american crude oil stockpiles fueling the route in energy stocks. pimm: we will look at earnings from target. the company's cost-cutting efforts are beginning to pay off. betty: the launch of microsoft's xbox -- the changing landscape of the videogame business. pimm: good afternoon. betty: let's begin with a look at how the markets are at this moment. -- weis a rally underway are sinking to near our session lows of the session so far. the s&p down 1%, the dow off by 200 points. we have lost almost 1.5%

already. some of the big movers are being led on those fears of global demand slipping away on china. caterpillar down 2%. dupont down 1.6%. freeport off by almost 3%. commodities, oil prices, look at nymex crude, down 4.3%, trading just at that $40 a barrel level. this is a six year chart, down 8.5%. the reason for the fall today, energy information report on crude supplies rising 2.6 million barrels last week. a decline of 800,000 barrels. pimm: there is a lot of crude oil. let's take a check of the bond market.

we take a look at a bit of buying that has happened all week. yields up half a percent more. the dollar basically unchanged against the euro. the yen also 124 against the dollar. the two currencies that had to do you value to dting -- had 2- evalue with the chinese currency. both of these countries are big exporters. just to take a look at some details, i want to bring you into my terminal here.

this is looking at the performance of these various commodity emerging-market currencies. same time last year. let's say oil state at the same price. it would cost 23% more in malaysia to buy the same thing between now and last year. no one has been immune to all this. look at the indian rupee, down 7%. singapore dollar down 11%. ofeal decline in the value these asian emerging-market currencies. let's look at the top stories a -- later today, the federal reserve will release minutes from last month policy makers meeting. investors will be waiting to see whether there was any consensus that september is the right time for the first rate increase in nine years. earlier, we spoke with the chief

economist for j.p. morgan securities. >> we have international set of forces, adding worry to the fed not just because inflation but on the growth side, the dollar going up. it hits inflation and growth. continued labor market that the fed should be looking at to be pushing up inflation overtime. it is a close call here. more than three quarters of the economists surveyed by bloomberg say the federal reserve will raise rates at next month's meeting. betty: the fed has 80% target for inflation. the economy is not cooperating. -- has a 2% target for inflation. shall prices barely rose with oil and the cost of airfare and home furnishings all filtered -- fallen.

angela merkel lobbied lawmakers to prevent too many members from voting no. movinghares of target lower by 1% today. the discount retailer posted second-quarter earnings that exceeded analyst estimates. same-store sales also better than analysts had expected. here's brian cornell on the target conference call. we are becoming much more flexible in the way we fill demand for products and services. this is stretching her supply-chain well beyond its core capabilities. as a result, some retail fundamentals have started to suffer. in our stores had been unacceptable so far this year. pimm: in the years since cornell took over, he has cut costs and focus more on the company's

best-performing categories such as apparel and home goods and toys. at lowe's, sales growth has slowed. the world's second largest home improvement chain posted second-quarter profit that missed analyst estimates. revenue grew at the slowest pace in five quarters. writing to rebound in home price appreciation that has led consumers to spend more on their homes. that did not translate into greater sales this time. betty: the hackers who stole data from ashley madison.com, they are naming names online. the website encourages married people to have affairs was reached last month. the postings including user identities, addresses, phone numbers and payment information. the hackers want the company to shut down ashley madison. those are your top stories at noon. we will hear from the

ceo behind the first fda approved treatment for sexual desire in women. the viagra for women. pimm: why the current illiquidity in markets is not just in the fixed income area. it's spreading to investments in commodities, particularly in the energy markets. let's turn our attention to emerging markets. more losses today. they are widespread. evaluating their currencies and emerging stocks are tumbling. brazil's currency down 20% since may. let's look at this, the ial at the lowest level against the dollar and a decade. -- in a decade. we were talking about brazil yesterday.

layoffs.otesting, mass is this a start of a currency war? >> in brazil, it's not really about what's going on in the rest of the world. it's because of what's going on in brazil. we are seeing the longest recession since the 1930's. the central bank thinks the economy will fall 2% this year. next year will also be down. it's not looking good domestically. then, you have the political instability, the political anddal because of petrobras popularity for the president is at an all-time low. it's below the inflation rate in brazil right now. betty: will this spill over elsewhere? >> what is spilling out elsewhere is what's happening in china. china affects the rest of the emerging markets and is affecting brazil.

