olivia: good morning. we have to get you straight to a market check. there is no stop to the bloodletting. stocks, commodities, current cies plunging worldwide. at one point in the open, the dow was more than 1000 points down. 500 down 82 points or not. the nasdaq off more than 200 points. all the main u.s. that smart indexes officially in correction territory. that they are often percent from the most recent peaks. the selling started overnight in asia with the shanghai composite fell for the single biggest a drop since 2007. the emerging markets index off the most since 2011. in europe, the stoxx 600 heading

toward its biggest single day declined since 2008. the frankfurt down by 6% right now and heading further into their territory. commodities are getting killed. the index trading at its lowest levels since 1999. in 16 years, west texas trading below $39 a barrel, trading above $38 a barrel. meanwhile below $45 a barrel for the first time since 2009. he just treasuries is one of the only places to hide. the 10 year yield traded below 1.97. more than $1 trillion has been wiped off u.s. equity markets. for more, let us get over to julie hyman. julie:. let us start with the doubt. the steep drop that we saw all right at the open is down more

than 1089 point. a performanceen like that may of 2010. lows of the session here. take a look at the s&p 500. down the motions november of 2011 and the lowest since last october. in terms of the swing, although screen, small on your' it is the third largest since 2005. take a look at my bloomberg terminal. this is a cool graphic that one of my colleagues sense t sent t. this shows you pretty clearly that it is the biggest drop on an intraday basis since that point in time. for the nasdaq, it is falling the most on a percentage basis. it is falling the most since fall of 2011 and at its lowest since october of 2014. it is down by about 4%.

just a reminder, the circuit breakers on the nyse will's trading in the s&p 500 if it falls at least 7%. we are still for the moment a far cry from that. off by 3.5%s&p right now. as i have been saying, more than $5 trillion has been erased with the value of global equities. economies born the brunt of the selloff, fueling concerns that the slow off in the world's largest economy them worse than anticipated. for a look at where investors should put their money, let us talk to krishna memani. is this just a healthy correction or the end of a bull cycle? krishna: no correction is healthy, but it is a correction nevertheless. the central bank policy has to

become more tightening as opposed to easing. that is certainly not the case. we have a global growth scenario worse than before, but we are still growing. andong as that is the case policy remained supportive on a global basis, i think this is just a correction and we get to better levels in the not-too-distant future. olivia: what is the catalyst for the selling? what changed on friday? krishna: it is the slowdown with respect to china. they mismanaged the equity markets as badly as they did. the surprise valuation effectively got the markets on tenterhooks. we just gave up last week. the selling commodities is even more extreme the equity markets. it is trading at its lowest level since 1999. brent trading below $45 a barrel for the first time since the crisis. to what extent are commodities dragging down equities? krishna: china was the biggest

story for commodities. the fact that china is slowing down quite substantially bodes pretty poorly for commodities. having said that, i think commodities at some point are going to show some amount of success, whether that is today or tomorrow or years time. it seems like commodities are definitely buy cheap at this point. olivia: sentiment doesn't appear to be moving in the markets. the dow only off for 50 points. at the opening, it was off more than 1000 points. what would it take to turn the tide of sentiments? some point, a gets exhausted, but from an economic , policy standpoint action can certainly change things around. if china comes out with something that is very determined and broad-based -- olivia: what would that look like?

they have done so much money at this. krishna: it would bring policy initiatives on the monetary front. reserve ratios quite substantially or injecting more liquidity in the market based or providing liquidity to some of the companies as opposed to the stock market regulators. olivia: is there a buying opportunity in the u.s. equities? you have some the biggest companies trading well into correction territory. krishna: if you have a two-year or five-year view, absolutely. the economic growth environment of the u.s. is not as bad an policy is going to remain supportive. therefore valuations probably remain ok for quite some time. math, at theo the earnings level, equities probably end up being higher. you also like european equities. what gives you the confidence to buy into europe right now? krishna: i think the change in the economic outlook for europe

