market day." olivia: could the fed further delay a rate hike? matt: speaking of slowing down, growth slowedles last quarter, one day after home depot showed gains. olivia: he wants to deport every so-called illegal, as he calls them -- matt: they are literally illegal. not so called, they are generally illegal. olivia: we're going to be 'slking about donald trump immigration policy as we crunch the numbers and came up with surprising legal findings. good morning. i am olivia sterns here with matt miller who is coming in hot. matt: there are definitions of words that we all use in

society, and it makes communication easier. olivia: that's not an official term. an illegal party, that's what you would say. olivia: no it's not. what about an documented immigrant? matt: i guess that's the pc way to say but the fact is they are illegally in the country. anyway, let's get straight to the market check. markets around the world are falling. more currency devaluation in asia. in oil prices as well. you see the s&p 500 down .8 of 1%, two thousand 79. the dow jones industrial down hundred 54 points, and the nasdaq off about eight times as well at 5020. olivia: looks about more concern about the rate of global growth. everyone looking out for 2:00 p.m. when the fed comes out. matt: the question is how interesting will the fed minutes be today because all the most everyone assumes, i think in the

market, most economists assume that we will see an interest rate increase in september. the market is showing awaits. olivia: and it will not include reaction to gdp numbers or disappointing inflation numbers. delia selloff underweight at the european benchmarks. -- clearly the selloff at european benchmarks. as we are seeing and selloffs in energy. matt: let's take a look at oil speaking of energy stocks. we saw a drop today, down more than 1%. $42.16 a barrel. crude is falling below 49 dollars a barrel, so the drop in oil we saw yesterday is scolding on the question is, how low can ago? tops also check the headlines this morning. starting with back to the future day for investors. they will study with the fed discussed last month for clues about what they might do next month. the central bank is due to

release minutes of its july meeting and investors or look will -- will look for views on interest rates and earlier we heard from chief economist at j.p. morgan securities who think the dollar can be pivotal in the decision. >> the dollar, in terms of financial moves, much more than oil prices is the fed. the dollar has been hurting the u.s. manufacturing sector, supporting disinflation and it is a reflection of weakness in economies abroad. if the fed is going to stop from an international perspective, it is the concern that the dollar has been moving up and offset to monitor policy sites. matt: more than .75 of the economists surveyed by bloomberg save the fed will raise rates in september. those that notes are due this afternoon at 2:00 eastern and we will have them instantly on bloomberg television. pitch mane long-term for subway will plead guilty to having sex with minors and receiving child pornography. federal prosecutors say jared fogle traveled to pay for sex acts with minors.

they also charge that he obtained child photography knowing it had been produced by the former director of his charitable foundation. subway has ended its relationship with jared fogle. the federal reserve says there is an inflation target at 2% but right now, the economy is not cooperating with that comment. it grows in july at the slowest pace in three months. the increase in the consumer price index, cpi, less than economist forecasted a growing .1 1%.-- at beliesonal experience those numbers. shares of target moving higher after the discount retailer posted second-quarter earnings that beat analyst estimates. sales were better than expected. and the ceout cost is focused more on the company's strongest category which appear to be clothes, leisure,, goods

and toys. matt: at leisure, huh? olivia: at leisure. matt: the u.s. is about to offer flights to cuba if sanctions are changed. obama is working on a deal that would allow travel between the two companies. they currently use charter on that route. some of the top headlines we are following this morning. olivia: still to come, much more including those struggling in the last quarter, even as the housing market shows plenty of signs of improvement. more shoppers seem to be favoring the big rival of home depot. call it the cheese mafia, smugglers have been broken up in russia. the latest test stop band foods from being imported. that is serious. there is a mozzarella ban in moscow. producers are still getting over $80 a barrel, how is that possible? that story and much more coming up in the next hour.

