market day. what does turmoil in emerging market currency mean for central-bank policy? behind the headlines. why has china taken such radical steps to devalue it's currency? reading the tea leaves. pimm: and don't fear the reaper. why the death cross makes headlines, but is not necessarily something that you should bet a lot of money on. scarlet: good morning. i am scarlet fu. i am pimm fox. it lets take a look at u.s. stocks. a little bit of a mixed picture. the s&p 500 basically unchanged. the nasdaq moving about a 10th of a percent higher.

not much action in the stock market, but a lot of action in the heard the market. interesting, was the late recovery yesterday not holding up. consumer discretionary's and financials are higher, well energy and utilities are on the downside. let's look where the action is. pimm mentioned. you can see that it is not as big as the last two days. some of that drama, volatility subsiding. let's look at the major players. you see the euro slightly weaker against the dollar. the dollar firmer against the yen, and the pound sterling at 1.558 right now, little changed. for: retail sales -- demand items such as closing on mobiles arose.

that matched the median forecast of economists. and as we have been discussing, m toa trying to restore cal global markets. signaling support for the end currency.- the yuan chinese authorities held a rare news conference and said there is no basis for the currency depreciation to continue. is also imposing new restrictions on market makers who submit prices. and the electric car maker tesla is set to raise nearly half of ilion dollars in a stock so. the founder, elon musk, plans to buy half of the shares himself. a market cap of

31 billion dollars. for comparison, ford has a market cap value of 38 alien dollars. -- $38 billion. scarlet: let's segue to money and politics. the only senate democrat to formally oppose the deal -- chuck schumer. appeals had donor not based his -- had not affected his decisions. intel getting more business with more minorities. year have hires this been women or other underrepresented minorities, more than what they hoped for. they have been criticized for a lot of women and minority employees. those are your top stories this morning. restored to the market, seemingly, for now. pimm: and as we have been

goingg about, the dollar up in value. joining us to discuss this, michael mckee and our bond guru reporter lisa abramowicz. start us off here. after what we saw with the chinese currency -- do we collect a selloff of the short end of the curve right now? lisa: everything is fine now. pimm: oh, ok. we should all go home. obviously, people have been expecting the fed would make a move this year. there is a 73% chance -- pimm: a quarter point in december? point. whole quarter and the probability the fed is going to hike in september is about 40% -- scarlet: which is a pound note -- statisticmost useless

in the world. 48% is based on yesterday's feds funds closing. after the retail sales report, you will see that go up. on friday, it was 56%. devalues, 40%. it bounces around so much. the only time fed fund futures are useful is the week of the fed meeting. it does not tell you anything, because they will react to every bit of data. i would say investors i speak with our focus to beyond the fed. they are not interested in when the fed will hike rates. they are interested in the price of oil. huge, huge determiner of inflation globally and just generally what growth is like. and they are focused on the pace. and how quickly the fed may hike.

if it leads to a strengthening of the dollar, essentially, given the backdrop of what is going on in china, it further weakens growth and they have to backtrack at a time when they do not have many tools left. this is one of the big prevailing concerns along people i speak with. it is the big conundrum. the fed can't move because the dollar is going up, but the dollar is going up because the fed can't move. if you think the dollar still has further to go, you will be afraid of the fed move and a lot of people say this is the most widely advertised fed move in history, and the dollar has priced and most of it. look what happened when china devalued. the dollar index went down. the dollar got weaker. a lot of people are saying, it is ok for the fed to do this. an interesting statistic out today people have not focused on. is this inventories came out. inventory building continued for the second quarter for june.

