can they hold on for a rally and avoid an afternoon swoon? matt: schlumberger is buying cameron international. is it a sign that the oil has hit bottom? and we will hear how the buffalo wild wings's ceo is taking a very american philosophy around the world. good afternoon. from bloomberg world headquarters in new york, i am mark renton, here with matt miller. matt: a look at stocks. points,rising over 1900 a gain of 40 points, the dow jones putting up a gain of 342 points, and we are looking at basically the top that we

have seen today come the nasdaq up 2.25%, 4607. rally that petered out and turned to a loss at the end of the day, but the chinese market had followed devon percent, and today we are looking at 1% and change overnight, not as bad. taking a look at treasuries, use the a little bit of a selloff in on as investors did a term -- in the market. the yield is up 10 basis points, and the 30-year long bond yielding 2.93%. and finally, taking a look at oil, what started all -- the chicken and the egg. 8/10 of 1% today. is also not higher, but i think it was unchanged, bouncing

between gains and losses on brent crude today. now let's look at the top stories. a gunman who is said to be a disgruntled employee who shot at reporter.n and a they were pursuing the suspect on interstate 66, and he was found crashed and suffering from a gunshot wound. he is being treated for life-threatening injuries, and nd adamid alison parker a ward were shot and killed. was doing an interview when eight shots rang out, and also undergoing surgery. james holmes has formally been sentenced to life in prison

after being convicted of murdering 12 people and trying in 2012.0 others jurors rejected his insanity plea, but they could not agree on giving him the death penalty. in france, the man charged train incident has been charged with terrorism. his lawyer said he only wanted to rob passengers. by threeoken up americans and other passengers, and one of the americans, anthony sadler, returned home, walking off a plane at the sacramento international airport a company need to buy his parents, and they are planning a parade for all three men who grew up in the area. from the new york federal reserve president bill dudley who said that the markets may have an effect on the at meeting in september. mr. dudley: from my perspective, the position to begin the normalization process seems less

compelling to me than it was a few weeks ago. the normalization could become more compelling by the time of the meeting. looking at 26%, versus 28% before he spoke. mark: orders for capital goods rose in july by the most in more than a year. bookings for nonmilitary equipment other than planes rose, and orders for all durable goods, those expected to last at least three years, exceeded all forecasts with analysts bloomberg surveys. and those are your top stories. militarykosh got a contracts, and investors sent the shares soaring on the news. sincethe steepest drop 1996, and lower interest rates failed to help. what, if anything, can help? and schlumberger has

greater one-stop shopping for crude exporters. and more coming up on "the bloomberg market day your quote funds hadange traded bucked theut some trend. mike, why didn't you set it up for us and tell us what the trend is that you see happening with investors? the big thing that caught my eye was the leverage into the those giving you two times or three times the market. there is the nasdaq index, if you tracking the s&p 500, and as a percentage of their market cap, the flows were just

incredible, so to me, it makes you think if you like this market after this, how about three times? why didn't you try to bet on it with the three times game? obviously, these are super risky. you're looking at potentially three times the gain or also three times the losses if we go back down. you can only go down to zero, where is the gains are unlimited. my goal that is one way of looking at it. yes, the gains are unlimited. differenta lot of flows, and people were all over and they had some pretty big days, so it is not an entirely bullish scenario, but to me, these triple leverage -- whenever i see big inflows in them, i find it interest thing. all right, you say it was

not an entirely bullish scenario. yesterday, did the bears go home? were they sulking when they went time? eric: i think mike pointed this out. people love to use hedge funds. traders like to use the long ones after bad days, and they love to use the short leverage was after good days. they are constantly betting on the opposite, and we also saw that in the vix. you would expect them all to go but half ofg vix, the flows went into the reverse vix. million, in about $500 and that basically bets on a rebound, as well, so i think when you look at these exotic, complicated products that are trading crowd the from your going to see a mixed bag of flows all over the place,

but generally, other people were doing things like pulling money out of equities and putting them into fixed income. mike: if an investor wants to make a big bet, how do these flows get into the market, and what is sort of the timeline and the explanation of how they go and how the shares are created, that sort of thing? >> great question, and it gets misinterpreted a lot. take any etf. start wanting to buy it on the exchange, and the price starts to creep up above the n.a .v., and at that point, there is an arbitrage situation, and they will get shares of the etf, sell etf in the open market, pocket it, and then that brings a.v.,rice down to the n.

