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. all of this means that on a closing basis, we might not

technically enter a correction today. unless you are rounding. it is just a amazing the bouncing around we have done during the session. take a look at commodities. i want to point out the movement we are seeing. energy stocks continue to sell up sharply. oil has been trading below $39 a barrel. rob materials is trading at its lowest since 1999. gold futures are even lower. you would think people would be looking for safety. olivia: that's incredible. pimm: i want to bring up a chart to show what started today as a rout. apple shares opening at $92. right now they are trading lower than the close on friday around $104.11.

it bounced back perhaps mirroring what is going on in the overall market. about 2.5%. olivia: incredible move. pimm: let's bring in peter tchir. let's talk more about the global market selloff. the dow tumbled more than 1000 points at the open. this is all about anxiety in china. olivia: it all seems to be triggered by the yuan devaluation about two weeks ago. $5 trillion wiped away from global equities. >> we were fairly lucky. -- tout us in a nice start buying. i'm nervous about that call. we will start lightning back up again.

we have seen the tendency for flash crashes to retest. and often fairly quickly particularly if they are small. how did apple open at 92? there were such severe dislocations that i don't think we are getting out of the woods. i am very nervous that it was too ugly and we will retest those flash crash levels. you're talking where? >> i think we might get back to there. the dow is only done 350 right now. -- down tree 50 right now. -- down 350 right now. we had the flash crash in october of last year. that retested fairly quickly. the big stock flash crash retested in a couple of weeks. i'm not sure what goes on.

i believe that with all the interconnectivity there is a very high tendency to push back appearlevels that briefly, disappear and that act as magnets. olivia: how does the dow fall 1000 points? is that electronic selling? automatic trades? >> severe dislocation, people reacting to various markets. olivia: really say this is not a retail investors market. this is portfolio managers that managed to get their phone call 9:35 that 9:00 and was enough to precipitate a 1000 point move. >> it's not really valuation. it's just trading patterns. this is why i keep coming back to being more nervous than i would be otherwise. open,d like to see a calm down a little bit -- pimm: everyone wants that.

if there is a 7% from the s&p 500 average of the previous month of the last quarter and so on. we haven't triggered any of those. >> all the futures which were 5% world down coming into the open. were all down coming into the open. we may have triggered the 7% s&p but it didn't officially trigger. we were very close this morning. everyone is talking about china. the thing i find fascinating is 1:50 on wednesday, stock markets reflate popped -- briefly popped. since then it has been a straight line down for stocks. olivia: what signals are you looking for to inform which way

the market is headed? bonds do high-yield very poorly coming into this. they're actually outperforming the last couple of days. hyg was down. that tells me the credit markets, which were the impetus for the equity selloff, so many companies have been relying on bonds, they were getting weaker. the stockshat helped selloff worse. now we are seeing stability there, that could translate to stocks. some of the things we had in place a week ago will be comfortable. pimm: tell me about program trading. there is also a circuit breaker or market curve on program trading. we haven't seen that in action. i just read a story about

stocks being halted temporarily. i don't know what's going on. that's another reason to take this big downs with a grain of salt and maybe use it to lighten up a little bit or at least wait to buy. olivia: thank you, peter tchir. before we go to break, i want to take a look at the biggest winners and losers and movers in today's session. julie: i want to mention something where watching. ameritrade tweeted that it is observing streetlight latency issues. volume, such a flood of that it is having latency issues, it is having trouble executing the orders in a rapid fashion. were having trouble getting into their accounts or executing trades. on a related note, according to the vix did not update in a

prompt fashion. the options were too disjointed to calculate the value. not only do you have this ,istoric volatility and volume there is also a little bit of trouble with information and execution dissemination. just because the pipes are getting gummed up. we will monitor this and keep you updated. pimm: thanks very much. we continue our coverage of the stock circuit selloff. ♪

olivia: welcome back. i'm olivia sterns. pimm: and i'm pimm fox. let's go to julie hyman. julie: the volatility continues. a few moments ago we were down less than 400. now it is back to 460. all of this volatility continues. a stock i want to come back to and that is apple. apple very briefly touched the unchanged level. it was up something like .04%. some individual stocks have come back significantly from their lows.

