>> live from bloomberg headquarters in new york, this is "market makers." >> the carnage resumes on wall street. and so areplunging treasury yields. >> a second health care worker is diagnosed with ebola. our american hospitals ready for the disease? and what about the impact on other industries like airlines. >> good morning. it is not a good morning for some of you. you are watching "market makers." atwe have got to take a look

u.s. stocks, european stocks, and treasuries. if i were tom keene, i would say it is stunning. so i will say it is devastating. >> there is velocity. there have been some breathtaking moves in financial markets early this morning. on the dow.v the 10 year treasury yields dropped as low as 186. we have not seen levels that low since the taper tantrum. it bounced back to 198. now we are trading at a to handle. -- two handle. >> the overhang in europe is about policymaking. question is what are investors responding to?

is this is this phase out of the strength or weakness of fundamentals? -- broad-based? fundsa hunch of hedge pointing straight positions? it is panic people are feeling. it is across the board. we are talking insurance companies, pension funds, not feeling it today. i feel it we should be paging gary shilling. no one listens because we have momentum on our side and you have got to be long because you have to match with the s&p is doing. now people are finally waking up to these nasty fundamentals. what they have decide is is that there are some by opportunities. the dow was down as much as 360 points. it has continued.

it is just down 115 points. if you added up, it is a lot, but this may say something. in reggie brown. he is the head of etf trading at cameron fitzgerald. i also want to bring in the chief market correspondent scarlet fu. and the man who brings velocity to the conversation, the one and only tom keene. >> it is never a door moment. -- dull moment. though the dow has come back from its steep losses, it is still off by more than 100 points. yesterday was a quiet day. >> reggie eerie at >> stephanie. overreaction,e you saw the 10 year spike, you

see the dow down. it is overreaction to a move, a reset that was long do. no jacket you, erik, today. he is almost rolling his sleeves up. he means business. >> almost. how much of this is overreaction? are people following the momentum in the markets as opposed to those who are creating the momentum because of what we were speculating before? you have some people who have positions who can no longer afford to keep. seeing sinceen labor day risk off. those are the themes driving the marketplace.

the exit on the high is amazing what is happening. they are starting to shift out of it. how big is the door to exit? etf's are the tool. can the marketplace absorb all the liquidity all at once? liquidity dueof etf's have to provide investors? as good as online markets. if the structure is flawed or not working well, etf's will not function well. etf's are fine. but if you can't sell a stock, they will not be. >> that has never been a liquid market. while etf's have grown exponentially, the market has been chugging along. you saw high-yield yielding 4% at one point. i am a traitor.

nothing but buyers, nothing but sellers. can the market absorb all the demand to sell into the high-yield market? i'm not sure. people pointed out treasuries as where you saw the first reaction to the fed minutes, indicating europe was a concern, and the stock market catching up at the end of the week. our treasuries leading the way and stocks are along for the ride reacting after the fact? i don't know the answer. oil prices had tanked leading up to today's trading. but they have rebounded and are positive. selling began in europe and emerging markets and that is creeping into u.s. markets. you are seeing a domino effect. sellers in europe, emerging markets, energy stocks, then high-yield. as though the

violent move early, the one that happened at around 9:35 was in treasuries first, followed very soon after by equities. >> i'm talking to guys in the credit markets and they said the panic they feel on the markets feels like someone is liquidating. when everyone is trying to push through the door in high yields, there is not capacity for it. this is not pre-dodd-frank era. was exchanging e-mails with somebody who we know quite well who manages hundreds of billions of dollars. he described it as a hurricane. >> i think it is a fascinating time. i look at the character that institutions are doing right now. i don't see the sweat that you

would normally see because everybody is waiting for everyone to come to the rescue, the fed to come to the rescue. >> how is that going to happen? >> it happens in europe with the markets over there. is that where there is a relative institutional column? >> i would not necessarily say calm. i would say risk off. volatile time in the market period. i'mink folks are saying, out of here, flings the marketplace, going to cash, looking to reset in december. >> how do you know when to reset? >> when the markets tell us. >> did the market tell us anything when yields tumbled and fell as much as it did in march of 2009?

the movement is now only as big as october 2011. >> i think what you are seeing in the treasury move was nothing but fear and people fleeing. as you see the fear build up, pressure builds inequities and you see all client categories getting out of the marketplace. >> let's turn the clock back five years. would you have been taking more risk, absorbing more of the risk today in a pre-dodd-frank era? >> we do really have the structures around dodd-frank. being in mid tier investment bank, we have more capacity to absorb some of the liquidity inventory necessary to help our clients. you are building up inventory. >> we have inventory.

as the market dictates, we build up inventory to allow her clients to be more efficient in the marketplace. we are unique in the middle tier. without the ability to buffer demand's for liquidity, you see these price gaps. pre-dodd-frank, we would not see moves this file it in the market. is that what you are saying? goldman and jpmorgan and the of would be stepping in. >> that is correct. players, but the inventory is down to asset managers. if they have the inventory were liquidity suppliers do not have it. as there is demand for liquidity in the marketplace, you have to go to the asset owners who have all the liquidity and inventory.