first, the cost of living in the u.s. rose in july at the slowest pace in three months. cpi and core cpi stripped up file a tell energy cost and it climbed less than they forecasted. casting doubt on how quickly inflation will return to the fed's 2% target. matt: that could impact went to raise rates for the first time in nearly one decade. is september still an option? joins us diane, she from chicago. one of the interesting things i have noticed is that most economists surveyed expect a september interest rate increase whereas the market is given it a 50%-50% chance. why the disconnect? diane: i think some of the disconnect is because economists are listening to the fed directly and say, the fed seems really ready to get to lift off although they are not going to move quickly after that. the low inflation numbers we have, the fed ensured that core inflation looked like it

stabilized and may be inched up a bit. overall, inflation tends to diverge to core inflation and that is the best indicator of future inflation and the fed says they do not need inflation --n to the 2% target which economists are listening to the fed and taking them literally while the markets are saying, listen, there is a lot going on around the world and they want to see of china will be a factor in those fed minutes today because china was one of the factors that came up in terms of markets ability that could maybe delay the fed in terms of its lift off in september. they arehe fed says looking for some further improvement in the labor market. how do they measure some? diane: some -- some means very little. august was a horrible number so it is a little tricky, and i think they are sort of pushing

themselves that even if august is a disappointment, they can still justify a september rate hike. i think what is really important in an issue with these inflation numbers, you mentioned earlier that year own reality is not what the print says. rapidlying up so much eating up a larger portion of consumer budgets. that will get into the fed debates as well because consumers have less to spend on discretionary purchases which is holding down inflation elsewhere in the u.s. economy. olivia: that is what is happening in my life. my cost is going way up in my salary is not. diane: and everything you pay at the pump is going into shelter costs. olivia: i'm not saving anything because i don't drive. matt: would olivia's shelter cost or the average american's shelter cost be affected if the fed increased rates by .25 of a point? dianne: very little in terms to qualified for mortgage, so a small impact.

the real issue is we have a shortage of single family and multi-family housing at the moment, so we are seeing a lot of apartment construction and not enough single-family construction. many people are still holding back on lifting their homes and they may be making improvements to their homes are underwater and unwilling or care they cannot qualify for a trade of orchids. they are unwilling to list. we have first-time buyers coming into the market and affordability will be a major issue on whether they rent or try to buy a home going forward. matt: would affect on the real benomy of .25 of an increase so minimal that it is worth it for the fed to finally raise the target rate to normalize? think there't even will be .25 of a point. i figure will fall less than that. there was a good justification for the fed beginning the process. that said, you take one step in like inching your feet into a self used to get your to it because there will be reactions in the financial

market and they want to give them time to adjust. they also do not have the clean levers they once did. they are talking about targeting a range that may fall in the low end and they have to use a lot of different issues, a lot of reverse repo market, worried about liquidity and the treasury market, and then they have the interest on axis preserve. this is not as easy as it once was and the fed does not have the scale to test in terms of how they have been testing these levers that they have to test when it will -- what it will be like in september. i think they want to get out the zero bound, but interest rate hikes thereafter will be very slow in measure. they have made that very clear. i don't think many markets -- there is a fear that financial markets unless the fed gets in on the stop, they will try to front run the fed in terms of raising rates. olivia: how about the stronger dollar? we have seen multinational company blaming the dollar on disappointing earnings saying the strength of the great mac is going to be enough to make the fed delay rate hike or as you suggest, raise up by less than

.251%? -- .25 of 1%? dianne: in terms of going forward, it will not delay the rate hike but it could actually slow down the pace of rate hikes going forward. one of the things the fed has been pleasantly surprised at his they've got the strong dollar falling import prices, which have fallen quite a bit, along with falling energy prices would have a bigger impact spillover affect on core inflation. one of the reasons it has not is because shelter cost goes up rapidly. look at this and we say it is not having a dampening effect and the fed takes that as reassurance. i think they will have to get in on this issue on shelter cost and what does that mean for overall price inflation? vehicle prices fell this month, airfares were down, but ice -- but i think to be spending more on those kind of things. olivia:! too! diane: -- me, go. it must be where we

this demand on inflation, there are some in the fed that are ok with inflation for longer and others who want to see overheating and overshooting on the target and catch up after cool period. matt: thank you. talking about the possibility of an increase in braids, but maybe if we called it something else -- olivia: such as? matt: rate reduction preparation. olivia: you never like lift off when i use that. matt: lift off sounds too aggressive, don't you think? up, improvement. a tale of two housing improvement chains. we will look at home depot and lowe's. ♪