economists have taken their forecast up to over 3% for second-quarter growth. if you have 3.4% growth and an unemployment rate of 5.3% and are creating 200,000 jobs a month, the fed is going to say we are behind the curve, we should do something. scarlet: i want to bring you inside the bloomberg terminal, because when we talk about all of this, there is a divergence between equity and credit markets. you helped me out with this. he yellow line is the vicks. the vicks is clearly more jumpy. -- the yellow line is the vix. is clearly more jumpy. what is driving spreads wider and why is it not showing up in equities, do you think? the bond yields and

in particular are more heavily weighted in energy than, say, the s&p 500. the energy sector has been absolutely annihilated given how low oil prices -- these are the unintended consequences of falling oil prices. there was a report out by fitch today reporting that rates among executive companies in the u.s. slid to 3% and energy companies, 4%, and mining companies 10%. investors are seeing fundamental weakness with these companies that have unprecedented amounts of debt. pimm: that is what i want to get to. we've got about 30 seconds. corporate bond issuance. trading back and forth this morning. up 20% so far this year. .ach deal is bigger

fewer deals. corporate trying to lock in rates before -- mike: [indiscernible] lisa: a lot of this is being driven by acquisitions. to borrows cheaper the money than it is to -- mike: investment-grade bond generallyinitely -- are flat or going down. at this point -- -- the returnsrn this year have been flat. lisa: there is a flight to quality. pimm: i like the way you did that. flight to quality. lisa abramowicz and michael mckee, thank you so much. next up, the new york stock publiclyroute newest

traded company. houlihan lokey. we will hear from the ceo. ♪

scarlet: welcome back to the bloomberg market day. i'm scarlet fu. pimm: i'm pimm fox. companies are increasing their stockpile the most in two years. it is generally seen as a sign of confidence. if company -- if consumer demand does not increase, they may cut back and that would be a drag on the economy. it may take more than lower gas consumers'mprove

confidence. views on the economy and personal finances remain unchanged. old media money meets the new media market. has a cold nomination of websites that focus on food. vox will create a partnership to help the network better connect with young consumers. why not.rkets? pimm: julie hyman. julie: secondary offerings from shakeand shakes not -- shack, and their stocks are doing different things. shake shack shares are doing what stocks usually do when they offer more shares. you see a dilution for existing shareholders. tesla, however, after offering

half a billion shares, saying that will be offering half a billion worth of shares, though shares are trading higher. an interesting situation. a couple mitigating factors potentially for tesla. we will get to the stock chart in a secondary one, elon musk will be buying shares and the other tesla is using the proceeds for growth. shake shack, we are seeing existing shareholders filed to sell. they are cashing out, if you will. that could be one of the mitigating factors as erik pointed out earlier. if you look at the shares to date for the state of companies and we have seen that shake shack shares have outperformed -- in the green. these are not normalized. we see shake shack shares up joint percent. to have luck, up 7%, a present year to date. the other context, the short interest in these stocks. as ais short interest percentage of the lows.

tesla is a longer chart because it has been around for longer. it has come down from elevated levels. 25% of the shares sold is still a high percentage, but not as high as shake shack. -- that company does not have quite as large a float. pimm sent this one to me earlier, saying that this .upports the idea pimm: thank you. i was sharing that earlier. i was looking at it earlier because it was one of the biggest volume leaders today. sun edison.n houlihan lokey.

the investment bank raised $220 million. 30% less honey price it was originally marketed. our own erik schatzker is standing by with the company's chief executive. pimm, thanks very much. that would be scott's. trading.k shares are i do have to reiterate what pimm mentioned. you priced below the range and you ended up selling less stock than your firm had wanted to read what happened? guest: our firm was built to deal him bullish and environments and tough marketplaces. we are one of the few companies that successfully priced in august. we are happy and doing well. who better to evaluate the performance of a banker than a

banker? are you pleased with the job that your underwriters did? scott: we have investors invested in our space. this is the first time people have been in. i think her story resonated with them. sold most of the stock you was his existing shareholders. would you have gone forward if your largest shareholder did not want to cash out interest? this was the right transition for the firm. we have been built to go public for many years. this will be an opportunity to get more clients, get more exposure. help us out with hiring acquisitions in our continuation of going global. aterik erik: why now question mark what does going public do for houlihan lokey that going private could not? it's better than having a website.

