joe: and i'm joe weisenthal. alix: turbulence through the markets, investors pile into safe havens. joe: "what'd you miss?" more terminal for emerging markets, how far and fast willie contagion spread? alix: stocks falling further and the dow off at one point from 500 points. ,oe: and all eyes on the fed does this mean a september rate hike is off the table? alix: you are looking at a completely ugly brutal day, a brutal week, the s&p 500 falling 5.5 percent, the worst week in four years. this was a bloodbath. the dow falling into correction

territory. joe: i saw that headline. ugly. some of those stocks we were talking about yesterday got androyed again, volatility everywhere you look, gold up. everyone was buying the japanese yen. a wild way to end a wild week. alix: we talk a lot about the momentum names, we can hammer on them, but netflix in particular below average, facebook low average -- below average, so these guys are breaking down technically, what lines up holding up the market? strength.w we saw homebuilders, they were down, but of more than other stocks. small caps, they got slapped down. there was no place to hide.

this was toss everything, the winners, even apple, down a lot. alix: talking to strategist, they said that they would talk -- catch a falling knife. joe: everyone wants to be brave. if we look at how the day began, looking at china, it was an ugly pmi,acturing reading, the 47.1, anything under 50 is ugly. number, thegly worst since the financial crisis. the shanghai composite, which was slammed again, back where it was earlier this summer, the --nese economy and stocks they are coming off right now. alix: starting all over. look at the vic's, we have seen a huge rally. take a look on my right around

biggest rally for it ever. joe: that is amazing. vix: the 7% decline in the equates to a 1% rally in stocks, ,o if it normalizes around 20 if you take a longer-term chart, the normal level is around 20 so if it goes down to 20 you will see a humongous rally in the stock market. joe: another thing to talk about, all this craziness, does that mean a september rate hike is off the table? i will go to this chart, the financial conditions, this is basically market indications of how tight the financial market is getting. you see that they are already doing the bench work. you mentioned the vix, as it

gets elevated so to -- so did the other conditions. there is a goldman sachs measure, also based on the dollar. it is tightening up. we don't need the fed to hike, we already see this dollar strengthening and volatility spreading. alix: it is doing its job. joe: you can sit back. alix: bank of america, merrill lynch investment, dan suzuki joins us to talk about the stock market meltdown, being the worst week in four years, volatility spiking and easy treasuries taking a safe haven. what you do on a day like today? >> for investors, you want to stay oldish, but the near-term risk in the market is on the downside. signs, one of the

pressures of the market, but this is a mark -- a month before one of the biggest shifts and monetary policy, so it makes sense to because she's here, in thewhat is happening market. you can see, if you think about the last time i have this will back, we had a 5% pullback. in the next month, you saw tens rally,ally -- 10 stocks so you want to be aware that the news can be violent. aboute were talking netflix, amazon, all really getting some messes right now. what do you think? joe: as leadership in the market has narrowed, you see people pile into the few remaining winners. shows thert this

in this cycle, trading at a 50% premium for the --ket, that is not to double sustainable, so we start to see cracks. joe: from valuation perspective, there was a huge surge relative to the rest of the market, so when you see a spike like that, you wonder how long it will last. alix: so what takes the leadership? shiftve been expecting a in leadership, that will ,robably come around now between now and the end of the year. -- that isart to see contingent on signs of the global economy, trying to accelerate. i would be worried if we don't get that. that means technology,

industrial, even energy stocks, you could see a rebound. joe: what would happen that would make you turn bearish? >> if growth continues to get weaker, you see, for instance, if the chinese pmi goes below 45 and that starts to crack, or we see -- that is a sign of caution. chartwe do have a speculated for the s&p 500 and emerging markets, on a normalized basis over the last five years, in actuality they have not checked each other. the ms ajax -- msex is grinding on the bottom. what is the correlation between these? >> it will not be that high,

because direct exposure to places like china is very small. so the bigger exposure, that has to do with the indirect relationship through commodities, so it is a sliding scale. if people get worried that china will have a hard landing, then the correlations will not go way up. if it is an isolated instance of china slowing, implications are not that bad out of the commodity complex. joe: the global cyclicals used to light, what else is attractive to? -- to you? positiveo areas we are on is quality and growth. if you think that volatility will go higher, which we do, then quality stocks are the best. and they have been outperforming very well. alix: talking about sectors and

commodities, looking at the terminal, comparing oil to energy stocks. over all oil prices have gone hammered a lot harder. the last time that oil was at this level, it was in 2009, and then energy stocks caught up to it. are we looking at a decline for energy stocks? >> do the same chart, and look -- and focusonger on the long curve, i don't think so. oil expectations have come down a lot. energy stocks are down double digits, that is reflective. joe: you seem not to worry, but what keeps you up at night? >> it will come down to global growth. if we see signs of what is happening in emerging markets

will spill over and take down global growth, that is causing for concern, but we don't think that there is anything pointing out that right now. you don't see gold expected around you -- stacking around you? >> if you do a simple valuation of gold, we note that it is interesting that gold is cheaper on a relative basis, for what it is worth. you dan suzuki. alix: here is a commodities question, which company just in half2015 forecast due to diamonds? ♪

joe: "what'd you miss?" country/--ked which forecastntry cut its , go ahead joe. botswana, itnt -- is crashing. theirit makes up 70% of exports, they are getting destroyed by the oversupply and lack of a man. i want to -- demand. i want to round out where we

down 7% on the year entering correction territory, the dow down. the s&p 500 not there to help. the price of earnings has dropped in the selloff. joe: stocks are cheap now. the dollar sold off, you think blood in the streets, five it is safety,e but it did not happen. people were buying the japanese yen. neil is here. what do you think of the dollar selloff? >> i think the dollar rallied against currencies and sold off against others, mainly the euro. it looks like a rotation into d10 fx.