-- says apple is uniquely compelling to buy because the company's business has been relatively strong in china despite everything has been going on in china. tim cook without with a letter this morning citing the strength in china as well. -- was out with a letter this morning citing the strength in china as well. decline inercentage the s&p 500, it is a very diverse group of stocks here. we have been energy stock. -- we have an energy stock. and then news corp. also. this is on a percentage basis. if you look in terms of index points, we have the financials in the form of wells fargo and jpmorgan and then exxon mobil is

also pulling back. it remains a very broad based selloffs. we will continue our coverage of the stock market selloff. let's take a look at some of the top stories. one of the nation's largest utilities once to capitalize on the demand for natural gas. southern company has agreed to buy agl resources for $8 billion in cash for that represents a 38% premium to agl's closing price on friday. southern is the third-largest utility owner in the united states and agl is a natural gas distributor. the private equity firm sycamore partners has agreed to buy belk. that is the department store change centered in the south. the price, $2.7 billion. belk has almost 300 locations in 16 states. sycamore invests in retail companies and tries to reinvigorate them. olivia: most business economists

expect the fed will raise interest rates before the end of the year. only 37% say it will happen as soon as next month according to a new paul from the national association of business eco nomics. director ath senior the blackrock investment institute. bymonetary policy only works influencing financial conditions. that is one of the reasons it has been so odd that this fed has said financial stability is someone else's problem. we don't care about that. that is the only way monetary policy influences us. is through influencing financial conditions. theia: economists say if economy continues to improve, the fed's interest rate will eventually top out at 3%. latest companye planning to finance investors who buy single-family homes. bloomberg news is also reporting the blackrock's lending partners will offer money to renovate homes that will become rental properties. blackstone group is another firm competing to loan money to smaller landlords. has released an army of

lobbyists in california to reshape the rules regarding drivers. it has spent more on loving there than facebook and apple combined. it is pushing lawmakers to exempt drivers from obtaining commercial licenses. and those are your top stories. pimm: the market selloff continues. the dow down more than 2.5%. you can see the big run up last week that the dow utilities head. today it is following the rest of the market. it is still trading above its moving average. clearly there are some people who still believe that utility stocks are worth owning. they have a reputation of being a defensive sector. the opposite of that is the tech sector. something our friend cory johnson knows about. he is our bloomberg west editor

at large and he joins us from san francisco. netflix, facebook, amazon, google, apple, the momentum billionshey have seen of dollars in their market cap erased this morning. important timen to separate the wheat from the chaff. they have not performed fabulously. companies like netflix and amazon are virtually profit free at any given quarter. they are trading at a norm is valuations with expectations of fantastic growth and no desire or necessity to show profits. those have been the momentum stocks. off,ee all of them selling but among all of the big tech stocks out there, the biggest

seller of has been netflix because it has been a source of cash for investors. they recognize that the market has been willing to bet that stock up into this bull market. you also companies like int , a big change in their business model and moving away from their quickbooks program. a stock specific story. in a market selloff like this, whatever bad news may have come into the stock on any given day is going to be a lot worse on a day when the market is tanking. netflix stock is still doubled since the start of the year. even with today's move and fridays bigger selloff. only up 4%. is there any way of predicting which tech stocks will get hit the worst?

we look for things that are a source of cash. we heard a story of a hedge fund trader whose portfolio manager said where have we made the most money in the last year. when the answer was netflix he was told to sell that. we will look for those things that are a source of cash. things that have worked for investors and maybe they think their time has run out. when we see day after day of selloff, we look for a change in sentiment. a market that is not looking for momentum. then you have companies who structured their entire business model about growing the top line because they want to be amazon. hell-bentant to be for topline growth, ignoring profits and free clascash flow. business model of companies like netflix and gopro and others, really focused on the top lined and not the bottom those guys could really get hurt. pimm: could you define what is a