and when they do the arbitrage, that turned into more shares outstanding, which eventually turns into flows, but it does take one extra day for that flow to show up. just last night, i mean, yesterday, we saw monday's flows. matt: so we short the s&p 500, does it have to be an inverse etf traded, going long the s&p 500, so the two can weigh each other out? ric: it depends. look at tbt. that is the short treasury. this thing has 4 billion in assets, so you will see a lot more flows into that one, even manyh many kiev's go -- etf's go long treasury. again, all of the flows start from the grassroots, meaning demand on the exchange.

., you mentioned the n.a.v basically the assets that the etf holds, and sometimes there can be a big dislocation between what is that inherent value and what the etf is trading at. there seem to be dislocation, v. turned away. did you see a lot of that in the recent days? : on monday, we did. dependents -- it is on how a discount related. people had been putting in stop loss orders, which is essentially a market order at the open, and what happened is the market makers widened to their spreads or stepped away completely, so they were in for price, andssible ask unfortunately, some people thought some really bad traits, and that is what you saw them trade down for about 40 minutes

at the open on monday, and then they came back once he figured out the market, and they narrowed their spreads, so the takeaway is just use a limit order if you're trying to trade and etf. eric, you were talking about how why the spread was. what were we talking about? about $30. when you look at those that do not trade a lot, you might have only one or two market makers, and if those people decide to a quoteay or just put in so wide to protect themselves, that is when you see the problem, so, again, a good rule of thumb, always use a limit order. usually, the bigger ones can handle market orders no problem at any time. eric joining us from princeton, and mike reagan joining us in the studio.

, we got in the tall weeds. matt: and it is a great way to do that without having a ton of money, and also very risky. and you are going to want to look their stuff up for more of an explanation. it is fascinating. : absolutely, fascinating stuff.

♪ mark: that is new york city.

matt: it is new york city. that is the east river. i prefer the hudson, personally. a -- welcome back to tiff "bloomberg market day." matt: julie hyman gives us a look. julie: i think we should get another chance. let's look at stocks. and we are seeing a resumption of the rally, although we are still off the highs of this russian, and it has been another roller coaster kind of day, and although it has remained positive for the day, you definitely see this sort of v-shaped as we have gone throughout the session, and even is down,e vicks -- vix it is still around three, and the s&p is still gaining one point 8%. i wanted to point out the moves,

the similar moves that we call in other groups that were even more sharp, so, for example, the higher take index, and that has been one of the root that has done very well for the past year, and you can see this actually turned negative at the same sort of trajectory and timing that the s&p 500 was moving a little bit lower. small caps also having similar performance here, and it is actually underperforming large caps. did actually turned negative, as well, before recovering, something interesting to watch that we are seeing. up more.s also take a look at this sectors at the bloomberg terminal. before, we were seeing more of a mixed picture. now they have recovered, at least to some respect. care, they health have remained at the top of the pack. and looking at the ratio for u.s. stocks, we are at about 2.4

falling, theeryone volume of of the 100 day average in the s&p 500 stocks, that is, so if you look at the underlying metrics in the market, some of them looking a little stronger now, versus, for example, as started to turn south yesterday, and i mentioned tech knowledge he a posthumous best-performing groups. tech stocks were even rising yesterday. it was the defensive ones that were changing. we have some commentary, particularly on google, with these stocks snapping back today, guys. our senior markets correspondent julie hyman. thank you, julie. why don't you take this? the bronco suv has not been in production for years. mark: they are also considering bringing back the rangers small pickup, an acre to be king editor joins us now.

