u.s. stocks closing lower after losing momentum from a mid afternoon fallback. the fed minutes reducing speculation of a rate hike in september. joe: but the question is, "what'd you miss?" take a dip for the first time since june. are they about to see their own mortality? emerging instability -- the selloff in emerging markets will let go. stocks drop in pakistan and vietnam. goesand as go the ruble so carlsberg. alix: but we are forced to begin with stocks. we did see a selloff earlier in the day. we did see the dow claw its way back into neutral territory, eating back 115 points and then could not hold it and we and lower. joe: it's a strange day because

the dollar did end on the lows. it did not help stocks much. we have to talk about emergent marking -- emerging-market currencies and a crazy night in china, stocks tumbling hard before coming back. of the hardest hit is oil -- we are looking at a stone's throw away from a 30 handle. outunbelievable -- it wiped energy stocks across the board. they were the laggards by about 2%. says twoconomics thirds of that is due to refinery outages. that is a short-term blip, but it goes to show how people love to be bearish on the commodity right now. got earlier in the week, we a little bounce on oil but slammed right down again. alix: i want to take a deep dive into by bloomberg terminal and talk about commodities. i'm talking particularly about glencore. what you are looking at here is

hold on.news -- i'm getting there. there we go. this is the good news. this is the free cash flow glencore was able to generate. andcan see it is rising increasing to $4 billion. let's compare that to its net debt and the picture looks different. yes, you see it come down a little bit. it's about $47 billion right now. the best spread is still significant and therein lies the problem. joe: you flagged glencore earnings as something to watch yesterday, but they said something interesting -- everyone knew china was going to be week and it was weaker than they thought and nobody can get a good read on china. alix: they also blamed short-sellers. that part was weird.

i want to look into my terminal and talk about stocks for minute. you saw the last segment here -- the divergence breaking -- momentum stocks have in on a tear. people piling into these strategies where they buy stocks just because they have been going up. this is a citigroup index of momentum stocks. as you can see, there was a sharp leg down recently and people are wondering if this strategy of piling into names because they have gone up is going to deteriorate. alix: luckily, we have the global chief investment strategist at blackrock. to joe's point but that chart, is the momentum trade dying? it is a more challenging

environment. it has been stable and you can count on one hand does vix has eclipsed 20. that is nirvana for momentum because you have an environment in which what comes up goes up in a nice, orderly fashion. when volatility has risen in the past, even if it is rising from a low level, other factors like quality start to work better, which is what you have seen over the past couple of weeks. see the stockyou market ending the year and what sectors are compelling to you? russ: we had a view that this was going to be a mediocre year for u.s. stocks. i would hold to that. beterms of where you want to , i would be cautious on some of the utilities. those stocks only work in an environment in which the 10 year stays at 2%. assuming we get a better second half of the year, looking for

some parts of the market that are more resilient to a rate hike by the fed but also benefit from some economic momentum. that seems you are expecting a fed rate hike sooner rather than later. did the minutes change that for you? russ: we think the fed will go this year -- whether or not it is september will be a coin flip. the most troubling thing is a drop in inflation expectations. but if they go in october or december, we are still facing a -- facing an environment where the monetary regime is starting to change. joe: i think we have a chart of it later and expectations out to 10 years. why are we not seeing inflation expectatio pick up? realizedt of it is inflation. we have not seen that pickup. the commodity impact is a big influence. oil prices are collapsing, copper prices are collapsing, that impacts short-term views on inflation.

we have aher thing is global economy where you just can't find growth. are not markets delivering the way they were five years ago. alix: how can you be bullish on certain growth stocks when we see inflation expectations so low and emerging-market growth not there? at thef you look performance of growth stocks, it does well in a slow growth environment. if you cannot get the rising tide lifting all the boats, it becomes a hard to find commodity. that's why health care has done so well. it is a sector that has been able to generate growth in a slow growth world. joe: you mentioned volatility in the vix earlier. something you are watching is that the virgins between high-yield spreads and the vix which is staying pretty low. you expect these to resolve in some way and reunite again? russ: i think they will reunite

and the bond guys are probably little earlier. in the last seven or eight years since the crisis, there has been a tight correlation between high yield and the vix. this is not a statistical fluke. lowerlity is going to be in an environment where credit conditions are benign. credit conditions are a bit tighter than they were six months ago and much tighter than a year ago. in that environment, it's hard to imagine the vix can stay in the low teens the way it was. , the vix hit 10 and that is inconsistent with what we see in the high-yield market. alix: if we see the vix normalized to 20, what are the knock on effects of that? russ: that goes back to the discussion we were having about what risk factors work well in that environment. you are going through that process of normalization from the low teens up to 20.