is definitely more substantial than the change in the economic outlook for the u.s.. and willis growing probably two to grow at 28%. europe has the potential of growing much faster than what it is at this time. olivia: how about on the credit side? where is the opportunity right now? krishna: the rest in investment rate credit are relatively modest. the spreads are quite attractive. one sector that i definitely want to highlight his mlps good if you look at the mlp market, their operating performance has really been quite good. but because of oil related concerns, the markets have corrected 20%-30%. if you are looking for a sector where fundamentals are good and risks are modest on fundamental mlps are there. olivia: are you in the mood to

buy them this morning? krishna: yes ikrishna: am. olivia: thank you so much. take a look at where the markets are trading right now. the dow off more than 470 points right now. all the main u.s. benchmark indexes off 3%, but well off session lesbian remember, the dow opening down 1000 points half an hour ago. stay tuned. we will be right back. ♪

olivia: good morning and welcome back. i am olivia sterns did i want to go straight to julie hyman with a market update. clearly in the red with major averages down 3%. not as bad as the open.

julie: way to look on the bright side of things that there is any believed to be had good it is , it is the fact that we have steep declines across the board. let us look at individual stocks we are watching this morning. we were watching the so-called fab five stocks. these were the momentum leaders for the year. let us take a look at how they are trading at the moment. , apple, and facebook have been declining sharply. in addition to that, it is not just those stocks. it is the larger blue-chip companies as well like exxon and general electric that are also declining. also have general motors declining sharply. not huge declines and as big as other highfliers. nonetheless notable about how broad-based the selloff is today. take a look at my bloomberg

terminal and we have the so-called correction. from the record close of the year through today, we have a decline of 10.4%. officially a correction now, not just for the s&p, but also for the dow and nasdaq could something else i wanted to note is that it is on relatively high volume. this is the volume on the s&p 500. if you look at where it was at this time, we are looking at it double or triple the volume today. here is today's volume and that is half an hour into today's trading. to give you perspective on these spikes here, these are all full days of trading. we are already up here. not only do you have this deep selling today, you also have it on relatively high volume. for contrarians out there who look at this for exhaustive selling on the market, they would be happy potentially to see that kind of volume. olivia: i was e-mailing one big futile manager if you want to

come on the show. he said no, but replied with a quote from "trading places," saying it was good for him. now a look at our top stories this morning besides the markets. a new survey suggests that the vast majority of economists expect the federal reserve to raise interest rates before the end of the year. 77% of economists surveyed by the national association of business economics believe the fed will raise rates this year. only 37% will leave it happens in september. also, a former policymaker at the bank of england. >> you always have to understand that you may be added turning point. the problem is that you often do not know that you are. you have to worry. we are at a situation where essentially those rate rises are off the table. maybe the next move is actually loosely. that model is coming closer by the hour. say that ifomists

the economy continues to improve that interest rates will top out at the percent. former treasury secretary says they larry summers will make a big mistake. he wants that raising interest rates in the near future would be a serious error that would threaten all three of the fed's major objectives -- price stability, full employment, and financial stability. the latest company to finance investors that by single-family homes. bloomberg news is also reporting that lack rocks lending partners will offer money to renovate homes that will become frontal properties. bblackrock group is another company competing for landlords to it is the biggest crisis on in threen peninsula years. south korea is demanding the north apologize for placing land lies that wounded to south

korean soldiers. the north the man's the south cross-border propaganda broadcast good authorities are trying to determine what caused the massive explosions and a tokyo, japan. no injuries have been reported. the blast was 25 miles southwest of tokyo. the building that exploded was oxygen, freegen, on, and eric at police chief says that the investigation into the bomb attack at a bangkok shrine has been hampered to the bombing killed 20 people and left hundreds of others when did. police have released a sketch of these suspect leaving a backpack at a bench. minutesd away about 15 before the blast. those are your top stories at this hour. oil slide down is accelerating rising concerns of a slowdown in chinese demand and the threat of a slide from the u.s. as well as

iran returning to the market with its supply. for a closer look at the oil market, i want to bring in skip yorkie he is an energy's consultant and he joins us now from houston, texas. thank you for joining us. a huge selloff in the oil market with rent trading below $45 and barrel for the first time since the crisis. confidence iny column a floor here? go?much lawyere lower will oil skip: we have to be close to the floor. you start to get the point where fairly substantial volumes of existing production start to become uneconomic and you have to start looking at potentially shattering that volume. the strength that we have seen in auto tech supply growth in the first half of 2015 could start to unravel and the second half of this year if we do not find a floor fairly soon. olivia: what would a floor be in

