a straight days of losses. we are looking at what to expect ahead of a possible five great heist. -- rate hike. erik: has brazil hit the record it? a lot of investors say can't get much worse than this. tt: we will talk to men who invested in tesla. -- who hacked into tesla and will tell us how to do it again. ♪ matt: good morning. i'm matt miller. erik: i am erik schatzker. matt: taking a look at what is making news. warren buffett, big headline. the price of little bit more

than 37 billion dollars in cash. that represents 27% premium to the closing price on friday. alibaba will spend $4.6 billion for a stake in suing cars group. the move comes as china's biggest e-commerce at a network of electronic stores. the biggest deal ever as well. the companies will partner in logistics and online sales as fast as two hours. in chairman after 24% drop the market value. bolstering the appeal of e-commerce operations facing slowing growth in china. it is now official as bloomberg reported earlier, under armour getting a foothold in the nba. part of a multiyear agreement. under armour will be the title partner of the nba combine draft partner in youth basketball program. under armour will team up with nba to launch a mobile fitness app.

the deal will allow under armour to put the low -- logo on nba merchandise. the u.s. postal service delivered a $586 million loss in the third quarter. down from a loss of 2 billion from the same time last year. revenue unchanged from a year ago. the u.s. postal service is growing package revenue and better productivity not part of all set inflation. a man shot by police in ferguson, misery, in critical condition. amanda was wounded after he opened fire on officers in the st. louis suburb. this happened one year after the death of michael brown, the unarmed black teenager fatally shot by a white officer. apple expected to launch a product launch early next month. it is set for the week of september 7. apple reportedly will push the latestmp along with the home and ipod model.

those are some of the latest stories. a look at markets. the dow on an eight-day losing streak starting the week in the green. -- seven-day losing streak. by dow stocks trading up about 1%. at the same time treasury yields falling as the treasury yields. investors are truly anticipating rates are going to rise next month. matt: most investors are anticipating. erik: when you look at fed funds -- 60%, almost 60% probability that interest rates will raise interest rates next month. caught --next guest counting on the rate hike in december. joining us senior equity strategist. rim. thank you for joining us. sticking your neck out.

something people don't like to do on wall street often. why are you running against the grain or swimming upstream or whatever cliche i can think of sure whether>> be it is september or december when i think it will likely be, that is released letting hairs. the important thing is what is the speed and magnitude. i think that is only part of this whole thing they have done a good job on, to tell us it will be slow, and i do believe it will be. i don't the data supports it. if they are going to raise in september, they have done a terrible job of trying to prep the market. , when rates are going to go up, and this environment, we need to know exactly when they are going up, how much they

are going up way before the meeting, not three weeks, five weeks before the meeting. we are too close to this meeting. erik: it was congressional testimony just last month janet yellen said her predisposition was to raise rates soon. >> this year. words haven your they done a terrible job preparing the market for a rate i inc. iteven though is splitting hairs, people are worked up over the timing of the first potential increase. look at where the s&p opened up today. lockhart comments last week it to market. market is sensitive to this. really what the fed would inically do in past i called the communication cycle we're been in with the fed is we would know well in advance, probably a month ago that september was the

date. we are not sure of that. the market is 60% sure. i think that is too high of audits. erik: ok. --i think that is too high of odds. the last time we were in a tightening cycle, alan greenspan was the fed president, and there was nothing like the transparency that started under ben bernanke and has now been transferred to janet yellen. >> ben bernanke was more communicative. i would say you would know under timing and the things much better. alan greenspan was much more of an era when at 5:30 new york see thursday they had to what they did at the discount window. or they do repos or for -- reverse repose. we are in a much better spot in terms of figuring out what the fed is went to do.

is the to know, september or is it not? that is what we need to know. we need everyone on the same page. when the fed officials be, they need to be on the same page, and they are not. erik: if the fed does come up with a rate hike, as 60% of economists x deked, or future show they expect, do you think that is horrible for equities this morning 52% probability versus friday. >> i think it is a temporary downturn for our clients. any downward action, those are biking opportunities. i think the market would be volatile. i think there would be downside if they don't tell us between now and then and do increase the rate september. be more volatility.