this is really about getting the chance to tell our story. we have been in business for 43 years. there are still thousands and andsands of companies financiers that will be held for our business to grow in the future. what you want to do this firm in terms of the number of employees -- which was about 695 at the end of june. you talked about your reach, going more global, and perhaps the variety of industries you serve? over: we have a little 1000 employees -- sorry, i read that in your prospectus. was that just professionals? yes, those are professionals. our business all you agents and our structure -- there are many, many more opportunities. it is a great opportunity to get rate individuals who do great

work. they do a great job for our clients and when our clients are happy, shareholders are happy. erik: how is will a low-key different from other boutiques? would you well and good times as well as poor times. we did not suffer at all in the lastownturn that happened several years ago and these ace we are in in the mid-cap space continues to grow and our market share continues to grow and we do not have as much competition as others do. you say youuld compete with most directly? scott: it's a variety. independent boutiques, regional players. it is a diverse firm and we compete with many other firms. erik: houlihan lokey has been rankings in the m&a buried your 20th in the united states this year. this is just pure m&a.

where do you want to be? about'sur focus is more doing more transactions and less about the size of those transactions. what we look at is, do we continue to do more transactions? do we continue to help our clients any transformative events we are working on? as long as that is working, we are happy and we know where moving the right direction. erik: you're in corporate financinginning at -- and restructuring. what factors specifically, economic growth, corporate profits, bankruptcies, most closely tracked the prospects of your firm? is change and activity. we will continue to provide services to our clients. actually the increased regulatory environment, all of that helps our business.

erik: you were scheduled to sell some of your own personal stake as well. did that happen last night? scott: yes, all of the management and employees sold a small percentage of their shares. erik: do you plan to sell stock? scott: no intention. it has performed very well for me. the ceo of land low-key newly public. back to you. pimm: thank you very much. scarlet: coming up on the bloomberg market day, what can be learned from an ejection prenuptial ingredient -- egyptian prenuptial agreement? we will tell you. ♪

it turns out prenuptial

agreements are nothing new. they've been around since ancient egypt. the university of chicago has an eight foot long marital document that dates back almost week 500 years in the details are fascinating. we are looking at the things that a married woman who files for divorce could get. it was, what? 12 pieces of silver and 36 bags of greens every year for the rest of her life. pimm: this is what was agreed to win to dub people came together in a marriage. this was an economic contract, and amarriage contract highlighted some of the unknown rights women had an ancient egypt. for example, they were allowed to begin lawsuits and also to the suit. they were allowed to own property -- scarlet: and by property. pimm: exactly. scarlet: serve on juries. pimm: serve on juries, file

lawsuits, all of these things. the actions where these were created, but it was a verbal agreement at first. you would speak whatever you wanted in the agreement, and the scribe would translated into legalese, and it was a verbal agreement between the two parties to put it into action. if one of the parties decided they did not want to continue, the other party did have the right to sue. scarlet: this is fascinating stuff. there were ahow lot of things about ancient egypt we did not understand. these are signs of it being a progressive society. this is also the site of history 's first labor strike. the ones working on the tombs -- pimm: we do not know how the strike ended. built, sohe tombs are

presently someone got paid or someone got convinced. pimm: yeah. scarlet: you go to the museums and you see all of these artifacts, but it's very pragmatic, monday and daily life dailyday and -- mundane life matters. pimm: something we know about. the person requested -- the woman requested 30 pieces of silver. even then legal advice was not an expensive. do not know if it is about being unfaithful. pimm: yeah. scarlet: ben, thanks for your leadership all these years. pimm: all right. we have very much more coming up on the bloomberg market day. ♪

♪ ♪ ♪

get excited for the 1989 world tour with exclusive behind the scenes footage, all of taylor swift's music videos, interviews, and more. xfinity is the destination for all things taylor swift. pimm: welcome back to the bloomberg market day. am pimm fox.

