make the most sense to you . The idea that there were these fundamental differences between gross and pimco . Or this notion that gross is putting out there he simply just wanted to spend more of his time managing client money . Well, the announcement certainly raises more questions than initially delivers answers. I would have to think that at some point in most managers investors careers the idea of spending more time managing money and less time managing the business has to be a nice way to think about your last chapter. Bill at 70 is probably younger than most people at 55. So he has a lot of energy. A lot left. So i would think that probably some of each. What do you think about the fact that this could really affect Retail Investors . Right now we are watching the market get slammed because hes been one of the most active guys in the credit market. What does it mean for Retail Investors who think bill gross is the bond king, the face of pimco. Do you think they could redeem . There is tremendous steps that pimco recently saw the new additions of deputy c. I. O. s, people i close to, scott, andrew, dan among others and their teams for them this is probably very good news. They will be able to absorb a lot of new responsibilities. And they have a skill set and now they are obviously been pushed to the fore. As they are being pushed to the fore, those behind them will have to have the first opportunity to increase their role on the stage as well. What this means to Retail Investors is really dependent on what they do with their money. If people watch pimco versus taking money out, there is no reason to believe that the script of pimco will change significantly. Pimco has always relied on income, whether in mortgages, primarily, but secondarily in corporate bonds. But the deputies need to get public quickly because pimco has been the most long in the credit markets. This is the weakest week we have seen in the high yield market in months. Right now it seems like its getting worse. Do they need to get public quickly . And still back the positions they have on . If you look at the cast of remaining significant stars at pimco, they include many fixed income managers of the year. Mark was a fixed income manager of the year. You have a number of others. I dont see this as a mass exodus from credit and therefore spread widening event. I would not make that conclusion. Bill, of the names that you mentioned, these deputy d. I. O. s, six of them i believe c. I. O. s, six of them i believe, who strikes you as the successor if it will come from within. Will it be dan or mark or somebody else . I would say scott mather. Hes been running the grobal group now for global group now for close to 10 years and has the greatest experience over the broadest range of fixed income. Tell us a bit thats my guess. Let me interrupt for one second. Sanford bernstein analyst said they may get 10 to 30 redemption. I know you said that shouldnt be the case given the bench we have. If we are seeing analysts coming out with views like this, what does pimco need to do today . I think what they do is continue to do obviously they have governance issues on the inside the factory of who the new c. I. O. Is or i hope they dont but they could decide to do a coc. I. O. Arrange. Governance is the first order of the day at pimco. The second is a that they will continue to do what they were doing before after bill leaves. Bill, tell us about dick. You were at pimco for many years. You worked with him before he left. Whats he like and whats his relationship with bill gross . How is it he was able to lure bill from pimco to janus where he is the c. E. O. . I worked very closely with dick when i was at pimco. The two of us did two of the most important things that i did in my career. One was broadening the products at pimco by expanding the number of Specialty Products and fixed income. Not only across sectors of the market, but globally. So dick and i traveled a lot overseas. Dick is like his mentor, bill thompson, who is c. E. O. , very much like bill thompson. Hes very measured. Hes a great listener. Hes strategic. He has a legal background so he comes from a deep depth. Think this is a masterstroke. Was he getting fired anyway . Stephanie raises a good question. When pimco says there were fundamental differences between the firm and bill gross, is that just code for the fact that bill gross was going to be on his way ut regardless at some point . Thats a very good question that you have to write a script when someone departs. This was their script. There can be differences and i think it shows in bills choice of what hes doing what he really wanted to do more of and wanted to do less of. I want you to stay with us. We have breaking news off this pimco story. Take you to our newsroom, our colleague betty liu has been on the phones. Thats right, guys. I have been talking to some people very close to pimco, very senior folks close to pimco. This is what i have for you right now. They said the reason why that bill gross left the company is that essentially some very senior people within pimco were getting increasingly frustrated at bill gross behavior. His erratic behavior at the firm and they threatened to quit. They threatened to walk out if bill gross didnt go. Essentially bill gross was being pressured to leave the company. They also said the fact that janus put out the press release earlier that pimco showed this was a complete surprise move that bill gross wanted to control the narrative. He wanted to leave the firm guns ablazing. He went to janus first and made this move which caught pimco by surprise. Thats why you saw the press releases afterwards. The other thing i want to tell you about