olivia: this is the bloomberg market day. mark: good afternoon and thank you for joining us on this market day. this is mark crumpton here with olivia sterns. >> what a turbulent day has been -- a selloff across the board, even if we are off the lows of the session. julie: turbulence indeed. we are seeing stocks move back down a little bit with a loss of 2% across the board. we saw them make a run at recovery and then fail at that. let's look at the s&p 500 to get an idea of what we have seen. we saw it fall as much as about 5.25%. now it's turning back lower. person that bloomberg crunched the numbers and found the last time we saw an intraday swing of this type of magnitude from a loss into a gain was back

in 2008. andas down more than 4.5% ended up recovering by 4%. just a little market trivia -- that's when oil below $70 a barrel and bond insurers were trying to submit plans to treasury for a bailout. we have not seen swings like this since that point in time. take a look at the s&p 500 to see where we are on the correction watch. a 10% drop -- right now we are at 9.8%, but as we have seen the volatility throughout the session, we have seen volatility in this measure as well. information technology was making a run at being little changed, even positive. now it is back down.

energy and materials also leading the decline. .ake a look at the commodities we continue to see this selloff with oil prices trip -- dipping dramatically today. selloff overues to concerns of demand from china. even gold is not catching the bid here. when people are avoiding risk and looking for areas they perceive as more safe, gold is unusually not catching the bit. we are starting to see the dollar pulled back. if we look at the dollar index, down about 1.5% at the moment as we see people figure out what is the fed going to do about all of this? let's take a look at rates because if there is buying, if there is anywhere perceiving it,

perhaps it is in the treasury. 2% for the first time since april as we saw people buying treasuries. one of the few things where we are seeing green today. olivia: probably one of the only asset classes where you are seeing green today. the u.s. averages sort of correcting their corrections. this is what happened overnight in asia -- blood across the board. the biggest single day drop since 2000 seven. look at the moves in emerging markets activities. that index off the most in's 2011. in europe, the stoxx 600 suffering its biggest decline since 2008. the benchmark in frankfurt off 20% or more. stories, theities

bloomberg commodity index, that ask it of metals off the lowest since 1999. west texas trading below $39 a barrel. let's take a quick look at treasuries before we get to our guest. the 10 year yield is unchanged. the two year yield, the change there is a little bit into the red that as julie mentioned, some folks are trying to find a safe haven wherever they can find it. we are in correction correction mode. olivia: investors very fluid with their bets on where they are going to raise rates. we are joined by the chief global strategist from charles schwab. always good to have you on. try to give people some sense of what is going on. the global market started feeling some reverberation from

what was happening in china when it devalued its currency earlier this month. is this a continuation, or is there something else structurally going on in global markets? jeff: that's a big part of the fear. there is something going on in terms of global economic weakness that had been previously hidden to the markets. if you look at china's economy, it's no surprise that it had been slowing at there are concerns that the consumer or service center in china is beginning to slow as well. that's not showing up in the data but there are concerns now that the stock market has pulled back and we have this currency decoupling, there are concerns that it is slowdown and -- that this slowdown is deeper and wider than we thought. you watchingare now to inform you of which way the markets are headed? jeff: this is the first year in

five or six were the economic data has been outperforming the markets. olivia: the u.s. economic data? jeff: i would say global economic data. if you look at the leading economic indicators, the eurozone is on the rise, japan is on the rise. if you look at the purchasing managers index, that is ticking up. revisions to profits have been moving higher, so broadly speaking, growth is ok this year. the contrast has really drove our gets up at a much more rapid pace. i'm watching these important data point. get the isn data or -- the isn data. servicing and manufacturing. moves upo see if that and stays around 54.

if that shows suddenly this, we could see more downside. in august, getting close to september, is this the volatility many have been waiting for throughout this challenger -- about this calendar year? jeff: we've been talking about volatility rising as we get close to this that rate hikes. it's to the downside and to the market and here we are finally getting them. have bonds in your portfolio, they are holding value and a lot of parts of your portfolio should be holding together to mitigate your losses versus just straight up large-cap stocks today. olivia: if we stick with overseas markets, let's a going

to take to turn the tide? what does it actually have to look like mark -- have to look like? jeff: that's a great question. a lot of intervention has backfired. whether was the intervention in the stock market or what have you, it has backfired. they are likely to keep their lips tight and what the data speak for itself. we have other data points coming in the next couple of weeks and they are important to watch. ist of china's economy holding up. that means a hard landing is probably not in the cards for china and that could be the best news yet as we continue to watch the shanghai composite and the shares individuals may have exposure to. mark: how do we explain that this is the first years as the financial crisis that the economy is outperforming the financial markets? how do you explain that?

