you are watching "market makers" and i and stephanie ruhle. erik: i am erik schatzker. once again, have a look, s&p 500 futures down almost .75 of 1%. world equities index down .4 of 1%. german the short-term sovereign debt instrument, down and finally,rd low stephanie, copper trading in london down yet again. fallout, the kind of let's say, but the surprise move china is having on global markets. stephanie: do you think this is a sign that could be a slowdown? alibaba reporting slowing sales and they announced the $4 billion by back in the hopes of reviving its lagging shares. we will have more on the latest earnings in this hour. a lot to cover. negativity inthis

august but straight to macy's earnings out right now. julie hyman has the latest. are they in fashion? julie: --stion mark get it? julie: i do get it but not so much. low estimates at the extreme for cents, a drop in earnings year-over-year and looks like sales are down by 1.5%. most of the analysts i had seen were looking for flat slightly down, so this could be a bigger drop then had been estimated. it also looks like if you look at the company on the sales basis, just a net sales basis, those numbers down 2.6% at $6.1 billion. that, too, is worse than estimated and the company decides weaker than expected sales performance in the first half. there have been activist involvement for macy's coming from starboard capital, pushing

the capital to spinoffs of real estate holdings, a similar thing to what we saw happen at sears. acs has not done that but they are announcing today the sale of one of its properties in downtown brooklyn to tishman. this is something analysts have talked about, it looks like basis will like a move on real estate but it would be a smaller scale. we are seeing it selloff one property. the company is cutting their forecast for the full year on sales, so expect to see some continued weakness. i will continue to go into the statement and see what else we learn but i should mention shares are down 4%, initially following the release of these numbers. we seeie:, you tell me, activist stuck in all the time. how do you think the ceo will take? erik: we will find out at 7:45 this morning. julie, you know how i feel about estimates but i will have my

cake and eat it, too. this missed by macy's is the biggest since 2007. julie: so it only matters when it matters. erik: i guess so. thank you very much. we will bring the top stories. it could have been worse. n two droppedeu even more but they stabilize the currency on the day after the surprised valuation. in official trading, a drop 2% before recouping half the loss in the last 15 minutes of trading. -- sendluation shuns shockwaves around the world. allgency currencies have been hammered. pearson, british company, agreed to sell the financial times newspaper and they are selling their 50% stake in the economist magazine, $731 million and the bible -- and the buyer's xo, the investment company that controls fiat chrysler and lastly agreed to buy the partner for almost $7

billion. stephanie: as long as the economist stays in tact. besides bloomberg news. of the acquisition today in the financial technology field. the banking and payment technology has agreed to buy software maker sungard valued at more than $9 billion including debt. they make software for financial institutions and it is owned by said in equity firms including kkr silver lake. in pro football, new york jets quarterback smith will be out up to 10 weeks after having his job broken in a fight with a teammate. espn says the fight was over 600 bucks in debt -- are you kidding me? -- who punched smith has been cut from the team and those are your top headlines.

if you are a third string player and you even damage a star, if you even give them a hangnail, you're in trouble. if you punch him in the jaw and break it -- you are out. erik: the jets just cannot win. stephanie: literally and figuratively. erik: let's get you need to know. stephanie: has to be number one, policy in china is obviously waiting on global markets again. look at futures, yikes. thea's yuan but the 2 -- biggest two-day selloff since 1997. stocks in europe also in the red and u.s. futures, as i mentioned, down almost 1% this morning. bloomberg's mark barton is in london following more of the winner and losers of the yuan. mark, we have to start with volatility. those invested or watching china obviously care a lot but this is august. this is what most investors stop in for little to no volatility, so what is this doing to broader markets?

julie: it is -- mark: it is doing a lot. i will show you three charts to some of the mood of some of the companies that do business in china. they are hurting. this is the auto industry, have a look at the today chart. in the last two days, the auto industry in europe is down by 7%. that is the biggest two-day drop since november 2011. wipedlion euros have been off the value of auto stocks in two days. 7%,onds down -- bmw down bmw, by the way, gets 19% of their revenue from china. it is not ended there, stephanie. look at lvmh, the world largest luxury goods company. this is a today chart, once again. this is the number we all care about. 9% lower in two days. 2009.s the most since 7.5 billion euros is being wiped from the market cap and sales

from asia nations, bodily the way, excluding japan, account the sales.7% of i do not want to end their but finished with the mining industry. biggest two-day drop in four years. i am talking about the likes of bhp billiton, the world's biggest miner, anglo american as well and the today decline, stephanie, 6.4%. that is the biggest two-day drop in four years. 15 billion euros of value have been wiped from the likes of bhp billiton, rio tinto and anglo american. the fear is that the valued yuan will make dollar dump -- dollar and nominated commodities more expensive and hurt demand as well. luxury autos, minors, they are hurting badly from the china devaluation. stephanie: thank you for breaking it down for us. a littleove it when

breaking news spoils our plans. julie: julie, at&t out with some aggressive guidance. the company coming out with the adjusted earnings per share, -- 262 to 268. .nusual a little bit the company alerted the below are need support on july 23, so this coming not too far after that, but the company says it is having an update for financial analyst today and is providing the guidance ahead of that. it also takes into consideration the recent acquisition of directv and other small acquisitions. the ceo saying in the statement that we are a different company than we began the year and it shows in what we will be able to offer customers. also the statement pointing out at&t is now the largest a tv provider in the united states and it says in the world, providing service to more than 26 plane subscribers in the u.s. in terms of some of the other outlooks that we are seeing, the company says from 2016 to 2018,

adjusted earnings pressure should be up in the midst will digit range or better that revenue should be up in line with gdp growth or better. thereaying that in 2015, will be capital expenditures in the 21 billion dollar range. all of this, by the way, not doing much for the stock this morning. it is pulling back by about 1.3%. erik: thank you very much. number two, commentary on china and top investors and economist. he says, the deflationary effect will keep 10 and 30 year treasury's well good. former pimco ceo and perhaps the best piece i ever read, the timing of china's has halted official signals and is one of the largest and most systemic and no longer in a position to play its long-standing role as a locomotive of global growth. finally, former imf economist and hedge fund manager stephen jen says that the devaluation of new round of a

competitive eating that makes currencies from brazil's real to crumbling from an average of 30% to 50% in the next nine months. stephanie: i have got to get you to number three. our own colleague, ramy. ramy: oil rebounding after falling 4% yesterday and at the lowest level in six years. .5 -- .05 of about 1% and trading at 29 cents a barrel. china, thegnals from world's second-biggest oil consumer after the u.s., china, for example, knocked record high imports in july and that boosted speculation that sustained by might alleviate that global glut we have been saying but beijing evaluation of the un has raised concern that economy and demand are slowing and they say it is growing at the slowest rate in the last two decades. stephanie: thank you.