is muhammad aryan. There is speculation perhaps maybe he might come back to the firm. Well, he is not interested. This is not coming from this is all coming from senior people within pimco, essentially he is going to stay and do what hes happy doing, which is spendling time with his family. Hes working half of his time, but not directly at pimco. He essentially has been advising them on Global Economic issues. His name will not be one of those that will be announced in the next few hours as an executive coming back at pimco. It will be others who will take over from bill gross. You can kratch muhammad elerians name off the list now as running back to pimco. The amazing thing we are seeing in the markets right now is the fact, remember, the fixed income markets, credit markets, are thin at a time like this. Bill gross the largest seller of those markets, their positions are getting buried right now. People have figured i. G. Is one of the biggest positions, brazil, insurance companies. They are betting against them thinking even if they dont have to redeem they may have to flatten out their positions. Anticipating an unwind. Bill, heres a very a question for you. This is the second big name manager to leave the firm he was for so many Years Associated with. Im thinking of jeff begunlock leaving t. C. W. To found doubleline. He has managed in a fairly short space of time to build up more than 50 billion of assets at doubleline. Now that gross is at janus, a much bigger firm already. How quickly do you think he can gather assets . I think bill could very easily and will accumulate assets. My starting point is as we came out of the deep recession pimco had under a trillion in assets. Very quickly as their track record, their team, and the flight to quality of assets moved pimco to double that, to two trillion. Which was astonishing growth in a very short period of time. What little money has left pimco under the current rancor, if there is another 50 billion that leaves out of the 1 trillion of new assets that pimco got post2009, 50 billion is a lot to a company like janus. 50 billion is a small percentage to pimcos assets. Fair point. Bill, great to have you this morning. Thank you for taking time out for us. Youre in nantucket on personal time and we appreciate it. Bill powers is the former managing director at pimco. Left the firm four years ago to start his own Real Estate Investing company. Dick, the man who hired him at Janus Capital. Obviously people are saying it was his time. He wasnt making the best investment decisions. Right now it appears the credit markets are frozen. You are only seeing the indices trade. Remember the week we just had. Remember how the market performed in the last four days. This is horrible timing if youre a guy running a portfolio at pimco right now. Sure. Youre going to get a promotion. Lots of people not trading today. For further reasons. There you go. Tough day in the market. An amazing development. Bill gross, the bond king, leaving pimco joining Janus Capital to be with his former colleague, dick. Enormous complications. Welcome back to Market Makers, im stephanie ruhle. Few members in congress are as polarizing as our next guest. Minnesota republican michele bachmann. She ran for president back in 2012. First elected in 2006. And is not seeking reelection. Congresswoman bachmann is standing by in washington with our own peter cook. Thanks so much. Im joined by congresswoman bachmann. Thanks for the time. Want to start first ask you about your departure from congress in a moment. Want to start first with current invents. Youre a member of the intel committee. Pretty outspoken. Youre pritsism of president obama and taking on the Islamic State. What is your reaction to his plan. You would like to see american boots on the ground . I dont criticize president obama taking on the Islamic State. I wish he would take them on earlier. Sitting on the Intelligence Committee we knew about the lamic state, we knew and presumably the president did. A lot of this jihadist tempo was uptempo for the last year, year and a half. We knew it was coming. Thats why it was patently obvious the last thing the president should have done is pull u. S. Residual forces out of iraq. They were there for one purpose. Maintain the peace. Now we see the lack of wisdom. The decision the iraqis made we were the economy. We were the backbone. For us to put nearly 1 trillion into iraq and leave, we dont even have rights to an air base, we had a lot more leverage than the president was willing to use. What about the policy Going Forward . You have said, listen, the president s strategy at this point is inadequate. You called for Congress Declaring War on the Islamic State. You are talking about american boots on the ground. You think that would be the preferred option here . The preferred option is to defeat the Islamic State as quickly and decisively as possible. Thats why i think the president s strategy is not the right strategy because its a dribs and drabs vietnam warstyle strategy. That didnt work well in vietnam. I believe we need to engage in a world war iitype strategy wherein we get serious about this issue. We have the finest military in the world. Why wouldnt we use it . Instead when we are doing is proactively a fellow member of congress and putting a gun in their arms and thinking somehow they are going to defeat a very large, very senior trained islamic army . Its going to be very difficult to do. Thats why i dont want to see us goofing around and wasting very valuable time. You know some of your fellow republicans in congress very leary and opposed to the idea of putting u. S. Boots on the ground. The cautionary tale for them is the iraq