forecast, but our investor concerns overblown? alix: one thing standing in a way of hillary clinton come herself. how she is giving of the candidates a wider opening. scarlet: and dumping stocks -- how will it affect tech shares? good tuesday afternoon. i am scarlet fu, here with alix steel. alix: let's look at markets this hour. you are looking at the s&p trading around the lows of the session. still not that much movement. we are stones throw away from the record high on the s&p. we saw a little bit of a club back around 2:00 when energy stocks came back but could not hold any kind of momentum there. on, it is a sleepy

tuesday in mid-august. that is kind of the context there. homebuilders are gaining for a second day. you can see the move higher at the open. there is a leg up right at the market open. the group is up 4% right now, gaining for a second day and gain for seven of the last eight days after housing starts rose more than expected, which follows the encouraging homebuilder confidence index yesterday. the builders are at their highest level since june 2007. media stocks and biotech stocks rollovers of the market needs a new leader. will homebuilders be able to hold that? home depot is holding the group at a record high today. the world's largest home improvement retailer benefiting -- get this -- 40 straight months of rising u.s. housing prices. more equity in your house, you take out a loan, you fix it up, there you go. scarlet: clearly the ceo is

doing something right at home depot. place we saw action is emerging markets stocks. come inside my bloomberg terminal. the indexes falling to the lowest level since 2011. the second day we have seen that. obviously, huge story about that with china. basically, net selling of chinese and hong kong stocks reached $530 million as of last week. the money keeps flowing out. scarlet: and turmoil in countries like brazil and a turkey not helping, either. alix: look at the ruble and the dollar today and what is happening with the currency. citigroup is the second-most accurate forecaster on the current the and says it will fall to the lowest level on record by the end of the month. -- forecasting a lot of dismal action there.

what is the central bank to -- what does the central bank do? what do you do there? scarlet: with oil prices continuing to falter as well. today now most any, as oil continues to sink to new lows. we will continue monitoring the markets as we head to the close. let's look at the stories making headlines this hour. alix: there has been a settlement over the data breach and target. hackers stole credit and debit card information from as many as 110 million target customers. now the retailer will pay as much as $67 million to banks that issue visa cards, according to a person briefed on the matter. the agreement will cover expenses that the banks incurred in the data breach, including the cost of reassuring the cards and any fraud that resulted from the incident. t.j. maxx and marshalls posted second-quarter profits that beat estimates.

t.j. maxx also raised its sales forecast for the entire year. the company said the third quarter is "off to a solid start." you can probably thank my mom for that. scarlet: all grandmothers across the country. two more u.s. senators say they are opposed to the iran nuclear deal but the majority leader admits it will probably pass to in a "washington post" op-ed today, senator bob corker of tennessee calls on congress to reject the plan. new jersey senator bob menendez says he will oppose it as well. senator chuck schumer is another. mitch mcconnell says there are probably not enough votes to override the expected veto. make 6me lenovo plans to million a year at a factory in southern india. india is a booming market for smartphone makers. plus, the government has offered to tax breaks. that always helps.

alix: the force will be with you on japan's largest airline this fall. they will start flying a boeing 787 painted with the image of the famous robot from "star wars," r2-d2. oh, my god, that is so cool. it is part of the hype surrounding the new "star wars" film in december. that is really cool, by far the coolest thing i've seen all day. there all your top stories. scarlet: walmart's pay rises may be eating to earnings but the cover he says they will retain more employees and boost customer service which in turn will fuel growth. alix: earlier today, pimm fox and betty liu spoke to the former ceo of staples, now with an investment firm. they asked him if retailers, especially walmart, needed to keep wages level even after second quarter sales beat wall

street estimates. >> what walmart is a lot of smart things could be increased sales and that is a major positive. they are investing in a people, both in terms of salary and they also emphasized putting a lot more money to training. again, those are differentiators overtime, and positive things for the long-term. bite the you have to bullet in the short term to get to the long-term, particularly in an environment like this one. wondering if you could talk about pricing and discounters and whether they should lower prices even more. you have an awful lot of downward pressure on prices. you have the h&m's and the top shops driving down prices. you have a lot of targeted discounters in specific categories getting aggressive. of course, walmart has the big battle with amazon, which seems to be a race to the bottom in terms of price.