>> they don't use balance sheets. >> they don't. to deploy their capital, it costs more to be more efficient and now you are seeing that there is less demand on the supply side because of that. is that confusion or panic right now? >> i think they are realizing they were right in thinking that the markets were too high, they were frothy. >> everyone thought that, they were too afraid to act on it. >> no one wants to be the first guy, so now you are seeing it. >> you don't want to be the first guy or the last guy. >> true. we were looking a lot at the etf's that were active including leveraged etf's. is there a danger that those kinds of leverage etf's exacerbate the selling we see today? >> first, they are etp's, not

etf's. there a swap-based instrument. it is not a long-term instrument. it is used for a one-day, get in, get out. you are seeing some of those moves in those categories where they represent. let's talk about regular etf's. yesterday in the last couple trading days. we are selling, to the marketplace, driving it to where there is a equilibrium, and then resetting the prices on and add basis. etf sorry forecast tool about where the market is banking and where it is going to market tomorrow. >> welcome back to 2008. if it is margin calls making people say, i've got to sell, it doesn't make you feel good. >> i'm fine with it.

i'm a market maker. i provide liquidity. we step in and provide liquidity. , letients are over levered them suffer the consequences, reset, get back into the marketplace, and have some fundamental opera -- understanding of how to play the game. >> spoken like a grown-up. thisve the ceos addressed recovery in volatilities? said, september was quite nice thank you very much relative to august and july. >> markets are choppy. is there any positive news? reggie was with us today. that is positive. thank you so much. reggie brown. bloomberg zone scarlet fu. and the always enthusiastic tom keene.

>> are american hospitals really ready for ebola? top researcher asking some questions. >> what about the airlines? are ebola fears being overhyped for that business? stay here. ♪

>> the second u.s. health care worker has tested positive for evil a -- ebola. the health care worker was immediately isolated after recording a fever. of theest victim was one work is treating you like a last week -- ebola. of david evans has 30 years experience. he is with us now davone.

.- via phone based on what you have heard and read and learned about the procedures that were taken in dallas, were they insufficient? or is there something about the disease we don't yet understand? think therely don't is something we don't understand. the types of protective gear, the types of protocols are really well-established and have been for years. this raises fundamental questions about personal protection equipment that the health care workers were issued with, the training they received or the specific protocols they followed using that equipment, which is part of the training. those questions are being raised and will need to be answered. >> how difficult are those protocols to follow?

the protocols are well-established and they are being used in west africa at the moment. to use the personal protection equipment, you are in a plastic suit, effectively. the outside of which is potentially contaminated. to exit that suit requires the equipment to be taken off in a particular order following strict guidelines. usually there is a buddy process , somebody watches you and tells you which items to take off next. sometimes they also decontaminate the health care worker. if those guidelines are not followed and that looks like what might have happened in the spanish health care worker that had become infected, then that person may become infected. >> people are pointing fingers at the centers for disease for all ofying that the talk and all of the observation that was made at the

outbreak in west africa and the way that it was being dealt with their, we in america should have been able to deal with this more effectively than having two after infected with ebola that patient was admitted to the dallas hospital. >> there may be some truth in that. ebola orr of cases of other highly infectious diseases that you get in the united states is really very small. the amount of experience that people have working with it and using those protocols is very limited. the u.k. has just been through training program, a kind of readiness program this weekend to test how prepared we are and it appears that it is quite satisfactory. think there some crumbs of comfort we can take from this. it is extremely distressing for the individual health care worker.

the individual duncan who brought the infection to america was in the community for four or five days before admission to the hospital. during that period, there have not been any cases in the community or amongst his friends and family. are at the workers forefront of tackling the infections and they are exposed to a highly symptomatic, , invasivediarrhea processes like dialysis and things like intubation, these people are exposed to large amounts of highly infectious material. although it is distressing and worrying about the protocol that is in place in the texas hospital, i think there is perhaps some crumbs of comfort in terms of exposure of the general population. >> to those people who think or believe or expect zero incidents , you say that is unrealistic. >> yes, it is unrealistic. in fairness to the cdc, that is

exactly the message they have had as well. countries to which ebola will undoubtedly become exported are likely to have secondary cases. , thehe context tracing good personal protection, the good protocols should limit those to a very small number. it is extremely worrying that we in such a short place of time in the united states and i suspect there is now a very thorough review of what has been done and it is clear that the cdc are going to have a sort of crash team from emory who are going to be parachuted into the area should there be another outbreak. >> thank you very much for your perspective. dr. david evans is an expert in urology. market makers will return in just three short minutes. we are talking about a renewed market selloff. extraordinary.

have not seen this since the middle of 2013 and the taper tantrum. we will be back. ♪

>> we are trying to catch our breath. it is time to take you on the markets. there is most often action. it has been all over the map. >> we think talking about credit markets. we have not even seen redemption or outflows. look out world. big hedge funds have seen a big drop in the last 2-3 days. look at how the market is responding. s&p and nasdaq down across the board. the dow is down.

companiesevelopment come everyone is searching for yields and stocks. it is an unusually great downside and they are feeling it now. >> it was much worse with the dow down 369. you have to wonder whether that was the bottom. ♪

live from bloomberg headquarters in new york city, this is "market makers," with erik schatzker and stephanie ruhle. "marketre watching makers" on this wednesday. >> i am a very scared stephanie ruhle. >> there is good reason to be scared. .he dow is down 171 points things seem to move at a high rate. >> a high rate indeed. the s&p 500 is back in positive territory for the year. if you take a look at how the index has fared over the last hours, we did fall quite a bit. we have come back, we have

bounced back. we are still down more than 19 points. industry groups are lower for the day. the movement really has been in treasuries. the 10 year yield briefly fell below 2% for the first time since 2013. not so much the concern as the speed of the drop. it is the rate of change that has everyone alarmed. the flight to safety is a stampede into safety. oil prices have been falling steadily over the last couple weeks. we know they have entered a bear market. they have held up fairly well this morning. oil prices bottomed to around $80, but have turned around and are trading just below $82. up 0.2%. when you look at the catalysts, blame it on disappointing retail

sales out of the u.s., an unexpected decline, the producer price index was not showing enough inflation. has contracted ebola in the united states. i know there is not a direct link, but it is playing a psychological role. the macro backdrop of europe potentially heading for a recession is also there. >> scarlet fu, think you very much. >> airline stocks have been getting crushed over the last few weeks. ebola seems to have investors spooked. is the selloff overblown? bob maca do think so. from los angeles. is this spook warranted? >> i don't think so. obviously, the market is getting whacked. we are in a situation where this industry is in better shape than