number four, cap one, assets being offloaded by ge. it agreed to acquire general electric's health care finance unit for about 9 billion dollars. cap one has been expanding the credit card from a toy diversified lender that ranks as the seventh logic commercial bank in the u.s. the transmission has been fueled by small acquisitions. erik: wall street has their eye on an boutique bank. they hope to replicate some of the success enjoyed by most and company which went public last year and now has the market capital of $1.6 billion with shares trading some five dollars higher. shares notwe've got trading higher. alibaba down about 6% this morning. it released earnings about one hour ago and the stock has been slammed. no other way to put it.

the company's market solute plunged about $100 billion since november. that is a drop they are then the market cap of goldman sachs. we've got to bring in our own leslie. for alibaba.ews they just announced a $4 billion buyback. why do they need to do this? lesley: if you look at the macro environment they try to operate, alibaba is of the atomic china's is a bet on the chinese consumer. you are looking at a situation where this company has to appease investors somehow. as you well know, the easiest and quickest way to do that often times is through a buyback. when you look at the earnings coupling that with earnings out today, it revenue growth is the slowest they have seen in three years. that, against the backdrop in course,s offsetting, of the potential gains they would have perceived from the buyback. erik: lots of people have

speculated, shall we say, the alibaba would do something different. make a bigger forward into the media business, for example. it does not appear on the basis for this that they have an appetite for that. market caps lost what $100 billion? leslie: $100 billion since the peak in november. they did announce in a condition yesterday which be more of a bet on electronics, which seems more of a bet of the bread and butter, the e-commerce giant in china. isir bread and butter electronics, but in terms of the big media bet, we have not seen one. stephanie: i remember the date of the ipo, given how much money they had, we were sitting right there, are they going to buy movie studios? they are way into the u.s. market. they will buy a major u.s. brand , maybe not so much. leslie: i was going back and reading through the coverage of

the show, and we did a story on the big investor concern. at the time, this was almost a year ago that they went on the roadshow, and all the things have played out. issues of counterfeit products, issues with not doing acquisitions with investors that have panned out to some extent, china slowdown, so we are seeing all of these concerns but the stock still pops 30% on the first day. stephanie: fundamental analysts are saying, listen to me! thank you. bloomberg's a leslie picker. still ahead in the coming hour, bloomberg's interview with alibaba ceo at 9:00 a.m. eastern. erik: charlie sheen has got nothing on this stock, up 150% year to date. company, itwhich will be after the break. ♪

makers,"s is "market everybody. bank. beat the

be the middleman. online mode tracking places have attracted revenues by more than 30% and the stock is more than doubled, making it the second-best performer in the s and p small-cap index. with us now online lending tree is so bullish and what obstacles lie ahead, ceo. why do we not begin with this -- people do not know enough about lending tree because until recently, it was not a $1 billion stock with not a lot of attention. how do you make your money? if somebody comes to lending tree and uses your platform to say get a million-dollar mortgage, how much do you guys get paid? doug: thank you. i appreciate it. lending tree's comparison shopping for any type of loan product and you can think about this a like expedia were consumers come to look for a auto loan or credit

card or any type of loan. we take information from them and we match them up with four or five different lenders and the lenders get a study supply of consumers which means their cost provided loan goals and we in betweenketplace consumers and lenders for comparison shopping. erik: but you get paid for that. it is the bank. the lenders that paid, right? gabriel: right, they pay us for every consumer we passed to them and sometimes, that can be went a first consumer leaves us or hit off thea website or it can be a phone transferred to them. ultimately, lenders and about their economic database for a loan and lending tree strides to meet their loan goals by consumers. loads to givehave away basis points in a world of zero interest point's, so i

guess you have to conclude that what you are offering is a cheaper way to initiate credit, is that right? if you thinkt, about the lenders economics of a study on advertising, they get the bride -- abroad lots of consumers responding and they cannot override all those numbers. where we add value in the equation, we get the same broad swath and weekend get prime or prime consumers to prime lenders and subprime lenders to subprime consumers and the lenders are only finding the type of consumer they need and they can underwrite. that is great for them because there was no wastage and it is great for the consumer because there is no frustration. stephanie: why does lendingtree make sense to you? you have a degree in nuclear engineering, i.e. -- a rocket scientist. why are you in loans? gabriel: it is funny. in the world we live today coming thing about marketing, advertising and then you think

30 years ago, it was brand and qualitative studies. now it is all analytics-based, targeting segmentation, and that is really the mathematical skills that lines up against that. in the business like ours, you do not hire qualitative finance andd operations people. you hire engineers and scientists and those are the ones effectively -- erik: we have almost no time. how to keep people coming back to lendingtree instead of sticking with the bank they barred from first off -- they borrowed from first off? gabriel: all of our data shows, for example, a personal loan, you save about 5% on a personal loan and that is real money. the second thing we do is offer a product called my lendingtree, free credit for life and we use their credit needed to offer proactive saving messages across all dirt lines -- all their trade lines over time and we continue to save the most money

over time. erik: we have to leave it there. i'm so side. alporto of lendingtree. ♪

erik: welcome back to "market makers." ramy: time for futures and focus. oh prices rebounding from the lowest close in six years after china's currency devaluation weaken the dollar and low streak routes appeal to investors. this one between gains and losses this week on mixed signals from china, the world's second-biggest oil consumer after the u.s. in countries record high july boosted speculation that sustained buying made alleviate -- may alleviate the global clutch. scott bauer, senior market

strategist at turning advantage, joins me. good morning. oil was up on monday, 4% down yesterday and up right now a -- .8 of 1%. what are you looking to most to decide oil future looking ahead? scott: obviously, this big news out of china really rocked the market, but what i am looking at is if you look at the volumes in west texas and in brand, we are almost at the point where values are so high that -- volumes are so high that we are getting too, not a capitulation point, but a point where buyers are matching sellers. it would have been easy to call $40 ago, but, $30, if you intently look here, it seems as if we are making a somewhat of a bottom. i'm not say we have bottomed, but the fact that the volumes are evening out, the by and sell even stopped here, it would be hard-pressed for me to think that oil can dip down into the