you may want to think about changing the relative mix of the risk factors in your folio. quality is probably going to work better than momentum. joe: something you watches the chicago fed activity index. alix: i don't even know what that is. joe: why is this something you are paying attention to? what is it? russ: this is a measure put out by the chicago fed and it is a leading indicator. it is a fairly broad composite of a lot of different economic factors. the reason i look at it is it is to my mind one of the debtor single metrics to use in gauging the health of the economy over the next one or two quarters. over the past five years, it's 10 a decent job of telling us the following -- the economy is at a slow growth positive mode and likely to stay there. one of the things people are concerned about is are we going

to slip into another recession? is this early 2007 or 2008? it's telling you today probably not -- we are not expecting a breakout in growth, we are not seeing the type of early warning signs we were seeing in late 2000 seven. portionis comes to the of the program where we like to ask our guest what keeps you up at night? russ: a great many things. one of which is the fed. it's certainly not the end of the world for initial tightening. stock markets generally do really well in the six months after that. but this question about the possibility of a fed hike in an environment in which inflation expectations are falling is a problem. that means real rates can rise even faster. that has been a tougher issue for the market, particularly when it happens the context of some luggage -- of sluggish

growth. alix: i want to talk about gold now. thank you so much for being here. the global chief investment strategist at blackrock. up, carlsberg is feeling the pain after its sales in russia dropped. we have a chart showing a correlation you can't miss after the break. alix: can you drink it? joe: the chart? ♪

alix: i'm alix steel. joe: and i'm joe weisenthal. "what'd you miss?" carlsberg expects a profit drop on russian sales. the correlation --

what's the charge so much -- i love this charge so much. when people are optimistic about getting- ruble is slammed and carlsberg plunges. alix: but carlsberg is not even a russian company. joe: but they have a lot of russian customers and charts move together so nicely. alix: the fda has approved the first prescription drug aimed at boosting sexual desire in women. it will come with a number of warnings. doctors will not be ball to prescribe it until he have taken an online certification program. they will have to cancel patients about the risks which include nausea and dizziness. and some says it will cover the bill. hackers who stole data from ashley madison are naming names online. wired magazine says the posting includes user identities, addresses, phone numbers and payment information. the hackers say they want the

company to shut down ashley madison and the related site. a longtime pitchman for the subway sandwich chain is heading to prison. he will admit to having sex with minors and receiving child 14nography and also pay victims $100,000 each in restitution. prosecutors are seeking a prison term of more than -- of no more than seven years. subway says they have ended le.ir relationship with fog here's something you may have missed -- two more countries we can their currencies in the wake of china's surprise currency valuation last week. attnam valued its currency 1%, looking at a 6.3% decline versus the dollar. joe: that happened late last night before most of us had gone to bed. it's not too surprising. its neighbors, china and malaysia, had seen its currency we can a lot. perspective, it made

since they were going to weaken their currency. alix: one analyst says the euro is down 20% versus the dollar, 6.3%, please. joe: you can't get too freaked out about these moves. china moves a little and people freak out. you have to put these things in perspective. the other currency devaluation that happened is the cause extend -- the kazakhstan currency. that's the biggest drop since early 4014. a similar story -- the urban -- the emerging market commodity selloff, a lot of exposure to its neighbor, russia. i don't think most people would have even known the name of the currency before today and i will admit, even myself, they are another one. alix: take a look at the break

evens in terms of oil -- they are at $86 a barrel. into perspective what a world of pain they are in. has ae come back, why major mining company started selling eggs? i love this. the answer after the break. ♪

alix: i'm alix steel. joe: i'm joe weisenthal. "what'd you miss?" alix: a canada mine is turning to australian eggs which it will export to china. prices havee plunged 16%. the ceo says australia is going

from mining to dining. they find the mining -- they find the iron ore and they keep it and if they can't sell it, they say i'm going to sell eggs and omelette instead. best story of the day. joe: the idea of currency wars are simple -- lower current season equal higher exports, but it is not working for japan. check out this chart. our currency -- our currency worth a myth? my guest says currency wars are myth. the yen has fallen so much and you can't devalue your way to growth. china has done, people will say this is a currency war. the u.s. and imf oath welcome what china did and there has not been any retaliation. the south korean banks have met moves, thaturrency same day, australia with those eggs fell 1.5 are sent.

