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00:00On the ECB how much is Mario Draghi actually distorting the market by buying corporate bonds. Usually he will end up owning on the current run rate twenty five percent of all corporate bonds an issue including euro denominated bonds issued by U.S. entities. Cheaper debt inevitably means that companies will continue to buy back shares they will change the structure and function the markets they will create a bubble. And today we find out a nice boom book scoop that he's also buying false Viking securities. Now Twitter has been alight with first of all. Folks that again still under investigation. It's a German company would he do the same with peripheral Europe. I think that he will buy a lot of everything simply because he has a huge task to undertake. And if you think about what is going on in Japan it is very clear that Japan's quantitative easing program is getting finished not because they wish it to happen but because they will run ise government bonds to buy James I'm going to ask a question that a responsible guy like you shouldn't answer in public. We do it over beverage of our choice here at the Dorchester. I'm sorry. There's a lot of distortions out there whether it's record low UK 10 year or the German yield point 0 4 5 percent after Bloomberg right now . When does this party end. When does the central bank's theory distorting these yield structures. When does it end. Well I think that what will happen is the macro change in terms of the structure and function of the north Asian economies. They either they will sort that out themselves or there will be protectionism and I think that we will see the first signs of that towards the end of this year. That will lead to a significant hike in domestic inflationary impetus and that I think it will be the major undoing of the bond market. Francine I know you're waiting around for your first gray hair. I will suggest the following in every path of history. This always ends with some form of banking adjustment whether it's Barings or Continental for the Chicago bank years ago. Continental it's always about some form of banking drama which is where the policymakers have to finally act. And I know this is something that you've been trying to explore. I mean it could be drama it could be there's some kind of consolidation but then you have Satya Nadella regulator and so it seems to me that it's going to be much much more difficult to have some kind of James Cross merger consolidation of big banks so some of them the smaller ones and we're not seeing any of the names that we talk about here but they may have to go under. Well you know I'm not sure about that because the central bank is prepared to underwrite the party the party will continue right until I disagree with tongue that actually is going to be the banks that caused the issue I think is going to be the politicians driven by the people. I think if Mr. Trump becomes president there's gonna be a big shift that the party has to end at some point. Oh yeah .

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Bevan: Draghi 'Hugely Distorting' Corporate Bond Market

James Bevan, chief investment officer at CCLA Investment Management, examines the negatives surrounding the European Central Bank's corporate bond buying program. He speaks on "Bloomberg Surveillance." (Source: Bloomberg)

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