what you are seeing within the region is all of the currencies are down. that is mainly driven by china. brazil can affect its trading partners like argentina. argentina has a lot of its own problems. argentina has a peg of an exchange rate. more pressure on them to the devalue. th pimm: i was looking at other emerging markets. and some developed markets like japan. you see massive the valuation versus the u.s. dollar. you are seeing malaysia spending millions of dollars trying to defend its currency to no avail. is this something everyone will have to accept? everybody's waiting for big domestic events to happen to drive prices even further lower. spent $25 billion in

reserves since 2014 to defend its currency. is he that throughout emerging markets bird central-bank string to step in and offender currency. -- you see that throughout emerging markets. central banks trying to step in and defend their currency. for the most part, you are seeing -- like we saw in vietnam and kazakhstan, pressure to weaken the currency to help the economy and to keep up with china. betty: is anybody saying this is a buying opportunity? >> that attends fence on your outlook for multiple things. outlook on oil, the fed. outlookdepends on your for multiple things. if you think the fed will postpone hiking rates because of china, countries that have currencies that trade closely to

what's going on in the u.s. will be a buy. if you think they will do for a hike. countries like mexico trade closely to the fed. countries inade emerging markets trade closely with the fed. as opposed to wild ones like argentina. curve of certain countries like brazil, certain people have told me they want to see what happens in brazil. they have the highest interest rates in the world, 14.25%. if you are thinking eventually they will have to cut rates because of what's happening with the economy, you may want to be looking at the local curve. betty: thank you so much. turning to the health of the u.s. economy, retailers like target and lows are reporting quarterly earnings this morning,

cost cutting helping the bottom line at target. pimm: profit at lowe's missing analyst estimates. the surprisingly weak result from lowe's. bigger ticket items were all selling, but they were weaker at lowe's. re is so much overlap. news with retailers right now. the cfo of target said it is just choppy. you are seeing all the retailers , not seeing a big consistent move one way or another. some retailers are doing great and some are not.

there's no general thing we can say that consumers are staying away from stores. they are going to some retailers, going to target. target sales were up. walmart missing estimates. it is on a retail by retail basis. i don't think there is any generalization. betty: is that different from one year ago? like two oren more three years ago where you saw this big mess move into walmart and the dollar store chains. there are some analysts who said the fact that target is doing good and walmart is not doing as well might say that consumers do have a bit more discretionary spending, they are not bargain shopping. have more discretionary spending. they like the target experience, they can go to target.

do you hear anything about people saving money because gasoline prices are lower now? >> exactly come which is what everybody wants to know. there seems to be agreement that because gas prices are low, people will more likely go to a store. --ecially walmart stores they think low gas prices drove more people to the store. they were not worried about spending the five dollars to get to the store. are they spending more of that on retail goods? a lot of the ceos of these companies still said they think consumers are pocketing that money. or spending it online. much. thank you so much more ahead. ♪

pimm: welcome back to the bloomberg market day. betty: let's get a check on how the markets are. you may want to close your eyes if you were able -- a full. -- bull. the markets are hitting session lows. back to the levels we saw on monday and even a bit lower. the dow is down the most by 1.2%. the s&p not too far behind. the nasdaq down 1.16%. part of the reason is the selloff in emerging markets and the prospect of higher u.s. interest rates which could come early as next month.

let's head to this one right here -- not everything is in the red. storage,of network shares soaring 87%. the reason is because of seagate. that is an 88% premium to tuesday's close. seagate is down by 3.25%. one popular retailer is not doing so well american eagle down by 7.9%. even though we saw a rise earlier this morning. its second-quarter adjusted dish its gross margin improvement in the second quarter slowed first the first quarter. -- versus the first quarter.

thank you very much. let's take a look at the top stories crossing the bloomberg at this moment. if i from ohio accomplishments has died. he was elected in 1968 and became ohio's first like member of congress. he was the dean of the delegation -- drawing attention for his unflinching interrogation of lieutenant colonel oliver north. he was 90 years old. betty: dick fuld is putting his estate in sun valley up for auction. 71 property includes acres. the compound includes three residential structures, the main house was service quarters, separate guesthouse with 11 bedrooms and 10 bathrooms. auctions expects the

estate to bring in $50 million. in the mood for love. the ceo of the drug company making the first ever pill designed to lift a woman's libido. ♪

betty: women who lost that loving feeling will have a pink pill come october.