somewhere out there, the statue of liberty. on this august 13th, 2015. now it look at top stories. in china, a series of explosions ofe devastated the city tianjin. 20 have been killed, at least 700 injured. -- saysch automaker that its automobiles were of 33d for a value million dollars. and after three consecutive klein, the 30-year mortgage edged up. the rate on a fixed loan is three point 1%. and the telugu jeske and has

been freed on a $100,000 bond, the order was blocked by the u.s. magistrate in philadelphia. and a couple of momentous days in havana, cuba. fidel castro turns 89 today and he has come out with a newspaper column saying the u.s. owes cuba damages from the trade embargo. john kerry will be in cuba tomorrow. he will raise a flag at the u.s. embassy, which has reopened after 54 years. those are your top stories at themoment there is also at moment, markets are closing in europe, so where the very latest, let's go to bloomberg's mark barton in london. biggest two-day drop which wiped when hundred 40 billion euros off the value of euro equities.

investors less concerned about the chinese devaluation after two days of decline. rubberstampednot -- germany has not rubberstamped the draft bailout yet. hopefully investors think that this will happen in the next day or so. these are the companies that made big news today. i thought first we would look at companies that take a large part of their earnings from china. 11% is the drop in the last two days. kona, finish a elevator maker, it has lost 15% of value. carmaker,he luxury one .2% of today. about china today. largesta, the second

bubbler of coproducts -- big, big gains. the biggest gain ever since it listed in 2012. strong performance in russia, nigeria, and ukraine offset weakness elsewhere. travel operator, shares up by 6.5%. profit growth will be at the upper end of its forecast. this is germany's biggest power producer, irwe. look at that. biggest fall in two years. a second-quarter loss of sevenfold as margin shrank at its powerplant. i want to finish with the 600. look at that. up by 9/10 of 1%. china concerns dissipated, not entirely disappearing. back to you. broughtonmberg's mark

-- mark barton reported from london. up, a renewed rivalry at the pga championship. courts atow you the the whistling straits in wisconsin. and tesla selling stopped to raise money and add charging states here in new york city. and in grace, no one really saw it coming, but real greek gdp despite0 of a percent the financial crisis. we will have those details and more on the bloomberg market day . , a volatile week in china. markets in turmoil. slowing is declined today and global markets are calming down. what is the chinese government take such a radical step. let's get analysis from nick

consonery. big your pardon. let's start out with a short-term and long-term forecast for china. k: short-term, i think you there is a concern that short-term depreciation of the currency could create a currency war. longer-term, i think this is reflective of where the government wants to head in terms of having a more market-based currency regime. that is what this is all about at the end of the day, to try to make the currency more responsive to market forces, and that is the reality. pimm: i wonder if you can describe what the political implications are and describe the timeline, because i know there is a big leadership change scheduled for, what, 2017? the seven most

powerful officials and the communist party are going to be replaced into any 17. the concern i have, beyond 2017, it is unclear what the government commitment to financial reform is going to be. politically, there are a number of individuals -- the central bank governor in particular -- you are empowered to push forward with financial reform. they have a window to do that and this went to -- this move with the currency is indicative of the broader initiative. pimm: tell us about the certificate deposits and how that plays into what is going on with the domestic market in china? one of the concerns we have had, you know, the argument about capital account liberalization, allowing more capital to flow in and out of the market, had become much harder to make. i think we may see reorientation on another key item in the -- portfolio.le

i expect we will see more through the end of 2015 in that regard. i wonder if you can discuss what the effects will have further emerging-market currencies, particularly those that trade with china. no question, it is a short-term. i think we will see the route in the currencies over the next couple of days. the central bank took steps to stabilize the currency. i'm not overly concerned about that the next couple weeks. i am concerned about the political repercussions. this will play poorly for china. president xi jinping will be visiting washington in september. i think this will be a big issue and will play out in a probably -- problematic way for asia and china. pimm: what will that do to china's ability to put together an economic zone, an international bank, so to speak, that would be run out of china,

for the development of the asia an area? i think that is a longer-term goal and in that sense they will move forward. the investment bank they announced this year was a big success for them. i think many of their trading partners want to get onboard. this move in the currency over the longer-term will play out as a liberalization. i am not overly concerned they have gone off the rails in that sense. it's just a longer-term story. pimm: nicholas, i wonder if you can describe the longer-term economy.or the nicholas: we are concerned about that. imports get more expensive, luxury imports even more so. think thenot government will go overboard with this depreciation. we are expecting less than 5% this year against the dollar. we think the impact will be limited. pimm: what will the impact

