the supply story returns to demand as brent crude drops below $45 per barrel since 2009. the data dependent fed has new data that has traders increasing their bet that janet yellen will wait. bloomberging, this is " surveillance." , monday, august 24. michael mckee is with us. i saw him in the elevator all packed for jackson hole. michael: the only thing we need to fear is fear itself. we don't know what is driving this route. do people come back and buy on the dip as they have done throughout this bull market? thedan: we thought conversation at jackson hole would be how to create inflation and the conversation looks like how to avoid disasters.

michael: the fed is getting easier today. we will go now to top headlines. the market selloff went global and it began in china where stocks fell the most since 2007. it fell more than 8%. there are growing concerns at the chinese economic slowdown is getting worse. at the opencks sell as the dax dropped more than 2%. futures indicate that u.s. stocks will be lower at the open and ended last week down the most in almost four years. oil is down again today as well. went low $45 per barrel for the first time in more than six years. three american servicemen have been awarded france's highest

decoration, the legion of honor. they helped foil what could have been a mass shooting on a french train and they spoke yesterday at the u.s. ambassador's residence in paris. >> the gun man would have been successful if my friend spencer had not gotten up. i want that lesson to be learned going forward. in times of terror like that, please do something. don't just stand by and watch. vonnie: the gun man is a moroccan who had been flagged by police as a radical. his lawyer is denying any linked to terrorism. there is growing speculation that buys president joe biden will enter the presidential race. on saturday, he met with senator elizabeth warren of massachusetts. she has not yet endorsed a democratic candidate. it makes sense for the two to meet. >> he talking to elizabeth warren who has important ideas and how to make the economy work for everyone.

i think it snows apprise he would want to talk to somebody like that. vonnie: neither of them are commenting public a. when the onlys hazards he faced were on the golf course, president obama confronts the political hazards of washington today as his family returned to the white house yesterday after their vacation. a busy september including congressional votes on the iran nuclear deal and funding the government. indycar driver is in a coma this morning at a pennsylvania hospital. he was struck in the head by debris during a crash yesterday at pompano raceway in is listed in critical condition. the 37-year-old returned to racing three years ago after recovering from a crash injury. that's hard to watch. michael: these guys keep going back. we have a crash going on in the markets around the world.

we got the headlines but let's do a data check. what stands out is the 10 year note yield at 2.02%. it has rebounded and look at the euro -- it is becoming a haven currency. people feel the ecb might cut rates again it appears. we talked about china which is down 8.5% but look at what happens to other markets in china. vix is up and it's higher than it was when bear stearns went under. are notonditions changed, the corporate bond spread for high-grade corporate bonds. it does not show a reaction which is good news for the fed. goes to your theme which is this is not necessarily a crisis. it's amazing how much

strategists are finding to recommend. people are recommending they get into dividend stocks and morgan stanley says growth sectors have been hit more than value plays. brendan: let's take a look at the mac monitor with two different measures of the strength of the dollar. this is what currency traders are looking at. this is weighted against a more liquid basket of the yen, the euro. the fed should pay attention to this, the strength of the dollar. this is what the fed is looking at. this is a broader trade weighted basket which means looking at the dollar against a bunch of emerging currencies. we look at how poorly they are performing. you have a completely different story. xy index does not n andde the chinese yua

they are our second-biggest trading partner. brendan: you will talk about this all week at jackson hole. it has been a dramatic day already in asia. the nikkei is down 4 and the downhai composite closed over 8%. let's go to hong kong. thatard over the weekend pension funds and china will work going to invest in equities. does the communist party have any tools left to support its equity markets? >> they have plenty of tools left in their toolbox. the central bank here has a lot conventional monetary policy in a long way to go to cut interest rates and a whole range to get credit loans through the economy and the government has

a balance sheet to die for impaired to the rest of the western world print if they wanted to, they could put a circuit breaker in the market tomorrow. it's a question of waiting to see what steps they take next. vonnie: any idea where the money coming out of those indexes is going? >> obviously, there's a flight to quality. the big concern in china is whether this is the start of a capitalized flow and whether it's the start of a capitalized flow for the rest of asia. it would put pressure on central bank to defend their currency including china at a time when they are let the -- they're willing to let the currency depreciate a little bit. brendan: chinese markets have suffered the worst in the last day of any global market. what is the level of panic in beijing? people are calling it quite ugly.

the steps they have taken so far have not gained traction. interestal bank is cut rates to record lows but they still have a lot of tools left in their toolbox. people expect them to intervene going forward to put a circuit rigor in all of this. i think there is an expectation that the economy will not turn around and a hurry but they want policy makers to make it slower. brendan: thank you. we will go to michael reagan. you cover equities. contagion? vector of this is all just fundraising ahead of the ashley madison settlements is the joke. i thought we would need a laugh. at when the market for started to roll over, the last time we set a record was may 21.

hadday after, janet yellen a speech in providence and she said we were going to raise interest rates and have had this slow roll over since then and it was more dramatic last week. china and yellen are the same story to some degree. the raisingact to of interest rates? brendan: what is the more recent catalyst? you have the ambiguous notes from the fed. as well as china. >> i think china is the story. we were down bad on thursday and friday and out china open's really bad on monday. now we are back. brendan: we have the cochairman

of gamco. we may not be entering a recession but it's a reminder there is such a thing as reversion and these things are healthy. we have not had a correction since 2012 so this is healthy. michael: do we go through another day of this and then come back? the market.t time you have to look stock by stock as we do and look for individual bargains. there are domestic companies that have recurring cash flow that are not impacted at all by china we will probably buy those. vonnie: people recommend taking stocks that have no exposure to asia. have deutsche bank recommending dividend plays. are there particular areas of the market you're looking at? >> we look at areas of core industrial media, and you're looking at exposure

around the world and the easy ones are companies that have little exposure to emerging markets. highan: do you have a dollar or load dollar bet? >> there are some exporters who are cheering the decline in the dollar this morning. that is important. brendan: we will look at the dollar as well today and will take our twitter question -- the global selloff, is it carnage or correction? let us know. ♪

brendan: this is "bloomberg surveillance." this is our temporary home which

indicates we are undergoing some construction. we will go straight to the top headlines. firefighters in washington state got good news weekend. there is less smoke from the wild fighters that have blackened almost 400 square miles which means more aerial tigers can drop water on the fire. wildfires are burning and at least four states in the west. chip dudley is planning a one-day hiring bids next month on. september 9 otlep p of late -- is planning a one-day hiring then his next month on september 9. the green bay packers may have lost one of their best layers for the season. jordy nelson injured his left knee in a preseason game against pittsburgh yesterday. the nfl network says he suffered a torn acl which is usually a season ending injury.