the fda approved the medication to treat sexual dysfunction in women. pimm: this is the first fda approved treatment for sexual desire in women and comes after months of lobbying over the drug's effectiveness and side effects. sprout pharmaceuticals is the is bringing the pill to market. -- company bringing the pill to market. >> we will go out with a program. withll go forward physicians and health care providers and pharmacies and take them through education about addy. they will become certified. getting this right for women is important to us. it has benefits and risks, we want to educate the marketplace. tell us a bit of the story

of getting the drug approved. it had not been approved by the fda. you worked with an advocacy group that helped to make this possible. >> science made this possible. that is missed in the conversation. an expert panel was assembled by the fda back in june. they voted 18-6 in favor of approval. realized that group was looking at a lot of new scientific evidence. when the fda has asked us to do additional clinical work we've done it. advocacy come up we are one of the coalition effort designed to change the conversation. -- in terms of advocacy, we are one of 26 in the coalition. pimm: what is different about this formulation that was rejected twice before? in terms of for elation but different in terms of scientific understanding by

more data. more data in terms of challenge studies, and other pivotal trial, more evidence that it is comfortable that we had a label that would inform patients and providers. pimm: how much does something like this cost? how do you take it and will it be reimbursed by insurance? >> it is once daily at bedtime, nonhormonal pill. in terms of payment, what we've looked at his prices -- coverage rates for male sexual health drugs like viagra. 70% of men with insurance have those covered. we would expect parity coverage. betty: all right. what i thought was interesting as i read more about this, the side effects -- i'm not sure how effective it is. pimm: it is effective enough

that the fda approved it for very specific uses with very specific warnings. the efficacy of the drug had been brought into question. it was rejected who times by the fda -- two times by the fda. the name of the ebix a group is advocacy group-- is even the score. a group supporting the approval of a drug -- betty: even the score. at least they did so yesterday, one step further. on that note, i say goodbye to you. much more ahead in the next half hour. investors have dinged up on the liquidity question -- dinged up on corners of the market over the liquidity question. ♪

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cloudy day there in san francisco. a bridge. let's get a look at the stories making headlines at this hour. the longtime pitch man for the subway sandwich chain is going to go to prison for sex crimes. jared fogle has pled guilty to having sex with minors and receiving child pornography. prosecutors are asking for a prison sentence of 12.5 years. restitution pay tuesday him's. subway says they have ended their relationship with him. oil falling today. crude stockpiles fell unexpectedly. , down belowf price $42 per barrel. oil is down 32% so far since a high in june. we are in a bear market with oil. behind analyst estimate, losses slump in, last year's the crude oil market left several asian carriers holding

hedges in places where oil prices were higher. >> hedging fuel prices is something that airline should do. it is to manage the upside risk of fuel. loss, we we incur some will still build smaller. the net benefit is better. if you look at the result it is a major improvement over the last three years and you can see the impact of lower fuel with less time managing the risk, the upside risk of fuel price. betty: shares in asia's largest international fuel line saw the most in six years and airlines in the u.s. are gearing up for a flight to cuba. the obama administration is gearing up for a deal to allow travel between the countries. allowedw travel is through charter companies. american airlines already flies

1200 charter flights to cuba per year. move over tesla. will have automaker quattro concept that can drive 300 miles before needing to charge up again. at your topok stories at this hour. coming up, the videogame industry has changed a lot the xbox was launched in 2001. we will talk with a key executive behind the launch of the console and its enduring popularity and the fight against ps4. at 2 p.m. eastern we will get a preview of what to look or at -- that the central bank considers when hiking interest rates. from all corners of the market you will hear -- where did the liquidity go? what can banks hold on their balance sheet?

fewer investors are showing up to trade. to federal reserve is about release the minutes from the last meeting. can they make investors feel any braver? is there a crisis doing here in the bond market? lots of big questions for the ceo of 3rd avenue management, joining me now. david, good to see you. from theg you hamptons? david: not at all. working hard. [laughter] betty: i know you are. the dog days of summer. the illiquidity question, is this a crisis ruling? david: this is not a crisis, it is a change in the market every day. will be a lot of winners and a lot of losers as a result of what's happening, but the most important point is the opportunity being created. dislocation and prices are exacerbated by what's going on. certain securities are just

getting supercheap. market, for one. take metals and mining for another. harder to sift through those companies. very hard for anyone to make a speculative that on commodity prices. onpeculative bet commodity prices. taking a long-term approach is a great opportunity. what, in thee bonds of energy companies? there is a-- david: component of our portfolio investing in securities related to the energy industry, yes. betty: on the broader side, i want you to look at this chart. there is this herd mentality with people fighting over what's going on in the debt crisis. over the last few years you see the long -- since before the financial crisis you can see that things have gone up, up, up