30's and remain there for long. it certainly seems, at least in the short run, short run meeting the next two weeks to four weeks and maybe two months, that this 43-44 range has set a pretty current bottom. ramy: that leads me to my next question, volatility. the crude oil volatility index was up 6.1% last week, closing at 4216 on tuesday. have we seen the worst volatility or do you think something is still my come out of the woodwork? think we will see increased volatility. i think what we saw at this big rise here kind of the gets to my point that we have seen a matching. we have seen thomas the capitulation point that we have seen this volume. typically, higher volatility, people are throwing in the towel, like you see with option volatility, same sort of thing. that is really addressing the point that i see this 42-44 area

as a good base. again, volatility is not over with. we could see 39, we could see 50, quite frankly, before 39. that being said, this is an area where you have been short the whole time, if it were me, i would be covering my shortage and maybe even dipping my toes into a long position. u.s.,i am curious, the has been returning oil rigs and opec has raced prediction 31.5 million barrels left. oilis opec still producing and is talking about potentially $39 oil? scott: opec is -- i do not look to say they are being stubborn -- but at this point, they are defending their asset, right? they could easily cut back but they are not going to. they're taking their lumps but defending their asset. we certainly have seen cutbacks in shale production. again, what is the outlook? $2030 a barrel?

is down the -- is that outlook $30 a barrel? $60 a barrel? we will see more consolidation in the u.s. shall producer marketplace and we will see consolidation, but opec is really defending this and they are not cutting back. they are not cutting back their production here because what are they going to do? this is their asset, if they throw in the towel, all bets are off, but so far, they are sticking to their guns and they are being pretty stubborn. until, if and when, they ever cut back, that will also help put in this base, this bottom in the low 40 area and oil. ramy: hopefully it is not too far race. thank you very much. erik, over to you. erik: thank you. time for our top stories. shares of alibaba are declining in premarket trading and by quite a lot. they have been down as much as 6%. chinese e-commerce posted sales

at the slowest pace in at least three years. alibaba says that over the next two years, it is going to buy back as much as 4 billion dollars of stock. shares down 35% since a record last november, good for record cap wiped out of $100 million. shares of macy's falling with second quarter sales unexpectedly falling. earnings missed analyst estimates and macy's have cut the comparable sales forecast saying revenue is likely to be flat. stephanie: inmates at a new york state prison say they were being by guards after two pillars -- beaten by guards at the two killers broke out. dozens of inmates were beaten, choked, and slammed against cell bars. to prison employees have been implicated in the state. new york state is investigating accusations.ons -- hillary clinton has agreed to turn over the private e-mail server she used during secretary of state. she has told aides to get the server to the justice department.

authorities want to know whether mrs. clinton sent or received classified e-mails through a nongovernmental system. those are your top headlines of 8:00 a.m. hour. erik: coming up, as the chinese yuan slides and brings local markets -- global markets down with the, we had to hong kong to find out what is next. head to honge kong to find out what is next. ♪

markett is the financial dropped around the world for a second day because of china. the yuan devaluation sent stocks sliding. the biggest to date selloff and agent currencies -- asian currencies since 2008. markwest bonnett stayed up late in hong kong. here's what everybody wants to know -- our correspondent stayed up late in hong kong and here's what everybody wants to know, what is next? how was china likely to move the next time? >> good morning.

the idea of the move was printed -- was put to debate. triggered other currencies in asia, triggered a concern on policy makers. we are not sure what the plan is in china because at the same time, they intervene to put a .low on the yuan they are happy for it to weaken but perhaps they do not want it to go too far and that is holding people back from saying devaluation just yet. erik: one of the things we learned takes to bloomberg reporting is that the chinese were actually in the currency market, so they wanted to flow freely and here they are intervening to prevent it from weakening further. edan: this is a classic paradox that is always the case with chinese policymaking. the invisible hand of the market is once again put to one side but the visible hand of the

commerce party in beijing. clearly, they want the market to force the currency down to some extent. they want weakness in the yuan to help the economy, but it just shows that it cannot go too far because they have issues like they need to keep an eye capital flows and protect those who have are in u.s. dollars and they want the yuan to be part of the imf as reserve currency, so it is a balancing act. stephanie: i think ultimately we understand, as he said, what their goals are, what they want to do, their desired outcome, but given what we have seen happen in the last 16 hours, does it seem like they know what they are doing? edan: look, they are obviously very capable and in control of their economy. but for sure, they have questions around the timing of their decision. at the very list, the objects of it are not good because on one hand, they have a reform and they can say we are doing this

because u.s. policymakers in the i am tell us to make a currency more market determined, that on the other hand, they do it at a time when exports are slumping and the economy slowing. it looks like really it is an old-fashioned branch to boost the economy in a sophisticated and planned market reform. if they do have a mission, -- their mission is running into bumps in the road because of low economy. erik: how long will it take before we know whether this particular effort on the part of the chinese to stoke the economy will work? edan: it will take time. it will be a lagging before we see a pickup in exports. of course, do not forget, the level of weakness in the yuan so far is not a game changer. it would take more than that to turn around the exporting base, so don't forget how week some of their big exporting markets are like japan and parts of the eurozone. korea and japan have let their currency weakened by most of

what china has and they are struggling, too, so this is more than just the yuan story. it will be more time before china sees that dividend from the currency move. stephanie: edan thank you so much for joining us this morning. when we come back, we will talk tom brady. he may be able to suit up in time for the patriots opener in four weeks, maybe not. we will have a closer look at the case against him. tom brady versus roger goodell. things are getting nasty. ♪

next hourng up in the of "market makers," alibaba ceo daniel zhang will be with us from hong kong to talk about his company'shis disappointing sales and announcement of a $4 billion buyback. time for the morning brief. agenda items to put on your calendar this wednesday.