i'm sure that's a hard break for the player. that's tough to watch. vonnie: at least it was not a head injury. is belows intermediate $40 again today. will it stay there? below 45 dollars per market and that's affecting middle east markets. we have the middle east erector -- director. he is in athens, greece right now. thank you for joining us. picked the spots in turmoil. let's ask you about oil and the impact on the middle east. what does a 12% drop mean? >> it is significant. whatever happens to oil, it has a direct impact to markets in

the region whether we are in saudi orabu dhabi or tel aviv. the fall in oil prices is impacting the region in a big deal. this spread or is this contained? >> i think there is a bit of both. what's happening to emerging markets is impacting. the wider middle east what's happening more directly to oil prices is impacting saudi arabia, egypt. oil butes not export it's impacted by the wealth in the gulf region. there is a lot of flow of money into egypt from the gulf countries. that is impacting egypt. there is definitely a psychological effect. brendan: the prime minister of kazakhstan some other oil

producing countries will have to float their currencies as well. just as they did last week. do you agree? >> i disagree. in the case of the gulf countries who are pegged to the dollar because they are only producing effectively one commodity which is oil and they are exporting that commodity. it makes a lot of sense for them to be pegged to the dollar for the time being. if they were diversified, it would make sense. these people are beginning to that that there will be a reevaluation.of their currencies in the gulf i think it's not going to happen. in 2700 did not happen i believe it will not happen this time around. michael: people are looking at saudi reserves and are wondering if they want to spend all this money trying to prop up the dollar. the region is not

going to do what the russians did for quite some time, using their deep reserves to support the currencies. the gulf economies have far more money in their reserve cash than what the russians had when they began supporting their currency. they will support it but at the same time, there is more going for the gulf region than other parts of the world. i do not expect for them to be doing anything contrary and but they are sitting on huge reserves. saudi arabia is sitting on close to 100% of their gdp on reserves. at the: when we look routeu in equities and theae, have these countries missed their chance to diversify? >> over the last 10 years, some of them have not been able to diversify. over the next 10 years, they should be doing more of that. certainly, saudi arabia is not diversified enough and they

should be thinking of that and i think the current political decision-makers are thinking thoroughly about this. they should be doing more of it and i think they will. brendan: thank you. we will go to our twitter question -- the question of the day -- is this carnage or just a correction? it might be something different depending on which country you look at. this is "bloomberg surveillance." ♪

brendan: this is "bloomberg surveillance." we will take a look at our morning must read. mine is from larry summers -- we have chrismorangi -- we have with us.rangi are we looking at long-term stagnation? global growth is definitely low and has been low in the u.s. you put that against a back drop of low interest rates and you figure out what to do. i think interest rates will stay

low. the september rate rises off the table. brendan: you would go into march? >> i think the fed got a gift. they were in a ox and needed an excuse not to raise rates and i think they missed the window. we are: let me note that seeing another deterioration in the market. the s&p 500 futures are down by 46 points which is 2.4%, not quite at the lows overnight but moving in that direction and the 10 year yield is down to just over 2%. it fell to 1.97%. look at the oil prices -- brendan: when you watch this deterioration in real-time, earlier this morning you said you want to distinguish that it's not a stock market, it's a market of stocks. >> you have to think of the

feedback effects and what is the reverse wealth effect and the hit to confidence. what we saw for a number of years was un- correlation and everything now seems to be moving together. >> it is a macro driven market again. brendan: what does that mean. its china, its oil, its currency -- it's all these things driving whether the market goes up or down as opposed to individual earning power of stocks. summersthe larry article you just quoted, you guys are going to jackson hole and janet yellin will not be there but stanley fischer will print what kind of questions will they discuss? michael: everyone will talk about what the global impact is of this and whether it should weigh on the fed. stanley fischer is supposed to talk about inflation.

we will see of they of the rough at all. vonnie: last time it was he u.s. ratings downgrade that was causing the selloff. the fed funds futures indicate it is only a 32% chance that there will be a move in september. our twitter question -- looking from asia to europe and now to futures in the u.s., is this carnage or is it just a correction? let us know. this is "bloomberg surveillance." ♪

♪ brendan: this is bloomberg surveillance. i am brendan greeley with vonnie quinn and michael king. it is busy and picking

up steam this money. thencern in china that economy is getting worse. the benchmark and shanghai fell more than 8%. that is the biggest one-day since 2007. u.s. stocks are down to. germany stocks down 2%. it is down 70% since the peak in april. futures indicate stocks will be lower in the open. down the most in almost four years. meanwhile, the price of oil keeps falling. west texas intermediate is trading below $39 a barrel this mine. crude went below $45 for the first time in six years. crises between south and north korea having going on for more than 24 hours. they are demanding the north apologize for placing when mice -- placing landmines that injured two south korean

soldiers this month. north korea says it is not responsible. read has come out in favor of the iran nuclear dear. he was one of 18 democrats who has not announced how he would vote. president obama is trying to line up enough lawmakers to make sure the agreement is not killed. attendance is better than usual for a sunday school bible class in georgia. the teacher was jimmy carter. even though he was treated for a brain tumor. the crowd was between 700 and 1200 as hundreds of people join the conversation. is doingout of compton what the box office. it took an almost $27 million. mission impossible a second. it taken almost $12 million. those are your top headlines. minions.

