Finding Steady Income in Unsteady Markets

Your next video will start in

Recommended Videos

  • Info

  • Comments


Aug. 29 (Bloomberg) -- Michael Fredericks, managing director at BlackRock, discusses investing in the changing market landscape. He speaks on Bloomberg Television's "Market Makers."

Live from bloomberg world headquarters in new york, this is "market makers" with erik schatzker and stephanie ruhle.

Geopolitics and the markets -- what impact will a u.s. attack on syria have on stocks question mark will ask a blackrock money manager.

Red flags in a jp morgan bribery firm -- did they trade jobs for a deal in asia?

A spreadsheet may hold the answer.

He sounds like the guy in the beer commercial -- he surfs that has beers with warren buffett.

Meet the most interesting brazilian billionaire in the world.

You are watching "market makers." spearfishing and surfing -- we have a lot to cover in the next hour, including the brazilian legionnaire and jpmorgan.

Right now, we're going to start with the newsfeed with the top stories around the world.

It would be the biggest deals deals in more than a decade -- verizon is in talks with vodafone about their joint venture.

The price under discussion according to people with knowledge with the matter is about $130 billion area that would give verizon the full ownership of the most wireless company in america.

Mortgage rates have dropped after hitting a two-year high.

Freddie mac says its average for a 30 year mortgage fell from a two-year high.

And the chairman of zurich insurance group has resigned following the death of the company's ceo.

Police say it may be a suicide.

The man's family believes he should have kept his share of the responsibility and ackerman says any allegations are unfounded.

He ran deutsche bank for 10 years before coming chairman of zurich insurance.

My alma mater.

Talking about other bank -- jpmorgan cannot catch a break.

A probe into their hiring practices in china has uncovered red flags all across asia.

Paul miller is a leading back -- leading bank analyst and rates mark -- rate jpmorgan at market perform with a $65 price target.

Also with us is dawn kopecki you broke the story.

Lay out this drama for us.

You know it front and center.

There is a spreadsheet -- the fcc started looking into this inmate -- the sec started looking into this inmate.

The company has undertaken their own internal investigation and they have found more than 200 hires they are looking at all across asia.

They're looking in other continents as well area they found a spreadsheet and other lists as well that detail specific interns with specific deals they were pursuing at the time.

People who were related, either their uncle, aunt, father or mother were related to people doing deals with jpmorgan at the time or who jpmorgan wanted to do deals with.

They found this spreadsheet that lays it out.

Attorneys say that prove some sort of intent, a quid pro quo type of thing.

That is why it could potentially get ugly for jpmorgan.

What do you think about a story like this?

Lots of banks and lots of companies hire interns because it helps somebody out but are they get -- are they getting caught red-handed here?

I think there is a lot to go with this investigation.

But the bottom line is it's not going to mean that much to jpmorgan in the long-term.

It's not going to find its way up to the executive suites.

They will pay a fine and move on.

What's more important is how many of these issues are coming up, it's not just this spreadsheet in asia, the energy department, the department of justice and the mortgage backed securities in the past that are starting to weigh down the stock valuation and you are starting to see the stock underperform the group.

It's almost a death by a thousand cuts.

It's another deal coming out of the woodwork they have to deal with great a thousand cuts for sure, but not quite dead yet.

What does it add up to when you investigate yourself and analyze all the different regulatory analyst -- allegations facing this bank right now?

It's not just jpmorgan.

It's all the big guys.

We have always said these companies are too big to run bio -- to be run by one group of people.

Bank of america is starting to break up slowly, but it should be accelerated.

At some point, jpmorgan will be looking down that path.

Jamie dimon is a great manager, but can someone else run it or does it have to be broken up down the road?

We think all these institutions are too big and that's what causes this type of thing going on in asia across the board.

If that's the case and you are not the only person who has been saying that thomas why is there not more shareholder pressure to that end?

Why aren't more people saying let's unlock the value because the idea is there would be more value to these companies if they were less complicated and they were run on an individual basis?

I think there is more pressure on citibank and bfa varied but when you have jpmorgan that has performed well, portfolio managers want the status quo and don't think he needs to be broken up at this point.

But as you get these other types of problems, maybe that discussion enters the fray.

Right now, jamie dimon is being hero or shipped out there and everyone wants keep the status quo.