betty: there also seems to be a race to the bottom in terms of currency. walmart does not make a lot of money overseas. canada and mexico are exceptions. most of the rest of the world is not profitable for walmart. it will not affect walmart the way it will, for example, procter & gamble. betty: on the issue of wages, tom, we've seen several measures and certainly a movement, tom, across the country to get wages up but you also have further disclosure among ceo's as to how much they make. there is an sec rule that says ceo's -- companies needed to come out with ratios between how much of the ceo makes to their average -- to their average worker salaries. i mean, this is something that people say is really going to hit retailers. are you for something like this, tom? tom: no, i think it is really a

waste of time. because frankly, if you look at goldman sachs, where the secretaries are making six-figure salaries, the ratios will be fairly low. walmart andat a even if the senior management will not make as much money as the guys that goldman sachs, the average hourly workers at the much lower level, the ratio is going to look worse. i think it is a misleading statistic brought on by the unions. pimm: i wonder if you could tell us from the strategic point of view, could you change the structure at walmart, spinoff sam's club? what would you do to reinvigorate the retailer? i think home depot is a good example of doing it the right way. as opposed to getting a whole lot of different countries and businesses, they focus on providing great service and great selection and driving the productivity of their box. under frank blake's leadership and now creighton year, i think

they are a role model of what every retailer should be trying to do. tom,: how about amazon, and all the pressure over the weekend on jeff bezos building this culture, and apparently, the terrible work culture he has created at the headquarters, allegedly, by this article? is that going to guess is that going to put any pressure on amazon? tom: i think amazon has gotten really three kinds of pressure that is going to hit it. one is the kind of sweatshop that they run. the fact that they are pricing at levels that really are not sustainable over time. they don't make real money in their retail business. and overtime i think wall street will demand profitability. thirdly, they still managed to dodge sales taxes in many states and that is a third headwind that will eventually hit amazon. i'm not sure when, but it will. you about question to another retailer, but this the

food industry, whole foods market should -- whole foods. should whole foods lower its prices to compete? tom: the answer to that question is, sadly, yes. the only guys in town offering a broad range of natural and organic products, they can get away with premium pricing. to that everyone from kroger cosco to walmart is extending their offerings in this category, you have a legitimate openingi don't think one change with 365 stores is going to do it. it will have to lower their price umbrella overall. scarlet: that was tom stenberg, founder and former ceo of staples, speaking to betty liu and pimm fox today. alix: coming up, what ever became of the als ice bucket challenge? we have the numbers in the science behind the phenomenon. did you do it? scarlet: i did not.

scarlet: welcome back. i am scarlet fu, here with alix steel. go to julie hyman, talking about a downgrade of the media stocks. from wells fargo and analysts said we wanted take some time post-carnage after the selloffs sparked by disney's earnings. we want to take a step back and reassess the media industry. the conclusion that the analysts at wells came to is they favored distribution over content right now. there is this debate over the cutting of the court. will we see unbundling of the cable channels? disney, 20 century fox, cbs all downgraded. some of the criteria wells said to look for -- he likes time

warner and comcast -- it was looking for low foreign-exchange and low regulatory risk and product offerings that are considered must-have by the average consumer. of course, as they alluded to, as alix and scarlet alluded to, they might be late to the party. take a look at bloomberg intelligence indices. is of entertainment companies. one is of distribution, pay-tv companies. look at my bloomberg terminal here and you can guess which is which. especially given the big drop we saw over the past couple weeks in the content companies. the index of these content 20's like disney and cbs is down around 13, 14% year to date. the pay-tv in a colonies like di -- the pay-tv index of companies like dish and comcast are up. the concerns have percolated and then some through the industry and these stocks. in terms of other movers we are watching, let's talk

homebuilders for a moment. they are doing well on the back of positive housing data that we got this morning, construction data to be specific. lennar and the homebuilders etf trading at the highest in more than eight years. toll brothers at the highest in almost a decade. finally, retailers. we have a letter retail news today and they are a mixed picture in terms of how they did. walmart missing in part of currencies -- currency costs, stronger dollar, and the effect that had on his sales, in part because of higher costs to pay employees. it's all higher than usual shrinkage rate. stealing more stuff. walmart and tjx beating estimates. housing and off prices are doing better, guys. -- alix alix steel steel -- julie hyman, thanks so much. alix steel sitting right next to me. alix: let's talk politics.