momentum stock? cory: great question. it is the stocks that move on their own accord. the corporate results maybe don't reflect the fantastic excitement of investors. and other investors are buying the stock opened that a greater full will buy it at a bigger price but not being directly connected to the valuation or the improving fundamentals of that business. those stocks run until they don't. today might be the day they don't. olivia: when the market is going up, people just want to see topline growth. when it's going down, it turns out you actually have to have a profit. up, more on the stock market selloff in the united states and around the world. we've got the details coming up. ♪

olivia: big losses around the world and in the u.s. stock exchange. u.s. treasury is one of the only places -- below 2%. the dow is off still roughly 3%. trillion has been erased from the value of global equities since china unexpectedly devalued the yuan two weeks ago. joined market makers earlier this morning to help suss out what is behind the huge market moves and whether or not now is the right time to get back in. >> i certainly wouldn't be a buyer today. of only from the perspective the technical work we have done over the years, but just experience and psychology.

this isal down like just not something you want to step in front of. you certainly can't yet make a valuation case on this market. >> where would valuations need to be for you to make a valuation case? >> this is not a forecast. 1500 or you get down to 1600 on the s&p, things get interesting from the perspective that normalized earnings on the s&p 500 are around $100 per share right now. if you were to get down to 15 times normalized earnings, that would put you right at 1500, things get interesting. that is not a projection. just showing how overvalued we got. dictating the u.s. move right now or is this some fundamental concern about what's been going on in companies in the u.s.? >> i would take a look back to last year. year thatduring the

-- they seemmoves so long ago, but from january to october, you took that bond buying down from $85 billion per month to zero in the space of nine months. policy moves like that have a lag time. typically from nine to 12 months. it has been 10 months. since the fed initiated that last tapering move and went to know qe. -- no qe. maybe it is just a reflection on that lagged impact of what in taperinge are actually last year and that could be responsible for what we are seeing in emerging markets. olivia: that was our interview with the chief investment officer at lose a week in -.ital management

we're looking at a price-to-earnings multiple at nadir.19 at the th we are trading at 16.5. pimm: a huge move on valuation and volume. no major fundamental change in the economic picture in the united states. maybe people are readjusting their models when it comes to reinvesting in emerging markets. there is no rush into u.s. treasuries. i was expecting a bigger move. people are just selling. maybe they are selling the most liquid positions in their portfolio. years: it had been for without a 10% correction. a lot of equity investors tell you that corrections are healthy revaluing's of the market. it seems like there was a lot of pent-up demand to release of the steam from the market. pimm: you didn't get a sense of

euphoria previous to the selloff. people were not going around saying, unicorns are transporting themselves into initial public offerings. i want to talk about that later. what happens to them now in a market like this. olivia: this was the bull market that nobody wanted to love. tchirsting to hear peter he is not sure he wants to buy back in yet because flash crashes -- he calls this a flash crash. he said they have a tendency to repeat themselves. he wants to stay on the sidelines. pimm: we will follow this story all through the market day. you are watching bloomberg market day. ♪ the only way to get better is to challenge yourself,

and that's what we're doing at xfinity. we are challenging ourselves to improve every aspect of your experience. and this includes our commitment to being on time. every time. that's why if we're ever late for an appointment,

we'll credit your account $20. it's our promise to you. we're doing everything we can to give you the best experience possible. because we should fit into your life. not the other way around. tand that's what we're doings to chat xfinity.rself, we are challenging ourselves to improve every aspect of your experience. and this includes our commitment to being on time. every time. that's why if we're ever late for an appointment, we'll credit your account $20. it's our promise to you. we're doing everything we can to give you the best experience possible. because we should fit into your life. not the other way around. pimm: welcome back. i'm pimm fox. europe are closing in right now. let's get a check on what is happening around the world with nejra cehic in london.

ejra: the selloff continues in europe. all those concerns over china, we have seen that in europe as well. the stoxx 600, every stock pretty much bar a handful has been declining today. you can see down 5%. at one point today it was down as much as 8%. that is the biggest drop since 1987. it has had its worst day in four years. look at the industry groups on this benchmark, every industry group has been declining on the stoxx 600 today. oil and gas stocks leading that decline. utilities not far behind and also basic materials. all of that is to do with a commodity route that has been dragging this particular stocks lower.