the energy department releases the latest oil inventory reports at 10:30 eastern. tom brady roger goodell meet in manhattan over the four-game suspension and the judge handling the case has called for a settlement conference. we will have more on that with the lawyer in the case. stephanie: after the closing bell today, advisory firm prices its initial public offering. the firm is taking evaluation of as much as $1.75 billion following in the footsteps of -- you want a quick look at the markets. stocks pointing toward another down day on wall street. with some of the movers to keep the night ahead of the opening bell. kick it with fashion right now. fossil group down 10%, earnings were out after the bell tuesday and the numbers just were not good.

sincere at the lowest november 2010. fossil's second-quarter revenue came in worst than expected, 740 million versus an estimate of 750 million. they cut the four-year revenue forecast from plus 3% to -1%. looking at the analyst piper jaffray who maintains an underweight rating on the stock and both institutions site headwinds in the watch category, that is one of fossils well-known divisions. and shares up about 1%. one of the factors is coming from morgan stanley in the note out late yesterday, they said "o" is for overweight. they have a price target of $820 and they also sent off of that will increase transparency and better business for investors. let's take a look at two homebuilders lastly. toll brothers and d.r. horton. right now, they are not moving the pre-markets but ubs is making a bullish call on it this

morning, upgrading shares to a buy from neutral. the analyst saying she has a "optimistic outlook on housing," and says as millenials come to age, they are looking more for homeownership. ubs notes that they have but a "financial health of entry-level buyers and loosening credit." todayly, you can see your d.r. horton is up 16% and toll brothers up 13%, so some of the movers in the premarket. over to you. erik: thank you very much. premarket movers on this busy day for stocks. following currency in china, where can investors find safety? we will find out when we come back on "market makers." stay with us ♪ . ♪

stephanie: you are watching bloomberg tv and later on, we will be sitting down with macy's ceo terry lundgren talking about this morning's earnings report

and the miss they had, shares of macy's, we are seeing drops this morning following that number. the new england patriots season opener is about one month away, but instead of focusing solely on football preseason, tom brady and nfl commissioner roger goodell need to see each other in court first. they are headed to court today after being summoned by the judge handling the dispute over 80's four-game suspension. attorney john is the founder of deflategate and he investigated and authored the report that led to the lifetime ban of the gross from baseball. this man knows sports and not a behavior around them. john, welcome. john: nice to be here. stephanie: first, why did think tom is being treated unfairly? john: i wish i knew why. it appears as though someone is trying to make a splash and use it. whether -- he has been entreated

from the very get-go. i don't really know what the problem is. erik: the problem is they were underinflated balls. daniel zhang the -- john: that they are corrected up halftime. erik: so we should forget that ever happened? john: no, i think the commissioner has to put the ball's in the hands of officials like they do in major league baseball. erik: so we should go back to when the role changed. john: why they spent six months -- erik: but that is -- but that does not fix the fact that the balls were underinflated. john: we don't know why. erik: well somebody -- john: it could have been a variety of things. that is the problem with the investigation. erik: hang on a second. air expands, it cannot be a warm room. if it is too hot, -- are ai know, but there

variety of reasons that the ball will lose air. they were never established and the science was no good. if you do not have the facts and you don't pin the tail on some unlike tom brady -- if you are going to go after someone at this standing with the hand clean record and accomplishment, you better have it cold. there is an old saying, if you are going to take the king down, you better kill him. they made a mess of it. stephanie: just because you behaved historically does not mean you will wake up and behave today. john: no, but there is a presumption. i do not know you, i'm sure you have never been in trouble. erik: you do not know her, john. stephanie: you know what? welcome to "market makers." john: fairness calls for a presumption and you have to overcome that. there's no fact saying tom told anyone to do -- to deflate the

balls. stephanie: what is roger goodell's motivation? john: i don't know, but he has goofed up every single one of them. it is just not good. they are seamless and they get the discipline and they take care of the problems, this one, everyone is a soap opera and everyone has legal problems, so this one is just a total mess. erik: kenny dispute the wells report conclusion that brady was generally aware of what is going on? lendingtree yes, -- john: yes, i do, that is a guess. you do not take a guy fortune, his reputation, and his liberty and impeded or impose on it and say, well, he was generally aware. there is no evidence that he was generally aware. generally aware of what? that they were deflated during halftime? probably, but that was it.

but no one says that he knew they were deflated. if you read his testimony, he never gets into deflation or how hard or soft the ball is. it is how they feels -- it is how they feel. stephanie: did you violate the line by line testimony? what did you think? john: thomas a good witness for himself. tom is a good witness for himself. stephanie: why do you think he destroyed his phone? john: he had already been told by wells that he did not need the phone and it was after that, his assistant disarmed it for whatever you do, pleaded out. those are the facts, but the commissioner, when he issued the headline and ambushed him, did not say that and that is unfair. if you are the commissioner or the arbitrator, your job is to be fair at all times. i'm not talking about the strict legal sense, just in the general

sense and that did not occur here. erik: but this issue or this perception, if you will, that tom brady didn't cooperate with the wells investigation is perhaps the one thing that inclines people who are generally supportive of tom brady to cast some doubt. john: if you go to the commissioner's opinion, he said he did cooperate. and wells said at a news conference in boston that he did cooperate. and when this whole phone issue came up at the hearing before the commissioner, they said, well, we will go get every record that he has and give it to you and roger said, we do not need it. erik: let me just go back, tom brady's agent responded to this accusation that he did not cooperate and provide the e-mails and text, not by citing what you just excited, he gave three reasons. he said first of all, moving innocence as opposed to guilt is the wrong way to go about this,

so he addressed that earlier, but second, he said the scope of the request was too wide and had nothing to do with the storing the phone. and third, he said -- with destroying the phone, and third, he said they would -- he felt they would have been prejudiced about the investigation if they provided this information. stephanie: provided what information? erik: the text and e-mails. john: well scott the text any less from all of their employees and he got both sides. my question has always been, what is it you are missing? stephanie: hold on. erik: but if tom brady has nothing to hide -- why wouldn't he -- john: some of the relevant e-mails that have leaked out could affect them personally and that is what you are worried about. a guy has a right to protect his privacy. by the way, in every football case that was requested and not turned over, there is a $50,000 fine, not suspension.