may bene of the reasons that we are not doing qe anymore in the u.s. that helped to boost risk assets, if you will. the bond market is way ahead of what fundamentals would suggest. now that program is not there anymore, we see more volatility returning to the market sector. i think we have to get used to this enhanced volatility in the market and we made no longer have that artificial support. olivia: thank you so much. the chief global strategist from charles schwab joining us from boston. mark: let's take a look at the top stories we're following this hour. monsanto is taking on another run at a swiss company -- they have boosted their takeover offer to about $47 billion in cash and stock. the new offer has a higher proportion of cash than the

previous one. there has been no comment from either company. survey expects janet yellen to raise interest rates before the end of the year. 77% of economists believe the fed will raise rates in 2015, but only 37% now believe it will happen as soon as september. we spoke with the co-chief investment officer of gamco. interest rates are going to stay low. the september rate rises probably off the table. if the economists say economy continues to improve, the fed's interest rate will top out at 3%. have antitrust officials zeroed in on staples plan to take over office depot. the federal trade commission is

looking at whether the deal will hurt competition for corporate crimes -- corporate clients. it would just leave one office supply retailer controlling 80% of that market. that's a look at the top stories we're following this hour. olivia: we have much more ahead on the bloomberg market day. have you ever seen a 900 point swing on the dow jones? we will be right back. ♪

york andazy day in new a hazy day on wall street and a hazy day and the global markets. olivia: a lot of investors on

holiday probably frantically on their bloomberg terminal trying to figure out what is going on in the markets. the dow jones off more than 400 points. let's get straight over to julie hyman with a look at the latest. julie: we are seeing the dow jones off more than 400. apple was higher but earlier dropped as much as 13%. then we saw a recovery as we saw analyst saying it would be a good buy after we saw tim cook writing a letter saying demand is strong. ist turned higher and now trading lower again, mirroring the project tree of the market overall. thee a huge weight on the 500. we saw a similar trajectory with facebook. now it's down by more than 3%.

general electric with some dramatic movement when it fell by 21%. it hasn't recovered much and is still down by more than 3%. stocks have been taking it on the chin, and this is the worst-performing group year to date. we've been trying to distinguish between these highfliers that have been brought low recently, but the low performers have gotten worse. chevron,il, schlumberger are some of the worst today. investors asking what the selloffs mean for them. when they think they would see an uptick in volume could be good. wells fargo, citigroup and jpmorgan all trading lower. financials were

just one month ago trading at multi-year if not record highs. whether you are talking about andgy or financials technology that has done quite well, this is bringing everyone down. olivia: i thought with all of this volatility that might be good news for the banks. thank you so much. at somet's take a look of the top stories we're following at this hour. you think you're folio looks that after the last couple of days, let's talk about the big losers. 1.9 billionerg last dollars on paper. jeff raises was down $8 billion. lost $1.7fett billion. there companies are all down today, all of this from today's bloomberg billionaire index. olivia: who's counting?

belk has almost 300 locations in 16 states. sycamore is trying to reinvent them. trying tokrock is finance investors who buy single-family homes. bloomberg news is reporting their lending partners will offer money to renovate homes that would become rental properties. ofckstone group is another the firms competing to loan money to smaller landlords. those are your top stories. stocks and currencies in developing markets are plunging amidst this route. .- this tout rout.s mark: just how bad is it? guest: it is pretty bad. it has been described as not an event driven selloff, but a fear driven selloff.

in order to stabilize it, we need to see some optimism coming from investors and coming from china. everyone is looking for them proved sentiment to stop what's going on. olivia: there's a signal that we need better macro economic data coming out of these emerging markets or that we need government intervention? guest: some people are calling for the chinese government to step in. if that means cutting interest rates have some room there because inflation is not that high or reducing reserve requirements which would allow folks to put some money to work and stabilize asset prices. governmentrom intervention or domestically, each central bank is weighing their options. you are dealing with slower growth, higher patient, so what do you do here? do you jack up interest rates or risk your currency?