it has been in years. oil is going down, which makes things better. i don't know where the bottom is, but people who are patient and can wait for this whole episode of ebola to clean itself up, i think the real opportunities, some real upside. >> along to the take for these airlines to benefit from lower oil prices? >> about 48 hours. the hedges that they have are typically call options. it is not like they have already bought fuel at a higher price. within 24-48 hours, when the price goes down, they are paying a markup of the spot. it goes right to the bottom line. prices were see oil dropping well before this latest bout the volatility. that should play through into the third-quarter earnings is what i take it we are going to see. >> we are going to see third-quarter down some. fuel, weree dollar jet

are now at $2.50. it has come down a lot. mostly this month. a are probably going to see better quarter in the third quarter than we have seen in a long time when you look at the investor updates. it is clear that we are going to have a record quarter for the third quarter in terms of the investment court or that people have seen. the real issue comes in the fourth quarter. fuel has been dropping. if you extrapolate this out, you hear all kinds of things. we are looking at quite a situation that we have not seen in a long time. >> what airline do you believe has the strongest fundamental? >> it is hard to say that there is one that has the strong fundamental business because we have had so many mergers of the big airlines. we are in a situation where virtually all of them are hitting records in terms of margins.

i was just looking at american airlines for example, with the margin they are going to have this quarter, the last time we saw this was something that was in 1997. at that point, we had $.50 per gallon for jet fuel. kind ofnever seen this number. all of them were in great shape at this point. >> where have they been able to make up all of that profitability outside of fuel cost? >> i think what you see is that -- and this kind of started back in 2005, 2006 -- people realized that this is not a game that gets one with market share situation. people started to reduce capacity. as you reduce capacity, you have revenue management systems that squeeze off the $89 people off the plane. you look at your weakest markets and you pull a little capacity out. you fly 30 flights a week in a , you go backa day to 29 a week, something like

that. pulling the little bit of capacity out will squeeze off some of those people and you will get a fare increase without having to raise the $300 fares to something north of $300. of peopleocess finally deciding that they are going to find to the network. basically, it says most of the big airlines have moved that way. >> fuel prices are going down. could we expect airline prices to follow? >> i don't think so. >> why? >> [laughter] there was a time when that was the case. that was a time when we had surplus seats and people trying to do what they could to attract new customers. with the mergers we've got now, capacities 85 percent full, there are not a lot of empty seats. there is not a lot of incentive

to reduce fares because we have lower fuel prices. >> if the airlines keep ticket and these margins remain so fat, is there an opportunity for new low-cost carriers to come in? going to bet is very difficult. the big guys are so big. they really blanket the united states in a way that we did not see 10 years ago, 15-20 years ago, shortly after deregulation. the country is pretty well blanketed. southwest is continuing to grow and fill in the few places that do have a place for somebody. it is not a matter of the big guys making too much money. it is a matter that there is not a place that does not have good service anymore. >> i don't know. i can never get that in-flight internet to work for me. but that is not the airline. [laughter] thank you so much for joining us. >> when we come back, the

congressman who started a food fight. it all has to do with government policy and the way americans eat. ♪

wants tossman tim ryan do more than represent his constituents in ohio. he wants to start a food revolution. he has even written a book. congressman ryan says government is pushing a dangerous diet on americans. he is here with us to explain why this time for a change. why did you write the book? >> we have some serious health issues in the country. we have a generation of who are not going to live as long as their parents. we have hundreds of thousands of people who are dying each year as theyof diabetes

beating factor to their death. costingth issues are not us government programs, but private businesses tons of money. to free up a lot of money for businesses to reinvest back into companies, we have got to get the food thing right. >> what is the first thing you would do? >> i would change the subsidies. we are making highly processed food very cheap and accessible. this is what the taxpayers subsidize. subsidies shift the to fruits and vegetables, whole foods. we need to reinvest back into our urban areas, where we have food deserts. >> what does that mean? >> a food desert is where you can live in an inner-city where you are outside of a mile or two. with only a corner store, doritos, pop, soda. we say pop in ohio.

a fruit roll up and doritos and that is your lunch. then you ask these kids to sit down and learn about algebra or learn science and we are not competitive in the world. in large part, it is because of our diet, i think. >> how are you going to persuade the agricultural committees in the house and the senate, the representatives from corn belt states, that this is what they need to do? the farmers i have talked to in ohio will grow whatever they can make a profit on. right now, they are growing soy, are,, where the profits where the subsidies are. i think we need to put a program together where we can reduce the risk for the farmers and create markets for them. they need a place to sell. these are business people. they have mortgages, a lot of land, investments in capital. university,state 650 thousand students there. if ohio state said, we are going to buy 2% of our food budget

locally, next year it is going to be 4%, next year it is going to be 8%, you are creating a market. canfarmers in central ohio say, this is a 3-iron from my farm and it is not going to go anywhere and it is going to be the market. >> it is just the subsidies? >> those kids want to order a pizza from popeye's they don't want to order kale. with my fetishf for chicken wings and ice cream. >> that is a weird fetish. [laughter] >> i don't think it is. i'm an american man from ohio. [laughter] it is very mainstream. everyonef we say, not has to go vegan, not everyone has to be vegetarian. we better move the needle on this thing or we are going to have half the country with diabetes or prediabetes. how are we going to sustain our current health care system is

half our country has diabetes or prediabetes? should monsanto and procter & gamble and general mills be worried about diabetes or what their shareholders demand, which is great returns? corporationss and in the united states, you should care about the health of your society, plus they have workers that they higher that are probably not benefiting from the current situation. >> you hit the nail on the head. the incentive needs to change for the farmers before anything can happen. but there are many villains in the story. we have a few more that we can share with our viewers. moving toward industrial agriculture. those gigantic pot farms. genetically engineered seeds. chemical fertilizers. the corn-based diet. how do we fix all of this? changing the incentives does not do away with all of those? >> you need to do a couple of things. the real food revolution is about mobilizing moms and dads, parents around the country.