stephanie: people are entitled to private life. erik: i'm just asking questions. stephanie: look at the post this week, tom brady's reference on the cover two days ago. if you are tom brady, you are not just the quarterback of the patriots, you and your wife are the most famous celebrity sports, fashion couple out there. but could possibly be in his phone? it is his personal business. show it is a quiet side to -- it is a quasijudicial investigation. he can make a motion to the court to have the court review what is pertinent and what is not pertinent. erik: so who has the capacity here? john: the other side that everyone wants to talk about is eight or nine people who he could have interacted with and who the nfl chose to talk to, they got all the text messages

from the phone, so why are we making a big deal if they've got it all? stephanie: why is in team tom brady making this more clear to the public? it seems that public perception is that the league and investigation wanted information but they smashed the boat -- the phone. if that is not the case, why wouldn't they want to make that more clear? they have been in the last week. remember, they got ambushed by the issue. as far as they were concerned, it was not an issue until the commissioner hit them with the headline that you destroyed your phone and obstructed the investigation. from that point on, they have had to educate and from the traffic i see in the clips i see , they have done a pretty good job. i think that is one reason they set up the website. you'llie: john, i know

be watching tom and roger goodell today. thank you for joining us. attorney and founder of deflategate.com. ♪

live from bloomberg headquarters in new york, this is "market makers." erik: good morning once again. we are just 30 minutes away from the opening bell. draggedkets are being down again by the chinese you one. futures are in the red. -- the chinese youan. china is controlling the market. it's having a bigger say in determining the exchange rate or but the central bank

intervened to keep it from falling further today. that happened one day after the devaluation led to its biggest loss in two decades. 2% beforeell another recouping half of that. the head of the hong kong stock exchange says the chinese government has taken.a bold step >> probably the beginning of a new era where it potentially will be traded as allowing full market forces to be the determining factor of rates. we may not be there yet but i think this is clearly the most important step in that direction. the chinese devaluation is sending shockwaves through the global market. stocks and commodities have been dragged down the past two days. aares of alibaba are taking hit in market trading, down as much as 6%. it posted sales that rose of the slowest pace in at least three years. twoaba says over the next

years, it will buy back as much as $4 billion of stock and shares are down 35% since they had a record last november. in just a few minutes, we will be speaking with the ceo of alibaba. erik: shares of macy's are falling. reversed its declines and is now up about one percentage point. macy's had to use discounts to clear seasonal inventory and cut its comparable sales forecast for the year and they say revenue is likely to be flat. are expected to increase over the next three years because of its takeover of direct tv. not risingares are this morning.

the chinese devaluation is putting investors on the defensive and there is certainly more in store. >> there is no way this is done. i am confident that this is just the beginning of something much bigger. 1.5% of valuation will not turn around -- turn around the chinese export prospects. need to recognize that they did this today in order to ease monetary policy more aggressively. stephanie: he was speaking yesterday and he was right. erik: the yuan weekend overnight. you can place bets and hope you pick winners and losers are try to avoid getting blindsided. we have the ceo of macro risk with us. the protection is getting more expensive? >> it has the last couple of days. erik: if you were to look at agreed and say china wants to turn around the

export story, if it wants to ease monetary conditions domestically, it will have to do a great deal more than devalue 3%.yuan by up to if you believe that's true and we are entering what some people call in currency war, what do you do? tremendous amount of sense to pay attention to the cross asset. you have to think of macro. it happens in different asset classes. --you are in equity at that investor, it remains important but you have to keep an eye on the central banks and what's happening in debt markets specifically in credits linked to energy and commodities. there is a tremendous amount of price erosion going on. there is a liquidity occurring and the vix does not capture the degree of risk. erik: you cannot buy hedges on everything.

where's the best place to buy that protection? >> we think the risk that has been materializing on whether crude oil andds, what's linked to commodities and china, we think that's not the place to look. that is already happening. we think bear significant that ultimately u.s. equities will be impacted and we think the vix is too low and there's good traits to do around that. stephanie: like what? >> a hedging trade that is popular is simply a vix call spread where you can do a wide september and october call spread on the vix at 10 points and get an 8-9 payout premium ratio. it might cost $1.20 and you can make $10. as all of this risk is digested by the system, with we are entering what historically has

been a seasonally more volatile time as the fed is starting to embark upon its normalization of policy. evidence in the work you do that people quickly are coming around to the idea yuanthe d valuation of the will put the fed rate hike off? >> anything is possible. i think the fed is committed to a september and october. it would take a tremendous amount of volatility and other asset classes to steer them off course. erik: is there a way to explain even after 2 days of volatility around the world like an --rging market conservancies remainses that the vix a so >> subdued. >>we are about to reach a record quarter. in 2007 as the cracks in the credit market were emerging, the

s&p 500 in the third quarter hit an all-time high. stephanie: do you feel like the cracks are emerging again? >> no doubt. we host macro dinners across different asset classes, they liquidity and credit is so substantial that the ability d to unwind ande-risk is not there. stephanie: what is happening in the credit markets? since the rates are so low, like pre-2008, non-core credit investors have marched their way into that asset class because they need yield in default rates are low. what is happening to them now? >> you have a classic case of overbuilding which is the fed sponsoring over many years credit markets being wide open and folks are buying paper at unappetizing levels. the carry trade's work. they have been forced to do it

for fear of underperformance risk. you've got a relatively crowded situation that is not mattered as much because defaults up and low but you are starting to see the onset of an uptick in the default rate. erik: if you believe that credit markets particularly on the more high yield side will be fundamentally -- found to be illiquid once there is a selloff, what do you do? if you have no choice but to be in credit, how do you protect yourself? a great question. you go up in quality and minimize the amount of duration risk you are taking because there is a risk that interest rates rise and force credit rates to rise. i think it's a quality trade. you are seeing the quality spread between the lower rated ends of the junk. that's how you will protect yourself.