what is this all about? is this a sea change? people really want to this? >> the ford official word is, yes, we are working on a new vehicle. good point.s a they are doing this because they are moving a bunch of small production units down to mexico, and they have got a bunch of workers sitting there, say what and nowoing to work on, detroit news and bloomberg news have gotten a scoop that the ranger and the bronco will be filling those positions. >> customer demand is definitely there if you trust the internet comments. people love the ranger online, love the bronco, and apparently a lot of people want to see it come back. and the huge hits, and the tacoma, a huge hit. this pickup market has faltered and has been growing, and that is one of the reasons. >> it is interesting. peoples ago, a lot of

were buying these banks treat people love them, and then companies stopped paying attention to them, so the question is, did people get sick of them, or did companies stopped making them attractive? and we are seeing them investing more on the more cool stuff. mark: all right, talk about the danger. series going to be hurt as a part of that? >> that is something they will be wary of. the f series has been the best-selling vehicle in this country for over 30 years, and that is something ford loves to remind us of with the commercials. that is something they will be very protective of. by the way, he runs a website, which is like if you say would you like the new truck, i would say, yeah, i love the bronco. why did they stop?

did oj have something to do with it? >> people want crossovers. they wanted more comfort. they were sick of the ride, and for a family vehicle, it has been much more attractive. matt: but the wrangler has come back and a huge way. >> it is an outlier. a is the only vehicle that is true off-road utility that is selling like crazy, and they go so heavily on brand cachet. mark: what about the tacoma? does ford still have their eye on that? bet: that cannot underestimated. greg from gm, they have been pretty successful, but it is still only about half of what it did, cells -- of what a tacoma cells in any market. matt: it has got its own little neat. niche.h --

go, building this new, what are they calling it? >> a joint light tactical vehicle. was competing against the people who built the original him the and the biggest supplier, and won. and goliath david story. >> they have coming out with concepts,game-esque and this may have something to do with the company winning the head. mark: i have to ask you, with all of this talk that we have with truck sales and that, can you tell us how low gas prices and low oil prices are playing into this? is it just making people salivate more for these vehicles? >> it seems like it is

surging no matter what. they still buy trucks. americans love trucks. three of the top 10 best-selling trucks are typically ram, silverado, and the ford f series. matt: and now this. i cannot wait to get my hands on one. $400,000 apiece. you could buy a rolls-royce on that. editor,ken to beating andrew, thank you. stay with us. day" continueset in a moment. ♪

♪ welcome back. let's take a look at the top stories crossing the bloomberg terminal this hour. eight lonmin described as a disgruntled employee suspected in the death of an anchor and cameraman has died. they say as they were pursuing the suspect on interstate 66, he

ran off the road and crashed and was found suffering from a gunshot wound. he died at a local hospital, police say, from a self-inflicted gunshot word. they say allison parker and adam were killed today. she was interviewing a woman about local tourism at a shopping center in moneta, and gardner is in stable condition after undergoing surgery. says it will stop selling military style weapons this fall, but they say this is not rooted in politics. the retailer says the demand for the firearms is declining. walmart plans to replace guns with other types of rifles as well as shotguns and more hunting-focused merchandise. roads are more clogged than ever now that the recession is behind us.

stuck in traffic about 5% more than they were in 2007. commuters in washington, d.c., suffer the most, losing 82 hours a year due to slowdowns. on a light note, burger king is not a joke. they say they want to put aside their rivalry for one day to have a highbred, a mcwhopper, which would be sold for one day. profits would go to an organization that promotes peace, world peace, and was and's says the plan inspiration for a good cause, and those are some of the top stories we are following for you this hour. ♪

..

matt: welcome back to >> first. bloomberg. bloomberg markets day ----bloomberg markets day.

i am matt miller. monsanto has dropped the offer for syngenta. in a while, monsanto says it will resume a share buyback program as soon as possible. tropical storm warnings have been issued for puerto rico, the virgin islands, and leeward islands, as erica gets -- closer. tropical storms could reach hurricane strength by tomorrow. and chair janet yellen might be the last hope for oil bowls. the decline was kicked into higher gear. the new -- next steps will be important for the oil market. senior analysta from his office in denmark. newecently we had two shocks, the iran nuclear deal and the prospect for additional oil.

recently, over the past couple weeks, demand shock has hit the oil markets as well, and to reverse this trend of expected weaker demand, the oil market will look to the fed because it might take the installment of a fed hike for the oil markets to gain comfort. matt: crude oil stockpiles found last week. dish says 179 local stations have gone dark. the reason, a fight with sinclair broadcasting. dish says the dispute is over terms for a cable channel sinclair wants to buy. sec chairman tom wheeler has set meeting to try to reach a deal. job cuts are on the way at the finnish company that makes the mobile video game "angry birds."