a lot of people are concerned about health and wellness, you need to mobilize them as a political bloc to hold legislators accountable. we had a huge discussion about the farm bill and act politics and there is very little talk about nutrition. >> one quick thing before you go. you do realize that people are going to have to probably be prepared to spend more on food? >> there is a reason why the current foods that are bad for us why they are cheap. >> they seem cheap anyway. >> they cost in the long run, but they are cheap to purchase. if we move the subsidies and we increase the amount of consumers who are going to buy these products, it will drop the cost. i think we will save in public medicare, in in medicaid. 25% of people over 65 have diabetes. there is your medicare. 25 percent. not to mention childhood obesity and diabetes and all of these things. which is why we have got to get into the schools.

there should be a garden in every schoolyard. there should be a kitchen in every schoolhouse. inre should be a salad bar every school cafeteria. let's begin to grow a new generation of young people who know how to plant, grow, cook, and eat real food. and that the tomato doesn't come from giant eagles, which is the supermarket back in ohio. it comes from the ground >>. thank you so much. >> i'm taking a side with you in this fight. >> thank you so much. congressman tim ryan. making a difference. mostg up, it may be the watched network in the u.s. that you have never actually seen. we will be speaking to the head of -- ivision deportes. >> stocks are taking another leg down. >> the s&p 500 is down 27 points. relief had a bit of a

rally. i'm not sure i would call it that much. saying, i'm suddenly going short, i want to be bearish. they are just saying, i want out. that is making everyone feel pure panic. stay with us. ♪

deportes is winning big. it is beating up major competitors like espn and fox. it had record coverage of the world cup. the president is here with us. this is where we are going to begin. if you were cup ring a football match, i want to hear what you would say. >> i have a lot of people that would do it way better. goalllll! [laughter] the sport,s clearly

the most important sport. what is the number two? >> i would say boxing. we have a lot of viewers that go to nfl and nba. we are a broadband channel that covers most of the sports. >> hispanic viewers are your audience. they gravitate toward soccer, football. how do you get them to watch other sports? or is it how much soccer you can pack into your networks? >> it is both ways. we have been able to cater the best talent on air and off air with soccer. we have invested a lot into technology. we kid or both spanish-speaking and non-spanish-speaking. we love it. we are super passionate about it. >> about what? >> about making soccer a super entertaining time. >> soccer is so big around the world.

it has not really caught hold here. we have said it is going to happen for the last 10-15 years. what is the hold up? >> it is going to happen. we presume that fee for is going to award the u.s. with the next 2026 world cup. we did an eight-year deal with the mls. with fox and espn, as well. we are super happy to join mls forces. we believe it is the sport of the future in america. what's your coverage of the world cup was fantastic. everyone in this office who was watching the world cup had it even if your channel they did not speak spanish. 9.2 million viewers, a record for spanish-language broadcast of the men's world cup final. we are not going to see that happen again, are we? >> you are going to see a lot of good things in the next four years. we have been securing new

rights. sure if you are aware that mexican league soccer is higher rated than the english u.s.,r league in the regardless of language. we have secure those rights for the long-term. >> why did you allow yourself to be outbid for the world cup rights? we are making money, not just to put your properties on air. >> that might have been tough. >> but it was a smart decision. at the end, we away to our owners and stakeholders to provide value for the company. for thehe bar very high next broadcaster to do this stuff. >> what do you want to air that you are not currently airing? what is the product or event that you need next? the spanishse, league is very appealing and we don't have it. regardless of that, i think we do a good partnership with the nfl, nba and mlb.

>> tell us about your demographics. >> are demographics are very unique. we have 57 million hispanics that watch univision somehow. our hispanic viewers are unduplicated. 80% of our viewership does not watch any other channel. it is a growing demographic. we are very enthusiastic about the future. is such a cash cow for disney. --generates five dollars where could you guys be in two years? >> we are going to keep growing on that scenario. our ability to renegotiate distribution, we look forward -- >> when is the next contract negotiation?

>> it is going to start very soon. we are now part of a 13 network group instead of only a two network group like it was two years ago. the growth is getting bigger and bigger. >> thank you very much. >> thank you. >> nice to have you here. deproteortes. how about that? >> very good. >> it is time for on the markets. days,e seen some rocky but not one this rocky in some time. the dow jones industrials are down 224 points. we are a must at 225. it is good for a drop of almost one point 5%. >> investors can't take these extraordinary swings. if they feel insane. you are seeing more and more investors pull out of the market because they cannot withstand this. these dramatic swings, you have got to have an ironclad gut.

>> we will be back in two minutes on "market makers." it is a wild day on the streets. ♪

♪ from bloomberg headquarters in new york, this is "arquette makers." >> breathtaking moves in the market, investors are fleeing stocks after new reports added to fears of a slowdown worldwide, the tenure treasury yield falls below two percent for the first time in more than 15 months. >> hospitals are under the gun after a second ebola case asks questions about whether america is really prepared to treat this deadly disease. >> an american company is reconsidering one of those inversion deals that would lower its tax bill and the reason

hedge funds are getting hurt. welcome to "market makers." >> we will take you to the markets in just a moment that right now, we have breaking news out of washington -- the white house has released the final deficit numbers for fiscal year 2014 which ended two weeks ago. here is peter cook with the headlines. >> the deficit is shrinking once again. the end of the last fiscal year, it fell to $483 billion which is a drop from last year's 600 $80 billion and as a percentage of gdp, fall two 2.8% which is the lowest level since 2007. in dollar terms, it's at the lowest level since 2008 and less than the administration forecast for the entire fiscal year but roughly in line with the cbo last projection. the improvement has been substantial. was an 2009, the deficit whopping $1.4 trillion.