as hillary clinton tries to win over voters in hawkeye state come one thing keeps getting in the way, herself. scarlet: clinton cannot shake the perception that she is unavoidable, giving candidates like presenters a -- bernie sanders a wider opening chewing good joining us is john heilemann. john: that discussions of shrinkage gave me reminders of "seinfeld." alix: totally different. john: they look back at her campaign about what she dead wrong and are trying to do things right here at she is doing more small events and is getting more into the -- more intimate contact with voters and not as imperial as you was in 2008, which hurt her when she came in third. it was the beginning of the end for her in a lot of ways. she is doing a different this time and i think she's doing it pretty well.

doing a good stump speeches and a lot of the photo contact, but this is still hanging over her, this e-mail controversy. it is her contention that no one cares outside of the beltway and people like us. scarlet: but that's not the case. people are asking questions. john: people ask questions about it all the time. i'm talking about in the democrats and operatives and voters, people come up and they don't necessarily think she is corrupt, but they want to know, how big a deal is this? will this hurt her in the general election? what is going on with the fbi? they all have questions. if sheat her peril ignores that or pretense this is just the beltway phenomenon, these questions. all the media coverage, voters start to ask questions, too. alix: how important is iowa per se because really, what someone like sanders or someone in the republican party needs to do is chip away at the democratic core, not the far left or farther right of the democratic party, right?

john: well, bernie sanders -- the democratic core is pretty left so bernie sanders is gaining on her everywhere, and the fact that the people who like bernie sanders the most are far -- white liberals, far left liberals. iowa andrs, winning new hampshire is the way he can change the race. after that, with a lot of african-american voters and hispanic voters, it is easier for her to win because she has support from those people that he doesn't. the fear is that if she loses in iowa and new hampshire to bernie sanders from they are not worried about withstanding the challenge. there were that it -- they are worried that if he wins those states, the whole race will blow up and the democratic establishment will look at her and say she is mortally wounded, we need someone else. her job is to shut sanders down. if she can beat him in iowa, it is pretty much over. if she loses in iowa, she has problems. alix: you can read john's piece at bloomberg.com/politics and

tune into "with all due respect" for former iowa senator tom harkin. scarlet: the pentagon will increase these of drugs by about 50% over the next five years. -- use of drones by about 50% of the next five years. the pentagon has been asked to cut down use of drones due to stress on personnel who control them. alix: a study of: cancer patients shows that those who drank coffee had better survival rates. soda and other caffeinated drinks do not have the same effect. coffee can lower the risk of diabetes. you have to restrain from the sugar -- scarlet: that would help you remember the -- that would help. you remember the fad from last year, dumping buckets of ice water to raise money for als, lou gehrig's disease. some of the money will go to columbia university to map the genes and critical phase of 1500 people with als.

alix: the question is, can they raise the money and without that kind of talent? scarlet: they need to come up with some thing else to go viral on a summer tuesday. alix: coming up, you will never need to ask for directions again. automakers, tech economies are fighting to make sure of that. i like it did details next. ♪

scarlet: there is a war brewing for the future of the american highway and who can map it the best fit it has traditional carmakers racing competition from gooe, apple, and even the chinese search giant. alix: cory johnson looks at the battle over your map. cory: there is a car race underway putting traditional carmakers against upstarts from silicon valley to the finish

line, getting self driving cars on the road first, and maps are the fuel in this race. >> it was really about getting from a to b. transitioning from something visual to something embedded inside the car, really going to become a component from the car than only helps you get from a to b but will help the car drive. cory: it is also knowing everything in real-time. so why would bmw, daimler, and audi team up to spend $3.1 billion to acquire the new kia map division? the carmakers are afraid of ceding control to the likes of apple and google. what makes it even more valuable -- apple with the nascent product, google with the google maps, tom-tom out of amsterdam, nokia. >> there was thought it might go higher. cory: automakers may have landed