in an unwind scenario, it does not matter the quality of your paper because people just need to de-risk. you can help by upping the quality but everything will sell off. stocks are not as liquid as they used to be. stephanie: who will absorb the risk? we have heard. frank and banks cannot take the risk but we have set here with so many hedge funds that say we are getting into the market. we have hired these traders. as the knife is falling and people want to sell and high-yield names and energy are at a $30 price and trading at $19. is there anyone observing this? >> a big move in markets as a function to the degree to which investors are surprise and for the market to observe the selling.

certain hedge funds that have stepped in to cause i market making roles that they are not suited to absorb the kind of selling given how illiquid markets have become without significant price disruption. erik: they are not employing the leverage the commercial banks do. >> that's a great point. think about the last crisis which was a more good -- a mortgage/credit crisis in the next one will be different than that. banks are not that excited to step up when i have to buy but there were definite situations were if you were the market maker, you would say black rock needs to sell. there seems to be zero chance that a hedge fund today -- they will not say that i need to unwind so let me step up. baloney. >> that is great. erik: great having you here. return, thehen we

alibaba ceo will join us next on his strategy to turn things around. ♪

stephanie: look how beautiful san francisco is. there is another place not feeling so beautiful today and that would be ali baba. they reported a softer than revenue in% jump in its latest quarter. the chinese e-commerce giant is down roughly 25% this year and the premarket action indicates more losses. p 's bring in julie hyman she joins us to break down this quarter. it amazes me when we think back to the day of the ipo. it seemed like they could buy

anything. it was like godzilla was coming to america. that is probably the most striking thing about ali baba now. the 9% of revenue coming from overseas, just 9%. this was going to be the company's entree into the global market and has not materialized. when you look at home in china, that is not exactly a good place to put all of your eggs. jack mao is coming out with a consolation prize with a $4 billion buyback. best place to get the answers is the ceo, daniel zhang. daniel zhang is joining us now from hong kong. thank you for joining us.

this is your first report card as ceo. what are you doing differently? $90 -- $90s lost million in market cap and have your reverse that trend? quarter wethis continue to deliver a strong result. we will grow 34% year-over-year and our revenue 28% year over year. specifically, we made good progress in mobilization for the first time. our mobile revenue exceeded pc revenue. i think this is a good transition for mobile and we made a big investment in the largest consumer electronic retail chain.

signals we will enjoy a healthy growth and we will create more value to our customers. this gets you big into off-line commerce, the biggest deal ali baba has made. how many customers in rural china do you expect to get as a result of this deal? the investment marked our our omni channel strategy. we want to create a unique premium experience withsoon yi to integrate online/off-line experience. they have over 1600 off-line stores. they have over 5000 service stations around the country. they will first open a store in the marketplace and bring us a

large selection of products of appliances. i think most customers will like this. they have already built up an extensive network. they will open a network today for the merchants and we can deliver theem to premium services to the customers. in many cities, we tend to do that through our fast delivery to customers. station, --ice after sales service is very important in consumer electronics. we want our customers to enjoy this after sales services. emily: there is concern about the chinese government the eval boeing -- devaluing the yuan.

the yuanoncerned about softening in asia? we always closely monitor the chinese economy and consumer behaviors. of 367 active buyers million. each active buyer makes purchases of 50 times per year on our platform. this demonstrates the system and people buy a lot of variety of product for their daily lives. people come here not only for specific shopping but they come here for lifestyle. we are confident for the long-term growth. we will continue to closely monitor the consumer behavior and the chinese economy as a whole. we are confident for the growth. has handed out

$2.5 billion in shares to workers. how long can we expect this compensation to continue? it is hitting the bottom line. we have a shared compensation program to incentivize our people. we think they are the most valuable asset in the company. we will continue to do so. today we also announced a share buyback program. the purpose is anti-dilution. emily: paypal is now an independent company so what is the ali baba interest in buying a company like paypal? paypal is a great company but

in china, we also have a company like that. is very popular in china. they are in the process of globalization. we are open to work with any other partners to work together to create the value for our mutual customers. formerwhat about the goldman sachs executive, michael evans? other than macy's, what deals do you expect him to bring in? what talent do you expect them to bring in? globalization is our top priority in the coming decades. mike evans is a proven international leader with extensive international experience. we are happy to have him join

us. as president of the ali baba group, this will serve our international strategy and help expand our business outside china. we just announced today that macy's joined our platform. they view us as an exclusive platform to enter into the chinese market. we are also working with a lot of partners and we will have more to come. as i understand it, the chinese government is now putting police offices inside internet companies in china including alibaba. what can you tell us about this? are police officers working inside alibaba now? as a company with a huge consumer base and serves

millions of merchants, we work closely with the government to follow their policy of regulations. will continue to do so and make sure we are in compliance with laws and regulations each time. emily: daniel zhang joining us, thank you so much. erik: thank you so much. that's the latest on ali baba. you heard him say why a $4 billion buyback -- anti-dilution. stephanie: we will be back with more "market makers." ♪

stephanie: look at that gorgeous new york city skyline. that is right here at bloomberg world headquarters in manhattan

on a sunny morning. whena dark morning inside it come to the markets. we are a few moments away from the opening bell. alloway is in the house with the three things we need to know this morning. welcome. cy: china is not number one. how do we feel about technical analysis? stephanie: excellent. closed in aow jones death cross when the 50 day moving average both -- moves below the 200 moving day average. it's supposed to be a bearish indicator. more importantly, it's supposed to suggest forward momentum is fizzling out. that makes sense because we have been talking about threats in the stock market, but fewer

number of stocks moving up in apple is a huge component of the dow jones and it's been having a terrible time. it makes some sense we start to seize things like this popping up in the market. you guys are in the fund to fund business. do you care about technical? degree but by and macro if you are in a trading sense or a systematic trading sense, he it will have some impact. when it is here at this time of the summer when things tend to be quieter but it looks back at the overall level of volatility of the market which i think is interesting. last nineook over the months, we have gone nowhere but a feels like it has been incredibly volatile. we get violent moves up and down we end up going nowhere so was not surprising these indicators are starting to cross and how we