i took a party of four -- of four to six-year-olds to minions. funny has told you about oil prices breaking genetically this mine. look at crude breaking well below $45. to otherelation markets or are prices telling us a global slowdown is getting worse? peter is an oil industry analyst with bloomberg intelligence. there is a distinction that matters. if were going into a global recession, then oil prices will stay low for a long time. if this is correlation, markets start to go back up and maybe oil prices go back up a little. what we have to keep in mind is the narrative in the oil markets has been for so long resilience. the narrative shifts to the demand side.

unfortunately we have been seeing like you talked about in china this morning, the demand side is not robust. a near-term up in the oil markets is shortcoming. we are getting into a season when demand will be slow. even outside of the macroeconomy. peter: in the u.s. we are entering high driving season. it is a low demand period for eric -- oil. vonnie: there is a psychological barrier. do we need to close below there before we can call this a collapse? peter: oil being down from its peak at 60% is a dramatic move. oilever nomenclature, the patch is serious. we don't have a specific oil price. what i can tell you was looking at the fundamentals and the supply and demand side, it is easy to understand how you could

conceivably get to $30. we recently did an analysis which said that breakeven prices are around $30 levels. in a bad scenario where demand is not pick up, you are looking at low prices for a long time. let's look at supply-side. there are indications we are seeing the rate of increase lowdown. at what point do the two lines intersect between demand and supply? peter: the bad news is that is a long off into the future. you see increase production from saudi arabia, iraq, and the onset of new oil from the run that might hit the mac -- market. this combination of factors seems like a bad -- barrage of bad news that the oil market and are doing well this morning. brendan: it is already a red day with futures in the u.s.. when you hear calls potentially as low as $30, how does that change your portfolio? >> these natural stabilizers at

the pump get consumers taking from the producers and industrial economies. with the mindset -- is the mindset of the saudi changing? given they will need a greater need for reserves? in between that time and december 4, there will be an emergency meeting. the thinking has not changed. the strategy of market share is working. they have not broken the backs of u.s. shale. we had stabilized around $40 a barrel for a wild. this particular pullback has to do with the dollar index pulling back a little bit, or is this more fundamental? peter: that actually helps commodities. since may, we have seen the dollar rise. that has put pressure on commodity markets and particularly oil. you're not trading

oil but you are buying gasoline, what is the impact? will refinery closures keep oil prices higher? peter: all things being equal that is true. during a seasonal demand for guessing, gasoline prices will be lower. that is the beneficiary in all of this, the consumer. -- gettinge looking any benefit our people driving cars. brendan: we have gone from supply to demand. i'm wondering if there would be a supply question in the future. peter: these markets are pricing in a run. what they are not pricing is the potential speed these barrels may hit the market. the velocity that these barrels move will dictate the price of oil in the short term. michael: what about the people who are hurt? whoctober, banks looking at they have led to in the oil industry and a lot of companies going banker. what about layoffs? that we lost a lot of workers or could we lose more? have cutey

dramatically on their workforces. that pain is not fully over. as those prices continue to drift lower, you will see them cut closer and closer to the bone. if you look at the macro picture where employment was robust in texas and north dakota -- those places have strong oil production in common. those places will see significant pullback. brendan: peter of bloomberg intelligence to conjugate as a number but saying there is a possibility for numbers as low as $30 a barrel. coming up, what is this global turmoil doing to the vix? is it the fear index or the uncertainty index? on bloomberg television, good morning.

brendan: this is "bloomberg surveillance". drop in the0% shanghai composite. a move to germany. right now you're looking at u.s. futures trading in less than three hours. they are down 2.5%. let's look at the single best chart. vix.priately enough, the whether it showed complacency.

it was a long, strange month of august. that is today's single best chart. the vix is a measure of volatility. at the s&p 500 and the expectations that equity in the u.s. will change in the future. it got as low as 11 this money. this morning, it is at 28. compare that to the crisis high in 2009 where it was at 44. michael: it is interesting to note at this point we are at 28 above where it was when the bear stearns collapsed. markets were freezing up and the fed had to come to a rescue. that was a 27 handle. ix already above that. is this really worse than that? vonnie: morgan stanley saying this morning that the spike in showing how surprised

investors were by this selloff. the initial idea that it is happening today so sell, sell, sell. people must be buying, right ? brendan: you made the point this morning that bear stearns looks worse in the rearview mirror than it did at the time. there was something going on that -- it wasn't a harbinger. we didn't know what was going to come. vixs, when you look at the right now, do you have a danger level? chris: we don't have a particular danger level. you make money when markets are fearful. you get an opportunity to buy stocks below their intrinsic value. brendan: how very warren buffett of you. chris: we try. i am a little surprise that the market is surprised that this was coming. we have an waiting for this correction for a long time. brendan: people have been telling us on this program for two years that we are waiting for a major correction. then he comes in everyone runs

around screaming. thate: it is interesting it is happening before any federal reserve move. do we see another move when the fed does finally move? brendan: i keep wondering. we have been waiting for some kind of next fed tantrum. was the tantrum free tantrum -- pre-tantrum? i think it has or surely will. either waiting for someone to make something about qb four. vonnie: mark brown is saying it is down to 1.34 -- 1.75%. live: not mutually excuse -- not mutually exclusive is my answer to the quick twitter question. i don't think the fed will raise rates and september, maybe not even until november. brendan: the qe4 is the worst

mistake for the fed. in the long run, is this correction a good thing for the markets? chris: corrections are part of the business cycle, squeezing x -- executive excess. this was macroid driven. is there a difference between the longer term trend and the route we saw friday in this morning? are both of those macro driven? chris: are our expectations of future clash -- cash flows in the global markets gone down 10%? no. vonnie: who are the buyers at the moment? are they waiting to make a decision? chris: people will come back from vacation and figure were they will go. the market -- the markets have been trading without a margin of safety for a long time.