before economies such as australia that depends on china, because they send a lot of the materials to the nation? what this ultimately comes down to is what is going to be the impact on china's economic growth this year? policy is becoming more supportive of growth. not just on the currency, but in terms of general monetary policy. i expect we will see increased momentum. that will be positive for the off-season. not overly so. the trendline will not be turned around for the next couple of weeks. effect,ll this have any do you believe, on federal interest-rate policy? nicholas: we don't think so. this is indicative of the problematic global environment, but we do not think this will affect the rate hike at the end of this year. pimm: thank you for joining me, , joining mesonery

from washington, d.c. coming up on the bloomberg market day -- should you fear the reaper? does the death cross mean and should you care? ♪

pimm: welcome back to the bloomberg market day. i am pimm fox. they call it the death cross and it's what technicians have been talking about a lot over the past few days. it to talk about what it is an possible applications, our senior markets correspondent julie hyman. the death cross, as it is called -- it sounds very dire, doesn't? it is essentially when you have two moving averages crossing. this is the 50-day moving average. this is the 200-day moving

average. short-term momentum indicator and a longer-term moving indicator. when the short-term causes the long-term -- that is what days ago. couple why do people care? is ao people think it negative indicator? if you did not know it is a negative indicator, the word death in the title is probably giving you a hit. a -- a hints. it is supposed to signal a long-term downturn. that is the thinking a way. we did have a big drop in the dow two days ago. since then we have traded sideways. if it is going to be deft or the it, it -- death for the dow, has not come to fruition. this is the s&p 500, over the past 10 years, and the same indicators. we saw it cross above it to can 2008, 2009, and then stocks dropped, although it had

probably a lot less to do with the death cross then the financial crisis. there's a lot of debate about this particular indicator, and, pimm, i know you have somebody with you -- pimm: yes, i do. we want to bring in bloomberg --w columnist barry results barry. i feel better about this. tell us about this. call of thepeople death cross, the dark cross. when it reverses to the upside, that is known as the golden cross. people of look that every example of this death cross -- research, go up yucca ron greece of the chart store. they have crunched the numbers. they have looked at this. depending on which index, which data set, the range is

-- negative.o eh pimm: meaningless to negative. julie: why do people keep talking about it? do people talk about the hindenburg, the super bowl indicator -- just things that people think of meaning. pimm: if people agree that it is meaningful, does it become meaningful because everybody agrees so? i do not want to say all, but many traders have short attention spans, and they will get excited about this today, but next tuesday it will be forgotten about. the math is clear. on an average month over the past century, the dow was up about 65 basis points. over three months, 1.5%. following the death cross, on average, we are off about 15 bips over the next month.

half the time the market is positive. that is what i mean by slightly negative. normally when you have a death cross, momentum is somewhat negative. or not as positive as it normally is, and the year later there is no real meaning. that is why i say meaningless to ever so slightly negative. julie: is all technical analysis bs, or is it only be stuff that really does not empirically have predictive power? say that,is funny you because there are various schools of technical analysis, some of which i think have a lot more resonance and persuasive ability than others. i have yet to be convinced that fibonacci and elliott wave -- they are great looking backwards, but going forward, they are just very subjective. on the other hand, there are lots and lots of people who look at the data, punch numbers and

say, we don't know what the future is going to hold, but this is ally, gee, fairly high probability bet when this, this, and this happens. the other thing that is important to remember, if there is anyone magic bullet, anyone indicator that works most of the time, eventually these things would be arbitraged away. pimm: because everybody would be using them. there is something to be said about supporting resistance lines -- pimm: expressions of buying and selling. that is really all it is. barry: when people are rewarded when they buy when stocks pull back, that will reinforce its health. with thed to argue trend followers. especially on the managed futures side, but that is just a very narrow approach and a very specific application, so there aspects of different technical analysis that work,

but it's not a science and it's not an art and there are better practitioners and worse practitioners. where people run into trouble is when they take some data point that happens to confirm their existing bias and they start beating the drum with it and thinking, hey, there is the magic bullet and there's no such thing. pimm: all right, no magic bullet. we still like seeing that chart. thank you, barry. at can read your column bloomberg view. thanks to your senior markets correspondent julie hyman. coming up on the bloomberg market day -- how can you fly just like a ceo to? we will tell you, coming up. ♪

pimm: fly like a ceo to cities such as pittsburgh. one carrier is using business jets to grab nonstop travelers.