sensitivedity currencies rallied. i think that is the way you want to think about it. cross, the euro-dollar cross, that had the biggest wave. i wouldn't call it a -- this is still a flight to safety. alix: take a look at oil, the lowest levels since 2009, the biggest weekly decline ever. it is ugly. joe: i have heard you talk about how the economy is like the 1990's again, stocks do well until a couple of days ago, then slammed by oil. can you explain? >> where reestablishing relationships in the market that existed in the 1990's, oil and equities. 99 days is an interesting example. now.loyment was low, like

we had all these firecrackers going off all over the world. what did the fed do, they cut rates three times. slowdown in the 1999, wend in may of had to raise rates. right now, the fed is thinking in terms of costs and benefits. at the cost of keeping the euro from rising as one of the benefits. alix: breaking, brazil's stock market has entered a bar -- a bear market, falling 21% from its peak. it is down 9% on the year. that is not the only one. joe: i'm surprised it wasn't like that already. they have been in a recession for a long time. you still have hong kong,

indonesia, taiwan, there is a bloodbath all over. >> the question for investors and u.s. investors to ask, do bad things happen to america when people are finding work and the housing market is going up and to the right? i don't think so. i'm still optimistic, if anything, look gas prices got lower heading into labor day. i should be happy about that. anyone who drives should be happy. , most look at the count adjustment has happened, the big was fromin the economy the rig count, and by come down -- and it might come down a little bit, but it will not be like the first half of this year. if anything, the u.s. economy has been stating. .- fading the 2.2% will be close to 3.5%. what we know right now, auto

sales, housing, they have been doing better. financial conditions, does anyone honestly think it is harder for someone to get a loan today, no. that is what the fed cares about. core bank lending is accelerating. lender interest rates decline. joe: we have to go to a break. but we will be back with you. ♪

still on set with us is have been a believer in the september rate hike, did anything changing your mind this week?

>> obviously the probability declined, the market probably too much, i don't think that the as -- the odds are as well 30%, but it is a coin flip. if the fed is data dependent, the data is lining up in favor of a september rate hike. the june forecast had a tendency -- the economy doesn't need to accelerate at this point to achieve the goal. it has been surprising to the upside and the labor market has done well. the unemployment rate is ahead of schedule. so what is important for them to access is the outlook. it is, how they think about datas now, not really the in my view. joe: so when janet yellen looks

at this, she will not be freaked out and it will not pressure off september -- push her off september? a part of itself is the market. if they delay, the market will rally. you get into these feedback moves, they should focus on the economy and determine the extent of the markets. i don't see this having an impact on the real economy. in 2013, remember the markets hit a september taper and it happened in december. they were really concerned about tightening conditions, because it longer-term interest rates rose substantially. the: so it does not affect september hike, but does it affect the trajectory of rate

hikes? that things coming in from overseas it will affect it. joe: we have this bear situation and the unemployment rate is bottoming out, but the housing sector is getting going, what is going on? >> we had a delayed recovery in housing. we had credit conditions, but those are easing. it is making it easy for people homese down payments on and housing is looking more viable as an investment, you ask someone if prices will go up, they are more likely to say yes now than at any other point in the last six years. up in value. housing is likely to do well for a number of years. in the near term, it is accelerating right now probably

10%. that is reasonably healthy. alix: what will that do to inflation expectations? >> it is interesting, because house inflation expectations have been stable for a long time, 2.8% over the next 5-10 years. think that is a reason why the fed looks at what is going on in the market and does not refer to it as inflation expectations. it changes the relative prices of security and it makes it look like inflation expectations are lower. joe: you still have this course of people who are saying why is there urgency for the fed to hike in september or any time soon? wait for inflation to -- it isu have already

too late. by that logic, going in june 2004 when it core inflation was well above 2%, was that the right thing to do? janet yellen has criticized her predecessors for going too late and to gradually once they started, so it is important for them to be forward-looking. we talk about downside risk to inflation from the dollar and -- coren inflation is inflation is accelerated. it has been argued this year. alix: what disrupts your thesis? >> if the real economy starts to slow, that would worry me. politically, we are looking at what is going on later this year, will there be spanish elections, the economy there has been doing well.

governmentt friendly could come in, that would worry me. the china story right now, that is the market. alix: thank you very much. joe: we will be right back. ♪

oe: "what'd you miss?" alix: do not miss this, the chinese central bank is unlikely to lower by 50 basis points. joe: another thing you do not want to miss, next thursday we get m three money supply in europe. this has been going up nicely.

credit is it going and feeding into inflation. alix: good stuff, big week, big day. joe: that is all, thank you for joe: that is all, thank you for watching ♪ ♪ ♪ get excited for the 1989 world tour with exclusive behind the scenes footage, all of taylor swift's music videos, interviews, and more. xfinity is the destination for all things taylor swift. 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. stock selloff around the globe, what is at stake for tech investors? ♪ >> i am brad stone for emily chang and this is "bloomberg west". what is keeping bill gurley up at night? and how investor fear may influence silicon valley.