The future of shopping. Apple has a new idea. Use social media to show off your outfits and get expert ideas on what to wear and buy. Look who is sitting and stephanies chair. My guest post is mark use go. Mark, it is terrific to have you here. The chair never fill of stephanie, but i am glad to be with you. Barra. Rst up, mary she is feeling the heat. She is back in washington, testifying for a second time about the faulty ignition switch that cost at least 13 lives over the course of a decade. Recalls,e been so many almost 20 in fact, more than 20 million cars. Congress wants to know how it happened and what gm is doing to ensure it never happens again. Matt miller is on capitol hill. The hearing is about to begin. We know a bit of what mary barra is going to say. Give us a sense of what we can expect from her and the lawmakers to whom she will be speaking. To saycan expect her pretty much what she has been saying the last four or five times we have interviewed her, but with a stronger and more confident voice. At the first congressional hearings. And seemed to be giving post answers. She now seems to have come into her own as ceo. She had just started when this whole fiasco started to unravel. She had just been put into her position as the first female ceo of any major car company. What you are not going to hear is a change in her answer to the question how could you not have known about this . That hasomething baffled everyone in congress. It is baffling everyone following the story. She has said she just did not know when she is not going to know any better why she didnt know this time than she did last time. She will say it was a cultural problem at gm and she is focused on change in that culture. It will be exciting to watch what anton the lucas has to say. Valukas has to say. More or be able to get at least new answers out of him. The answers coming out of mary barra will not be different than the ones she presented her when she had the Shareholders Meeting last week. Busy day on capitol hill. You are there the gm hearings. Mike mckee is down there for the fed decision. We will follow the hearing throughout the morning and you can watch it live, bloomberg. Com tv. Right now, the newsfeed. Policymakers of the bank of england and say investors are underestimating the chance Interest Rates will rise. That follows remarks by mark carney. Sooner rates may rise than expected. Investors are waiting to hear from the Federal Reserve today. Thet yellen will hold second News Conference as chair of the fed. First is unveiling its smart phone. It is said to have a 3d screen. At t will be the exclusive carrier in the united dates. That is the same role at t played when apples iphone was rolled out. A rare stamp sold for 9. 5 million at sothebys. The buyer, not disclosed. The seller was the estate of john dupont, who died in prison while serving time for murder. Let us go back to this question of investing at a time in changing Monetary Policy. You heard what mark carney and other governors of the bank of england have said about Interest Rates. We will get a sense of how the interestrate Setting Panel of said officials feels today at 2 00 p. M. Mark is the head investor of a Million Dollars in capital. It you invest with other managers and have to make decisions about how to allocate your investments, whether youre going to invest in funds and with managers that have a more macroeconomic focus, or whether you will be more Market Neutral and steer clear of any kind of disruption. How do you feel right now . That is a great question. We spent a great deal of time talking about it. With all of the noise around rates rising sooner than anticipated, the threat of the , we are hawkish shifting a little bit in our tactical fun. Tactical fund. Who play. Ople they are long and short. We do think the sentiment is for rising rates. We are on the other side of that. We think rates will be lower for longer. We think it is overblown. We can talk about that more later if you like. We can talk about it now. Structurally, we have an aging population in the u. S. And europe. Every day, 10,000 people in the u. S. And europe turn 65. 55yearolds have a preference for bonds overstocks. They do not love having debt. Decent ave a decreasing supply of bonds. Prices will go up and the yields will go down. You frame that in terms that are interesting to me. On one hand, it sounds like you are in the new neutral camp, looking at a future where there are structural economic challenges and Interest Rates will have to remain low to tackle that problem for years to come. On the other hand, you sound a bit like larry fink, who does not feel that way about the future of Interest Rates. He spends a lot of time talking about the challenges of retirement and the Way Investors will behave. We talk about the new abnormal instead of the new normal or the new neutral. I do not think this is normal at all. We have only seen one period like this, that was the great depression. Forget. Out what people s from zero Interest Rate 19 29 21944. There is this belief that growth is going to come back. The days of 3 gdp growth in the u. S. , they are probably gone for a wild. How challenging is it to be an investor now . Was be longed to do and strong. You more than made up your losses during the recession. Here we are, s p 500, up 30 last year. We are up in the Single Digits this year. It is very hard is it not hard to tell where things are going a lot harder . I hear that from a lot of people. The common refrain is that this is the toughest environment that we have seen for investing in our careers. If youre a Market Neutral guy, if you are a dollar long and a dollar short, five or six years ago, you made 5 or 6 . Today, you are long and short, you make a zip. Theres is a cost to borrow. Paid to borrow and now you have to pay to borrow. Part of