it is going to be downside. i don't think it will be large downside. we want them to that bin and put the cash to work. it is still around the 2100 mark. yet we see investment grade on spread rising. is this not a red flag for stocks? is definitely a concern. they have risen and are not dramatic. some segments of the fixed income market some spreads have widened more than others. i would not call it a dramatic widening right now. the chartill bring up again so everyone can see it. historically it leads the stock market. start --le argue it is smarter than this song ♪ stoc. >> i'm an equity guy and definitely think the bond market is harder than this talk market.

the equity market is concerned over things like emerging market debt denominated in dollars. they are concerned about the fact that energy companies have a lot of high-yield debt. that is how the debt market in the near term is going to affect this market. i think spreads right now are widening but not in most segments. the equity market may be paying attention to her but not totally focused on it. more focused on global growth and concerns over that. matt: thank you for joining us. senior equity strategist at wells fargo. we like occasionally when people break away from the pack. erik: coming up, hans nichols hence -- happens to be in new york. we will talk about the never-ending greek debt crisis. ♪

matt: good morning. welcome back to betty: bloombeg "market day." are we going to go straight to remy? digitw looking at triple gains. a look at the market and what is pushing stocks higher. >> taking a look at the major markets. the dow is rising. now up by a little more than 1%. you will remember over the past week the dow had been falling for street seven sessions. we are looking to snap that today. the nasdaq up by 1%. part of this is because warren buffett acquisition or attempted precisionn of

castparts for $37 billion and a rally in china. taking a look at one individual stock, and that is apple. apple right now is seeing a good pump, 2%. after falling nearly 12% since july 21 when it reported less than stellar iphones sales. besides this little bump right here and the fall, let me take you to the bloomberg terminal. i want to show you analyst ratings. what we're talking about is despite the fall, all the analysts we're talking to are seeing a bump in it. price upeing a stock by about 140 three dollars. we are seeing the biggest number uys the past several months through november. this is something that has been happening across the entire field. bernstein, oppenheimer and numeral being pretty bullish.

-- nomura. taketein says they could market share from samsung. oppenheimer says the decline is really just unjustified and apple growth potential in china. the decline is overdone and fundamentals are studied. since july 20, the price of apple shares down by about 12%. that is because of the high sales numbers and a decrease in demand for ipad. we could see a bump today if apple can hold onto it stock rise. back to you. matt: taking a look at the top stories. the powerful typhoon that slammed china is now going -- blamed for 22 deaths. half-million people fled their homes. the storms rock lanes and trains to a halt. rivers and one eastern province

are overflowing. malaysians government says debris has been found in the maldives and will send a team to the indian ocean island to debris canhether the from a plane. last week it said of airplane flights said to be from 370. the flight reported missing march 8, 2014. 289 people will aboard flying to beijing lost. the zimbabwe president says his country failed to protect cecil was killed by an american and an illegal hunt. he says zimbabwe should protect its natural resources from foreign vandals who try to illegally acquire resources. those are your top stories. turning our attention back to greece. we may finally be a step closer

to the never-ending story. perhaps a chapter. negotiations for a 93 billion dollars rescue program may conclude as early as tomorrow. hans nichols has been covering forever,t seems like for about 23.5 hours per day. great to have him stateside in new york. i hated the never-ending story. i have been loving the greece story. close to a deal. everyone says it is taking place in a positive atmosphere. he is not heard from the germans yet. germans,hear from the i will not remain skeptical that sold that it is totally and finally done. erik: yes, we heard from the when the cohort might happen. b did not happen in the came to a deal. >> the numbers do not add up.

what we have out this morning as theu officials say a economy contracted by 3%. that number is almost entirely a guest. we will get official data out thursday. we just got an industrial manufacturing number coming out of race. it was not bad as you would expect. negative four point percent -- 4.6 percent. all of the numbers will have to be refigured. matt: one of the problems with those numbers is a do not include the entire economy. 25 shadow academy counts for percent-30%, more than gdp. unlike your shadow in income it is very difficult to measure a shadow. if you have more of the economy come out of the shadows, you would have higher tax revenues. i think we need to focus on the denominator. the denominator is for growth will happen in greece?