olivia: good morning. welcome back to "bloomberg market day." i am olivia sterns. matt: i am matt stern. let's get a check with ramy. amy: target posted second-quarter earnings that beat analyst estimates and the reaction is positive, up 4.4%. profit was one dollar -- $1.22 a share versus $1.11 according to data compiled by bloomberg. ceo brian cornell has aimed to cut costs and target says it aims to cut $2 billion in the next two years, including about 500 million in this current year. another retailer is not doing so well. american legal is down right now, accelerating gains, even in 8.8% andfive minutes,

this is even though we saw a rise earlier this morning. it's second-quarter adjusted eps with $.17 a share versus an estimate of 14 cents. the gross margin improvement in the second quarter slowed versus the first quarter. one interesting thing to note, short interest is now 9.3% of float and that is up from 6.2% back in may according to market data. finally, writing out this big, staples is currently holding -- not holding to the flat lie, i saw this couple minutes and it is not accelerating losses down 1%. the office supplies company sees third-quarter coming in at $.33, $.36 versus an estimate of 36. it is citing stronger foreign exchange on sales as well as eps. it is a second-quarter adjusted eps that did not come in line with estimates at $.12. it's second-quarter revenue slightly falling short, 4.9 4 billion versus an estimate of

4.9 6 billion. investors not exactly too happy with what they are saying. olivia: everybody blaming fx, we were just speaking with diane. thank you. let's check the latest headlines. two suspects have been arrested in turkey after shops -- shots were fired at the palace in in stumble. one officer was wounded and the gunfire targeted the palace. now, and is a museum and twist attraction. -- and tourist attraction. attacks are on the rise by leftist militants. a longtime ohio congressman has died. louis stokes was the first african-american to represent the state in congress. he served five house terms. stokes was 90 years old. the first prescription drug to boost women's sexual drive is headed to the markets. it is made by sprout pharmaceuticals and it is a repurposed depression medication.

such a drug for women is long overdue but critics point to an array of side effects and say it is not that effective. those are your top headlines. matt: apparently, it makes you fall asleep, very sleepy and you cannot drink alcohol or take birth control. olivia: you just could not resist. matt: i feel like there are so many side effects. it is like the medicine that makes you grow hair but leads to erectile dysfunction in some cases. olivia: what do you know about that? matt: it doesn't make sense. why would you want to hear? depot earnings yesterday, lowe's reported a second-quarter revenue beat analyst estimates. home improvement chain shares are getting a boost this year thanks to things like improving housing markets and the demand for appliances, outdoor power equipment. despite that, the company's similarities, investors are viewing them as very different. olivia: more on the tail of the two home-improvement chains,

analyst fromn an ubs offices in new york. michael, thank you. toterday, we were trying have a conversation on whether or not home depot success was a function of the housing market doing so well aware there was, people executing. if you look at lowe's results, it looks like him depo is -- looks like come depo is executing well. what is close not doing right? -- what is lowe's not doing right? ishael: i think lowe's starting to catch up. it was 110 basis points over the last two years and averaged 200 basis points, so i think lowe's is starting to execute better. matt: what would you say is the main difference? frankly, i see home depot is around -- we have one in this building, full disclosure, more often than i see lows stores. are they in different regions, neighborhoods, what is the difference?

a good point.s i think the proximity of start locations to the population center is a short advantage for home depot. lowe's stores tend to be on the outskirts of town's as it developed its stores at a later time than home depot, so home depot has access to preferential real estate. lowe's has also made changes to stores and merchandising sides. that has inevitably lead to disruptions. home depot has not gone through such a metamorphosis, so i think it is a combination of those two factors. i think both willfully continue to participate as the home improvement cycle reaches its next stages. i think that will drive significant earnings growth for both companies. matt: why are we seeing slowing growth -- sales growth that lowe's and home depot had to increase the forecast? to go reiterated its, about look for the second half of the same thing this morning.