have to do for nine months. erik: i don't think that chart did a good job of showing the death cross. let's ask the control room to get a better view. if we can bring it up, this gives a better view. it's the 200 day moving average and the 50 day moving average. i think it was 20 and 50 which is why they look the same. unfortunately we can't show the real chart. -- there we go. ! tracy: malaysia will forever be our emerging-market indicator. their currencies down to the lowest since 1998 which we remember as the asian financial crisis. we have continued fallout from the yuan and malaysia suffers

from lower oil prices and has a political scandal so everything you can ask for from an emerging market. erik: do you look at china and what the chinese have done over the past several months in an effort to stabilize the stock market and try to use their economy and wonder if they should not be careful what they wish for? always about the laws of consequences and we see it just about every market and are now seeing it in china. the chinese story moves beyond the currency. i think that has implications that the markets have to digest as it relates to fed policy and if we get the move in september. i would've said we would get a september move before all of this but now you've given the fed one more reason to hold off if they are inclined to do that. stephanie: do you think they would hold off? >> i think they might.

i think they are very nervous about undoing all the work they have done. on the other hand, the markets want them to -- stephanie: aren't they just setting themselves up for a possible hang now problem? -- hangnail problem? >> i couldn't agree more. i would love to see them go. i think the market would like to see it. anothere: you've got three months left to stabilize things in the year. >> if we go from zero back to 100 basis points, you would have said that is easy monetary policy one year ago. of the macro funds in which you are invested get caught offsides? the asian currencies is not something they are victim. big in.

macro guys have given back a little bit of money but the other area is some have started to get short bonds. people are not talking about the bond move but it has been massive down in the 10 year. cy: the third thing for today's market expectations of an interest rate hike. last week, markets imply to 50% possibility of september and now it's down to 40% in one day. the possibility of a strengthening dollar is weighing on the fed. it's a pretty big move. there are lots of things for the fed to think about. >> inflation is one of their biggest fears. if the fed were going on the basis of job growth and labor market alone -- >> they would be tightening. erik: but inflation is nowhere to be seen. it raises obvious questions about the pace of economic growth. >> energy prices they are also

keeping on the back of their mind. erik: with further strengthening of the u.s. dollar -- we're just importing more of this deflation. >>tr exactly. likeright now, it seems the market is holding the fed hostage. they threatened to react. and then the fed starts rethinking. i think what you brought up in the dollar move -- if you look back when the dollar was trading at $1.06 and the fed was terrified that they could not tighten. they would drive it through parity. it backed up to $1.14 and it gave them some breathing room. at $1.10, maybe they feel comfortable. where it islook at trading in the concept of this because they are fearful if you have strong momentum behind the dollar move of pouring more fuel in a fire. erik: thank you very much.

partner atomanaging sky bridge. tracy loa is the executive editor of bloomberg markets and thank you. are close to the end of the season. we are taking a quick look at the movers after the opening bell. ramy: some of the early movers include macy's. it's the biggest department store chain in the u.s. and it's down 2.5%. it has been bouncing between gains and losses in the premarket trading even though it posted worse than expected second-quarter earnings. the actual profit came in at $.64 per share compared to an estimated $.76. same-store sales fell 2.1% compared to a prediction on the plus side. one of the factors is the strong dollar that kept tourists from

buying. port strike earlier this year and that held up good to port and forced macy's to slash prices to get rid of inventory for the next season and sales are falling to a one-month low, suffering their worst intraday loss since late june. at&t says it's raising its earnings and sales forecast after a deal with direct tv. shares are down right now 3% and they say it expects earnings of up to $2.68 per share versus an estimate of $2.57. it says to expect revenue growth in the double digits and the to bey expects some capex around $21 billion. guidance was also lower than anticipated. one analyst said shares are falling to their lowest level in three months and suffering their biggest intraday drop since july 8. at&t is the third worst

performer in the s&p 500 this morning. wayfarer is up 24%. this is the online retailer for home furniture and reported earnings that were better than expected. it was expecting a loss of $.27 per share. that turned into only $.15 per share. better, aboutso $50 billion better than expected. active customers jumped on the stock is hitting an all-time high. it's on pace for its best intraday gain in five months. stephanie: thank you. guess what we will talk about? might there come a time when the markets most precious commodity is not oil or gold but drinking water? coming up, a company using technology to prevent a

catastrophe from happening tomorrow. ♪

erik: typically growth is a good thing but not in the case of global warming. 2015 is set to be the hottest year on record and we have been keeping records since the 1880's. we are focusing on the players making inroads in the noble energy. changecalling it climate and changing business. we are with the ceo of a company that purifies toxic water. people are not the miter with their company. what does it do and how to the products work? >> good morning and thanks for having me. we are based in boston and armed mission is to deploy solutions around the planet to transform the world's most abused industrial water back into valuable freshwater. water is the lifeblood of our human bodies and the global

economic engine. these waters are for it mining and oil and gas i 70 and refining and textiles and power production. these activities generate and create abused water. always us has developed a system that can transform these complex waters that overwhelm traditional technologies. we can take the waters and transform them back into a valuable freshwater resource. that helps to solve the global water scarcity issue while minimizing pollution in places like china, india, and texas. erik: how is your super thin membrane different from traditional osmosis? areike reverse osmosis, we a reverse membrane system. it's to filter out the water. seawatere waters like or you might have two or 3%

salt, you can use high-pressure to drive movement across that membrane. when you talk about these difficult complex waters like water from hydraulic fracturing for the beckoned of a power plant in china, these waters have many times the salinity level of seawater and are much more complex. if you put pressure against the membrane, you will destroy that membrane. our membrane operates with a minimum of pressure. stephanie: why should investors care? >> investors should care about water. water is the lifeblood of the economic engine. if you think about investing in the industrial complex, think about water as a supply concern for producing things and also it's a huge regulatory risk. if you look at china, the environmental issues are depressing the growth and 61% of the china you cannot touch. us to get back on a growth

trajectory in china and india and globally, we need to solve environmental issues airborne and and water. how much does it cost? we live in a world where oil is trading at $43 and the hydraulic fracking industry is under cost pressure. for them to employ additional theyions to purify water, have to spend money and are reluctant to do so. >> correct, from an economic side, there is a regulatory driver. our technology is popular in china and india because their regulatory pressures driving the use. in oil and gas, we can provide an economic alternative to take a commendation of cleaning up the wastewater from the oil and gas activities and turning it into freshwater and minimize the cost to source freshwater for hydraulic fracking. that's an economic equation we can square for our oil and gas customers. erik: what about copper

producers who use a lot of water? many of the copper mines are located in the desert? if you think about d salinization and freshwate -- in freshwater inland, there's a lot of underground aquifers that have been depleted and are being replaced by briny waters was have organics. our technology allows the cleaning of that water and production of freshwater resources. integrate the use of renewable energy sources to further reduce the sustainability footprint and decrease the cost of producing freshwater. erik: we thank you very much for spending time with us. oasys.pany is this is the moment where we take a look at some of the most interesting images of the day.