rovio plans to cut workers. o has not been able to duplicate its success. those are just some of the top stories we are following for you on the bloomberg terminal. the federal reserve bank of kansas city will host central bankers, finance ministers, and market participants at its annual economic symposium in jackson hole, wyoming. the theme is inflation dynamic and monetary policy. professorlomiris is a at columbia business school. tom keene and the surveillance crew asked him what kind of smoke signals will come out of the fed gathering. the fed has addressed that is the main problem -- we are looking for smoke signals. they are already behind the curve. we should increase rates. the market is currently spooked. they do not know what to expect. ie: why do treasuries play

as big a role as equities? member, the fed has been inflating risky asset prices, equities, farmland. housing prices are above the 2007 peak. this monetary policy -- five years of the zero interest rate policy has been inflating markets. for them to take the symbol that the problem in the markets is requiring them to do more of the same -- you charlie, i talked with to work three days after the crisis in cyprus. i invented the phrase twitter vigilantes. there are bond or affects vigilantes. is the world of michael regan telling them what to do? where is the world of vigilantes? charles: the tao cannot wag the dog. what is going on in china has very little to do with day-to-day market trading strategies. it has everything to do with

horrible news. vonnie: if it is a data dependent said, it is not just this kind of data they are looking at. charles: they could look at them, but that is not what it is about. the u.s. should not be looking too much at china. china matters for global markets. china is in a long-term slowdown and it is not going to be reversed very easily, at least. chinese growth year on year has been 16%. retail sales fell 10%. tom: i have to get your blood boiling -- charles calomiris -- r paul krugman saying something surrogate we need a for the fed while we clear markets? charles: i do not know if you remember, six years ago we did a special event where we talked about fiscal policy. we had interesting people.

bob schiller. tom: peter orszag. charles: we have needs for investment, including education. there is lots you can imagine from a fiscal capacity. here is what we lack, debt capacity. we do not have the debt capacity to do those things. real reform, which we could have done with bowles simpson, if obama would have been serious, could it put us in a position to break through this. an exclusive. i think they agreed on something. let's look at oil, not on the demand side, the supply side. global oil production was once flat. then it went up, then it really went up, up, up. this curve of his more and more in accelerating with production. teachs calomiris, you

this at columbia. there is a point where the microeconomics gets squishy. doing away the price is on oil right now? charles: $40 a barrel. tom: but it is still moving, isn't it? charles: yes, but what i think this graph is telling you is pretty clear. what is been the major shifter driving the oil market? tom: technology. charles: expansion of supply and technology. that is going to continue. i think it is a positive for the u.s.. listenersmany of our and viewers won't know is you have been an ace on intelligent conversation on regulation. i would suggest this oil miracle occurred without a national energy policy. charles: it occurred contrary to the national energy policy. the administration has been doing every thing it can't down oil production. tom: should we slow it down to bring stability?

charles: i am not an environmental scientist, tom: i'm an economist. -- i am an economist. tom: how can you do it -- you do not know the ramifications. charles: there is a lot to like about it. it is good news for the u.s. economy. vonnie: how long before the u.s. consumer spends the oil dividend? wantes: we certainly consumers to spend when there is a fundamental that is a very positive in the supply side to produce. this is the prime example. friedman's hypothesis tells us when you have a major -- improvement in the ability of the economy to produce, go ahead and spend. matt: that was columbia university finance professor charles calomiris. --ll to come, shall emerge a

slumber j is buying. is --s a sign the oil business is a bust? ♪

matt: welcome back to the bloomberg markets day. miller with alix steel. in a week of high anxiety, news for commodities has been unsettling. the bloomberg commodities index sank to its lowest level on monday since 1999. it is been a cool summer for oil and metals. bloomberg's alix steel joins us for more. alix: how bad was it? matt: it has been rough. alix: yeah, and oil has taken the brunt, down 33% since memorial day, but it was the