the economy has shut down. erik: while they will make , the same collect tax efforts have included reforming the pension system. reforming the labor market and probably worked on several payroll as well. the denominator will change this week, what is the numerator? will be 86 oh you need to change gekko how much will the banks need? do they need 50 billion echo no one quite knows what you need to recapitalize the greek banks with. all of the numbers have a moving target. is willquestion we cap the international monetary fund participate in this gecko the germans have said all along for them to continue to fund greece, the imf needs to be aboard. the imf has not indicated they are 100% on board. they may join an online eight package sometime later in the

year. all of these would have to fall into place. erik: if the european stability mechanism, european central bank, european commission and germans are on board with a deal for greece, you really believe the imf would submarine it by christineg it? >> lagarde does not have a permanent position. she needs to take care of their stakeholders. they are concerned about precedent as well. i think that is well within the possibility. matt: they have until august 20 two pay the ecb loan. i want to talk about politics. when i lived in germany we invaded iraq in 2003, and there was a powerful bowl, everybody hated america. now you live in germany, and we have donald trump as the front runner for the republican presidential campaign. germans are fascinated by the story. they'd like u.s. politics.

donald trump is an easy one to explain away. the bigger issue is the racial problem, which is real. when germans ask you questions about ferguson, baltimore, those are difficult conversations. truck you can get away with a quick. donald trump is the party front runner. herman cain was the party for run -- front runner for years ago. the front runner for the germans. doing a to go down that road gekko erik: thank you very much. hans nichols in new york city. --not going to go down that road. matt: how easy it to perform hack attack on tesla. we will talk to two guys who did it. ♪

matt: the tesla model s is the world's most connected car in also one of the most secure. after two years of in-depth research to hackers managed to

hack it and now working to make sure it does not happen again. we are talking to them in las vegas. >> i am a principal's 30 x all caps. -- visible security researcher at cloud cap. >> i'm the founder and ceo of lookout. hack willbecause we sla toest lead -- tels build safer cars in the future. elon musk will is a visionary. a visionary. we wanted to look at there were any issues and what were they? have filled glass. the tesla took a little bit of time. simplyas not a case of hacking the car. we had to do one system, gather the information and gather more information.

finally use that to get more information. we were able to get full control over the entertainment side of the car. >> that means you can do everything with the touchscreen you and i can do. you can honk the worn, flash the headlight. you can lock and unlock the car and switch the car off. >> the biggest take away is cars are computers. your car has more in common with the laptop than it does the model t. with that in mind, we have to think about cyber security issues just as much a safety issues with car crashes. >> i am a hacker. that is why i hacked tesla. if i am not doing it, there will be others. they will do it maliciously. what you want is you are one of the good guys. >> this is a software update that we worked with tesla to prepare to fix vulnerabilities we identified as part of the research. to do is click

install now or install overnight. we do this the vast majority of tesla's will already be safe. matt: such good intentions. what a couple of great guys. this is important. i am cynical. tesla gets downloads. wireless downloads into the operating system. if any car is fun herbal to hacking. matt: that is what i would say. these guys say security is fairly strong. they are susceptible to hacking of one sort or another. .his is the only solution i'm in favor of this, going back to full analog. --full analog cars. erik: the first car i ever owned had a carburetor.

a stick shift. it had rolldown windows. matt: i love rolldown windows. we more of that. i don't want hackers to be able to roll down my windows on the highway. erik: which car company is taking the hacking threat most seriously? with ford sent a team their ceo to this hackers conference. i am sure general motors stiff as well. all caps major car companies are taking this seriously. -- all of the major car companies are taking this seriously. erik: this is the point of the show where i say i am done. did we say happy anniversary? 17 years of bloomberg. ♪ the only way to get better is to challenge yourself,

and that's what we're doing at xfinity. we are challenging ourselves to improve every aspect of your experience. and this includes our commitment to being on time. every time. that's why if we're ever late for an appointment,

we'll credit your account $20. it's our promise to you. we're doing everything we can to give you the best experience possible. because we should fit into your life. not the other way around. bloomberg "market day." imf miller. hillary clinton will unveil a

major platform in her presidential campaign today. her ideaswill outline for making college more affordable, 300 50 billion dollar plan with the were student loan rates and offer free tuition at two-year schools . it will be interesting, and we will bring it to you. a federal reserve vice chairman low inflation and the u.s. will not persist with the economy near full employment. and lee fisher spoke on bloomberg surveillance. stanly fisher. these are things that will stabilize at some point. we are not going to be as low as we are forever. they will meet september 16 and 17. many investors at the federal reserve to raise interest rate for the first time in almost 10 years. coca-cola reportedly funding diet studies that could deflect criticism of the products.