a sweet deal. it will map the future of the auto industry. scarlet: an cory johnson, bloomberg editor at large, joins us now. cory has no problems asking for directions on the road. alix: so he claims. scarlet: you tell me who to ask and cory: you tell me who to ask and i will tell you why you don't listen to them. in addition to the map, it is going to have some sensors, probably, in the car. it will tell if there was a pedestrian walking or you are turning to close to a fire hydrant or something if you are making a left-hand turn around traffic. one of the biggest problems of self driving cars. let's imagine that the only maker of the self driving car won't be tesla or google or apple. that maybe toyota would like to have one, maybe mercedes and audi and bmw would like to have the self driving car. this is why they don't trust apple and google. what is while -- what if while

the map is going to work with their sensors, it is the map from apple or google in the car? what if apple is making their own carving their sensors work better with their map than what they let you use apple and bmw or audi? that is why the carmakers don't trust apple and google -- scarlet: two they trust each other, though? cory: i don't think google and apple have a lot of love. scarlet: no, to the carmakers trust each other? cory: it is initially assured destruction. they are working off the same principles in software, no one can isolate the others. alix: so it is not necessarily because consumers are clamoring to use it here. it is because they want the proprietary technology cannot rely on someone else. cory: bingo. it is also about future revenue sources. are they interested perhaps and

whatever other businesses may accrue to the map data? you can imagine a yelp-like service would have a value in the car. apple can build that, google can build that. if the carmakers -- let's say four to put apple maps in every one of-- ford put apple maps in every one of their cars, that apple could build a business around every ford user, a yelp-like this is because they would have all the advertising data and all that stuff. it is an interesting issue is valley andof silicon technology converges with the world of automobiles. scarlet: i cannot wait for the subtyping car. alix: i will finally get my drivers license when that happens. goodbye to you. much more coming up.

alix: welcome back to the bloomberg "market day." i am alix steel. let's look at the top headlines this afternoon.

in bangkok, authorities say a suspect in that deadly explosion was spotted on security camera footage. they are looking for a man who took off a backpack and then walked away. 20 people were killed and 100 others were wounded. the obama exploded in a bangkok shopping area that is popular with foreigners. -- the bomb exploded in a bangkok shopping center that is popular with foreigners. hostage was hiding in a covered under a sink, currently unknown to the gun man, when at least three television and radio stations revealed his possible presence. he was eventually released unharmed. 20 people were killed, including three attackers come in the islamic extremist attacks around paris. the largest auto retailer in the country is getting a little bit bigger. 16onation has agreed to buy car dealerships representing $69 in annual sales. autonation's operating income has risen by double digits east of the five last year's.

softbank group has increased its stake in spring for the second time this month. million,uiring $73 following an earlier $87 million investment in sprint five days ago. the softbank founder has reiterated his commitment to sprint as it shows signs of recovery after reporting its third consecutive gain in subscribers. we talked about that with the sprint ceo earlier on bloomberg. >> i think she has been very clear that she believes the sprint stock is highly undervalued so he will continue to invest in sprint as he has done and will continue to provide us the support he has been providing like we said, we are on the verge of a massive turnaround and we feel very good of the prospects and feel good about the future and that is why i believe the cell phone -- softbank continues to invest in sprint. alix: he's sec's light at the end of the tunnel for sprint, which booked losses in six out

of the past seven quarters, but the turnaround may take two to three years. bb&t may hit the cause but in on m&a activity. the regional bank -- may hit the pause butyton on m&a activity. the regional bank won approval for kentucky bankshares. the ceo joined olivia sterns this money from the company headquarters in north carolina. olivia asked king why the deal made sense for bb&t. >> is an outstanding acquisition for two reasons. one, it is a fantastic company, $9.6 billion in size, hundred 24 branches, very high quality, very profitable. and from a synergistic point of view it combines very naturally with the susquehanna acquisition, which we just closed not very long ago. two combined moves our