now we have a little margin of safety and you can pick your spots. the leverage, high-quality companies. michael: we are about to get a panda chaser. tony gwynn has photos. -- vonnie quinn. trash: massive amount of picked up from the streets. people demonstrating as police used fire hoses, tear gas, and rubber bullets. dozens of people haveeen injured. the army was deployed on sunday. protesters are fighting government in action and their inability to elected president. michael: a little disquieting, particularly given that had been a place of relative stability recently in the middle east. to see that the army was called out. vonnie: i hope they used those hoses to clean up the streets. number two, the nasa curiosity mars rover checks and no thing off of most people's bucket lists, taking a selfie. buckskin,the photo at

which was a rock target on its mission. it held the camera at arms length and took a picture of itself. it has been on mars for three earth years. didn't they have a cougar or a wolf traveling across country doing the same thing? brendan: a wealth selfie? -- wolf selfie? what is amazing is that these missions take so long to plan that one rover took off from earth, i don't think the word selfie existed here. vonnie: good point. michael: credit for inventing the selfie stick. brendan: oed selfie. ok. vonnie: while you do that, we are looking at the number one top photo. michael: this is the story everyone will talk about at the end of the day. they depended are cute? michael: they are weird looking.

had notthe smithsonian one but two baby pandas. with the new twins, the zoo has five pandas on site for the first time. they won't be named until they screech. the babies and moms will be visible from the stream. brendan: that mom is thinking about the future. she is thinking about retirement right now. michael: two more to put through college. i can see that twitter question 100 days from now. i guess it takes a while for them to grow up. brendan: that is my twitter question. how awesome are these baby pandas? vonnie and i don't agree. coming up in the next hour, michael holland is better than eight panda. he is on surveillance to talk about china. this is bloomberg surveillance

and panda report on bloomberg television. among. ♪

brendan: "bloomberg surveillance ."

plan b for german industrials has been to sell trains to china. that looks like it will be harder in the future. the dax is down 2.4% today following news out of asia. >> in the u.k., the death toll has risen after the disaster. police say more than 20 people may have died after a military jet fails to pull out of a loop and crashes on a busy road. they are still searching through the wreckage for the victims. meanwhile, two small planes collide at an air show in switzerland. one of the pilots was killed. sony plans to enter the commercial drone business. starting next year, they will offer drone services to construction, just six, and agriculture industries. it will capture high-definition images and transmit them for analysis. ohio state is making college football history even though we are two weeks from the first match. theh urban meyer's is

unanimous number one pick. that is a first for defending national champions. they lost only once last year. those are the top headlines. well --say the odds are good they will do well this year. brendan: we have an alice from one thomas kean -- analysis -- ash."-mailed the word "c it is right across my screen except for some currencies like the euro which is benefiting. feeling the downdraft last week. it is his will has. he is in studio with us today. chris marangi is with us at this hour. to you agree with craig moffett that this is like comcast, or do you agree with chris greenfield

who says this exposes the frailties -- get out now? we have known for years that the way consumers are consuming entertainment is changing. two weeks ago, people realized this is really happening. the rate of decline and subscribers will be moderate. the market is probably overshot. i have long favored the streeters comcast, charter, cablevision, and others around the world because they have the broadband hedge. no matter how you consume content, you need a fast broadband connection to do it. that is provided, in most cases, by the cable companies. michael: the content providers have been getting hammered. fivewe call the faab amazon, netbooks, google, apple. apple is down 3.4% this morning alone. what are they doing wrong? are they cut and a downdraft?

chris: two weeks ago, we saw recognition that the affiliate feeds are in danger from this trend of cord cutting. the multiple is related. the army raided to a point where they are attractive. may i remind you, some of these stocks after getting hammered for the last couple of days -- michael: netflix at 444. brendan: one of the other things going on is that some of these most loved stocks are where people are selling now to pick up some cash. chris: that is absolutely true. weather was netbooks are google on friday, netflix, obviously. two weeksk a big hit ago was a chicken media stock. they said i don't want a media stock that i want to on because it was least exposed to these cyclical trends. y cbs being sesa

bargaining at the moment. when people express fears about the revenue stream, what do you say to them? is a different problem which is that they have cyclical exposure. this transactional exposure favor cbs. they will not be dropped by distributor's. they have the nfl and other rogue running. vonnie: who says? why can't i just subscribed to 16 weeks to nfl.com? chris: you will not get the games you want. cb set -- cbs itself will be in the bundles. they will get a revenue uplift from that. brendan: i want to go broader. you said something interesting. it is something we have known for a while which is realized in the last week. you could say the same thing about what is going on in china. when you look at what happened on friday -- what is likely to happen today as well -- given the weighty futures are. are these things u.s. markets

have always known and are just realizing now? is this a new realization or new data? chris: i think it is both. the growth and china has an suspect for a long time. people on this program talking about bubbles and certain sectors of the chinese economy. it looks like the data is a little worse. , the contagion coming out of china was maybe underestimated. michael: any fundamental assumptions you've had that have been changed in the last few days? chris: not really. michael: ok. chris: other than, perhaps, a greater probability that rate hikes will be pushed out in the u.s.. michael: into march is your call? chris: i would say that is the highest probably. we are getting a bit for the euro and the yen this money. the rest of the world is lower. the rule through 70. look at this. has lost ground.

now it is down. michael: the washington ruble move through 70. that is amazing to process. this is bloomberg surveillance on bloomberg television. lots going on. my call and coming up. -- michael holland coming up. stay with us, good mine.