home depot saw a little bit less of a disruption from the weather given the storm is a bit more diversified. there was particular weakness in some of the southern states given the rain that occurred early in the quarter. i think that explains some of the differences, but they both should see single-digit growth in the second half of the year with the spread between the copper performance narrowing. you will see the market for embrace lowes. olivia: what you think of lowe's management? do you think their financial cylinders -- firing on all cylinders? --hael: they have make an they have taken progress. they have taken more stands in certain categories such as appliances and outdoor power equipment. it has allowed them to gain market share and that has been a necessary step. i think we could characterize those management team is showing progress. lowe's marketing team

showing progress. olivia: thank you. matt: still ahead, six cheese mafia members were arrested in russia. the latest on president putin's crusade to stop the import of banned foods. ♪

matt: russian authorities arrested six cheese smugglers in an effort to rid the country of u.s. and european food which vladimir putin band last year. officials have destroyed hundreds of tons of food so far. they announced a hotline for citizens to report like market food. it is part of russia's response to u.s. and european sanctions over its annexation of crimea and support of armed rebels in eastern ukraine. olivia: pretty incredible. mozzarella has been found in moscow. matt: i did not know that. isn't that italian food?

i guess europeans are an issue, not just americans. olivia: yes because the sanctions are from the u.s. and europe. so in response to the sanctions initially put in place because russia annexed crimea, and we have changed. of russians because activity in the eastern part of the country, the europeans and u.s. -- excuse me, the russian response was to put hands on some imports. matt: i saw them dumping and destroying tons and tons of food. olivia: how did that make you feel? matt: i felt like they could have given it to someone else, sent it to china or someplace where they have hungry people. olivia: it seems wrong to destroy cheese. matt: do you think vladimir putin feels guilty about this at all? olivia: i'm not going to speculate. the point is, they set up this hotline. the government is encouraging people to snitch on their fellow citizens. matt: i wonder what the punishment is for bringing in mozzarella. olivia: that's a good question. matt: do you sit in prison?

how do other prisoners you? what did you do to get in here? i brought in mozzarella. you know? maybe become a resource for other prisoners. olivia: you probably know someone on the black market who could help you smuggle in. black market choose video. look at this. -- black market cheese video. look at this. hope we don't get 20 years for bringing cheese into russia. olivia: six people arrested. matt: olivier, i fear that is all the time we have together. olivia: really? i'm pretty psyched. that does it for me. we will be back after the break. ♪

matt: take a look at new york city from our. gorgeous wednesday. the clouds may look a little

grim, but at least they keep some of the sun away from new york city. welcome back to "bloomberg market day." i am matt miller. let's check on the headlines. final hurdles and germany's parliament passed the 95 billion dollars plan today. it passed easily after lobbying with merkel and her finance minister. dutch lawmakers are now debating the plan as the germans returned to vacation. areunited auto workers angry about a plan general motors is considering. they're looking at importing a buick model built in china. that would make gm the first detroit automaker to sell chinese made cars in america. somebody is going to do it some day anyway. concerns about hillary clinton's evil controversy are surfacing among voters. cnn surveyed and found 56% of those polled and she was wrong to use a personal e-mail account as secretary of state. on the campaign trail in las

vegas, she was asked if she tried to clean the server. >> like with a cloth or something? we have turned over the server. they can do whatever they want to to figure out what is there and what is not there. that is what the people investigating it to try and figure out, but we turned over everything that was work-related, every, single, thing. serveromeone wiped the of tens of thousands of e-mails. it shows that mrs. clinton has a lead over her rivals for the democratic presidential nomination but puts donald trump within six percentage points of her self in the hypothetical head-to-head match. or than 400 days from election day. -- more than 400 days from election day. lows growth is slowing as posted estimates that missed -- posted sales growth that missed estimates. they prompted owners to spend more on their houses, but it did

not translate into sales this time. the shares, however, are still gaining today and year to date and over the past 12 months. lowe's and home depot have done incredibly well in the home building industry. the hackers who extol data from asher madison.com are naming names online. the website that urges married people to have affairs was breached last month. wired magazine says the post and includes a user identities, addresses, and entertainment information. it is owned by avid life media and hackers want them to shut down ashley madison and the related site. they dump the data on the dark web, so it will be difficult for everyday internet users to find, but they have succeeded in pushing ashley madison's ipo, let's say "shelving it" possibly forever. a had planned on selling $200 million worth of shares. those are the latest headlines.