. you can see it very clearly. the shorts have pretty much gone nowhere. they are practically in the single-digit, positioning wise. when it reverses, it will be painful. david: it could be painful for the shorts. especially they have made the wrong bet in terms of those companies surviving. not every bond has a short position, right? those securities will continue to perform as they have performed historically as that chart reflects. you hope that at the end of that maturity, you get repaid or refinanced on terms acceptable to you and they just continue to extend. marty whitman told me a long time ago that sometimes that is

never repaid. is just never repaid. it is just refinanced over and over again. intelligent companies will do that over time as they perform an improved. betty: but do you think that there is an illiquidity problem? david: i think there is an adjustment going on. betty: what does that mean? david: people need to adjust to the way that they enter into the market and exit the market. we had a meeting the other day with counterparties in the marketplace that are not trended -- not traditional for us because we want to find new alternatives for better execution on buying and selling. betty: is that because the banks are not there anymore? in thethe risks traditional sources of capital and transactional capital arm basically gone. -- are basically gone. it is hard to make two-sided markets with these institutions anymore.

betty: right, they don't want to hold this debt on their balance sheet anymore. that goes back to the dodd frank regulation and those conspiracy theorists out there saying that we are making a lot of nothing over the illiquidity situation because we want to then go to the regulators, like the treasury, and say -- hey, you created this problem. you have got to loosen up the regulation. it's not working. david: i don't know if i am a subscriber to that theory, but i will tell you i have had my own personal experience with regulators and they are exploring this issue and trying themselves to better understand what exactly has happened to the marketplace. betty: do you think that there should be more transparency? david: there is when we trace securities, every time there is a transaction it is recorded, but better transparency will

only lead to better execution. betty: right. on another note, speaking of where funding flows are going, did you see that article in "the cavalli?about mary is he a dinosaur in the industry? funds flow out of active stocks, people are just going into etf and index funds. what about for you? david: we are a much deeper value investor then mariano -- mario. this is probably more painful than what he is experiencing. betty: have you seen that up flow? david: through june 30 we are flat and flow. -- inflow --in flow.

a shorter term oriented thinker is frustrated -- frustrating for the long-term investors like mario and myself. we want to invest in good company's where we think we know that there are inefficiencies in the way the market prices that security and we want to buy that security and hold onto it for long time -- for a long time. he does it the same way, but it's hard when investors have wholeterm mindsets and capital into these passive strategies where they don't know what is going on. listen, a lot of money and time is spent trying to educate wall street people to make good investment decisions to learn about the companies they are investing in, studying them, research them and know everything that they can, but this flow of capital is going to do none of that. right, but are you sensing a fundamental shift? david: the shift has been

occurring for years. betty: it seems to be accelerating. david: we continue to believe -- ir-term, like mario didn't know how old he would be -- betty: something like the next four years. [laughter] be doing it into 2040 and beyond because we have young people at our firm who will be practicing this forever. betty: but does it keep you up at night at all? i was on, last time your show i talked about a company called weyerhaeuser. it is about what's happening in the housing recovery with our economy. has negatively contributed to our fund performance this year, yet we are still outperforming the benchmark. betty: what point is that? david: the point is that you have got to stick with your investment decisions over a longer period of time. betty: ok, the long-term

perspective. david, good to see you. more ahead on "bloomberg market day." reverberation from the chinese allation is being valued around the world. which market is taking the worst hit? we will be back. ♪

welcome back to the "bloomberg market day." we have some of the big stories of the day as we await the fed minute. climbing back up a little bit? lows,are off the session

down across the board. all three indexes have been giving back again over the last few days. right now the s&p, the dow, the nasdaq, all similarly down in the same percentage range overnight with selloff hitting europe and asia. investors are of course europe -- nervous about higher interest rates. take a look at the map function. this is a snapshot of the health of the 10 sectors of the s&p. around the circle, everything is in the red. energy is down as the biggest laggard. oil and gas companies are the biggest break. as it turns out the top three areest laggards on the s&p energy stocks. , down by more than 5%. chesapeake energy down by 6%.

for marathon this is their slowest since march of 2009. let's look at the price of oil right now. retreating today after its biggest gain in the past week. there was speculation that increased opec reduction would extend the global supply that we have been talking about for the past weeks and months. right now it's down to $40.79 per barrel. boost is important to meet the needs of the growing , exporting the most crude in four years this october. oil tumbling more than 30% since the peak in june. another commodity falling today is copper. that is because the world's biggest minor has aggressive synchronized shortselling from chinese hedge funds that have pushed it too low. right now copper is down. this is its lowest since july of