when the airlines consolidated, place toted nonstop many cities, leaving many passengers stuck having to make connections. our connection is betty lou and she is here to tell us what is going on with one jet. betty: i do not know -- i can't think about this line from "roque back mountain." mountain."ck "i can't quit you." cities. quit a lot of milwaukee was quit by many, pittsburgh, indianapolis -- all losing their status as hubs for these carriers. they consolidated. they rerouted. they are more now -- pimm: it is less profitable to run big jets out of the cities, so they want to go with the smaller jets, the commuter jets. betty: exactly and they want to

have been major up, the spokes like going to other cities. this is clever. appliesy called onejet to the second, even third tier cities, you might call them. indianapolis to memphis, milwaukee, pittsburgh. it is a business jet. we are talking about seven-seater planes. very nice. they are charging maybe two or three times -- pimm: the regular commercial ticket? betty: yes, and there are some fares that could be had for 300, $400. seats.ut only seven so if you are one of the 8, 9, 10 people, you are out of luck. betty: yeah. pimm: do they have backup jets? betty: we don't know that yet, but they have flown about 1000 people so far. they don't fly

on any route above 1000 miles. so, they want to keep very small, and maybe seven people a day is enough for those places. hawker.e beach jet, the well done. all right. can fly business like that, why not? pimm: let's find out. let's find out a little bit more what is going on on our options in sight. we want to bring in julie hyman. you, pimm.k let's look at the major performing averages. we have been muddling along. slightly positive at the moment. joining me for today's options in sight, dan from kk and financial joining me from out of chicago today. see this muddling along, we have had big news the past week or so, not least of which devaluation. where do we go from here? julie. is interesting,

basically when you look at how this market has moved, we saw the bounce off, the moving utility average yesterday, we are stuck in this range. but when you look at the seismic -- how, houthi market the market is moving on a day-to-day basis, we see the s&p better than 1%. i think you can make a case that implied volatility is a little cheap relative to what the market is realizing on a day-to-day basis. and the look at that seismic increase, i have to say, this is more indicative of top of the market than some kind of consolidation pattern. sorry, walk me through exactly why this would be a pop in the market? the increase in volatility expectation. when you see the realized moves on an intraday basis, you see a real increase in volatile. i think the fed is challenged. i am kind of minded of "o

where where art thou" they are in the barn and they go, we are in a tight spot. the fed is having a difficult time with the yuan. that is why we will see increased volatility moving forward. julie: gotcha. you have a downward buy here. welcome me through the trade if you would. yeah, i do, julie. i think there is a higher probability the market will realize higher profitability. put looking at the 206, 200 spread. looking at the 200-day moving average, i think this will offer a nice protective sleeve. yourdges out some of

market exposure. i think the risk reward is pretty good given the market conditions. speaking of the fed being in a tight spot, what would be the ideal scenario for equities, for the fed right now, for the fed execution of a rate increase? new the answer to that. i thinky, right now, the fed has kind of percent b message. it will be interesting if they stick to it. i think the market will react accordingly, but the expectations are still leaning to the fed moving later than sooner. julie: we have to leave it there. we will be right back. ♪

pimm: good morning. betty: a mixed day for stocks

and concerns for china. comcast a mistaken box medius. kkr joins the race for better benefits for employees who become parents. what the deal is, including flying with your nanny now. pimm: good afternoon. i am pimm fox. betty: and i'm betty liu. let's look at how the markets are trading at this hour. a little bit calm her. -- calmer. you can see the dow is up about 17 points right now. concerns about