they backed scientists who exercise instead of calorie counting. health experts blame sugary drinks for the rise in obesity and type two diabetes. a revamped diet pepsi without aspartame is reaching stores. new diet pepsi should be available nationally this week in response to customer feedback . they are replacing aspartame with another artificial sweetener. aspartamestill has and -- as well as others. those are some of the stories we're following at this hour work. a quick look at the markets. could be the day we break a seven-day losing streak for the dallas. the dow up 170 points. the smd also gaining one full percent at 2091. at nasdaq up 1% as well 5091. coming up on the market day, few

professional golfers make $10 million in winnings in a single golf season but jordan be poised to glowing -- jordan spieth poised to join the elusive club. warren buffett has made one of his most lucrative deals ever. why berkshire hathaway is --hting christian vision precision castparts. take two interactive not performing as well as the competitors. and has one of the most popular games ever in grand theft auto, but is that enough? is a time to bet on brazil? the country is ailing with soaring inflation, stifling interest rate of the political crisis. falling, on deals rising. some investors are betting the worst is just about over. a global market strategist joins us. also with us today, julia light till who covers brazil. ask about the risk

involved in this. it is certainly a risky proposition, even if you think it is a good one. >> absolutely. i think the risk is high and things could very well get worse before they get better. there is a lot of uncertainty. first and foremost it is political. the president has lost a very important ally in the congress. it will not be winning him back anytime soon with a percent unpopularity rating. very difficult position to be in the economy in deep recession. high inflation, 9.5% inflation. very low political capital to have the bandwidth to respond in kind. matt: that could be the major problem. obvious he there are economic issues all that. the political crisis is first and foremost on investors mind. walk us what is going on with brazilian politics right now. she has lost a lot of

popularity. she took office for the second time in january. popularity at 8%. her main ally in congress. he said he will not vote anymore. she is scrambling and not a lot to do economic leap. things are very hard. inflation is very high. looking at a two-year recession at this point. matt: is this a situation where she is looking at jail time? issue not wrapped up in the petrobras bribery scandal? >> things can get worse, it really can. it is increasing, not getting better. use either tentacles wrapping into all facets of the economy and politics. they are probing additional

ministries. the question is now well in peach may occur? i think the risk is higher for impeachment and 2016 downgrade. matt: it is a possibility they lose the investment grade rating? >> it is. we had s&p downgrading the outlook pretty recently. market is still waiting for moody's and fitch to move. it has become very high probability that they will lose investment grade. matt: when will you know things have hit bottom or do you dollar cost average in throughout the worsening? >> that is the question. is there value now gekko baby getting thrown out with the what is the risk appetite? are you ready to withstand volatility? certainly there is value. there is staple means. comparables with johnson & johnson. they have very diversified and will do well in a recession. whichlike steelmakers,

are trading at very attractive multiples. if you are witty -- ready to withstand it, there are interesting place. i think this year will be a horrific year for inflation and growth. statistically speaking has to be better. i think inflation will come down. you will see the benchmark rate down 2016. come ask you quickly beyond brazil, what is the outlook for the people who live there? it has to be horrible to live in such an inflationary position? >> people are not very happy with her. when she went on tv thursday there were people outside complaining about whatever her speech was. there are protests scheduled for sunday, protests like we have seen in march. i guess we need to see the size of those two really gauge. get past this, is

there a light at the end of the tunnel? a better alternative out there? >> we would still be three years away from an election. that is kind of hard. markets are pricing and the rating. they are pricing in the potential for impeachment. cbs most 200's -- basis points why to mexico which is comparable in theory. they're following completely diversion trends. certainly not a nice outlook for the near term. if you are looking at brazil and potential for long-term appreciation potential, you would want to start looking in the near term. the blue-chip names, names trading at a nice price. matt: great distress story. here atrazil for us bloomberg. still ahead, anxiety and the bond market. would not know it looking at the s&p 500. we will tell you why the divergence is not good for the