2009. betty: ok, down across the board. you so much. let's move over to asia, where it took a big front of the hit of the selling that was going on. in southeast asia they remain under pressure from valuations in china. we have this report filed from hong kong. >> southeast asian currency saw another volatile day. thailand holding steady in the wake of a deadly bombing in bangkok after its biggest drop since 2009. in malaysia the ringgit is an further decline. a political crisis and surprise increase in consumer prices weighed on the currency. dong for the third time this year, they said they acted preemptively to protect exports in light of the chinese

and expectedion upcoming fed interest rate hike. the south african department of justice said that the plan to have oscar pistorius released from prison early and put under house arrest is on hold. he was scheduled for release on friday and -- after his sentence of five years to prison. he has already served 10 months. a federal court hearing is underway on the tom brady case here in new york. brady and roger goodell are not in court. no settlement has been reached in his four-game suspension. to somely he is open kind of suspension, but not for the deflate gate itself, only or not cooperating. that's six days before the patriots host the steelers in the nfl season opener. batgirl crime-fighting

has died.966 "batman" she played in dozens of roles in 1960's, as well as costarring into elvis presley films. she was best known for originating the role of batgirl. yvonne craig was 78 years old. coming up on "market day," the man behind one of the most successful videogame consoles in history. we will speak with a former aboutoft xbox executive whether the console has a future and what that future is. ♪

betty: welcome back.

betty liu, he with my colleague, matt miller, who has decided to join us. matt: because you have a very exciting guest. betty: i know, and i know that you love video games. matt: particularly the xbox. betty: don't take away the fun just yet. users have been allowed to stream content from their consul to a windows 10 pc, and the is to their xbox one console as it remains in a dog site -- dog fight with sony's playstation four. the latest figures from the company show that they have sold ''s whileillion ps 4 microsoft has sold 12 million 's.x one joining us, a man who changed the life of matt miller robbie bach,. [laughter] .- matt miller, robbie bach

[laughter] matt: let me explain. some of moved to berlin suggested that we all get xbox is because we could all play against each other and this was the first time, 2001. it was magical when it first came out. what differentiated xbox from all the councils that came before it. robbie: in the early days xbox struggled. sony probably had 60% market share. xbox live was one of the two things, that and a game called halo, really saved the console and gave us a chance to be successful. betty: bringing it in, you just saw these numbers. there is speculation out there -- is there really still a war between ps for -- ps4 and the xbox? tobie: history will tell you

look at it by territory. sony will benefit from sales in japan. xbox will do better in north america and europe. there is sort of the battle by country that happens. also, the life cycle will be 5, 6, 7 years on each console. they go in cycles based on what's coming out. betty: they put the x -- matt: they put out the xbox one ahead of halo by one year. robbie: you will see how that plays out. betty: what is going to differentiate between the two? robbie: typically is not the box, it's the content. that is why halo is in an game. sony has its own important game. betty: i was going to talk about streaming. exactly. once you own an xbox or playstation, you don't think about the console itself very often. you think about the controller in the games and the things you

do on it. matt: that was not the case with the first xbox. there was nothing like it originally. now the ps for is a most identical -- ps4 is a most identical except for the games. robbie: we copied some things that they did a long time ago, we copied some things that they did -- they copied something that we did and now it is a bit of a dog fight going on. you are not just here to talk to matt, your devotee, but about your book. we've got that here, showing it. why did you decide to write this took? ibbie: when i left microsoft said i wanted to have an impact. it was an opportunity to take what i learned during that journey and apply it to different issues. i took the strategies that we used to fix the business, the 360 and did with xbox

apply it to civic issues. matt: what is the framework? three pages to build a strategy. tell me your purpose, your principles, and priorities. it's very concrete. very focused. you take that and you can use that complex -- use that for complex problems. betty: like what? robbie: we have a transportation issue in seattle. how do you fix that problem? think about immigration, our education system. there are all kinds of civic issues that we face. infrastructure in this country. there are real challenges there. the problem that people have is that the average citizen does not know how to influence it and politicians are busy playing politics rather than trying to address it. thegoal of the book and three-piece framework is to give you and i away to be civic

engineers and actually solve some of these problems. betty: before we go, what is the next thing in video gaming? robbie: the industry will tell you virtual reality. there is a profit -- product called oculus, microsoft has a others are doing it. the concept is cool. matt: what is your gamer tag? robbie: mine is old xbox. [laughter] betty: awesome, now we know. thank you so much, robbie bach. the author of "xbox revisited." matt, i will see you in the next few moments, in the next hour. coming up, data from ashley madison. ♪

"the bloomberg market day." we are 50 minutes away from the release of the latest fed

minutes. will they give any clues on whether a rate hike is coming? betty: an index that tracks the momentum stocks like netflix just hit an ominous sign. we will tell you what it is. data secret no more, user hacked from ashley madison, posted online, deep in the dark web. ♪ betty: matt: good afternoon. i'm betty liu. and i matt miller. let's take a look at the markets. stocks are down across the board about 1% at session lows now with the dow jones industrial average at 171