market share of them seventh to fourth place, it is a great company in and of itself but the combination is what makes us a real powerhouse in pennsylvania, which we are very excited about. third: so this is your whole bank bridges in the last 12 months. do you anticipate taking a little bit of a breather, taking a pause in dealmaking activity? kelly: i really do. we are excited about these three, two of them being very large. we will take a positive nature we probably get executed. we are very experienced at acquisitions. we have done over 80 in the last three or so years. we know what we are doing. it is important to be focused and really be sure that we take the time and are very patient and make sure that we execute with profession. overa: kelly, an analyst at guggenheim put up a note this morning saying that your deal

suggests that regulators are taking a lighter touch to this kind of consolidation of this size bank. what is your experience? is he getting easier to work with regulators? is it easier to get the acquisition green led? -- green-lit? kelly: over the last year or so the regulators decided that combination mergers are ok. they are positive on combinations that make sense, but as long as he acquirer has made the investment, the good corporate governance processes, to be able to take on the additional volume and continue to manage a very good company, a lot of times people think it is about the acquisition targets, but it is really not, in my view . as long as the acquirer has the capability to do it right, the regulators will be fine. if not, they will give you a lot of trouble. olivia: kelly, you are one of

the few regional banks you are buying up other banks right now. why don't you think we are seeing more regional banks do deals? kelly: well, i think some regional banks may be enough scale that they feel like they don't need more scale. some regional banks are concerned about the risks of problems that the acquisition target may have. and maybe they have other strategies they're working on. it is really out for me to speak for them. i will just say for us, we believe that scale is very important in the environment we are in today. certainly the cost of regulation compliance has gone up substantially. compressed. relatively slow economic environment. scale matters and when you do it with a high-quality company, it is win-win for everybody. kelly, then, do you have

a sweet spot in mind for scale and how far away are you from the ideal size, or is it more geographic? kelly: that is a great, insightful question. we are about 220 billion now with this combination. in terms of pure absolute science, over a number of years 325uld like to be in the -350 billion size range. that is not overnight. it will take a number of years. more important than sizes being good at what you do and being well-managed from the risk perspective. we really focus a lot on diversification, in terms of park services and geographies. you have seen us over the last several years make investments , lessller markets fast-growing markets. we have spent a lot of time

investing in texas and florida, growing getting -- faster. now pennsylvania, which has a combination of rural, more agrarian areas, like in central , andylvania, manufacturing then a market like philadelphia, we get all of it. we are always trying to think about combining rural and urban, fast-growing and slow-growing. the reason, quite honestly, is that combination minimizes risk. all markets have good times and bad times. what we want to do is have stable, fast-growing, less volatile earnings so that we can have less volatile performance and study growing dividends instead of growing share price. king with was kelly olivia sterns. shares of walmart are taking a hit after missing second quarter estimates.

one week point, higher wages. the company says its decision to increase wages to $10 an hour could produced profits by $.24 a share. for more, i'm joined by shannon pettypiece. $.24 a share -- how much money does that translate into for walmart? shannon: walmart says this wage increase will cost them about a billion dollars, an increase in the minimum wage to nine dollars an hour, $10 an hour next year, and in addition, they are doing training and other things to improve morale among employees. $1 billion is around what this is costing. is company said today it probably going to cost a little bit more than that, then what they had been previously expecting, because they are wanting to do even more to increase hours for employees. when it sounds like a money, whats a lot of money, -- it sounds like a lot of money, walmart has billions of dollars in annual sales. alix: was this the only reason for that?

we are seeing the high operating expenses? , ere's a lot going on. there was another one that surprised analysts. $.11 earningssaid per share when they decrease the forecast was due to increased costs of the pharmacy and what retailers called shrink, which is essentially left and waste -- theft and waste, products that go bad before they can be sold were items that are damaged or mismanaged inventory, things left in the back room before being put on the shelf. this is the first time that walmart has really talked about this shrink problem, and it could be pretty big. i'm in, we are only talking about things being stolen, put -- but rotten produce from a tv in the back room that .ummary forgot to put it out now they have to market down to it to be significant especially with a company the size of walmart.