the improvement comes from the better economy, the expiration of some of those tax provisions in crude -- including the payroll tax and the budget deals which restrain spending here in washington. the administration causes the fastest deficit reduction since world war ii and as a percentage of gdp, it is been cut by roughly 2/3 but the medium to longer term, not quite as bright. the cbo projected by 2016 that the deficit will again rise unless there is a broader budget deal that includes an title months. that is the warning to come in that isnistration -- the one to come. moment, they will take this short-term improvement as a positive sign. we need to get our viewers to the market action -- will this play a role in the midterm elections? >> it can't hurt democrats. the problem for them is it so close to election day and by and large, the public perception is

that republicans are doing a better job in the deficit. there is a gallup poll that came up that showed this issue is extremely important to 73% of respondents if they gave republicans a 20 point edges to who would be better in dealing with this issue going forward. the administration has a challenge to sell this message that they have been responsible on the deficit especially when we've got about 20 days until election day. >> thank you for the update from the white house. we will take a look at the markets -- u.s. stocks and european stocks and treasuries -- treasuries are extraordinary with the swings we have seen. the 10 year yield is 13 lower. let's bring in julie hyman. >> thank you so much. swing seeing abroad based but mostly negative as it has for the past week. it is sort of accelerating as

time progresses. financials of the worst performers. cautionary,onsumers it seems like there is not necessarily a lot of rhyme or reason to some of the selling in the various groups. we know that it is broad-based. on the other big declines, we see technology is taking it hard and you have staples and industrials. even as we see a lot of movement in the broad market in the s&p 500, in treasuries and the dollar, we are seeing a lot of movement among these groups today in terms of what is falling the most and was falling the least. be example of the volatility is in thekx, the bank index. kx, which is the bank index which is down by nearly three percent. x has mirrorede bk

in the s&p 500, a big drop in the beginning and choppiness in the wake of that. i want to look at the individual movers in the s&p 500. keycorp is another financial that came up with earnings and apache decline. >> thank you very much. is here.vos >> is known as the guru. >> i have heard that before. >> i get commentary sent to us from the guru. >> lisa abramowicz is also here. what on earth is going on? >> we are transitioning to a new world and it's confusing. you guys had me on the show a number of times when stocks go down and the economy is in the pits. whatever the bad news was, i

tried to tell you and i try to tell our clients that the fed will keep going until they get thisreflationary recovery in place and guessed what? it's here. >> why are we paying attention to it now? why are we saying oh my goodness look at what's happened? >> we are moving from a part of the policy reaction function at the fed, how they react to the downside which we knew well to this new world where we have to figure out how they react when everything goes right? the answer is we just don't know. that creates confusion. it's as simple as this -- they have rate projections telling you they will raise 75 basis points by the end of next year and so on. but we don't really know anything about those rate projections. we have the dollar to contend with, the europeans to contend with, the japanese to contend with. add in a lot of mixes of different policies in different countries and you cannot figure out what is exactly going to

happen when it all works right? it's not that it is bad for the comp -- the economy, it means risk premiums have to go up. >> is that why high yields are frozen? >> i think the oil prices are really hitting high yields and there are a lot of energy companies that have issued high yield dad. traders who i have talked to are not able to sell their high yield bonds. g it's causing things toap out downward. >> is that because the street is not able to show them a bid? it's not like there is real money saying i will go along here. if blackrock and fidelity are long on the market and they don't want to buy more, goldman sachs and morgan stanley can i buy more. >> there is a lack of liquidity in the market and it's not just corporate debt. treasuries are even seeing volatility potentially because big block trades are not happening there either.

in the high-yield market, even hedge funds that might have been short, why will they come in now before the end of the year? throughout this whole fed experience, we took all the treasury traders and we made treasuries rich through qe and we took the ig traders and made them become hy traders. wanted to haven happen. he wanted us to move across the portfolio ballot and take risk and get this economy going and we are generating jobs and of a 5.9% unemployment rate and sentiment is strong and things are good. is better than it was years ago. how do you take us from this constant drip of medicine that got us to take risk to being off the drip and not making a mistake when we do it? the answer is we will make mistakes. y treasuryre and ar dots -- debts being run by

grown-ups? ] >> i cannot say. >> i have a hard time believing this is just because of the fed. they have been very vocal about the fact that their data dependent. >> the ecb is the strongest hand in the box. >> the fed may be hiking rates but expectations in the futures market are coming down for when they will hike the rates. >> what really transpired over september was as large movement in the dollar associated with a realization or coming to grips with the fed probably raising rates in 2015 and the ecb is starting in june, it got up and did something for the first time in a while. for years, the ecb balance sheet was contracting while our balance sheets around the world were expanding. they fell behind and they seem like they woke up and in the market saw these very large dislocations in the currency

market and that's where it started. there was a rethink on the dollar versus the rate story, how will accommodation get removed by the fed? will it just be a strong dollar or will it be rates? nobody knows the answer and that's what makes a confusing. that's why bonds have to move all over the lice for no reason and that's why we have to accept higher risk premiums. there's nothing wrong with that. it's actually pretty fun. look intoe time -- this camera right here and say that one more time. >> it's fun to trade in a high volatility environment. >> are you kidding me? i don't think anyone out there today is saying that. people are dying. look at hedge funds. >> how many people have i spoken to over the years that said the fed to call the volatility out and it does not blend more and i cannot make money and there is no opportunity in the market? >> you are right. qetold your clients that