this has to do with the environment. what you are seeing is not your average chuck e cheese ball that which is disgusting. that is the new us angela's way of fighting the drought. the l.a. department of water and power dumped 96 million so-called shade balls into local reservoirs to save water from evaporation. they also prevent algae growth and toxic chemical reaction and cost $.36 each. i think the term shade ball is fantastic and should be used in slang socially. when you use it in science and technology, i have never seen anything like this. erik: nor have i, it's very cool. let's move on to phoenix were a dust storm there are through the city yesterday. of it reducingeo visibility to near zero in turning the sky orange with wind gusts exceeding 40 miles per hour.

more than 10,000 residents lost power and the public was urged to stay off the roads. stephanie: this would be scary. erik: i have been in a sandstorm like that. in saudi arabia. stephanie: were you endorse? erik: outdoors first. stephanie: you went indoors -- erik: covered in sand. stephanie: is there a risk your windows will break in? erik: the wind is not blowing that fast but it's scary. its pre-dramatic. stephanie: we will let you stretch your legs. be back with more "market makers." ♪

stephanie: you are watching "market makers." hour, i am excited

to share with you in interview with macy's ceo terry lundgren. we will talk about their earnings numbers out this morning. the stock is down 3% and i may have an activist knocking at their door but they've also got back to school shopping which i don't want to talk about because it bums me out. you will have to watch that it 10:45 a.m. erik: here's a look at our top stories. hillary clinton has agreed to turn over private e-mail service to use while secretary of state. she has told aides to give the server to the justice department. authorities want to know whether she sent and received classified e-mails through a nongovernment system. the sharp downturn in the automobile market in china follows the june 3 .4% decline. such monthly third contraction since september of 2012 and china is the worlds biggest auto market by number of vehicle sold. gross has declined as the economies fooled -- cooled.

wallenda completed his longest tight rope walk ever in wisconsin. was builtor wire above the speedway. fallsked across niagara in 2012. stephanie: i wonder how you demand your kids to wear seatbelts and helmets and then take them to see this. i hope he had the appropriate safety equipment. stephanie: he didn't. what is the appropriate safety equipment to do that? erik: i just said i'm hoping. i see some wires. stephanie: negative, nothing. erik: if he falls it's just a splat? stephanie: i'm not sure but you are giving your children some mixed messages when you take

them to this show. that's how they roll in wisconsin. they make it happen in milwaukee. after entering a bear market yesterday afternoon, emerging-market stocks extended their slump this morning sinking to the lowest level since 2011 to trigger the chinese moved to devalue its own currency. there are concerns that it will trigger a new round of currency wars. we try to have positive summer days. katia: get has been rough lately for emerging markets. what's really happening? china does not want their

currency to fall off. we sought intervention at the end of the trading. clearly, they don't want their currency to go out of control. avolatile currency is not currency for a reserve currency may want to be considered that way. they clearly do not want their currency to be very volatile. they want kind of a stable adjustment to a free market driven rate which is what the imf wants from them. if they do this piece by piece, they can control global markets from falling apart in their own market from falling apart. they have a highly levered economy. they don't want their currency to fall off. erik: markets are difficult to control. we have economies around the world that import and export that are being affected. the perceived currency war could be happening in asia where you

have economies like korea that compete with china and then you have economies like latin america that export to china. been dealt a huge blow throughout the year. they have been having the worst currency drop since the financial crisis. this comes at a really bad time and a suspicious time for them. we need to see how everybody is reacting. erik: how are they likely to react? what could the korean central bank or the central bank of ofzil do to fight the power the chinese devaluation? katia: some central banks are already reaction like how they widened the trading ban in vietnam and others are just waiting. 3.5% the evaluation is not as much as people expect it should be. some say 5%. if they go that route, we could see a lot of central banks responding. it's kind of like a wait-and-see

right now. we will see how far they go. stephanie: is there any scenario for emerging markets benefit from what's happening in china? this stabilizes the chinese economy, yes, this is great news for emerging markets because they have been dealt a huge blow on the specter of a slowing chinese economy. if this revives growth in economy and demand for commodities, this is great news. if this proves to be deflationary in the u.s., maybe it postpones a rate hike in the u.s. the strong dollar has been bad news for the em world. erik: some of the foreign capital that might leave emerging markets would stay there? katia: erik: yes. thank it very much. it has been a crazy couple of days. stephanie: if somebody's going

to give you bad news, let it be katia: we have a story so ugly we almost did not want to show it to you. the new alien like fish that has been discovered by scientists. it is thin and has sharp teeth and it has a glowing fishing pull on its head. scientists discover the fish about 5000 feet low the service in the gulf of mexico in an area of the deep-sea that is a mystery to humans. this area is called the midnight zone. that is gross. ♪

is 10:00 a.m. here in new york. you're watching bloomberg's market day. you're watching a global stock selloff. equities are down and there are fears that china's yuan

intervention could spark a new currency war. analystsme in below estimate for macy's, cutting the sales forecast for the year. macy's claims a strong dollar and inventory backlog. you'll hear straight from the ceo. sinks as well-- as the saturating the chinese market. the stock is trading at its post ipo lows and now jack ma is announcing a buyback. matt: good morning, i matt miller. erik: overnight, the chinese yuan devalued by an additional 2%.