u.s. market coming up next on bloomberg market day. ♪

matt: welcome back to the bloomberg "market day." i am matt miller. when you get -- to the product around the world. european stocks rebounding from an earlier loss of .7%. technologies. something back in two days of losses. -- technology stocks bouncing back from today's of losses. , what a story a week ago. remember, up to five weeks, the athens stock exchange open today fell by 16%, biggest decline ever. over the week last week, the

athens stock exchange fell by 15%. a bit of a rebound today up by 2%. there is high hopes greece will conclude talks with creditors by tomorrow. that would be it -- give parliament and a time to disperse funds to the ecb by the of august. 31st the biggest percentage gainer. how do we look at the bond market? falling -- the two-year . that is significant. in may it was about 30%. the yield curve in greece, there is still a high probability of default. .ook at the yield in germany down to -.27%. of euro areaeuros

government bonds have a negative field. that is the equivalent of 23% of the market. over to you. andooking at the markets how they are doing today, taking a look at the board you can see we are all in the green. the s&p 500 up by 1%. the nasdaq of five point 8%. you will remember at least for the dow we are now on track to break a seven-day losing streak. we were on a two-day losing streak. hopefully we can hold on to the games. taking at the bloomberg terminal . i will show you who are the leaders in flaggers. the industrial sector is the biggest gainer right now. this is because of a couple of shares. is because of caterpillar and the other boeing. caterpillar shares could rally. reason for that as a

downturn in orders from minors and oil drillers might be nearing an end. taking a look at the stock price up by nearly 3.5%. boeing up by nearly 2%. boeing could see a rise because of what we're talking about earlier today, the act decision between berkshire hathaway and parts.on cast on the order of $37.2 billion, .235 per share it is a maker of metal industrial parts for things like jet engines, power plants and oil and pipeline. customers include ge and airbus, as well as boeing. that is why we could see that pop over there. at berkshire, down by about 1%. precision cast parts the best performer on the doubt. up i-19 percent. meanwhile, over and asia,

the naked rose by less than half of 1%. the hang seng and the red. -- the nikkei rose by less than half a percent. the index rallied on a potential megamerger. in the shipping rope and prospect of additional economic stimulus measures. chinese stocks rallied posting the biggest gain in the month as a potential make a deal in the shipping industry sparked the area buying. all of this despite dismal trade figures over the weekend. the market jumped on speculation china shipping group and costco would merge. rival thes would biggest ocean freight line. the merger would signify china's the stater all of owned enterprises. part of beijing's ongoing push to/waste, boost efficiency and create global industrial giant. -- slash waste.

the latest headlines from the bloomberg terminal. a contraction in russia's economy in the second quarter year.e worst in six the gdp shrank 4.6 percent. slumping oil prices could deepen the recession along with western sanctions. but country relies on oil and gas for half of the total budget revenue. target will remove gender labor els from most of the toy for children area. lack muscle.o r" took in $26u million, well below expectations. phone rings and $29 million.

some of the top stories we're following at this hour. when it comes to credit markets, had u.s. stock investors lost reality?ost touch with michael regan is here with me for more. the s&p has not done a lot this date.ear to 10% not about rally, especially since we see why things went in the bond market. mike: we have a story out on this. basically looking at the relationship between the market and investment grade bond market. yields on investment grade bonds have risen to 1.58 percentage point above treasuries. matt: we have a chart here. is showinguro spreads are rising on investment grade bonds. typically when they rise as much as they have, about a quarter of a percentage point in the three months through july.

typically when that happens, 71% of the time stocks have fallen over the same time. they did not this time. obviously there is some kind of disconnect there. interesting thing is what happens next. what happens generally is stocks through they widening spread, it depends it spreads narrow or wide ins more. if they continue to widen, it is a very scenario. matt: what is causing investment grade credit to rise? as far as the difference between bond and treasuries? mike: a lot of it is supply. it was a record for a record for the month in july. when there is more common the yields will go up. part of the disconnect a lot of thele believe is so many of

stuff being issued is being issued for buying back stock or issuing dividends or takeovers, which at this point in the stuff fort is bullish stocks. it takes the question if these spreads continue to widen out, what happens when the sugar is cut off? exactly. 2 trillion and by fax. will that be a headwind to that and increasing evidence? dividends? matt: how does the fed rate hike by into this? e: that is possibly why there is so much deals being done and bond issuance coming into the market. it is pretty well polygraphs there is a good chance percent will raise rates in september. why not get these done ahead of time? though it goes like the s&p has gone sideways for so long, we are looking at decent gains.