>> "bloomberg surveillance."

brendan: a black friday gets even darker on monday. equities route from the u.s. from china. a supply story. $45 a barrel, the first time since 2009. the fed has new data. it has been a long, crazy august. fed futures traders trade their bets. good morning. this is august 24. withrendan greeley you vonnie quinn michael. tom keene is out. michael, 16 equity markets to watch around the world. the shanghai, deposits, dax, what concerns you the most about what is going on? pointl: probably at this the u.s. markets because the u.s. is the strongest economy. the question is how long does this go on? the question we don't know the

answer to is why is this happening? is oil, china, there instability in the middle east. nothing you can really point at. it makes it harder to know when this comes to an end and why it is happening. brendan: we thought the u.s. was inoculated against this, but futures are down this money. vonnie: futures are performing the worst this morning which indicate something about tech and apple . stocks have were stay in a years in china. and shanghai, down more than a percent. global equities lost more than $5 billion since china devalued its currency 13 days ago. european stocks fell at the open. 2%.pean dax fell down 20% from its april peak. stocks ended down the most in almost four years in the u.s..

oil traded below $39 a barrel. to $39 a barrel for the first time in six years. the highest award, the legion of honor awarded in france. say quick action is the only answer when confronted with a crisis. >> the gunman would have been successful if my friend, spencer, had not gotten out. to be knownlesson going forward in times like that . please do something and don't stand by and watch. whoie: suspects in morocco have been flagged by police as a radical islamist. he is denying links. talks of a presidential run by joe biden are getting louder. the massachusetts some -- senator is a favorite among liberal democrats. say it makess

sense for them to me. withlking to someone elizabeth warren who has important, incredible ideas and how to make the economy work for everyone. i think it is no surprise that he would want to talk to somebody like that. vonnie: he made presidential bid in 1988 and 2004, but cannot get past the primaries. after two weeks, when the only hazard he faced were on the golf faces, president obama the political hazards of washington again today. he and his family returned to the white house yesterday after a martha's vineyard occasion. discuss the iran nuclear deal and funding the government. a british racecar driver is in a coma this morning. he was struck in a head -- in the head by debris yesterday. he is listed in critical condition. the 37-year-old returned to racing three years ago after recovering from a crash injury.

we wish him all of the very best with his recovery. michael: us take a look at data right now. connie gave you the numbers. are is happening here is we getting into the 7:00 hour where we are seeing volume pick up and we are off of our lows for the day not getting really good news, but we are off the lows. the 10 year yield is hanging in a 2%. toex crude which had fallen $38 is just below $39. if we get some recovery maybe that will encourage people. we are also seeing the fallout from china drop today. they led vietnam to devalue it's currency.-its look at the hideaway stock market. done 5.3%. at 28. starts it is quite elevated. does it state are? the last number i have for you is the spread for corporate

bonds. at this point it is basically unchanged on the day. just a little bit. the fed is watching this closely. well financial conditions tighten? so far we are not seeing that. brendan: we are not seeing that i just now saw west texas dip below $39. it is an extra narrative day when that is not the biggest story we have. friday's theatrics in the u.s. led to a dramatic day already in asia. the shanghai deposit a .5% down. contagion moves east to west. -- shanghai deposit 8.5% down. does the economy's party -- what is its next step looking at the drop in shanghai? the next up is, they better hope it works. up until now, they had tried to put a sink in tried to support

their economy. neither seems to be working. conventional monetary policy -- cut interest rates, take a lot of steps to push lending through the economy. on the physical side, they can support stocks. they can do a lot more. the question is will it work? to drive futures back in the u.s., what is the difference between the underlying economy in china and what we are seeing on the shanghai with the collapse we're watching in equities markets? a good indicator, one of the key rings we have had shows the manufacturing sector is much softer than people anticipated. going forward, although people knew the third quarter would be slower in china because the stock market would not be there, it is actually worse than people anticipated. bloomberg's tracker in china is well below the 7% growth target.

the disconnection between stocks and the underlying economy are starting to merge a little bit now. a very: the end of interesting summer. thank you, more to come. michael, looking at everything we just talked about locally, we look forward to u.s. market day. what is your one indicator right now? /i have an looking at some measures. something called the value line arithmetic. chris: these are wide-ranging stock indicators with all of the stocks in them. they have been really leading this decline. either in a correction or going into a correction. that shows you the whole market is down. mike holland is with us which is extra ordinary because it is the exact right day to have him on set. answer a question nobody has

been able to answer today. how do we draw the connection to the panic we saw to the u.s. on friday and this morning? ke: they are obviously directly related. we are in a very liquid environment at the end of august. there is no doubt that panic the gets panic on this market. -- begets panic. you call this black friday this mine. it is a psychological thing. it is not anywhere. it is not energy stocks, junk bonds, it is everywhere. /does that correlation tell you something about the fact that we don't know? we are going to push for two sitomer 17. let's say they hike rates 20 site -- they hike rates 25 basis points. , how about intos

the u.s.? this is good stuff. vonnie: can i ask both of you. could this be a healthy correction? a lot of people have been saying there were losses and financial markets. this is exactly what the fed has been waiting for. mike'sto go back to the housing market is good, the job market is good. the cliche it is the t-shirt and the hamper, the u.s. is not looking like block bursar -- blockbuster growth. but it is looking good compared to some other markets. brendan: how dirty is the shirt in china? [laughter] the caller just pops, it is amazing. -- help us understand what is going on in that economy? it does not seem to justify the 8.5% plunge we saw in shanghai. michael: any more than the 100%

increase from last november to june 14. we were talking about that. 100% increase from january 1 to june 14. a 60% increase. we talked about it on the downside because the 60% has been wiped out. brendan: this is the sound of one bubble popping? michael: one bubble popping. the stocks are still expensive in china, but the rest of the market is ok. brendan: thank you so much this mine. the twitter question of the day, global selloff all over the world. carnage or correction? let us know this mine. ♪

brendan: this is "bloomberg surveillance". supply issues they get demand issues but get supply issues -- supply issues beget supply issue -- demand issues beget demand issues. vonnie: a must-read i picked up this morning from a strategist and specialist this morning writing in a piece called deep funk.