mark: are these economies structurally sound enough to withstand the interest rates? .uest: it depends some economies are being overly sold. in mexico, it's a great example anmexico does not have inflation problem even know their currency is falling off a cliff right now. they have implemented their own reforms like breaking down the monopolies. enabledlim -- they have them to do that. take with what we've seen in the commodity prices -- trading at lowest level since 1999, that that would suck all the inflation out of the air. guest: it's not pretty. we have laces like chile, which country but they

are dependent on copper. if copper goes to two dollars a pound, we would see growth slowing my one percentage point. we would be seeing the currency following another 6%. olivia: thank you so much. the bloombergp on market day, apple, facebook and google all down, but they are not as bad as earlier this morning. we will dig into tech stocks, next. ♪

olivia: it looks like a roller coaster ride in silicon valley -- check out the movement and stocks. here, a three-day chart

the so-called fang stocks. that giant vertical line is what happened this morning. six --k by as much as facebook off by 16% earlier. ride in those so-called momentum stocks. toward thedipped right side of the screen tells you everything you need to know about what's going on today, especially in the tech sector. bloomberg'sow is editor at large, cory johnson. is the tech bounceback here to stay? --y: we can already see it indeed a lot of tech stocks are leading the way when it comes to u.s. equities. a big part of that is because the stocks have traded at very high altar bulls that may not be supported -- very high multiples that may not be supported.

a company like netflix which led the way on this he may not be as interesting in that brave new world. stop -- isflix is a a stock that has doubled year to date. but people like to look back and compare this to the.com boom. dot com boom. look at netflix later as a specific example but apple is a company that hasn't had that fantastic rose premium but does demonstrate how quickly things can change and how i product that is popular as a new becomese was suddenly on popular even to the point of existence and it technological driven change can happen at such an aggressive pace that market leaders can change in short order and the growth multiples

of a twitter or face the or groupon or zynga. when we see that massive change, it can happen on it time. that's a risk these stocks carry with them at all times. at a time when risk is being recalibrated, you don't need pets.com to understand tech stocks can be this it remediated. what about the startups? is that going to affect them as well? cory: that is going to be the question. what's the effect of the bubble like a valuations that we have -- the unicorns and alien dollar companies that are private and have a profits, some are pre-revenue. what are the effects going to be if there's a global market selloff on the capital available to them? risk amy adams change when treasuries are at near zero. way to ideasnd its

that will show a rate of return or promise a potential rate of return. when that applecart gets upset, a lot of his misses that did not raise the money and were blowing through the cash will spend less and have less to spend. that could affect the entire ecosphere. other us that real estate could be affect it as it affects the broader economy. mark: thank you so much. i'm gone, but this is a wild day. olivia: i wish you are staying with me. i will be back with continued coverage of this global, cross-asset selloff. ♪

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welcome back to the bloomberg market day. i'm only a let's get straight to the stories making headlines. ukraine may take a 20% haircut -- they are discussing writing down $19 billion worth of debt. the payment is due to months from now. a federal judge reject did royal bank of scotland's bid to throw out a lawsuit over faulty mortgage track this is. there's speculation rbs may have to pay $4.5 billion to resolve these claims. netflix is getting a partner for its debut in japan. the services teaming up with one of the largest mobile carriers, soft rank. japan is one of the

biggest new overseas markets with 36 million broadband homes. let's take a look at the markets. seeing red acros the board, cross asset classes. looks like treasuries are the only place to hide. matt miller joins us from the newsroom. i saw the dow jones off more than a thousand points. you have been doing this for what? 40 or 45 years? have you ever seen and 1100 point move in the dow jones? matt: i have never seen it swing this big that i can recall. the recovery had been amazing and then we came down on another leg because according to some margins -- investors have to get right with those margin calls, so you saw more selling increase after 1:30.

103 point.s&p fall chart.with a one-day we saw that chart fall 103 points at was down 20 points. this is my terminal which has nothing to do with any of that. this is the dollar index. incredible dollar strength here. it has been flat but choppy over the last view weeks or months. the last four days in a row, it has gotten crushed. as we see investors running for safe haven, they are not looking it appears at the dollar. of course, the dollar is fairly safe. hiketations for a fed rate have been coming down so severely that investors were positioned for a rate hike in september and they were just driving that down.

it's interesting to see weakness in a model like this where you normally expect people to plug in to the dollar. people looking for liquidity in markets like china where they cannot sell any of their stocks are forced to sell dollar assets raise money for anything. that's why the dollar is interesting. if you look at the major indexes, you see a recovery story that in the late afternoon turned down a little bit. i think that's because of people looking to fill margin requirements. thosee were down at levels, most investors we heard him were saying i have my shopping list ready. i'm going to buy with both hands. these were some of the cliches being tossed around this morning.

now we will see if we recover into the afternoon and in to the close. that failed on the tech side, they may have turned down. it is a fascinating market to watch and has been one of the more interesting days at bloomberg in a long time. you for that very thorough roundup. we wanted to get your take on what caused all of this. there's clearly not one single catalyst. we're pointing to disappointing manufacturing data. perhaps it was the currency evaluation or broad commodities devaluation. we are all racing for the fed to raise rates. your buddy was on earlier saying one of the triggers was the dislocation in the credit markets. what is your sense of what caused all of this selling?