your mind? $35 a barrel on west texas? skip: we would see a floor around $40 brent, translating to $35 west texas intermediate that will be a pretty comfortable price for all those small independents that are working out in west texas. olivia: what signals or reports are you looking at to inform your analysis where you think oil is headed? skip: we look a lot and we are watching the iran deal pretty closely to see how that is evolving. we look at the monthly data we get on the supply side coming in. at this point, what we are really watching is the emerging markets statistics in china. the decline in oil price has shifted from too much production could we are now concerned that demand is not growing fast enough if not all at the emerging world.

olivia: there are so many catalyst like the stronger dollar. slowdown. economic is said that the timing here as important as a driver of the selloff as the magnitude. what did you mean by that? the point of the year where we are effectively into september and october. this is lead time of year when a lot of oil company's are setting their 2016 capital budget. they may have been thinking back in june of 2016, in which oil prices were $60 a barrel and maybe going to $70. they are now going to be finalizing those budgets where we were at $50 and now have $40. we need to be able to survive 2016 and a $40 world. that means they're going to make much different capital decisions in 2016. those budgets and that lower lip

lot less activity. all the junk activity that did to tear supplyt from the non-opec perspective added to market. olivia: when does u.s. supply cap out? skip: we think we are fairly flat from this point out on u.s. production. a lot of the rigs that we have seen added in the last 6-7 weeks, think eight weeks before that. while prices were around $60 a barrel and a number of producers told us that when oil got to $60 that they would bring rigs back to the field. two months afterward, the rigs started showing up. they are $20 below where we work in those breaks may start to trend down. we are flattish and declining by the end of this year. we think 2016 is a net negative for u.s. production what it will be down year on year by the end of 2016. that is if we are in the oil

price environment we are in for a substantial time. olivia: you're thinking it is topping out in 2016. thank you very much, skip your, joining us from our bureau in houston. really interesting stuff with a huge move in oil off more than 30%. now here is a look at where markets are standing as we head to the break. the dow gaining back a little bit and paring some earlier losses. down 2.4%. 1000e point, we were off points within five minutes of the opening. stay tuned to bloomberg television. we will have much more on the global selloff when we return. ♪

olivia: as global markets tumble, investors strategist and asset managers are struggling to describe the selloff. michael ingram is a market strategist in london and he sums it up this morning.

investors are scared and confused. if you are an equity investor, al."e to suicide a f atya, what's the story. a lot of people use the term black monday. and a lot of people are worried that this is the end of an era and that things will get worse. it is not just about the effect, but it's about china and commodities. people are very nervous. olivia: what are investors speaking about the catalyst of the selloff? obviously, there is the stronger dollaer. we are bracing for a tighter monetary policy environment sometime in 2015. we have the big commodity selloff putting pressure on the currencies of oil-producing countries.

what is the sense that you are getting about what caused the big selloff? definitely be stronger dollar and the expected height and interest rates in the u.s.. that is definitely taking away a lot of the appeal of riskier assets. there is china and the unwinding of a lot of trades going on. i was speaking to somebody and they were talking about how you have certain people trying to position themselves against a stronger dollar by going short is euro to offset itself and a rush to haven assets the euro appreciating, people are getting burned on this trade. etfs and innding of stocks and bonds. this is just exacerbating the mood. olivia: the move in the market currencies is at a dollar low. it is trading where it was back in february. where are we talking about

government intervention? we are always on the chinese government to stabilize the markets there. what other countries can devalue the currency or take steps to shore of the market? katia: we have seen kazakhstan and vietnam. in latin america, peru -- it has otheren hit as strong as currencies. we are seeing their government saying we need to hike rates. terribleia, they are a performer today, down for presented they are in oil exporting economy. their central break cap interest rates low. it is dealing with much slower growth. what do you do when you have a currency plummeted and inflation rising? do you hide and risk slower growth? you let rates stay low and let it fall off?