that they now is begin to require late -- -- record late - the question, and i put it to michael holland, our guest for will discontinue? could've possibly lead to a recession? michael: there could be a myth of simultaneity. i don't want to get into that. one thing that struck me from the comment he made, the dot com relationship. that is not about the u.s.. it is the shanghai market. over there, they were crazily priced with foreign investors. by the way, it crashed.

it is still expensive as it was in 1999 and 2000. these companies want to zero. in china, the same thing. a lot of the underlying companies in china are ok. coms interesting, the dot relationship is important. brendan: think one of the jargon words. correction or bear market? michael: i have always hated that. vonnie: but i use it. michael: people do use it, and it is ok. i understand. me, i'd rather not. thing --he correction i will not predicted because i know that i can't and no one else can. right now what you have is -- as you have been talking about -- the underlying economy is pretty good. incould get a fed lift up

september. brendan: you are pushing back then? michael: it seems to me that unless we got something very bizarre from the data -- brendan: michael holland will be with us for the hour on a busy morning. s&p futures down 2.2%. carnage or correction? ♪

brendan: this is "bloomberg surveillance", i am brendan greeley with vonnie quinn. tom keene is out today. we're watching a role west from china. almost 2.4%.e down that is one of the many stories happening. vonnie as one of our headlines. and washingtone state. the smoke from a wildfire is

going away. a tanker plane rejoin the fight. it has scorched nearly 400 square miles. only 10% is contained. there are 16 major wildfires across washington. netflix is getting a partner for its debut month in japan. it is teaming up with one of the country's largest mobile carriers. netflix can now sign up numbers through their outlets and website. of green bay's top players may be gone for the year. yesterday in ae preseason game against pittsburgh. the nfl network says he'd suffered a torn acl, usually a season-ending injury. michael holland is making some noises beside me. it is a sad day for michael. brendan: it is worse for mr. nelson. vonnie: that is true. the carnagehere is

any markets. i think we decided we could use that term -- more evident than in emerging markets. that has people harking back to the emerging markets of 97 and 98 -- 1998. that is not really an accurate comparison, is it? nie was pointing out, we got a u.s. a session out of the -- a u.s. recession out of the asian financial crisis. when you look at the start market right now, the world looks like it is burning. it is not like it was. asian countries are better than they were. they have reserves, they can fight this. you do not have currency pegs. in latin america they were also very pegged. countries devaluing and

a terminus way. the ripple in brazil, in argentina. helped spur the collapse of argentina in 2001. people are not as concerned as they were back then. michael: it seems that a lot of people are not paying close attention that it is different everywhere. brazil has its own reasons for going down, as is argentina. they are not the same as it is in kazakhstan, russia, or china. they have different reasons for why they are lower. >> the idiosyncrasies of each country -- brazil has tremendous issues as we discussed many times. we are seeing they are going back on their word. they have all of these fiscal issues. they have to tighten spending there. insee development banks come and have to boost credit out there. they have such high domestic interest rates there. they are even going back on their word. they were supposed to do everything to tighten spending and they are going back. $9.25 foru're getting

the u.s. dollar. what does that have on the impact on the streets? >> you visited argentina, you know what it is like. the currency there -- it is just an official currency. people cannot access that. it is very limited. what we have been seeing is on the black market that rate is blowing out. it is reaching close to 16. what that means is that argentines are accessing dollars at that rate. that does not have to do so much with external factors as with internal factors. really high inflation, high spending ahead of elections. lots of pesos in your pocket. possiblewe asked is it that saudi arabia might have to tighten itself? you have a burning desire to talk about the tanguay.

point, ares to her we going to see more countries abandon their pegs because it is not sustainable like in 1998? michael: at this point it seems inevitable. >> the prime minister of causing stone said he expected to see more of these countries pegging. these countries maintain a peg because oil is priced in dollars. we should have more -- we should have a currency priced in line with the dollar. into suchave oil fall a degree, if you had a more flexible exchange rate you would have more revenue coming in. china is actually doing something in that direction. what they did, they did not do it to create exports. they did it to do what she is talking about.

to be more flex will. brendan: they are not really take to the price of the dollar, but to the price of the oil. that is the pressure. vonnie: can i point out something that she said that was obvious but wonderful? the things with the worst fundamentals -- michael: you sell apple. vonnie: exactly. michael: you so what you can. the best trading things get sold. that is what happens. vonnie: this, in fact, benefits commodity currencies in some ways. michael: they get hurt less. [laughter] reaching, but, yes. brendan: thank you so much. we have an emerging market and joe biden futures. elizabething with warren. we are going to washington, d.c.

this is bloomberg television. this is a busy day in the markets. we are looking at futures down 2.4%. ♪

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momentum for equities. compositeark shanghai fell more than 8%. that is the biggest one they have lost since 2007. a top shanghai investor calls this a real disaster and thinks nothing can stop it. euro drops more than 2%. it is down 20% from its april the. to an open pointing at u.s. stocks. they were down the most last week in more than almost four years. oil trading at $39 a barrel. $39 -- and whyn at $39 in almost six years. south korea wants an apology for a landmine explosion that killed -- that maimed to soldiers. the iran nuclear deal gets a

pivotable new backer. senate minority leader says he will vote for. he is the 27th senate democrat to endorse the plan. that makes it less likely that republicans could override the president's veto if congress reject the plan has excited. attendance was better than usual at a bible school in georgia. even though he was being treated for brain tumors. 700 aswd swelled to people from hundreds of miles away join the conversation. compton" isut of the best at the box office for the second-best -- second weekend. they may 20 $7 million. "mission impossible" was a distant second. all i know is i went to the movie theaters this weekend and someone walked out of "mission impossible" and they