to move earnings, you have to have a lot of waste. alix: not only is it inventory mismanagement, but theft, how unusual is that for big-box retailers? been hearing about this from employees over the past month, that they've been noticing theft increasing in recent years. everything from people who load a shopping cart full of tv and electronics and run out the back orr and like a getaway car, employee stuffing meat in their pants, and trying to walk out the store with stolen meat, i guess. this is the type of stuff that goes on. the employees told me that they felt it got worse when they were fewer associates on the floor level and walmart started putting them other places. walmart is trying to reverse it and put more sales associates on the floor and bring readers to stop this type of activity. it is a problem that has been creeping in for a while. we are picking on walmart

because they are coming out openly and talking about it, but nationwide, the retailers estimate that they have lost $44 billion -- alix: oh, wow. shannon: and that is just theft. alix: unreal. thank you, shannon pettypiece. meat in your pants? that is just gross. keep it right here. ♪

alix: welcome back to the bloomberg "market day." i am alix steel. we will head over to julie hyman. s&p off the lows of the session but an unremarkable day overall. julie: negatively unremarkable, unfortunately, for those who are long out there. we have had declines across the

board the much since early on today. you are lower pretty solidly and the nasdaq is near the lows of the session is not quite there. hasan walk you through what happened here because the consumer discretionary group is not even up anymore, little changed. some of the retailers are doing a little bit better. on youre, a lot of red screen. it is materials, tech, energy, providing the biggest weight on the s&p 500. in other words, all about commodities again. at least a lot about commodities again. if you look to the material stocks, it is the miners and metal-related companies -- report , newmontort-mcmoran, mining, all lower.

morgan stanley cut price targets on base metal companies by 33% on average because of lower pricing for the underlying metals, although they did say cmoran and alcoa looked the best for 2016. that is not helping stocks. aluminum and copper, both of them trading near six-year lows today. crude actually bounced earlier today. didn't seem like there was any particular news catalyst for that, but of course, declining along with the rest. analysts at barclays pointing out that china consumes 44% of the world copper supply, and if we see that demand declined, if growth and copper consumption there slows by 2%, we could see prices for copper fall -- i 3250 dollars. a further pullback in copper if we see the china situation continue to be a problem. finally, a quick check on the

semiconductors today. every chip stocks in particular were downgraded -- membership stocks in particular were downgraded over at bank of america, saying that these companies are spending too much on capital expenditures and lack discipline and demand in the industry. it has been a little soft because of pc demand. alix: fair enough. thank you so much, julie hyman. now to our top stories making headlines. thunderstorms are, getting gecovery -- complicatin recovery efforts in the chinese port city of tianjin. experts are concerned that the rain could spread hazardous material in the warehouse where the blast originated. workers held a moment of silence marking the sixth the day after the disaster. rights toselling operate 14 regional airports to a german company. it is the first in a wave of privatizations that the government needs to make to qualify for bailout loans. the decision hands over the

airports including several on popular tourist island destinations to a company that runs the frankfurt airport. the concession is worth $1.4 billion. russian president vladimir putin is at it again. he has taken a small submersible craft down to the bottom of the black sea to see if an agent ship grizzly discovered off the coast of crimea. putin went scuba diving and brought up agent greek pottery shards. it was discovered that the items were planted for him to find. those are your top stories. chinese stocks fell today by the most in three weeks. the shenzhen composite index dropped by almost 7%. meanwhile, china's wealthiest investors are dumping stocks. the number of traders with more ofn 10 million yuan shares in their accounts dropped in july. howell second listing be

affected? -- how will tech investing be affected? joining us is emily chang good some of those big tech names, what is the selloff doing for them? emily: alibaba is a company we have been asking about again and again and yes seen shares slump -- it has seen the shares slump could what investors are telling us is they still believe alibaba is a good long-term that. in the short-term, it could be a little rocky. same with other chinese giants. what is interesting, one thing we are looking at today on "bloomberg west," is what this means for global technology companies. chinese technology companies aside, what does it mean for u.s. tech companies like apple and google? apple is pretty good case study of what could happen, what the impact of the yuan devaluation could be for the broader economy. fact not to mention the