war. They dont want to put americans in another sectarian conflict. We are already doing air strikes with american resources. The way the wars progressing now, because it is a war, the way its progressing, eventually the United States will have to come in. Even the white house admitted that over the weekend. The white house Senior Advisor said, yes, we may have to go in in the future. But if we do, we wont go in with a combat mission. And our troops will only be able to fire if they are fired upon. Well, that doesnt sound like a winning strategy. No combat strategy. And not being able to fire first. You have to wait until youre fired upon. Thats never going to defeat the Islamic State. I think we need to have a realistic view and we need to take them as serious as they are and defeat them and defeat them early when they are at their weakest. Switch to politics. You are set to leave congress. You will be speaking to the value voters summit here in washington later today. Are you going to shock the world and announce youre running for president again . No, i will not. I was very grateful for the opportunity and privilege i had to run in 2012. I intend to be very involved in the election, but perhaps from a media point of view. Do you have a candidate in mind right now . I will by the time 2016 comes around. We have a plethora of riches. We have great candidates that are expressing interest. Obviously no one has declared. By my count theres about 16 so far that have expressed very serious interest. That field will probably winnow a bit as the months go by. Its quite a task to put together a president ial effort. I think well have a very good candidate on the g. O. P. Side. Do you think mitt romney should run again . Mitt romney is a great candidate and he may be the candidate if he chooses to run. But well see. Let me ask you finally about congress. You are departing. Speaker boehner, do you think Speaker Boehner continues on as speaker of the house in the next congress . Will his fellow republicans elect him speaker . I dont know. Im not sure he will. He may stay on and do what former speaker Denny Hastert did and resign after the election. I dont know. It will be up to the speaker to make that choice. But i think, again, people are looking for a bold, fresh vision and whether they want to give that mantle to john boehner or another member of the house. Well have to see. If you were there would you vote for him . I have to see at the time. I have to see what his vision is. What hes planning to do, and who the other candidates are. Congresswoman bachmann, thanks very much. Your final weeks in congress. Appreciate you joining us here in bloomberg. Stephanie back to you. Thank you so much our own peter cook and congresswoman michele bachmann. Bloomberg politics is coming to bloomberg tv. With all due respect is coming on october 6 just in time to cover the final weeks before the midterm elections. Coming up here on Market Makers, stocks bouncing back after the big selloff, multiday selloff yesterday. The worst for u. S. Equities in two months. We are back. Youre watching Market Makers. Im stephanie ruhle. We are approaching 26 past the hour. Time for bloomberg to take you on the markets. We have got to talk for a minute about janus and pimco. Have a look at the price action. Janus capital hiring bill gross away from pimco. The stock trading up 33 . The expectation here, clearly, stephanie, that bill gross at janus will be able to attract so much more in the way of fixed income assets than janus has ever had. 177 billion in assets under management. Bill gross himself in the total return bond fund managed 220 billion. Janus has always been legit. When youre thinking about fixed income market, who are the real money players . Black rock, pimco. Fidelity. Those are the guys right now who could get hurt because they have the real money. Its henning funds that have been smoked in the last few months. In the next two days is when everyone will be in a complete panic because these guys have to mark their books. If you are on the market going this week and watching the credit markets widen out. Im hearing dealers, have more inventory today than they have had in over three years. The goldmans, Morgan Stanleys of the world were under pressure to sell in their positions. Tough at this day tough day to do this. Elian didnt talk about el owns pimco and they are pricing in exactly the same thing. Not just the possibility that Janus Capital will accumulate fixed income assets, but those stampede out of pimco where bill gross has played such an instrumental role. Bill gross is the face of the income markets. Whether you like his performance or not, Retail Investors connect fixed income markets to bill gross. On the move. Thats that on pimco and ilianz right now. Back in two minutes. Youre watching Market Makers on this busy friday morning. Im eric schatz kerr. Im stephanie ruhle. Get to the market. It appears to be rebounding after global anxiety broiled markets earlier this week. Yesterday was the worst day for u. S. Stocks in over two months. The question was this morning is the worst over . With us from boston, david kelly. Chief global strategist and head of the Global Market insight Strategy Team for j. P. Morgan funds. David, lets start with whats got you the most focused, most excited this morning . Theres so much news asecretarying the tshaffecting the markets . I think the u. S. Economic numbers are important. We saw an upward position to g. D. P. Growth. Everything we are looking at suggests we are going to have about 3 growth or more for the third quarter. Finally after years really disappointing economic recovery, there are signs that the u. S. Rehe covery is gathering