let's take a quick look at the markets this morning. well, u.s. down, stocks are down across the board. the s&p 500 down 15 points, 2081 is the level. the dow jones down 51 points. of nasdaq down about 6 -- .6 1% in recovering a little from the lows in the session but still down 30 points. there was indication this would happen when we saw europeans early this morning, european markets opened up so far down and they are all off more than 1%. at least the major indexes there. down 50.ee the cac the dax down 1.6% and the ftse at 600 452. coming up, the biggest sovereign wealth fund lost almost $9 billion in the second quarter. we spoke with the ceo about the current investment environment.

we are talking about norway. year oil trending at a six low but small producers are still getting over $80 a barrel. how is that, you ask? we will tell you. greece is moving forward with their first privatization since the last bailout deal and it starts with 14 air courts. that story and more coming up on bloomberg market day. republicanme, presidential candidate donald trump has solidified his lead among the gop field and the latest cnn poll. among republican registered voters, 24% said they were most likely to support trump or president. in second place, former florida governor jeb bush with 13% and neurosurgeon ben carson and scott walker to round out the top four. looking at democrats, the poll out this morning showed 47% of respondents favor hillary clinton, bernie sanders is second at 29% but that 10 point jump since late july for bernie

trump ands the donald clinton go head-to-head in the general election, the poll shows hillary clinton edging out trump by just six points. donald trump has garnered a lot of attention for announcing a plan to deport all illegal immigrants. what would an economy without that part of the work was look like? let's ask jenna smiley cu joins us from washington, d.c. -- take a look at the cost not the cost of the actual just spoke which i with doug and he said that would cost about 600 billion dollars and take 20 years, but you look at the cost, for example, at unemployment or wages. jenna: exactly. we sort of took a look at what exactly deporting all of those immigrants might do to the labor market. in a nutshell, it would not necessarily be that for the u.s. workers. even a skilled worker. the research sort of shows that

there has been a lot of the unskilled, undocumented immigrants who work in the united states service complements rather than supplements for low skilled workers coordinated to the u.s. so deporting them could be a negative. matt: doug said the same thing. we should seek illegal immigrants as complements to native workers. we should point out that the research isn't conclusive, right? much of the research is not in line with other papers that you look that. jenna: that is absolutely true. the latesty on point, there is this cold body of recent research by giovanni perry at the university of california davis and several of his co-authors that find that these unskilled, undocumented workers with wages -- if you look back 10 years, there is a whole body of data that contradicts that, so you have to take it all, read it, decide

what you think, decide which research you choose to believe and what studies you think are most authentic. at the end of the day is it introduces some kind of doubt, you know? necessarily the case like mr. trump says that undocumented immigrants are pushing down that wages of united states workers. matt: i think the paper you cite shows that illegal immigrants actually add the native wages. if that were the case, we would all hire illegal immigrants to boost our wages. the paper by perry shows that unemployment would actually rise if illegal immigrants or all supported, but. says that is because wages would be too expensive for employers to pay. jenna: right. his argument is that when employers are employees undocumented immigrants at a steep discount, actually boost their profit and incentivizes them to invest in more capital, specialized workers, hire more workers.

if you deport all of those less expensive undocumented workers, it could actually be a negative for the workers at the company who were always there to begin with. matt: you don't look at the possibility of all -- when you look at, for example, social security contributions. you don't look at the possibility that all illegal immigrants are documented, if only 50% are deported, then we would still see a significant drop in the social security pot, would we? jenna: yeah, so the social security administration couple years ago put out numbers looking at how much undocumented immigrants are paying into the system. it turns out to be about $13 billion and that is because either they get fake papers or they have overstayed a visa, but somehow they are still on payroll taxes, they are paying in and the contribution somewhere around $30 billion and that was in 2010 and the received -- $13 billion and that was around 2010 and -- matt: you and i were discussing