that these tech companies in china had problems aside from the selloff. there is concern of slowing growth in china. right, it is a, google does not operate in mainland china, basically. it is not as big a deal for a company like google or facebook and twitter, which are blocked in china at the moment. you have to think to us an extent with the broader slowdown could mean for the broader economy. some analysts think that software is not going to feel the brunt of this, but hardware companies will. it instantly makes the iphone a lot more expensive for a chinese consumer. this is in a market where there is saturation. more and more people already have smartphones, so they don't necessarily need a new one. the iphone is about $300 more in china. it is already quite expensive. the other thing is apple has already locked into contracts with some of their supplies at a fixed rate, so before, the currency was desired, apple

signed these contracts and cannot even get the supplies for the phones more cheaply. china, for example, is more than 1/4 of apple's revenue. this could be a big problem. alix: interesting that you brought that up. as you pointed out that iphones has become a more expensive, the made in china logo now becomes a lot cheaper. emily: right, except if they had these contracts locked in already with the supplies like foxconn. there is definitely a very interesting story there. we also were considering other companies like hp, which did a joint venture in china. because they did that joint venture, they are a bit less exposed. companies like microsoft not going to feel a lot of short-term pain from this. it is the longer term pain we have to worry about. alix: like commodities and hedging, the same kind of idea. thanks so much from emily chang. don't forget to watch "bloomberg

west" today at 4:30 p.m. eastern. still ahead on bloomberg, love etfs or hate them, but one thing is sure, they investors are using them as shortcuts. ♪

alix: bond etf's are gaining in popularity, with the trading volume steadily increasing in recent years. who is buying? big investors, including harvard's endowment portfolio, are looking for ways to dabble in efficient bond markets. lisa abramowicz joins me with margaret really dumb question, but why not buy the underlying bonds? hard.it is too darn you think there is an opportunity to jump on and it is not a specific bond opportunity but overall the asset class is looking better. it can be really tough to get those bonds. there are thousands of individual bonds.

it can be really challenging. it can be easier to just trade something that is more frequently traded an increasingly, it is an etf. it is like a new derivative, or as many people are saying, it is a new derivative or credit default swap index type of thing that people are turning to more and more. alix: so what does that mean? lisa: basically, in other words, it is like what you want to invest in but isn't necessarily the direct thing. like, for example, what is a corporate bond? it means were basically lending to a company, right? all of a sudden if you have a product that does these loans to the company, these bonds, backed by the revenue from specific colonies, you are investing in the concept could you are not investing necessarily in a specific company. it is one step removed, even though etf's do own baskets of

these bonds. alix: how are they using these come as a hedge, long-term bets? lisa: all of the above. yes, and goodbye. they're using them as short-term plays, clearly. there was an incredibly interesting study earlier this year that show that 12% of institutional investors they surveyed reported executing a trade that was more than $200 million at a time. yes, in credit etf's. big type oft-term a trade that people want to get in and out of quickly. that is pretty interesting to me, really. -- the sameudy study showed that the trade volumes in the top five etf's had increased 75-fold since 2008. this is a very new product in this new cycle. alix: what does that wind up saying about the liquidity in the bond market, which we tend to talk about a lot? lisa: people are worried about

it, really worried. and they want to have an insurance policy to get in and out of something quickly, which is something they value necessarily doing all of the work and going after specific companies. it also shows there is more money coming and going at any given time then people can put to work in a reasonable amount of time. if you have a fund manager getting a lot of inflows, people are pouring money into their fund, they want to getting income from that, it is tough to do that sometimes with the bond market, clearly. alix: good stuff. thank you so much, lisa abramowicz of bloomberg news. much more ahead. how do you like $67 oil? we will talk to the alastair thinks that will be the key. ♪

moments away from the closing bell. >> i'm joe weisenthal.

alix: u.s. stocks closing lower. ishares and shanghai dropped the most in three weeks. joe: the question is what did you miss? turmoil,ncertainty and what is coming next. alix: reading the tea leaves. scanning for hence of a rate hike. joe: and we talked to a texas bank chief about oil, housing, how the lone star state does it different. alix: we begin with the stock for the dow jones industrial average falling, ending the three-day advance. all about the commodities leading declines lower