It seems like regulators might even have it out for him.

It seems like they really want to go out for him.

The london whale investigation, the one thing that did do is shine a very bright spotlight.

Everyone thought jpmorgan and jb dimon walked on water.

That shined a spotlight said maybe the company doesn't have the total control.

Right now, you're seeing regulators spent more time looking at this company, but what they are finding is they are not making this stuff up rate jpmorgan actually did these things.

Also , other banks, jpmorgan is not the only bank that hired well-connected interns.

You may see other banks taking a look at their internal control as well, all the other banks and if they had any spreadsheets.

Paul, you said you doubt this would go all the way to the top, which is to say all the way to jamie dimon.

But what if it were policy in the bank?

What if it were some of his top lieutenants aware of these type of practices, and only if these practices are proved to have broken any laws.

He's gotten rid of so many executives already, the bench has to be thin.

He can't afford to lose any more top people, can he question mark i agree.

And if it does go to the executive suite, they have some real issues because the fines become much more material and he does lose much more talent.

The people who have left have gotten much better jobs.

It's not that he's getting people, the talent pool is getting weak in the executive suite.

If it does end up there, it's a real issue but that's a long way to go at this point.

Is all of this saying we should be underweight financials in general?

Even the big run-up in stocks we have seen, financial stocks, we believe there should be some profit taking.

You need economic growth to justify these higher rates and if you don't get the growth, we think rates are going to come down and seize valuation will head south.

Thank you for joining us this morning.

That is paul miller and our own bloomberg news reporter, dawn kopecki, who broke the story last night rick when we come back, he's the brazilian billionaire with the all- american for polio.

We will look at the man behind three g capital.

Investors waiting to see what america will do about syria.

How will they respond president obama launches an attack is to will speak to michael frederick blackrock in just a few minutes.

? how do investors stay steady when markets are rattled?

There's a lot of uncertainty right now.

We don't know what the fed is going to about the bond buying program.

We don't even know who will end up running the federal reserve, and we don't know what will happen if the u.s. attacks syria.

The goal frederick from blackrock overseas $15 billion.

What are you seeing right now?

Your your focuses on retail investors more than institutions.

Maybe we will get into the difference between managing money for the two groups in a moment.

But what do you think about those things and what is your posture as you look into the future?

We have all of these things to worry about -- there's the next fed chairman, there is tapering or taper light.

And there is syria.

Serious is the buzzword of the moment.

It certainly is.

These are all short-term factors.

Rates are moving higher and we are in a process of this paradigm shift and we will see where rates level out at.

We are in the process of of a rising rate environment.

Are people not paying attention to those things?

@six months for now, we will have priced in a new level of interest rates.

We will get there, and if you haven't taken steps to hedge your exposure to duration and things like that, it's going to be a painful process.

We have been prepared for this for a long time, so i don't think the pace of tightening or the fed chairman -- will it create short-term problems question mark we don't look at that.

That if people look at their portfolio say things are going well for me -- if they say summers versus yelena -- versusyellin, what do we do?

If you go back to may, they were telling advisers i'm only up x percent and it's been a great year for the equity market.

It's kind of a sign of greed coming back in.

But a lot of that sentiment has been flushed out.

Investors are primarily focused on let's manage volatility.

They don't want to take a lot of risk.

And although the equity markets have done well, i don't think there's a lot of participation in this rally.

You look at these markets and there's clearly a geopolitical risk between these markets and emerging markets.

It happens at a worse case scenario develops and serious?

-- philips in syria?

What if syria and iran all is through on its intent to attack israel.

Or what if the roles take control and there is a flood of chemical weapons going into lebanon?

All of these peripheral effects are difficult to forecast.

I don't think wall street is good at forecasting.

I think you do prepare for these things ahead of time.

We had exposure earlier in the year two emerging markets and it's almost like watching a stock run in rally.

You saw a lot of these interest rate sensitive asset like treasuries have high yields, a lot of these things did really well and they have been struggling with this rising rate environment.

You have to tremble -- you have to channel your inner clint eastwood and pull the trigger quickly when these things start to roll over.

This text has been automatically generated. It may not be 100% accurate.


BTV Channel Finder


ZIP is required for U.S. locations

Bloomberg Television in   change