i want to look at national equity benchmarks. 13 out of 18 western european markets in correction territory at the moment. as you can see, no national stock index is actually escaped the selloff in europe today driven by those fears over china. the ftse 100 hit its lowest levels since 2012. the psi 20 is an bear market territory. the dax index was one of the best-performing indices at the beginning of this year. it is an bear market territory as well. germany with its export oriented economy is very much exposed to china. we have been seeing losses all across these markets today. we have been calling it bloodletting. pretty appropriate when you see all the red. julie: volatility continues with the bouncing around. open of the selling at the

has abated to some extent. see the bouncing around we have seen. the range has definitely tightened as the session has gone on. off 60 points, 3.1%. the selling is happening on very high volume. compared with the 100th day average at this time of day, we are looking at volume at least 150% above normal. these are full days of trading. some of the other highs we have seen in terms of volume. a lot of selling on a lot of volume. we have been hearing from some vendors that they are having trouble executing orders. td ameritrade talking about market volatility and volume causing market latency problems. also let's take a look at the vix. we had related issues with the

market operator saying we saw delayed pricing in the 30 minutes after the opening bell. that was in part because of making all of the orders normalized enough to come up with a price for the vix. right now a 33% gain. let's take a look at the relative strength index on the s&p 500. this is a 14 day rsi. you can see the red and green bands. in theory, when we see it fall below the green band, it means the s&p is oversold according to technicians. that does not mean we will get a bounce today. pimm: thanks very much. let's take a look at some of the top stories. ukraine's creditors may end up taking a 20% haircut. the two sides are discussing a write-down of ukraine's $19

billion worth of debt. the next big payment is due a month from now. ukraine could end up freezing debt repayments. a federal judge has rejected royal bank of scotland's bid to throw out a lawsuit over faulty mortgage practices. rbs had argued that regulators filed the claims too late. there is speculation that rbs might have to pay $4.5 billion to resolve the claims. it is seen as the holy grail for medical researchers. scientists at johnson & johnson are getting closer to developing a universal flu vaccine that would work against a number of strains of the virus. that could eliminate the need to come up with a new vaccine every year. if you think your portfolio looks bad after the last couple of days, let's talk about the real big losers. on friday, facebook's mark zuckerberg lost $1.9 billion on paper. amazon's jeff bezos losing $1.8 billion. archer hathaway's warren buffett lost $1.7 billion.

their companies are all down again today. all this from the bloomberg billionaires index. and those are your top stories at the moment. we know it has been a wild ride this summer for the stock market. beganss in many markets right at the memorial day holiday and have accelerated over the last couple of weeks. postt to bring in kelly and david heroes. the firm has $130 billion in assets. the majorned for us stock market groups leading the decline. >> every stock market group out there is down. the worst are the ones in semiconductors. and the largest u.s. technology companies. facebook leading the decline. apple, netflix.

portfolio managers are saying, i want to take profits here. general risk sentiment in the market. pimm: david, do you agree? vid: i think what is going on is there has been some fear and fright in the market. who knows what initiated it. the spark seems to have been the china currency situation last week. don'tndamentals really warrant this. if you look at valuations today and underlying intrinsic business value, it doesn't move as quickly or as violently as share prices. when these share prices dropped or go up abruptly, clearly these rapid moves in prices are not matched by changes in the underlying intrinsic value of the businesses themselves. pimm: in that case, are you actually buying today?

do you have a list of stocks you want to buy? david: clearly to us, as price moves away from intrinsic value, we add to those positions. and the reverse is also true. a huge spike in the market going up and if price goes up faster than intrinsic value, that is a signal for us to trim. givenhe last week or so, it rate of change of price, is more of a buying opportunity for us than anything else. pimm: tell us about what is going on in the energy sector. allie: it is being hit hard again today. it has been hit hard all year. it is down more than 50% since the peak in june last year. energy has been one of those sectors being targeted by the bottom feeders. you see erratic price movements there.