olivia: $5 trillion wiped away since the chinese t devaluedn yuan. how is that having an effect on latin america? katia: a very big effect. rizal is dealing with a lot of other issues as well. they are dealing with the longest recession since 1931. they are dealing with more and more. olivia: i was just going to say -- good news since you were speaking. the dow is off 300 points. that is less than 2%. that is good news. it appears that we are off session lows in deep sentiment improving, but still a bloodbath out there. don't go away. more on bloomberg in just a minute. ♪

♪ olivia: welcome back. i am olivia sterns. that's look at how markets are trading. we go to julie hyman. julie: we are continuing to see

a bounce, such as it is. 1089ow fell as much as points when we started. now it is a little under 400. the s&p 500, which was down 2.5t 5.5%, now down about percent. still shortselling but not as sharp as earlier. i want to look at you fix volatility index. we watched as it had its rest week ever -- best week ever. we site upt today, by a record 90% in one single day. the increase in the vix. we call this the fear index. it shows clear updating as we see major averages bounce off the low. if you look at the five-year stillof the fix -- vix, relatively low. we were about 40 earlier, which was the lowest in some time.

since is at its highest 2011. not as sharp as earlier. back as weake a step talked to participants and strategists to look at what wall street has to say about the selloff we have seen and the lack of reaction to it thus far. this is the average of the strategists on wall street. 2232.at 20 to 32 -- seen anyone to medically cut their forecasts yet. still the average of about 22 -- wall street analysts we surveyed. given the recent drop, we are well below those levels. will we start to see wall street less bullish? getg one of the people we averages from, the 12 month

for the s&p. her weekly note said she is holding steady on that. going backf likely to the one in 1998. if you look at the parallels, she is not expecting it to continue. olivia, as commentary follows and strategists react, we will see if they will reign in forecasts. olivia: to highlight how much volatility, the dow has swung 200 points. it is off 480 points. when you started talking about 90 seconds ago, it was off by 300 something points. very volatile out there. julie hyman, thank you. i want to get to our top headlines. growing speculation that vice president joe biden will enter the race.

he met with senator elizabeth warren of massachusetts. she is the rising liberal star who has not yet endorsed a democratic candidate. a biden advisor said it made sense for them to meet. haslizabeth warren important ideas on how to make the economy work for everyone. it is no surprise he would want to talk to someone like that. or bideneither warren are commenting publicly. president obama will unveil a renewable energy initiative. $24government will spend million for 11 solar energy projects. there will also be a loan guarantee program. in favor ofame out the iran nuclear deal. he had been one of the senate democrats who had not announced how he would vote. president obama trying to line up enough lawmakers to make sure the agreement is not killed. the french president awarded highestericans france's

decoration. they received the legion of honor for avoiding what could have been a mass shooting on a french train. they spoke yesterday. >> the gunman would have been successful if my friend spencer had not gone up. i want that lesson to be learned going forward. in times of terror like that. please do something. do not just stand by and watch. olivia: the gunman is a moroccan who had been flagged by french police as a radical islamist. he is the nine links to terrorism. sony plans to enter the commercial drone business. they will offer drone business to the industrial and agriculture industries. they will capture high definition images and transmit them for analysis. netflix is getting a partner for its debut in japan. it is teaming up with softbank. netflix can sign up members

through softbank outlets they call centers or websites. japan is one of the biggest new overseas markets for netflix, with 36 million broadband homes. going back to the slowdown on china, i want to bring in inriot -- i want to bring gerry alfonso, trader at shenwan hongyuan. we also have jaime metzl. he predicted a china market bubble bust in june. give us a sense of what the mood is in the asian equity markets. the biggest single day drop. shanghai, positive down 8.7%, the biggest single day drop since 2007. is it panic or is there a sense the government will stabilize it? gerry: the sentiment is rather bearish. today was a tough day in the market. it is an issue mostly of sentiment rather than fundamentals.

the economy has been -- go ahead. i think the signal is fine. please continue. has slowedeconomy down, but what is happening actually is lack of confidence by investors on the market. what you see is there were so much expectations of policy support. of racese reduction for banks that did not happen. that impacted the opening today. in such a retail market like this, it is difficult to recover. it is not a thing of fundamentals, but of sentiment. policiese get to the in a second. i want to bring in jaime metzl,

with me on set. in june, you had the foresight to call a chinese equity bust. what did you know that we did not? jamie: when you look at the average valuations of the stocks on the shanghai markets, they were three times greater than the other valuations in any of the large markets. how could that he if they did not match the fundamentals? eventually, gravity applies. people sometimes have too much faith in the ability of chinese leaders to be magicians. but gravity applies to these guys. chinese stocks are still overvalued and there will be further drops. the issue is confidence. guyse used to think these were magicians. now it looks like they are good engineers but not good at managing a complex economy like china. olivia: how much further do you think chinese equities will fall?