this earlier. i was wondering how these 11.3 million undocumented workers contribute to social security since they clearly do not have real social security numbers, and you dug into the research and found that millions have fake papers, thick birth certificates, thick numbers. jenna: yes. somehow, they managed to pay their taxes. matt: i suppose that is at least one big plus. apparently, they help us get paid more, as native workers. let's take a look at the sectors that these illegal immigrants actually though. -- actually fill. for the most part, they are doing service work. we have a chart of that shows a massive amount of service work being done by an documented workers compared to natives. in the professional manage and and finance sector, there is not as much of a threat. jenna: exactly. i guess what sort of to take

away from this chart is that there are industries where these workers are really concentrated. if you look at who is actually working or trying to work actively in the workforce, it is about a billion workers and they are really concentrated in service industries, housekeepers, and really concentrated in construction and in farming. those are the industry that you really have to look to that might suffer if we have a real outflow of employees because they have all been deported. matt: when you were doing reporting and making phone calls on this, did you talk to anybody who said, i think donald trump's plan is a pretty good one. i would support that. jenna: i have certainly gotten those e-mails since i have written this story. is, at the endis of the day, legal and they should not be in the country because it is against the law, but i think they certainly research and it shows that they hurt wages among minority and low income groups who are

concentrated in certain industries, so construction for example. there are arguments to be made for why this might make sense. i think if you look at the numbers and that is the take away from our story, if you look at the aggregate numbers, it is not conclusive story about the labor market but it does look like it probably would not be good for american workers. matt: you brought to mind an insurance commercial, a home in sure that protects against a zombie apocalypse invasion. it is so unlikely that it is kind of silly at the end, right? 11.3we could deport million people. great work. i will treat that story out. still ahead, we are going to discuss a female viagra. stay with us. ♪

matt: welcome back. we are one hour into the market day. i am matt miller. i will kick it off in europe with mark barton in london. mark: i call it a spillover from emerging markets. european stocks declining today. ohhave that for the earl four the emerging market index. that on four of the emerging market index. we will know more about the fed later with minutes from the july meeting are released. sections expose to china, automator's and miners continuing to drop. european commodity producers are trading at the lowest level at the broader market since 2002. this is the great stagnant, since china devalued the currency last tuesday, minors

and automakers caps on by 10%. you know what 10% means. it is a correction. germany approving the bailout and rubberstamping it and another hurdle overcome for greece. now the european mechanism has to give greece at least part of the bailout to paint the european central bank 3.2 billion euros tomorrow. european bonde market, i think investors are theing those minutes from fed minutes in july to see if the fed will raise rates in september. little movement in sterling, comments from david miles from a policymaker that caught my eye. he said rate increases are on the way and when they come, they will be a reflection of the economy's strength. ramy:

: markets are down and hovering your session low. let's take a look at numbers. well, if we can bring them up that would be great. putting much back to the levels we saw on monday. s&p 500 is down by 1% and the dow jones down a little more than that and the nasdaq is the least of the three down about .9 of 1%. looking at the graph, indices have given back the gains they notched in the past two days. part of the reason is that selloff in emerging markets. as well as the prospect for higher u.s. interest rates and we will know more about that later today. dive with me into the bloomberg terminal and take a look at the imf function, a snapshot of the help of the 10 sectors of the s&p 500 and you can see that all 10 sectors are in loss mode. energy is the biggest lag down about 1.3% with oil and gas companies being the biggest. the lips, valero, and marathon oil down about 1.5% to 2.2%.

speaking of oil, the oil price today is retreating after its biggest gain in one week. it is down by nearly 3% at $41.33 a barrel. there is speculation that increase opec output will extend that global supply surplus we have been talking about for weeks, months really. iraq, the second-biggest member of opec, said a production boost was important to meet the needs of its population while angola will import -- export the most crude in four years this october. oil has tumbled more than 30% since this year's peak close back in june. that is all the time i have right now. i hand it over to you, matt. matt: thank you. over in shanghai composite, it was more than 2.2% and the nikkei dropped and the hang k fell by about 1.2%. dashboardory out of

the big story is currency. there has been little relief for confession -- investors in asia as southeast assets remain under pressure. southeast asian currencies saw another volatile date. in thailand, it held steady after falling to the lowest level since 2009 in the wake of the deadly bombing in bangkok. they say that attack is unlikely to the economic stability. for the decline as china's devaluation. the political crisis and a surprise increase in july consumer prices weighed on the currency. the announcement of banks apprise the market by devaluing the dollar for the third time this year. in a statement, the bank said it acted preemptively to protect exports in light of china's yuan devaluation and upcoming fed interest rate hikes. matt: that was bloomberg in hong kong. time for a check of the top headlines. award is out in thailand for suspected bomber.