looked at each other and said that is long. that is my only take away. "minions."ing the minions at the fed have a different understanding of what is going on with the dollar then those in the market. a great piece that came out last night on the terminal. the trade weighted dollar, what the fed uses to measure the dollar, a basket composed with the biggest trade markets. the yuan is part of that. the dollar is much higher than what currency traders generally look at. they are looking at the dollar's value against the euro, against the yen. michael holland is with us. are you following this trade weighted value? michael: when the dollar is that strong, it means things are

fundamentally ok. that is the key to september 17. things are ok. markets would be better off with a 25 basis point move and then stay there. i think that is what they are looking at, more important. brendan: not quite that enough. vonnie: we have a $12 billion deal on this monday. a company in atlanta, georgia is buying atl resources. --agl resources. southern company is a provider for a -- of electricity, telephone services in the south. -- getting more information on that company. areticker is agsus if you interested. it is based in atlanta, georgia. a 36% premium and a $12 billion deal. brendan: not such a dark monday

of people are willing to close a deal. michael will be in jackson hole at the end of the week. with me, we will both be going. channel us or we will channel you. what should we be asking the president we will be talking to? michael: are things ok? is anything you will be talk -- worrying about a lot? with the economy and with mr. fisher who will replace janet yellen, what you want to find out is there is not anything, i think sitomer 17 is the -- i think september 17 is the right time to do something. a look atet's take where we are right now. four days ahead of the s&p. michael: futures down 50%. below 1.98.

we do not think we look at the low. the euro down 1%. nymex crude at $39 a barrel. we will see with echoes the rest of the day. -- where that goes for the rest of the day. brendan: this is "bloomberg surveillance", i am brendan greeley with money quinn -- vonnie quinn. weekend, joe biden had a not very secret meeting with elizabeth warren. washington, phil to help us understand what is going on. elizabeth warren's bring is the in thessable ring democratic party. should we interpret from that that joe biden is serious? phil: deliberations are serious. whether he will run is an open question. the timeline he is looking at is

and is september, first week of october. if your name is not hillary clinton, getting a elizabeth warren on your site is crucial to have any impact in the democratic race. what joe biden is trying to do pathwayw is scope his if he would jump into this race. that is about money, the route he would take, and how he would organize. if he wants to get a jolt in organization, elizabeth warren is crucial. recent polling coming out nationally shows joe biden is 35 hillary40% behind clinton. when you look at swing states, joe biden against donald trump, he is leading in states like florida, ohio, pennsylvania. that matters for democrats who want to see a reason or rationale of why hillary clinton is not the be-all end-all or the party. those are the numbers joe biden is looking at as he tries to weigh this decision. donorsmichael: can he get the

and can he get the troops on the ground to organize a campaign? can he gets here when people? -- can he get tier one people? phil: one thing to keep in mind here it there is a very small handful of people who know what is going on. people who know biden and his team. there are probably five or six people involved in these talks are now. their biggest concern right now is money. hillary clinton has locked up a lot of these huge donors. she got 65 million dollars in the first quarter. raising $15 million already supporting her. joe biden has none of that. if you want to make an impact, you need money. he has drafted a super pac that is starting to get more serious. he is month behind hillary clinton not just in money but also organization. michael: i had planned this money to give you a trump free

hit, but that will not happen. he told cbs face the nation yesterday that he wants to save the middle class. he said something about our audience here on "surveillance." take a listen. donald trump: the hedge fund guys did not build the country. these shift money around get lucky. when the markets go down like they are now, the market collapse and they lose a fortune. michael: this is a very serious question. can donald trump when talking the money that hedge funders make any taxes they fail to pay -- can he pilaf some of the bernie sanders vote? -- peel off some of the bernie sanders vote? >> the crazy thing is you action talkingknow who was right there. is that bernie sanders or hillary clinton? donaldu look at what

trump said yesterday should kill him ideologically in a primary. it actually helps them. when you look at the 25% of the republican base he has targeted and has stuck with him through every comment and what all of the political groups have said will sink him. that has message resonated. if you look at capital gains and the hedge fund loophole, this pulls extremely well nationwide, 60%. i don't know if he peels off bernie sanders's supporters expressively, but this is actually an issue that resonates with people who support donald trump. michael: i am going to ask you a 10 second question. when your son is one year and three-month-old, who will be president? phil: i have no idea. that is too painful. my only hope is that brendan, you pop into the race and you lead the country into a better place. is exceptreeley pac

in donations are now. twitter, theon global sell-off: carnage or correction? answer the question or send us pictures of pandas and babies. good morning. ♪

brendan: this is "bloomberg surveillance", i'm brendan

greeley with vonnie quinn. tom keene is off today. let's look at markets in europe. an alarming shade of red coming out of germany. the dax down 2.4% so -- 4.2% so far. the lowest level since 2011. tftse down as well. michael holland this year. let's ask the question -- michael holland is here this morning. union, or isropean that also in china? michael: china is a big part of it. china's relationship with your -- germany. it is of a piece. the psychological part we talked about earlier is in all markets, commodities, emerging markets, or european.

the real world for germany is less good, for china it is less good. michael: this is the month where everybody disappears and goes on vacation. we are seeing enormous volume in germany today. the dax -- you can see the volume there -- at this time of day you would have 43 million shares traded. 100 and 88 million shares traded so far on the dax index. -- 188 million shares traded. people seem to be coming back into get out. michael: that may be part of the story, but i think you put your finger on another part of the story. machines are doing a lot of the trading. bots are involved. when things hit the headlines, the machines say sell. and they are not out of the riviera. you'll have to get up to have the computer say sell. michael: let's look at the long term. i'm looking at yield curves right now for germany and the u.s. and the u.k..

long-term inflation at citations up around 2.5%. in two years. they don't get higher than 1.5% in germany. michael: with real-world expectations of things continuing to depress in terms of price pressures, that is where you are in germany. that is surprising to me. michael: long-term, you don't see growth higher than -- what is the long-term estimate for growth in the eu? michael: i think 1.2%-one .5% is still ok. -- 1.5% is still ok. china is moving back towards that. vonnie: it is amazing strategists can come up with positive things to say. a wide variety of recommendations. dividend plays from deutsche bank. where are you today? michael: they may be right.