jamie: an easy way to gauge that is right now the average valuation on the shanghai is 61 times earnings. in the s&p, it is 19. let's say you get a little extra because it is a growth market. let's say it goes down to 25 or 30 times. the means 50% more fall in chinese stock market. the problem is the chinese government massively overreacted to what was a natural correction for an overheated market. they put all their credibility in maintaining the markets at these unrealistic levels. pulling back,are which is sensible, people are saying who is in control, what is happening? so much other chinese economy is based on faith in the government. not that it is receding, it leaves questions open. olivia: you said the average multiple in the s&p was 19. it is now about 16.5 to show you

how far valuations on the u.s. equity market has come. is there a consensus that a 61 times earnings, the chinese market is still overvalued? well, it may be overvalued, but there are substantial pockets of value. the market had a massive rebound at the beginning of the year. we still have some of that impact on the market. there are pockets of value. but you look at companies related, for instance sld reform, a state owned enterprise reform. there are still pockets of their. what with the chinese government have to do to step in and stabilize the markets? gerry was thinking about reducing the reserve rate again. jamie: they need to stick to

their plan. the chinese government has a plan of allowing markets to allocate resources. crisis,me there is a they pull back and they have this instinct to think like engineers. that they need to control things. they need to go back to their plan of liberalization and let market forces allocate. in the near term, they have to reduce interest rates. they have to let banks lend more. do all these things they did not want to do as part of their reform program. there is this constant battle between stimulus and reform. they need to double down on reform. onvia: we had peter fisher earlier. he thinks the chinese government devaluing the yuan still the concern we are seeing now. jamie: i believe that. some people think leading market forces better determine the

value of the rmb. other people think they were doing a little of that but they were also trying to make their exports more competitive. -- olivia: smell the desperation. jamie: when they keep making decisions like a basque and their nuclear response to the natural correction in the stock market, it makes us think may be they know something we do not of theout the weakness chinese economy. why are they being so aggressive? it brings us back to the issue of the numbers. , but who knows if that is correct. with the capital flight, i am concerned about where the chinese economy is going. there are good fundamentals but big questions. joiningthank you for us. jaime metzl, senior fellow at the atlantic council. and shenwan hongyuan securities trader gerry alfonso. in the u.s. equity

markets. you're looking at the dow. off by 360 points. with it off by 500 points. all the main u.s. average is now in corrections territory. ♪

♪ olivia: welcome back. we are one hour into the trading day. breaking news out of turkey. there in stumble 100 index has officially entered a bear market. a broad global selloff. stocks, commodities, currencies all in the red. the u.s. treasury one of the

only places to hide with the 10 year yield dipping below 2%. over to asia, where the selling started overnight. the shanghai composite plunging 8.5%, the biggest single day drop since 2007. the index erased all of it gains in 2015. we have more from hong kong. >> worst day for asian markets in four years. it is going from japan to australia to taiwan. the indonesian market all in bear market territory. composite synci the most since 2007. elsewhere, japan had its biggest plunge since april. -- australia also falling. analysts saying things may get

worse before they get better. on china'siette biggest single day drop. we had to europe where stocks firmly in the red. cehic standing by. >> we have talked about about bloodletting. given the color on the screen now, it is appropriate. stocks hit hard in europe on these concerns over china's growth and the selloff in asia. of 18 western european markets in correction territory. the ftse 100 heading for its lowest level since 2012. the german dax, one of the best performers at the beginning of the year, now it is the first heading into a bear market. we go to the stoxx 600, europe's equity benchmark. it had its worst week in four years last week.