when was the last time we had a correction in the s&p 500? the last major one was 2011 when the u.s. credit rating was stripped. that was almost a bear market, 19% drop. this year very notable. we have not had a 5% dip in the s&p 500. believe it or not, three years since the 1960's where that is the case. very unusual to have this quiet of a market where there is not a 5% pullback. matt: what is this chart? third year without 5% retreat. this is the chart of the s&p 500 since 1964. are yearscircle spots we have not had a 5% retreat. a very range phones, quiet market it has been. since 1964 we have had

three single years without a 5% and 2015 looks like that. very interesting stuff. mike regan doing that. finish 10th place at this weekends world golf championship, but he will have another chance to hit a major milestone in the coming weekend. is not worried. >> i like to take chances. not be scared of the neck shot. -- next shot. ♪

matt: welcome back to the i amberg "market day." matt miller. finish and only 10th place this weekend but will enter the pga championship with $9.1 million in total earnings. that is on track to be the third golfer ever to top $10 million

in just a single season. joining us from milwaukee with a look at how likely is to make the cut, that cut, our resident golf expert. , let me first ask about what we're talking about. jordan has made a lot more money than $10 million this year i am assuming in sponsorships and other kinds of earnings. we are just talking about personal earnings. absolutely. he is the guy just re-signed by under armour. .e is making plenty of money money on the golf course. it is crazy to think about he is making less money on the golf course doing what he does then he does off the golf course. signed theth is not bank accounts category. this has only been just a couple of guys that are at the 10 million mark. top 10 finish last week he was ok with it. he wants to win and come to the pga championship this week.

that is the next goal, to win the pga championship. matt: i am guessing tiger woods has made the $10 million mark a couple of times. mike: tiger is the main guy who is hit it. it has been a while since he is one much money at all. jordan spieth is the guy who has brought the number back in. when tiger past the 10 million mark, it was a number of people do not think was possible on the golf course. also, look at the prize money that has come into golf. tiger largely responsible for the prize money that is going on. look back at what arnold palmer one. they may have one more tournaments but nowhere close to the money they're playing for on the golf course. our: but they did when respect. where is the big money being made? we pay attention to his major not as golf were obsessed as you. he had one 5 or 6 pga

tournaments, right? mike: right. four wins -- has alone. he is make the cut 18 times. very consistent year. last week of the british stone in it -- invitational, third round two that threw him off the traffic came back with a d6 in the final round to come into the top 10. he is not shy on the confidence area either. he saidto last week absolutely i want to win, i want to be the number one player in the world. right now that is roy mcilroy. he will get a good look come thursday when this tournament begins at the pga championship. he is paired with rory mcilroy and zach johnson who just won the british open and denied him the opportunity to possibly win the grand slam after having won the u.s. open and mass first.

it will be interesting to see friday roy mcilroy who is been injured to come back to place speith at the top of his game. matt: when did we see him tee off? mike: thursday afternoon, 2:00 in the afternoon. i am going to go out and watch them play nine holes this morning. he is already flown in from the british stone invitation to play . a little overcast and rainy so a bit of a british open field. hopefully some good weather in wisconsin. lots of cows appear. matt: the best job of anyone at bloomberg. he watches golf for a living. quick break. back with more on the bloomberg "market day." ♪

♪ matt: it was 11:00 in new york, it :00 in san francisco, and 4:00 in london. berkshire hathaway is making one

of its biggest acquisition evers, buying precision castparts. the price tag, more than 37 alien dollars. right-hand yellen's man still efficient -- stanley fischer is expecting inflation. pimm: a battle over billions of dollars, who should pay for the high cost of drug treatment? matt: good monday morning. i am matt miller. pimm: i am pimm fox. we are 90 minutes into the trading day in new york. a little bit of a rally, the s&p hunt -- 500 higher than 1%.