for me, the obvious thing -- we talked before about the 10 year treasury below 2%. the dow industrial is up above 2% yield. brendan: a busy market day coming up on bloomberg television on "market makers," peter fisher is helping us understand what happened. our twitter question for today, you help us understand what happened. carnage or correction? ♪

,rendan: we have breaking news stock continuing to fall. where are we? vonnie: let me pull up my chart and see where we are. i will get back to you in one second. sincel: 17 points, lowest 2011. that is the movement all over europe. reflecting domestic weakness and lack of demand from china. now, heading towards those asian type losses. the selloff is gaining momentum. it starts once again in china. the shanghai composite index fell more than 8%.

that is the biggest one-day decline since 2007. a top shanghai investor calls it "a real disaster and it seems nothing can stop it." it spread to europe. germany's dax is down 2%, more than its april peak. the death toll could rise in the british air show disaster. up to 20 people may have been killed when a vintage fight eter jet crash on the freeway. the confirmed death toll is 11. switzerland show in -- a pilot was killed when two points glided in midair. the restaurant chain plans to add 4000 employees by september 9. that would boost the workforce by 4%. it is a strategy move. ohio state making college football history. is theherman myers

number one pick in the associated press preseason polls. that is the first for the defending national champions. those are the top headlines. brendan: this morning off of the equity selloffs, west texas intermediate dipping below $39. we are going to talk about energy and a second, but let's talk about old energy first. as the price of oil returned to supplyd story or ena store that we have gone used to? >> there are a lot of girl is sitting on the market. a is opening as soon as it is allowed to. not back yet. not back in china, not in the united states. brendan: it is possible that

this morning what is being priced in this morning is not china but the selloff from iran. >> i think it is a lot of everything. a bunch of gorillas is sitting on the oil market. some are underneath, some are pushing from the top. brendan: this changes the focus of what it is you do. you talk about this long-term transition the world is going through two different sources of energy. the president has released a for -- his opening gamut negotiations in paris. what does the price of oil to do that story? >> nothing if you look at it right. there are two very different things going on. one is the day by day, hour-by-hour change in oil prices which is often volatile as we know. the other is the long-term transitioning that is gaining momentum, inertia. those two things don't really

interact on a timescale that we sit here and talk about. michael, i can see your eyebrows -- michael: i think it has some impact. to the extent which natural gas, for example, which is clean and 275, 265, to go down, doesn't have an impact on solar and everything else? think it is useful to separate energy from transport fuel. only separate that from natural gas which is enabling this. that is a power sector thing. until after cars work and everybody has one, it is a useful distinction to keep in mind. brendan: some of the policy successes that the president has had have been a long changing standards for fuel consumption in cars. what is happening now is that

americans are driving trucks again. what has the price of oil done to habits of consumption in the u.s.? >> we have seen this before. you could do a chart. people have done that a lot of times. the sizes of cars get bigger when the price of oil goes down. brendan: michael holland, game this out. if the price of oil continues go down. what does that do medium-term to the market in america? michael: some of the big gorillas in the energy business -- exxon -- they will take a bandage of this as they always do with a 50 year horizon. go outeople like samsung of business. a great a lot of destruction. right now you have opportunistic big companies taking control of this. -- advantage of this. michael: the oil majors will be

final matter what. michael: some of them will get stronger and bigger as a result of what is going on. this is a crazy time. bp and shell this morning are yelling over a percent. -- 8%. they will probably not be able to maintain that. ironic. they have not cut a dividend since world war i. michael holland to sing the 500 pound gorillas and oil become 600 pound gorillas. net brings us to the agenda. i will go first. watching what is happening in greece. that brings us to the agenda. alexis is trying to pull in allies in parliament. tom mackenzie is in athens with more. with somethe weekend

of the far right parties. more broadly, what does his coalition look like right now? you an updateve of that what is happening today. today, the largest opposition party, new democracy, they had handed over their mandate. they felt. that moves to be latest antiauthority party. popular unity. they are notreeing going to be able to overthrow the government. they are just trying to get their message out. thursday is when the president of greece will dissolve parliament. lookingsipras will be at a small new party for a possible coalition. brendan: you spent the weekend with a far right party and greece. any nasty surprises in terms of

gain shares in this upcoming election? tom: there is a lot of concern. there are concerns that they will use migration crisis happening in greece coming from south africa. it is concerning they will use this to their advantage to get double figures in this election. something to watch for. brendan: tom mackenzie in athens. thanks. traveling to jackson hole. what is our job this weekend ? michael: we are going to find out if there are any discouraging words that the fed will pull back. futures trading today at 30% chance. brendan: how long were you working on that? michael: you are busy. vonnie: i'm sure people will be trying to nibble in certain

areas. time to answer our twitter question of the day that we asked, the global selloff -- carnage or correction? we got some funny and good answers. -- janet willons be the judge of that. brendan: michael holland, 10 seconds, looking for cash or is that carnage? michael: that is a correction. i will be in china in two weeks and i will come back and let you know. vonnie: china may be a bear market as oil must find a way to financially clear. vonnie, i miss you. i'm quite sure that is 140 characters. brendan: michael holland, we missed you, too.

the new energy editor. it has been a is a day. thank you michael for sitting in. market makers is up next. this is "bloomberg surveillance ," good morning. ♪

>> good morning, or for perhaps many of you, it is not such a good morning. you are watching market makers. i am erik schatzker. there is no stop to the bloodletting. the wave of selling continues. thestors around the world risk and i'll into the safest assets. most equities fell by the since 2007. in new york, futures are down big, indicating we could see another 500 point trapped in the dow industrials. commodities are getting killed. 16 years since crude traded below $39 a barrel. treasuries are the safe haven yield. we will bring you the global perspective this morning.