what makes this challenging is not the uncertain policy direction of fed policy, but with the ecb is going to do. That is where jonathan ferro, here from london, comes in. You are talking to betty liu about the shift in tone from the boe and mark carney and how it has caught people by surprise. Were you caught by surprise . Thatwas surprised he took stance. It has been a rapid change of language. Are unpredictable. You should know that by now. It has been shocking. Is surprisedngland about the low probability of actual rate hikes. Why are they surprised . The guys behind the whole thinking in the market, that we were going to get no raise, they have added they have batted it away. Rush and eagerness to normalize policy . Curveball Financial Stability . The big fear is that in two years, when we get the next crisis, were still a zero, how do they react to that . You are right. They have been talking about this since 2009. The forward curve has been upward sloping since 2009. It has been wrong since 2009. It will be wrong for probably the next five years. What carney is doing, and i what janet is going to do today, i think she is going to go hawkish. Prick theying to bubble. Loans are flying off the shelf. There is a credit bubble spread and she has to prick it. If she does not, it could get away from her. Cannot take up rates if you do not have growth. If you do not have growth, you cannot slow down and economy with higher rates. It is already slow. They need the market to tighten. That is what is going on. Is increased transparency creating this ability for them to get more done in the marketplace just by words. K at what draghi did with do whatever it takes. Wheree bond, yet look spanish rates are, italian rates are. Incredible. All with words. An incredible start. Here for the whole hour. Tune in today at 2 00 for a special edition of bottom line. There has been a shakeup that harvard. Be covering that any couple of minutes. Pushing the boundaries with online consumers. Pos tries to figure out the future of shopping. You are watching Market Makers. m here with mark yusko we are talking about 32 point 7 billion. That is the size of the endowment at harvard university. It is far from being the most successful. After years of subpar results, harvard is lagging behind the rest of the ivy league. The university is looking for new leadership. Michael, what happened at harvard . How is it that the great harvard has been screwing it up for so long . How is it that they have managed to screw it up to the point that it is lagging so far behind the rest of the ivy league when it comes to endowment returns so critical for the Financial Health and prospect of a University Like harvard . That is too bad. We are having technical problems. We will try to bring him into the conversation. One thing you do not know about mark use go, he used to run the endowment at the university of north carolina. You are familiar with the problems and challenges that management faces. A University Endowment is not an easy task. It is not an easy task at harvard. Right now, jane mandell oh is still in charge. She was preceded by mohamed elerian. Ofthere are offer types endowments. There are the small ones run by Financial Advisors and then there are 50 million to 500 million. They do not have enough assets to hire their own team and they are usually hired usually run by a consultant. Tore is usually 500 million 10 or 15 billion. Once you get above 15 billion and start getting into 20 billion, now, you are too big to be outsourced in external management. Theythey did at harvard, started to create a internal management. Running internal management is different than picking external managers. Mcdonnell, how deep is the anxiety at harvard over the performance of the endowment . Over the past five years, it has posted average annual returns of 1. 7 . Anyone with two eyes knows how well the market has done it that time. I apologize for the technical difficulties. The cable must go through the box. The anxiety over there, it is difficult to tell. Clearly they are operating at a much higher level. Hand,performance, on one they are defensive about it and say they are beating their own internal policy portfolio, on they compared, themselves against their peers. Last five years, they have been trailing the ivy league. It has been a difficult time for them. On one hand, they are trying to reposition the portfolio after difficult after a difficult 2009. Find newtrying to opportunities, to try to find this elusive alpha. Six years into her tenure, she is leaving. To stay for at least 10. She said she needed five to turn the portfolio around. Ofare yet to see the results that. At least the kind of results we ame to expect to come from place like harvard where it is the biggest in the world. It is supposed to be the best when it comes to producing top results. I am going to go the other way. You justke the graphic showed of first to worst and we took it 10 years, 15 years, and 20 years, it will invert. The schools on the left have a less private equity, less nontraditional investment, much more traditional stocks and bonds. Is that looking backwards or forwards . Over the last five years, you have one of the best fiveyear period for public equities in the u. S. In the history of the stock market. If you add the five years before that, when it was not such a good period for stocks, suddenly, things are a little heavy. Things that harvard does spectacularly well and has done well for years. Those results turn the other way. The problem is, that is not what people see or focus on. Are you getting the feeling that whether it was harvard hospices Harvard Posco decision harvards decision or. s decision everybody has nothing but great things to say about the work that she has done. What is fascinating is trying to lift the lid. Everyone knows it