i was talking to tom lee earlier. saidfamously bullish but yesterday afternoon into late sunday night, their fund was incredibly busy. they were freed out about what is going on in china. you saw it inop chinese markets, when you see something like that, it floods across regions. people were up worrying about it all night. he says he thinks it was a lot of computer versus can shooter training that we saw this morning responsible for the big drops and big recovery that we saw. within the first hour, apple was down 13%. 21%ral electric was down this morning and is now back to basically unchanged. olivia: i have to believe it's a

lot of automatic, algorithmic training -- trading that precipitates a 1000 point move on the dow jones. --reciate your time for stop appreciate your time. guest covers stocks for bloomberg news. what can we expect tomorrow to mark -- what can we expect tomorrow? guest: usually it ends up positive. for 5% after a 5% a lot move? guest: a 5% selloff. it also means things might be more volatile. the data i got when all way back to 1980. ande has been 28 since then four of them the bull market

tarted in 2009. people were not impaired for something like this. it is a little bit of a shellshocked. olivia: a big shellshocked for me. matt has not actually been covering the markets for 45 years. when was the last time there was such a big move? 2008, in thely depths of the financial crisis. then you can go back to the 1980's where there would be an 18% or 20% move. but the story the first half of the year was how volatility was so low. look at a chart of the vix and it has spiked like no other. its worstia having day on the shanghai composite 2007. keep watchingwill the markets and look at the commodity markets with rent oil

falling below $45 a barrel for the first time in six years. we will take a closer look at the commodities close up next with alix steel. ♪

olivia: welcome back to the bloomberg market day. let's take a look at how commodities prices are settling in new york trading. i want to bring in alix steel. the basket trading at its lowest level since 1999. bloodshed across the board. what are you looking at? you want to focus on commodities really exposed to china. i would pay attention to steel

and copper. real estate accounts for about 50% of all the steel used in china, so if there is a slowdown, the other prices are moving up. about 50%ina consumes of all copper production, so it's ugly anyway you slice it. olivia: what is your sense of why? is it the global slowdown triggered by china or a surplus in supply? yes and notd necessarily market fundamentals. theing about the fact that copper market is at a deficit in may and april. the recent selloff has been driven by speculation. if you can't short stocks, what can you do? you can short sell copper. it has been a derivative play in that way.

is demand coming off of it. imports have been strong but that could be due to financial arbitrage. olivia: let's bring our colleague in from bloomberg intelligence. he covers the oil markets. selloff leading over into oil and a catalyst of oil deflation? : we think about the imbalances, they are evident and obvious. you have a rainy and aral some day come online in 2016 and you have resilient u.s. capacity. you have rigs coming back online and that will offer resiliency to the overall out but. these imbalances are wider than expected and will continue into the second half of 2015.

olivia: you have to wonder what it means for the miners who dig this stuff out of the ground. they've been balancing their legit with $60 a barrel oil. alix: but their own costs have been coming down anywhere from 10% to 30%. can you sustain your production to pay off your loans even if oil is below the $30 or $40? you have to repay the bank and that is in itself the problem. youes keep going lower, but are still doing it because it is cheaper. olivia: no one can afford to turn off the tap. vince: the one thing to look for is borrowing base redetermination season. reserve levels for 2015 and 2016. that could be a harbinger of things to come. investmentng you see

flow into high yield energy bonds. companies have been able to fund themselves due to investors looking for that easy money. if that goes away and esters are no longer willing to give a company with that yield, they have to do it and that's when the spigot dries up. vince: credit has been the life will the 2008 low and it has been there for them. things may change as we head borrowingwith the base redetermination and credit standards overall. earlier this morning, we had skipped york on and he said 2015 is when we will see u.s. reduction finally top out. out.s. production will top beot of producers will not able to pay back their debt and we will see a decline in production in 2016.