on days when energy is doing well, it is doing really well. pimm: and metals and industrial companies. production.per gas production. a major supplier to the energy complex. commodities across the board have been ravaged. energy stocks have gone right down with it. pimm: looking for some inexpensive energy stocks? david: we have been looking. we have been traditionally over the last half decade way underweight energy. because we always believe the natural price of oil should be somewhere at $75 a barrel. this is when oil was at $130. we are starting to do a lot of looking in some of our domestic accounts. we are adding to some of these

positions where we have a little bit of -- pimm: what about the big integrated oil companies that pay dividends that in some cases are greater than 5.5% now? avid: it is the same thing with some of the resource names. if these dividends are sustained, 6% yields. an investor should be looking here. pimm: we talked about technology. what about the media sector? disneyned from the conference call, people were worried about the espn segment of that call. that seemed to have extrapolated to a variety of media names. callie: media names are getting hurt again today. they have been part of the big summer swoon of these stocks that have been hit really hard compared to the fundamentals that have come out.

media stocks are in a correction. some are down 20%. it seems a little crazy given how present the issue with paying for content has been over the past few years. it seems more like a sentiment thing. portfolio managers said, i want to sell an eye to want to be the last person to sell. thanks very much. still ahead on the bloomberg markets day, bank stocks getting bruised. investors swinging a long list in a choppy market. we will tell you who is getting hit the hardest in this market rout. ♪

pimm: welcome back to the bloomberg market day. i'm pimm fox. let's begin with the top stories. antitrust officials have zeroed in on one angle of staples planned takeover of office depot. the federal trade commission is looking at whether the deal will hurt competition for corporate clients. would leavetakeover just one national office supply retailer controlling up to 80% of the market. it is a new frontier for go-go. this is the company and provides wireless service to airplane passengers. it has gotten clearance from the faa for the next generation of satellite connectivity services. it will begin installing the technology in 500 planes next year. the world's largest diamond producer is cutting prices as much as 9%. debeers had sought to support

the market by reducing production rather than lowering prices. $250 millionffer of diamonds for sale this year. as we have been reporting, the market selloff has been making waves for wall street. but who is getting hit the hardest and why? here is michael moore. it is always great to see you. let's take a look at the stocks being hardest hit. the bears are out in force. michael: you sought friday as well. it seems like banks have a lot more capital and less inventory so it's not as much of an existential crisis as it is an earnings story. a couple of things we're looking at is what happens in the next few days. does the selloff triggered market participants taking a step back and being

less active? pimm: meaning less willing to offer a bid for whatever the stock is? michael: right. a lot of those have been wound down. they're very reliant on client volume and volumes are very high today. a lot of times when you see a big selloff, the next few weeks are pretty quiet. if that happens, that could be not good for the trading results in the third quarter. thelly september drives trading results because august and july are slower. that will be a big indicator of how earnings will look for the wall street banks in the third quarter. the other thing is what the fed does. a lot of the banks have been waiting for a rate hike. that interest margins have been squeezed over the last few years. they hope the fed hike would reverse some of that. bank of america was down the most on friday. perhaps as people see the hike coming further in the future.

pimm: you also see regional banks falling today. is this just because, you trade a basket of stocks, not necessarily one stock in a selloff this pronounced? michael: right. a lot of it is broad selling across industries. some of it is unique to the individual story. a lot of banks have been playing up when interest rates go up, we are going to benefit significantly. we are very asset sensitive. if people see that being delayed by the commodity drop by china exporting deflation -- pimm: as the fed delays raising interest rates, that would have an effect on the banking industry. what should we make of the trading volumes? is there any kind of threat correlation between a lot of volume not only in the stock market but maybe in the bond market and that helps the trading businesses. that one is very tough

because the banks often talk about good volatility and bad volatility. you're never quite sure until after it's done. usually trending volatility with high volumes is good for the banks. but a steep selloff and a turnaround like what we have seen today -- honestly have a variety of customers whether there hedge funds or money managers or whatever. if there is a margin call or if they are forced to sell for some exogenous reason, the bank is obliged to say to me the money if you want to remain my client. michael: there is some of that. a trim, thehave bank says market makers can position themselves a little bit better for that area when you have this website and things turning around very quickly, sometimes the volume helps offset that and sometimes not. pimm: thanks very much, michael moore.