now down about 4%. it dropped as much as 8%, the worst since 1987. we see if that selloff continues . one winner today has been the euro. all these concerns over china question and pull back to their bets on a fed rate increase in september. that increased demand for the yen and the euro. it is at a seven-month high against the dollar. 5 for the first time since february. julie: we have seen an enormous amount of volatility and a swinging around in term of the range we have seen in the major .verages that continues. the s&p 500 on an intraday basis and the swings we have seen here. offooks like we are coming the load to some extent, but we keep swinging around.

this is the imap. where we stand at the moment. you can see, a broad-based selloff. energy, financials, health care, take your pick and we seabees groups traded lower. here is an interesting one. we talked about volume being up. this salmon viktor sam will give you the individual volume changes in the various groups in the s&p. in consumer staples, the biggest surge in volume. big increase.ng a telecom, financials. bbb 10 dayhe s&p 500 moving average and the 100 day moving average. not only are we seeing a lot of selling and volatility, we are seeing a lot of trading. on the nasdaq 100, we have seen a couple stocks turn positive.

.e see this bounce up micron and sky works. wereonductor makers massacred this year. these stocks in particular really underperformed. now starting to see a little buying, at least enough to overwhelm the selling we had seen in these stocks. we will keep monitoring this and let you know where we end up one minute from now because things keep changing. olivia: i am impressed you found green. svs, one of my favorite functions w.a.r. the -- what you are seeing to pick up that tradersint is now pricing in less than a one in three chance the central bank will act next month. thank you, julie hyman. we look at the top headlines.

buymore firm agreed to belk. for about $2.7 billion. sycamore has a strategy of investing in retail companies and trying to reinvigorate them. army ofeashed an lobbyists in california to re-shape the rules regarding drivers. uber spent more on lobbying there than facebook and apple combined. it is pushing lawmakers to exempt drivers from obtaining commercial licenses. is planning to hire 4000 employees on september 9. it would boost its workforce almost 7%. the bestny says recruits could one day earn six-figure salaries. reporting, u.s. markets joining the global selloff's, though selloffs

happen. . the dow plunged more than 1000 points with within 500 mid -- within five minutes of the open. now it is down 500 or so. it is clearly in corrections territory. commodities heading for their lowest closing level in 16 years . the s&p 500 on its -- on track for the worst august decline. peter fisher, consultant and investor at black rock investments shared his thoughts. listen. >> what worries me is the fed may have lost influence. that should worry them and all of us. we bring in phil mattingly who has been working the phones. any sense of a fed reaction? does anyone share peter fisher's restaurant -- concerns that the fed has lost influence? phil: what you are hearing

,ehind the scenes from the fed banking regulators, and the obama administration is they are keeping a close. they are all watching and waiting to see. no imminent action planned at the moment. a financial stability oversight meeting planned. but all of these regulators are in constant communication. longer-term, one of the interesting things today is larry summers had an op-ed out. he has started trending on twitter in washington, d.c., which is not be norm for economic policy makers. saying this could be the start of a "very situation -- of a "very serious situation." sounding the alarm and leading to some alarm amongst reporters and policymakers in d.c. certainly issues for people to talk about.

olivia: and we are looking forward to our coverage on jackson hole. phil mattingly, just back from paternity leave. cover thistinue to global selloff. money piling in the u.s. treasuries. the dow off 326 points. ♪

♪ back.: welcome imo olivia sterns. we head to europe. a rough trading day in europe. 4%.dax falling more than hans nickel joining us from berlin. forave wiped our gains 2015. i know you are in berlin. what is the mood on the market? the mood is fear and concern. the german economy is so

dependent on china. this is all china-related. the dax was way down earlier. it started clawing back some of its gain. if you look at the index -- and these are 30 stocks in germany last 11 days, you look at where he was two weeks ago monday. it ended the day positive. then it started crashing quickly. sign, hinkle is the one stock in the green. olivia: thank you. hans nichols joining us from berlin. we want to look again at the market. deep in the red across the board. ♪

olivia: it is 11:00 a.m. in new york city. >> welcome to the bloomberg market day.

olivia: good morning. what a wild day on the markets. i'm olivia sterns. pimm: i'm pimm fox. let's take a look at what's going on in new york. u.s. stocks continue to fall. i looked up at our monitor and i saw the dow down more than 1000 points. indeed we are seeing the decline as the day goes on. it fell as much as 100 points. the dow was down 1089. back at least to some extent this morning.