vince: year over year, not likely. we are at nine point 3 million barrels a day. activity has ramped up, so while we should decline from those july peaks come year-over-year, we should be higher. there's always a lag when it comes to oil reduction, so after the lead that, we have not seen that yet in the rig count. the bigger issue in the oil market is what happens when the product market winds up filling up? if we don't use the product, does that hold up so much that refiners margins shrink and they say i'm going to pare back what crude i use and that remains a huge demand fact your in the oil markets. that is a huge demand that could

fall off. olivia: now we have the mexican refineries in market, so we are sending crude. alix: if they ask for it. vince: and it will be a nominal amount at first. olivia: i was trying to make a lame commodities joke. alix: you have to hang out with vince and i to really understand commodities. olivia: that sounds like a really exciting night. [laughter] in the meantime, let's take a look at the top stories we are watching at this hour. it's a new frontier for go-go, the company that supplies wireless to airplane passengers. they have gotten clearance for next generation services and will target dolling the technology and 500 lanes next year. sony plans to enter the commercial drone business,

saying they will offer drone .ervices they will capture high-definition images and submit them for analysis. and it is seen as the holy grail for medical researchers. are getting closer to develop a universal flu vaccine that would work against the number of strains of the virus. that could eliminate the need to come up with a new flu vaccine every year. .hat could be huge coming up on the bloomberg market day, we will speak to pimco's executive about the global market selloff. ♪

olivia: stocks on wall street are tumbling following heavies elling in asia and europe -- heavy selling in asia and europe. the dow jones was down by as much as a thousand points within 10 minutes of the opening this wording. all the major benchmark averages off by 2.5% or more. the dow jones officially correcting itself from correction territory -- off by a little less than 10%. the s&p and nasdaq were off by 10% but they have pulled back. worse in overnight was asia. we saw the shanghai come positive all 8.5% overnight, the biggest single day decline since 2007.

-- index of emerging my get falling markets stock across the board -- the euro stoxx 600, the major benchmark on the continent off by more than 5%. wasrankfurt, the dax which up this year, falling for the day by 4.7%. so the dax officially in fair territory. the only place investors did catch a bid was in treasuries. falling below 2% for the first time. i want to cross over and go to my colleague, matt eller, who has been covering the markets over this selloff. the dax andlk about i was talking to someone from blackrock -- he says investors have an unfairly punishing

germany and the greater european markets because they are so worried those markets are more exposed to china than the rest. more so toey are china than we are in the u.s.. 22% in just a few short months. he thinks it's a great place to invest. he has been seeing investors .ive in, investing today although we still see red arrows across the board and they have 2:00, the dow jones was off by a thousand. and typically on the markets later in the afternoon, you will start seeing the short cover into the close. if there's a rally today, another one, i should say, then that is when you should see it. olivia: when we started, we were

off i 400 points. now we are off by more than 500 points. i want to bring in tony crescenzi from the pimco offices on the west coast. you make any trade today mark -- did you make any trade today? tony: we are always trading. we are active managers. that's an understatement. olivia: what are you buying today? tony: you don't want to jump in fully when the water seems cold, so we are being careful about that, but we have cared for volatility, saying there could be some related to the fed. china, forrices, preparinge have been by raising cash and moving up in quality. there are golden opportunities

for investors to invest in the long term. places to go. remember it's a big market. the bond market is $100 trillion in size. investors he might have been thinking and worried about the dead as it seemed there would be a rate hike in some timber, but perhaps now off the table. gettinge thinking of out of the bond market and there was one week about was. way of market timing the bond market and saying they were taking risks. this week, that diversification benefit is so evident. time bondto market investments. stay invested even as the fed rate hike nears and at some

point, it will. let's pick up the conversation right there. you said september is perhaps off the table. a 1000think -- granted point move in the dow is enough and ability to make janet yellen hold off? decision were to be made today, the decision would be no, especially given that the rate hike looking at fed fund futures is only around 20%. it would be a surprise to markets and it last thing markets need. over time, markets can heal as they often do in the economy might look through this. it's a bit of a goal to make a comparison and use historical data but 1998 is an example of this talk market with the dow falling in the second half of 1998.

but the economy flu well. this is in real terms. while the economy does not have that sort of juice, it cannot provide the same gains in the stock market did then. likely to be some continued expansion and moderate growth as the fed puts it, enough to push prices back up. for the equity market, which has been under arming, it could snap act at some point. -- which has been underperforming, they could snap back at some point. olivia: clearly, tony crescenzi is seeing long-term value in a credit market. we will be right back. ♪

good afternoon and welcome to the bloomberg market day. moves with equity

markets firmly in the red but well off session lows. take a look at where the dow, s&p and nasdaq our trading. the selling really picking up momentum in the past few minutes. 170% more volume on the we want to get straight to our senior markets correspondent, julie hyman, who is looking at this crazy market day. olivia: we thought stocks were making a run at a recovery. back towardeading if not the lows of the session, certainly closer to them with the dow jones off 650 point. it dropped more than 1000 points which was its worst performance since the flash crash act in may of 2010. but