no big crisis. i think we tend to exaggerate these things. it sells newspaper it makes nice headlines, but it's like an arms race. we can make nuclear bombs but we have agreed we can have arms control. countries have agreed not to use their currency for competitive purposes. of pursuing effect a monetary policy given low-inflation and growth. alix: when you look at what kazakhstan and vietnam did, what is your take on that chart -- what is your take on that? marc: this is the third move by vietnam this year. we know that kazakhstan is having an oil crisis. i think economic forces would dictate the policy. joe: every day, we come in and it's another low on the lira or .he brazilian riel

when does the bloodbath stop? we had a love affair with emerging markets and that love affair is over. we need to see stronger world growth and yet we know big parts of the world are not growing quickly. we need to see higher commodity prices and we're not seeing this. we need to see the federal reserve easing policy. we also need to see emerging markets tend to do best in a weak u.s. dollar environment. a lot of companies borrowed dollars. because interest rates were so low, so they have a short dollar position and they have to buy it act. these emerging markets are feeding the currencies and the companies -- the countries with political problems like turkey, they have a week political structure. how much worse is a going

to get when you look at the emerging market currency index? marc: this is the third big dollar rally we have had since the end of grant woods. we just celebrated the anniversary -- nixon breaks the gold dollar link. we had the reagan dollar rally in the clinton dollar rally and now we have the obama dollar rally. the obama dollar rally will be as big as the clinton dollar rally which will push the euro down to record lows. we are at about $1.11. give me 30% on the currency before it's all over. it might take another year or two years, but it is a durable trend. joe: you mentioned the euro. today, the german parliament approved a greece they'll out. when you look at greece and the greek government, do you see a government that can follow through on this a lot and fulfill its terms? marc: i think there are two

criticisms -- the plan is horrible. austerity for a country that still has deflation. it's not going to work because the government will not be able to implement it. they don't leave in it. what's happening in the greek government -- there are two wings to a movement. one wing is the fundamentalist -- people who are having strong convictions. the other group is more realistic. they want to shape flour -- they want to shape power. greece, theening in two wings of the party are being split. the netherlands and germany have been approved, so the next step is maybe a vote of confidence that maybe the fundamental wing of the party is likely to support the government. oppose alikely to government could set up a new

election. -- thelection in greece current prime minister is still the most popular politician in greece. this political thing still has to sort itself out, but it looks like you'll have implementation and whether it short -- whether it sorts itself out is another story. greece is not going to be put on a path that leads to a stable growth. a long time of a difficult negotiation and it got easier. can they fulfill it? can they make it the next you years? marc: they have already begun implementing it. there was a story about the greek government authorizing privatization, which is one of the key commitments. like a reluctant imposition of this and i think it will be a catfight. when we think back to the

settlement, we think the negotiation is over, but the agreement is just another stage in the negotiation process. alix: we like to ask guests on the show what he'd you up at night and i want to ask you what currency keep you up at night? marc: to me, it is not a currency. turkey is a lot of trouble, the government is in trouble, the economics are horrible, the same thing rusher -- same thing with russia and south africa. look what is happening in mexico. the manufacturing sector is expanding the mexico is making new record lows. the big problem i worry about is we are in a world in which our children won't be able to live as good as we do. we are in an era of lower expectations and we have not come to grips with what that means. growth on af 3% sustainable basis are over. alix: thank you so much.

a pleasure to have you here. joe: we will be right back. ♪

alix: i'm alix steel. joe: i'm joe weisenthal. "what'd you miss?" mobile reports its earnings overnight. it's the biggest player in the phone market. take a look inside my trammell for the one number you need to know. this is average revenue per user to aboutm a down, down nine dollars and $.40 on a semiannual basis. joe: another thing you don't want to miss is the philly fed business outlook. 5.7s expected to rise from to 6.5.

we have a really ugly manufacturing report, so with a strong dollar, there have been a lot of concerns about manufacturing and this is definitely one to watch. that's all for "what'd you miss?" miss?" alix: great time for a shiny floor wax, no? not if you just put the finishing touches on your latest masterpiece. timing's important. comcast business knows that. that's why you can schedule an installation at a time that works for you. even late at night, or on the weekend, if that's what you need. because you have enough to worry about. i did not see that coming. don't deal with disruptions. get better internet installed on your schedule. comcast business. built for business.

emily: bitcoin hits a fork in the road. will it propel it into the mainstream market? i'm emily chang and this is "bloomberg west." paypal makes its first acquisition since breaking off from ebay. it's a startup named modest. i speak with a cofounder. messaging act -- messaging app kik -- it's