germany's dax stocks index now officially in a bear market. up ongot much more coming the bloomberg market day. ♪

pimm: welcome back to the bloomberg market day. we have been reporting a wave of selling circling the globe after a historic plunge in chinese stocks. stocks in the united states are continuing their dissent -- descent, although they are higher after their low open today. the s&p got near a correction. i want to bring in my colleague matt miller. we are well off of our session lows. stockone of my favorite -- is apple. it was back positive within 15 minutes. -- no, it isown

actually up right now. it opened down at 92 and then climbed all the way up to 106. matt: all morning this ani d ifranco song has been stuck in my head, both hands. all these people were saying, i have been buying with both hands. to join usis going for 30 minutes. 35 years in a row. it is really unprecedented. pimm: if you thought that apple was a stock worth buying any time between october of last year and last friday, it is less expensive today. so why would you buy it today? if you listened to any analysts in the intervening eight months? matt: obviously you would. that's what we see investors

doing today. and said thatout he is seeing increased purchases of his product in china. one of the reasons apple took a hit -- pimm: people are buying iphones. what a surprise. few: apple corrected a months ago because he was seeing a slowdown in china. are 13% less,they he says things are looking better in china. pimm: it will also be interesting to add up all the analysts that said sell and wait for a day like today. matt: it seems like a lot of people are going back in with a shopping list today. one of the interesting things about the big drops we have seen and commodities is that should be good for the global economy. if gas is cheaper around the world, it is good for europe and china and us. pimm: let's go to julie hyman with an update. let's take a look at where we stand right now.

it looks like we are pretty much at the highs of the session with the dow down to 50 points. points. apple is also in the green. we have seen an enormous amount of bouncing around today. strugger.g in jim what can you say on a day like this? the vix earlier was of the most ever in a single day. jim: obviously some scary stuff out there. s&p options weren't very liquid. the bid size and ask size were flashing between one and 50. really diminutive size. the prices were very wide. almost untradable.

did no one want to get in front of this? you couldn't find any buyers? jim: the natural response in a market like this, where it is is market makers widen themselves out and make themselves smaller. if you go through the typically most actively traded sector etf's, there was minimal volume traded. the market recovered a little bit, spreads should tighten up. that is not to say there is no volume coming in. we were tracking about 28 million on the day. that is relatively high but it is not an easy market to trade in option terms. optionsnasmuch as the market has predictive power, it tells us about sentiment and where people expect things to go , what can we glean today from sp y options?

jim: you might be more from option metrics. it always happens when we see this volatility. liquidity dries up. there remain a number of unknowns. regimen a low volatility -- we are in a low volatility regime. the fact that spot fix opened means -- is about 10 points. that's very wide. a lot of uncertainty. no one is going to give you an answer today about what the next few days or even few weeks look like. julie: are we still in a low volatility regime? m: base case is that we are there. but you have to keep in mind

with a spike in vix, the profile of the volatility changes. 2011, you get a spikes in the high 40's and it is three months before it works its way back below 20 over that period the s&p declined. julie: are you putting on any bets today? jim: liquidity is an issue. if anything, we have people looking to put on some hedges here. we're looking into the most liquid products. julie: jim strugger, thank you so much. protect yourself is the mantra. ♪

>> good day. it is 9:00 a.m. in san francisco. noon here in new york and hong kong. matt: welcome to a very special edition of the bloomberg market day.

u.s. stocks on a roller coaster ride to start the week. the dow down 1000 points. some extentired to the index with huge losses. in china, it was even worse. the shanghai composite dropping 8%. a look at whether today posits selloff is in china. matt: crude oil falls shorter. a six year low and we will look at how companies are adjusting to the reality of every cheap oil. ♪ pimm: good afternoon. matt: we have to take a look at the markets right now. i am checking them basically every 30 seconds here. it is such an interesting story. you had massive drops at the beginning of the