whipsaw action -- the run-up in march 265% and we have been trading at $45 a barrel. $65, and now we have been trading at $45 a barrel. matt: inventory is lower. that is a good thing if you want crude prices to go up. alix: yes. we did not see a product build. at some point, too much product, your margins stink, and you stop using crude and not work as hard. these data points start rattling the markets. matt: am i the only person in the world looks low commodity prices -- i want to pay less for gas and gold. that 50ti had a note darrelle -- $50 oil prices could belowo dollar -- two dollars fuel prices. matt: it seems to be coming down

at a time when it should be going up. gold bugs say they want to get in when printing presses are worrying and central banks are offering accommodative -- policies them but that has not happened. alix: 100% correct. a couple of things going on -- gold has held out a lot better in the big downdraft versus oil. wouldity and oil bulls say it is doing its job. the problem with china, it could be a good hedge against a devalued currency, but then you have the stronger dollar that weighs on commodity prices. you also have real interest rates in china. because you're not seen inflation, when you have the real interest rate, you will not want to buy gold. it only makes sense when it is a negative real interest rate situation. matt: you mentioned china. we always link copper to china more than any other commodity. is it in the doldrums just as much for the same reason? at differentlook

parts of the chinese economy, it is really difficult to figure out why china is doing. one chart shows the shang how premium -- what you would pay to get copper out of warehouses in china, versus what you would pay to get it out in london and the premium for the shanghai is up 71% since memorial day, versus london, which is down 18%. matt: i'm looking at an orange line and a purple line. a ton of letters. alix: the orange line is the shanghai premium, what you would pay to get copper out of the warehouse. line --, privileged purple line is what you would pay out of london. reductionbeen a 10% in supply in china due to normal disruptions. that could explain why we see a higher premium. it could also point to stronger demand. is lessthough that likely, isn't it -- stronger demand in china? alix: this is the import chart.

check this out. it is up slightly. it was pretty much flat from a few months ago. it was actually higher. where is it going? is it real conditions? is it going to make washing machines, tvs, cars and apartment buildings, or as a trade? would you rather short and sell copper versus chinese stocks, which, by the way, you really can do? there is an arbitrage between china and london, as we saw on the premium chart and if it shakes out, you have to import copper to fulfill your role in the trade. that is a question no one seems to be able to figure out. matt: i need you to stick with me. i'm glad you are here. i need my commodities guru by my side. schlumberger is the world's largest oil services provider, and it agreed to buy cameron international for most $15 billion. it combines the company whose engineers helped explorers

drill, slumber shake, with another company, cameron, the provides gears -- gear like pumps and midi gears as well. this will allow for saving costs. joining us is david welch to discuss. we will see a lot of consolidation. who is in an advantageous position, and who is weaker? it looks like schlumberger has the upper hand. has the bigmberger hand. they are the big dog. they have the brainpower, the engineers, and they are the guys the axons of the world turn to to help them find these pockets of oil. the guys with cash on the balance sheet, they are the ones, obviously, in the driver seat. the lowest amount of debt -- they are able to look at trying to buy a company like cameron at

a time when some analysts think this was schlanger j --schlumberger signaling this is close to the bottom of the market. right, otherwise would they want to keep cash around to whether further declines in oil prices? david: possibly. i was going to say, what this is with schlumberger, they have been looking at cameron for a while and have been partners for a while, so it is very possible schlumberger has wanted to do this deal for a while and they found now is the best time to do it. matt: what is interest --alix: what is interesting, matt, you said this could reduce cost -- that has been the problem, cost inflation of 10% to 30%, which is why they can pump so much oil. matt: again, you cite this as a

problem. i see it as a good thing. sure, but in general you need prices to match up with real supply and demand and that is not happening. there is a dislocation. if you have cheap costs, you have overproduction, which means you get to drive for cheaper, but it creates dislocation in the market. more supply, demand stayed the same, costs fall. that is fantastic. where's the dislocation question mark alix: because -- dislocation? the supply is not meeting the demand. matt: with more supply, i cannot imagine what people are bringing rigs online. been a hit toas profit margins around the world. schlumberger is more global-based than halliburton, which is focused on north america, but schlumberger has felt the help like nash hit like

everyone else because there customers are not spent -- hit like everyone else because customers are not spending. .att: thank you, david wethe numbers continue to increase? alix: that is my point. they can afford to do that. matt: we will continue to talk about this. coming up, we are watching markets and we will continue to do so because they are coming back pretty big. i hate to say big time, but we are of more than 400 points on the dial. stay with us -- on the dow. stay with us. ♪

we are seeing markets rally to pretty much the highs of the session. at s&p 500 is up to .5%