was something they should love that risk was something they should embrace. if they listened to you, they made boatloads of money. how long since you started saying that? >> almost five years ago, 2010. >> so what should they do now? >> in the beginning of september, we wrote a piece if you are ready for the big rally. it was a sequel to a piece i wrote early in the are called are you ready for the big sell off? the first piece was a big sell off and everyone got excited. it was a play on words because it was a sell off on volatility. over the course of this year, there has been a drop in volatility and starting with the federal reserve release and changes of the ecb, we went to our clients in the middle september and said it's time to be long volatility. we are not abandoning the risk worksw, the view that qe

and we will make it to the upswing of the business cycle. what we have to recognize is that this is a much less certain time to put on precise that's about where rates, the dollar, commodities, equities or any financial asset will trade. thered the fed standing going we are going to keep rates on hold for two years, 2011-2013. that extracts a lot of volatility out of the market. now we don't have it. we are kind of unhinged which is good. i don't think we should be pointing the finger. i am embracing volatility. i am basking in its glow. >> how much does the move down in treasury yields by virtue of shorts getting squeezed out of the market? >> probably many people bet incorrectly that there was going to be a re-pricing higher in yields and we like many others thought that yields should probably rise. what you saw on the beginning of

the year which is interesting is the bond market reaction. it was the janet yellen press conference when she said that a considerable time equals six months and never buddy freaked out. stocks went down, short end of the bond market went down but the one asset that rally was the 30 year bond. the reason was that everybody was fearful that they were going to tighten to quickly and it was going to be a mistake. honestly, i think that is was getting priced into the bond market here. it is pricing in that the fed might oh two quicken make a mistake. by the way, they made three mistakes at least during the qe process. we had to do three phases and if they got it right the first time, we have us -- we would have just done it once. . the idea that we will take the balance sheet up and not make mistakes is wrong. the idea that we will take it wrong and not make mistakes i think is also wrong. discovery hedge fund is set to fall eight percent in

october. this is one of the smartest 15 billion dollar macro funds out there. see titans like this stumbling in october, what do you think performance will look like for the month across the board? >> i think it will be a tale of two cities. it will be like we have seen a lot of macro funds that had their test runs in a long time -- they had their best runs in a long time. aey have been waiting for pickup in volatility and september was an amazing month. contrast that with the world you know well which is the distressed world. it was probably the worst time in history. distressed trader that said it felt like 2008. i was talking to macro traders that said this feels like the greatest market i have seen in ages. gethis is when managers paid2 and 20. >> you don't get paid for just

sitting there. . >> why would you pay that in an easy market? it's answer something now. >> to me, it's healthy to have the volatility. move.ike aminsky-esque >thanks for having me. >> chief market strategist at jefferies and lisa abramowicz a bloomberg. we are back to talk about the people who always win on wall street, employees. >> perfect time to talk about that. ♪

on theave breaking news second case of ebola in texas. matt miller has more. >> we are just hearing now from the cdc that frontier airlines carried that second ebola --

second health care worker who tested positive and is now being treated. they carried him on october seen. -- october 13. they are checking all of the passengers to make them aware. thatimportant to mention today especially, any headline that has ebola connected to it goes viral almost instantly. i'm sure you have all seen the many tweets that apparently there was a quarantine at the barcelona airport but that's not true. this is the kind of thing you have to watch for in this market. hand, contagion is usually coupled with symptoms. if the passenger did not have symptoms which we understand from the cdc, there is a high degree of probability that that person was not contagious.

>> i find it remarkable -- take duncanient thomas eric in texas who passed away. he came into contact with many friends and family members in the dallas area including a few people he was co-habitat in with. his girlfriend for one and none of those people have come down with ebola so far and they are being watched closely in quarantined. however, the health care workers with him in the latest stages of his disease were the ones that got it. -- thes that you've got cdc has been saying this -- you've got to be showing serious symptoms of this for it to be contagious. >> the cdc has come under criticism whether it's warranted or not for the protocol that it is giving hospitals that they should follow themselves and protocol to be followed by health care workers. it is fair to ask the question -- what was this person doing on a plane after having treated

thomas eric duncan? >> exactly, you hear the same criticisms of the spanish health ministry. the nurse who is infected there and is now being treated was traveling by air also, hanging around madrid after she had come into the fever. you see this criticism all over the place. >> thank you very much, the latest on the second case of ebola, somebody infected with the disease two days ago on a plane. when we come back, more on the market meltdown, incredible volatility, breathtaking moves in stocks, bonds, currency markets, we will have it for you right here. ♪

>> we are taking you "on the markets." olivia sterns is watching the

european closed. it seems like upon a most pet. -- it seems like it most pet. >> it feels like it. some investors in europe say brace for the markets to go lower. it looks like panic. isgreeciate problem no one trusts them bute, they are also worried about italy. the stoxx 600 is down nearly three percent and the dax in germany's i 2.5%. it is down about 10% since the start of the year. supposed to be the locomotive of european growth. it is officially in a correction. the ftse 100 is also down by 2.5%. in france and italy and greece, you are seeing the selling pick up their.

in athens, the market was down as much as 10% earlier. it really looks like déjà vu all over again. the bond story. you see a flight to safety. . >> in early september, greek sovereign debt was trading a shade over. five percent right now it is at 7.81%. >> it has moved up 76 basis points. it's an incredible move. this comes after you have some political turmoil in greece. use of the rise of the opposition to the prime minister. that is perhaps stoking some what can happen and grace. alternately, it boils down to a problem with liquidity. you heard this from bill gross earlier. he is saying the problem is greece, it highlights chronic

illiquidity. >> for the last two years, every distressed guy has sat down saying i am buying illiquidity europe. we will be back in two minutes. ♪