is a black box when it comes to endowment money management. Are somew that there issues with the private equity portfolio and emerging markets. Will tell to see if she can turn it around. We have to leave it there. Michael mcdonnell is in boston. Sticking with us for the hour. Coming up, mary barra is on capitol hill. Lawmakers are asking why it took gm so long to do anything about the faulty ignition switch that ultimately resulted in the death of at least 13 people. Kwik breaking news out of the nfl. It is out of the patent office. They have canceled a trademark of the Washington Redskins name. They say it is disparaging of native americans. It does not mean they have to change their name, but it may raise the pressure on dan snyder. We are back in two. Live from bloomberg headquarters in new york, this is Market Makers, with Erik Schatzker and stephanie ruhle. You are watching Market Makers. I am Erik Schatzker. Who is this guy . He is not stephanie ruhle. He is mark yusko. Stephanie is on assignment. It is great to have you here. He is my guest host for the hour. We are going back to washington. Opening statements are underway for general panel motors. They are asking about the failure to recall cars with faulty ignition switches. Matt miller is there. Ofy barra is in the midst her opening statement. The lawmakers have had an opportunity to make their statements. What did they tell you about the mood inside this room . They do not seem to be as angry as they were last time. They are interested in political showmanship. If you came to this hearing hoping it was just an inquiry, focused on getting answers, then you would be mistaken. It is definitely about the pr that the congress can get themselves. Diana brought back her prop of the ignition switch and held it up to the cameras. It does not add anything or help us learn anything more. It is just about her making a pressent, maybe making a appearance for her reelection next time, i guess area on the other hand, there are some very serious questions here. One of them is the same we have outd from the time we found about this. How can Something Like this happen and what is wrong with the culture at General Motors that would allow Something Like this to happen. A lot of people were asking mary barra to give them specific examples of how she is going to change gms culture beyond the installation of a Senior Executive in charge of safety. Fore were a lot of calls legislative changes, to give more power to knit some to nhtsa. About someng to hear kind of restitution. Ken feinberg was supposed to be into action 30 to 60 days after the last hearing. It has been almost 80 days and that is a concern for the congresspeople here. One comment earlier was that she looked more confident this her in her speeches or in commentary, that she was taking a more bold response. Do you see that . Absolutely. It you see that from her. If you came here to the first set of hearings and if you listened to her give her first public appearance speeches about this issue, you can tell she had a lot. Her lawyers warn her not to divulge too much information. It is difficult to answer if you areout not used to. She has gained selfconfidence and is putting more i am not saying she was lying to begin with, but she is giving more honesty. She is not giving the answers you want, because she claims she positively did not know about this and neither did any Senior Executive. The report seems to support that. Bergerresentative from posed the question who is working for . He is getting paid by General Motors. These congresspeople may ask more interesting questions of anton then they can of mary barra. Movement ofseen any talking about the future as opposed to the past . I am not sure eating the dead horse over and over is giving us new information. Are they giving her some opportunity to respond to how theyre going to move forward as opposed to beating up on what is going on . You hope to hear Something Like that. It would be nice if the political showmanship was dialed back a little bit and we got something useful out of these hearings. That hereen saying focus is squarely on making sure Something Like this does not happen again. She repeated that again at the Shareholders Meeting and again in her opening statements. We have not gone to a more lax a more relaxed q a session. We are going through the incredible amount of opening statements. Is justton valukas finishing up now. I am going to go back in there. I want to ask mark a question about General Motors. You invest with managers. Many are in equities. You do some of your own investing in equities. What purpose is this hearing serving, not to americans in general, because this is supposed to be a nexus size an exercise in democracy, challenging major actors in the economy and society. From a shareholders point of view, is it helping . I do not think it is helping at all. You think the gm may be able to skirt some of the scrutiny and controversy . I think we are seeing so much of this because the role of the government in the bailout. I do not think there would be so much grandstanding without that. The reality is, it is a big company. It impacts a lot of peoples lives. There should be good scrutiny on it. This was many years ago. Lets focus on today and things going on. Lets talk about the Safety Record of current vehicles and the things they are doing to make sure they deliver good products. That 13 people died is a fact that congress and the rest of us cannot escape. Than 20 million cars have been recalled. Wish congress were still asking mary barra more about why gm cannot seem to get control of its recall problem, as opposed to focusing on the one issue around which Anton Valukas prepared his report. That is my question to you. They will ask her that question. I cannot saying believe you are recalling cars as late as monday