1913. the dow jones industrial average is up 2.5% as well. 16,052. the nasdaq gaining more than 4624.t remember, the first six days saw 2000 points erase from the dow jones industrial average. so, these moves are not at all making up for the declines we have seen, but may signal, and i highlight the word "may" signal an inflection point. now let's get some beer and wild wings. buffalo wild wings is in the midst of a massive expansion, opening up 90 to 100 new restaurants including restaurants in mexico, the philippines, and dubai, but with that comes debt. explained theh money side of the wings business to erik schatzker. for the first time, we

have gone to these markets, but the cash flow is strong and the debt will be paid off quickly. erik: this is a question private equity answers all the time, what is the optimal capital structure for a company like yours? sally: that is what we are looking at. because we generate significant cannts of cash -- if we invest in ourselves and continue to add restaurants, bump of our remodel schedule, and acquire where we can, that is our number one thing. then, the second thing is to take a look at how we return cash to shareholders. would it be in the form of a stock repurchase, a dividend policy? and we are talking with our largest shareholders to find out what they would like. erik: and what is it they would like? sally: they would like a combination of both. david wethe how much debt --erik: how much debt with a

like you to have? sally: they look at our enterprise sheet. you know what i am after -- a feel for what you think is the appropriate amount of debt relative to the size of your enterprise. sally: we would look at the industry average and look at that same amount of debt on the balance sheet. erik: what else might you do with the debt -- there has been talk of returning capital to shareholders. sally: that would be the next thing after the ability to grow return capital to shareholders through a share repurchase or through a dividend. erik: and what are you inclined to do? sally: we are talking to the board right now and i am sure in the next six to nine months we will have some sort of announcement talking about what we will do with the cash that we do generate. erik: explain to me some of the calculus that goes on in the boardroom and in your own head. what is the value of a dividend

versus a share repurchase? sally: well, as we are talking with shareholders, the majority right now would prefer a share repurchase. the connotation of a dividend indicates maybe your growth is slowing down. erik: and it is also a long-term commitment. sally: it is a long-term commitment. we may start with a share repurchase and richard is a dividend. i do not think the board thinks having a small dividend indicates you have reached your peak. industryte and the generates a tremendous amount of cash, so i think we can do both. erik: the markets have been deteriorating gradually over time. why? we strive for 20% cash flow from all restaurants. some years we will hit that, some years we won't. pricesar we have wings significantly higher than they were a year ago, and then labor, as we have introduced guest

experience captains. increasing wage rates, and as that happens to be some not unemployment, worker's comp. and some of our medical -- erik: do you see the same pressure you see in places like wages aso raise opposed to waiting for a municipality to allow you that force you to do it? sally: it is interesting, because other than the entry-level position, we are paying more than the minimum wage. for the restaurant industry, it is often the person's first job, and we have to remember you have to get the first job somewhere before you have the second job and more than 40% of my work force is less than the age 21. i think to be able to attract people there is going to be discontinued pressure on wages and we will address that. matt: that was sally smith, the chief executive of the fall wild wings speaking with erik schatzker.

still ahead, we are watching a little bit of a rally heading into the last hour of trading. markets well into the green. a 400-point gain for the dow. ♪

matt: it is noon in san francisco, 3:00 p.m. in new york, and 3:00 a.m. in hong kong. alix: this is >> first. bloomberg. .- bloomberg markets day

matt: 10 markets hold onto a turnaround? alix: sticking to a china selloff -- the great year for who he is and how he is doing it. here for who he is and how he is doing it. i am matt afternoon, miller here with alix steel. alix: let's look at the markets. for now, we see a 400-point rally on the dow and the s&p up by about 47. i say for now because we know what happened yesterday at 1:30 p.m., the steep decline into the close, and a brutal end to a tuesday. stocks are holding a. overall volume for the dow is up 44% versus the 10-day average, peanuts are we saw on friday and monday. matt: yeah, the trajectory looks a lot different today. with