♪ live, from bloomberg headquarters in new york, this is "market makers." >> welcome back. we are continuing to follow the markets today. matt miller is digging in deeper to the selloff. we were just speaking to olivia sterns about the brutality in europe but the u.s. is not ok either. >> actually, there seems to be three main drivers of this global selloff. the ebola fears have been escalated this morning by thousands of alarmist tweets

tout rumors that turned out be false about what is going on in barcelona but also you have u.s. economic data that was much worse than expected and then you've got the european -- death march? you got that going as well. the s&p 500 futures has three distinct drops and you can pretty much trace those two everyone waking up and reading about the second patient, read about 6 a.m. was the first drop. a.m.,le bit later at 8:30 you had the u.s. retail data coming out much worse than expected. we were already looking for a drop in retail sales of 1/10 of andpercent and got 3/10 that brought temperatures again. around 9:15 a.m. people start to notice that european markets were falling more than three percent in some cases. rocket dropping to the

bottom of a well if you look at the futures chart. downow have u.s. equities 217 points. here you see the s&p 500 cashday chart with s&p trading down 1 1/3%. we will follow this very closely. we will do in our dedicated to the market in those three themes, at an oil and russia and we will figure out what is going on in this crazy world. washe best part of that those three things. >> you put up four fingers. >> i'm dyslexic. [laughter] >> we need to switch gears.

people or feeling the worst today might just be shareholders in shire. the new treasury department rules designed to curtail tax inversions are starting to bite and one of the biggest mergers of the world is in jeopardy. may scrapaker abbvie a 50 ilion dollar purchase of shire than the shares plummeted. wowed -- way down as of the open and i have barely moved since then. board will meet soon to reconsider the deal which was designed to slash its corporate tax rate. what is this telling us? >> this deal is dead. are just following the legal steps they have to do to kill this deal. they will have to pay $1.6

billion breakup fee to make it go away. you can tell that these treasury department rules -- >> jack lew has a big smile on his face right now. >> that's right. >> when the treasury department -- these are proposed rules. of these lew announced proposed rules, there was a lot of head scratching and people and tax lawyers were analyzing this and they were not certain whether the rules would have the desired effect. several companies like medtronic said it's not going to stop them and were working -- and burger king, did not stop them. >> even abbvie said they would move forward with the merger. they might have done more analysis or talked to treasury. they got the sense that this was really going to have an impact on them. who is feeling the pain?

we have heard that hedge funds have billion dollar positions and they have to be gushing blood today. >> blame the arbitrage trade. >> in a deal like this, there's a huge amount of shire stock that will be bought by merger arbitragers and they bet on the spread. after the treasury rules, some lawyers are saying that we were telling people they should short the deal. they thought the market had underappreciated the power of these treasury rules and they were right. happenedid something over the past couple of weeks and it's them possible for us to know without more information theirt was that changed minds. based on the reporting you have done, these are proposed rules and the treasury department is getting comment letters -- what can we surmise from what is

supposed to happen? though there were 40 pages of treasury rules, there is a lot of gray area in their. maybe as they thought more carefully about how they would apply -- the treasury also said not only are we giving you these new rules but we are going to write other rules later addressing earnings stripping that might also have an effect. if abbvie got the idea of those are coming, too, that might have affected the decision. >> because burger king is going ahead and medtronic is going ahead is because there are many other reasons to do these deals other than the tax advantages whether the lower corporate tax rate. big-timeacouple& of bankers here the other day.

us that they said it would be inadvisable to try and put forth the deal now common in version ducommun early for the benefit of taxes and this would suggest they were right. >> that's right. to note that since the treasury rules came out, there have been two inversions -- two new inversions announced. that just shows that these rules, even though they are stopping certain deals that had a big tax component to them, they are not stopping all inversions. companies will try to get offshore. >> thanks very much. >> great reporting. >> tax issues are so important to corporate america. >> when we return, fighting a bowl on american soil and a whopping easy for hospitals were cheap -- it won't be easy for hospitals. ♪

>> how much of the role is ebola

playing in today's market meltdown? it is impossible to know but encase you are behind on the latest news, let's recap the headlines. a second nurse from the dallas hospital has tested positive for the disease and it turns out that on monday, the day before reporting symptoms, she flew on a plane with more than 130 other people. it was a frontier airlines flight from cleveland to dallas/fort worth and the cdc says the nurse did not show any symptoms during the flight which means that in all likelihood she probably was not contagious yet. meantime, president obama's in the situation room right now talking with allies about ebola crisis. it's pretty clear that most hospitals in america are not prepared to handle ebola cases with the required care and isolation to limit the contagion. marks has been looking at the challenges and ramifications

of treating an ebola patient. >> let's say that there is very few hospitals who are really equipped to handle these kind of patience and that's mostly having to do with being able to isolate them. we reached out to about 50 of the top grossing hospitals in the united states and few of them got back to us but those that did said they are now taking all possible precautions. we heard from the cdc yesterday that he will try to designate the current hospitals in each state but there are risks with that. >> you have to transfer the patients. >> absolutely, so that adds another element of risk. >> how do you sterilize the vehicle? what about the people who come in contact with the vehicle? so many questions -- the reason that these hospitals are so ill-equipped to deal with ebola is presumably because a disease this infectious and fatal is rare. >> it is rare and the kinds of

training required to contain these kind of contagions is not something that is typically part of everyday life for these hospitals. we have had an are as -- a nurses union coming out and quoting anonymous nurses at texas presbyterian hospital saying that really they did not feel they got the right amount of training. many hospitals we spoke to say that is now absolutely the number one priority. they want to make sure they know how to take these hazmat suits off. one of the reasons that may be behind this contamination with these two care workers in dallas is in fact a simple as taking gloves. >> how much does it cost to get the proper training? instituteu have to across a large staff, it's huge amounts of money. some of the larger hospitals, it will be an essential financial cost to them.

they will have to train thousands of staff. that will obviously impact their bottom line. >> is a frightening scenario. where is your reporting take you next? >> i am off to sweden this weekend to look at a cashless economy. >> fascinating. no ebola there. >> i hope. say don'tgoing to go to dallas. . we will be back and coming up, maybe this is not the day you want to hear about wall street paychecks. stick around, you may be surprised to find out who gets premium dollars. ♪