out inls -- a warrant is thailand for a suspected bomber. there is a reward for his capture but police are not limiting their search to him. they believe he had the combo says. across thes from country are helping overwhelmed crews on the frontlines of fault fires. 95 fires are burning in 10 western states. hundreds of homes and more than one million acres have been destroyed. the forest service says the fire is burning through their budget as well. the japanese market is heading for the international space station carrying 4.5 tons of water and other supplies. japan launched at this morning after weather delays. the rocket should reach the station on monday. those are some of the top stories we are following at this hour. fantastic footage. norway, which poses the biggest sovereign wealth fund, poses the biggest loss in three years.

in an exclusive bloomberg interview, we spoke with the nordic banks ceo about the current investment environment. >> it looks on the surface like the quiet market since most returns have been zero for quite a few so far this year. interest ratell, crept up again after going down. i think the most interesting thing probably has to be the currency and [indiscernible] market currencies and commodity currencies. >> those currencies are moving constantly at the moment. my question to you there would be, can we expect bigger moves, more expensive moves? the chinese have depreciated the currency. perhaps you can defy what word you would use. will greater volatility come? >> i think it is possible. the currency market is slightly

-- slightly different. it moves into the currency market and that may be what we see for some time. >> you also mentioned during the news briefing that less money overall coming in from oil revenues, this is the challenge thethe fund in terms of risk and the duration. how about fundamentally change how you invest? >> one of the things is that we take 100% of the government's revenue and that means there is still a net positive inflow. it doesn't really change anything in regards to strategy, but we do not have the same amount of cash flow to reinvest in markets, etc. we don't move around that much. >> if i asked you what the biggest challenge is for you when you joined the ceo -- cio, it is it the fed hiking, is it china, is it the emerging market

industry? think it is monetary policy and china. both of those are influences of different variables related to currency but they are two key things we spend the most time on. matt: that was the ceo of norges bank investment. oil prices have tumbled more than 30% but some oil companies are reading more than $80 -- are getting more than $80 a barrel, double current oil prices. we will tell you, next. ♪

matt: welcome back. i am matt miller. oil tumbles to a six year low but smaller oil companies are reaping more than $80 per barrel through futures and derivative trading. producers from how come -- from

halcom have locked in higher crude prices and even though they are getting more money for down big, the stock is so far this year. here to explain my is bloomberg's investigative energy reporter and you must be a very busy woman these days. first off, the big integrated companies are not getting this. >> no. we have exxon getting about $55, 50 six dollars and chevron getting $54 for their oil. the reason is is because the companies have a huge cash cushion they can rely on and would text him. matt: so they are not forced to hedge. >> and exxon the tories they does not. matt: these smaller companies have to hedge as i understand it. >> it is unnecessarily a debt covenant but it reassures lenders they will have the cash flow to repay their debt, interest payments. so they tend to lock in prices

further out as insurance as how con -- halcon did. matt: their investors do not seem pleased that share prices are down. >> hedges eventually run out and when they do, the companies will feel the full brunt of the crash and even getting over $80 a brow, those companies are still spending more money than they actually earn selling oil and gas, so negative cash flow. matt: cool story. thank you for joining us. our investigative energy reporter. coming up in the next hour of "bloomberg market day," a flight to safety. precious metals are rising as stocks selloff and we give you a look at what is driving the market. ♪

matt: it is 11:00 a.m. in new york, 8:00 a.m. in san francisco. : stocks in south korea had a six month low.

malaysia's currency is the weakest level since 1998. results stock market has entered a bear market. matt: do you want to by an airport?- buy an the privatization plan that changed -- having an affair got even messier if you are one of the individuals who use the ashley madison website. matt: good morning. pimm: we are 90 minutes into the trading day in new york. let's take a look at where markets are trading right now. a bit of a sellout today. dow