>> welcome back. it turns out it's not just bankers and traders raking in the dough, wall street support staff is paid a big premium. according to a new study about

why big banks must pay so darned much to attract any employees. ideasmith has a few welcome to market makers. traditionally, we think it's the huge bankers who are bringing in the advisory fees or traders but walk us through why it is that sales assistance and administrative assistants get paid sometimes $200,000. >> we don't know but the study found that when you control -- when you have skills, there are still about 20% left over that is unexplained. it's a wall street bonus. 20% is not a huge amount that is a substantial. why should a secretary on a trading floor get paid $150,000 when the secretary at a law office gets paid $50,000? >> the real difference is not that much. there are some reasons why.

one reason is that it is really stressful working in a market sensitive environment. anyone who has ever -- people are talking about the big market crash today. when things like that happen, it's very stressful and it takes a lot of aggravation and time. >> and the other reason? >> everyone always says you work on wall street. occupation thee way the nonprofits are. college graduates taking $20,000 a year to feed starving kids or working in an emergency room. on wall street, people think you're just managing money. >> is it time to recalibrate this? we are no longer in a bull market. things are crazy and insane and you have to deal with a lot in order to sit on the trading floor. should we suddenly say let's pay

top performers a huge amount and the rest should not be paid bonuses? >> may be so, supply and demand is the environment. >> do you believe in the stress premium? a noblee it's not profession so i need to be compensated accordingly? is there an aggravation premium? >> i do, people talk about it. >> they believe their own hype. >> talk to a secretary that works on wall street and they say that have to be around traders all day. >> crimea river. -- cry me a river. >> what about the stress premium of the emergency room or the delivery room? it's real but somehow people don't know about it. >> every mother i have ever met knows about it in a delivery room. wouldn't a trading floor

secretary say they should be overpaid? now that the study is out, will there be a recalibration? >> it's not just support staff. this goes beyond the support staff. it only partly explains why wall street in general gets overcompensated relative to the rest of the economy. >> waste question -- which question should answer first? i'm just tossing stuff out. maybe as things get more automated and human trading becomes less common, maybe people will not be is time sensitive. they program a computer and let the computer run, that could decrease aggravation. >> instead of asking you whether you agree with these findings, do you think wall street is overpaid? >> i don't know. i just don't know. some of wall street is absolutely not overpaid. if you believe in free markets,

some of them should be paid more. i think the vast majority -- >> if you believe in free results isn't this the effectively a free markets? >> i don't think so. i think this is a situation that has been existence for too long and no one has paid attention. ♪

>> that will do it for "market makers." what a day. i am trying to keep things calm. >> tomorrow, i think we learned

our lesson. erik needs to put his jacket back on. >> hockey season is underway so that's a diversion from the markets print pro basketball is about to start. the ceo of the philadelphia 76ers and the new jersey devils scott o'neill will be here. the devils have a better record right now than my toronto maple leafs which cannot possibly last and we will talk about that. . canadia?rsey outpacing i like to hear that. past the hour and there is nothing more important to do now than take you "on the markets." >> i would say there is nothing more important all day than look at these markets. for a "on the markets" solid 24 hours today. every time i look at these markets and i look at the u.s. indexes, it does not sound as

bad as what we see overseas. i will say that five mins into the open this morning, we were off on the dell more than 300 points and have recovered slightly but we are still off 1.5%. when i look at these markets on my terminal, when you pull up all the equity markets and you see the u.s. markets on top and your eyes drop to europe, the and thecks indexes down ftse was down as well. the cac was down 3.6%. it is a real slaughter over there. it's not quite as bad over here but we have our own big news. yesterday, we had the u.s. 10 year yielding two point read percent of this point it has dropped to 1.9%. it's a four basis point drop in less than 24 hours. it's pretty amazing, we have not seen a move like that in treasury since 2011.

joining me for today's options insight is stephen -- kevin kelly at recon capital partners. it's interesting to look across the broad swath of these markets. we see movement all over the place and big. you could look at commodities, treasuries, equities, what does the options market look like? i'm guessing you're seeing amplified movement? yes, one of the things that wall street has is an old adage is that stocks take the stairs up but then take the elevator on the way down and you see that across all asset classes. the vix is especially showing that. >> i am a child of the financial crisis. i remember the vix jumping up to 80 for a while. it's not that bad right now but we are definitely seeing an elevation. it's at 27. only recently were we looking at 16 and now we are double that.

>> the long-term averages about --so if you add 26, that is that is a standard deviation. will signal a bottom but it can stay there and vacillate between. once you hit that and you start seeing some positive news coming out of the market and decision makers in europe come out with policies, then you'll find the bottom. standard deviations line i have to remember for tom keene. what is the smart money and options doing? are any big players coming into place contrarian bets? i imagine this is the best market in which to place that sort of that. >> this is an ideal market and over the last couple of years, volatility players have been twiddling their thumbs and waiting for opportunities like this. one of the best opportunities is to take advantage of implied volatility. options makers are actually selling puts and buying upside

calls. they are going into december and january to take advantage of the seasonality and the spiking vix. >> thank you for joining us. we are looking at all the markets today and we are "on the markets" all day long. in the next hour, we will put "money clip" on hold today and take a deep dive into what is going on not only in equities but also in treasuries and commodities. stay with us. ♪

>> we are covering the market move we are seeing across asset classes. they are significant in some cases and severe. take a look at stocks in the u.s. -- and at the drops open they were bigger. the s&p 500 is down 1.5% and the dow jones is down 250 points. within five minutes, we were off 326 at the open. 369 was the biggest drop we saw out of the open. than&p 500 has fallen more tw