growth. how well are the automated money managers performing? mattolivia: will they or won't ? what the federal reserve will do next. pimm: brazil. investors have lost about a third of their money since the start of the year, but it is politics and scandal that might save rozelle. ♪ -- save brazil. ♪ olivia: good morning, everybody. i'm olivia sterns. pimm: i'm pimm fox. on the s&pearly 2% 500. the dow moves higher by 1.5%. the nasdaq gaining similar to

the s&p. up nearly 2% today. let's take a look at what is going on in copper. this is the best performance for copper in seven sessions. olivia: it is the first time i can remember looking up at the screen and seeing green. looking at copper futures, up nearly 4%. olivia: let's take a look at what is happening on the crude markets. it looks like crude found a little bit of a bid today. west texas up nearly 7% today. unbelievable. new above $40, above $41 in york trading. brent finding a big bid this morning. pimm: let's take a look at top headlines. another sign of strength in the housing market. pending home sales rose for the sixth time in the last seven months. sales were up 0.5% in july.

mortgage rates still inexpensive by historical standards. consistent job growth is helping the real estate market grow. the economy grew faster in the second quarterthan previously estimated. gdp rose at 3.7%. the first estimate was 2.3%. there were bigger gains in consumer and is now spending and a record increase in inventories. pull me at to the speculation about vice president joe biden in a potential run for the white house. the new survey comes from quinni pac university and shows that he better nationally against top three republican candidates than hillary clinton does. 83% of registered democrats view him favorably compared to 76%

for clinton and 54% for sanders. clinton was asked about whether he will run. >> he has to make what is a very difficult decision for himself and his family. he should have the space and the opportunity to decide what he wants to do. olivia: the poll did have some news -- good news for clinton. 45% of democrats would choose her to be the party's nominee. some mixed messages. a big legal setback for the set -- ceo of dole food. they have been forced to take $148 million in a takeover suit. a new all-wheel-drive version of the tesla model s toured off the charts. it is the quickest the dan ever

tested -- sedan ever tested and on a 100-point scale. i am not a car wrecks were, but i believe it is about as fast as a porsche. pimm: yes, there is no exhilaration drag because it is on or off. olivia: and it is a great drive. a september rate hike is looking increasingly doubtful, though not totally off the table. pimm: that is the message from the new york fed president whose book yesterday. -- who spoke yesterday. it seems less compelling than it was a few weeks ago, but normalization could become more compelling by the time of meeting. pimm: wall street took some comfort from his comments. olivia: will the fed continue to call investors?

-- coddle investors. joining us to discuss is mohamed el-erian. great to see you. thanks for joining us. we got a 3.7% read on second-quarter gdp this morning. if the fed does not hike in september, how do they justify it? mohamed: it has never really been about the u.s. economy. u.s. economy continues to recover and heal. 3.7% is somewhat of an overstatement because of inventory. this is an economy going at 2.5% solid. the reason why september is a question mark and why dudley said the case is less compelling is because you cannot be the great house in a fluid neighborhood and ignore the neighborhood.

the fed will look at the rest of the world. the fed will not want to add to national instability. the fed will wait until december because of that. pimm: let's begin a bit about oil prices. they are rising today. what implications is therefore the economy? mohamed: there were two positive froms for the u.s. economy the last week of crazy market moves. first, lower energy prices. second, lower market interest rates. those things are supported and will help offset the negative impact of the wealth effect. thinkt and that is why i december is on the table, net-net is not clear whether the u.s. economy will be heard by what has happened or not -- hurt by what has happened or not. olivia: the successful hedge

fund manager of bridgewater associates wrote that he believes there will be a big easing before a big tightening. your column says don't expect qe4. why is he wrong? mohamed: people immediately look for the fed to do more. in october, when the fed was clearly exiting qe3 and we had a little bit of market instability and people immediately said we need qe4. the market has been conditioned to view the central bank as their best friend. people immediately look to the central bank. i don't think the central bank is going to respond this time around. the fed has reasons not to do qe4. the impact on the economy is very weak. it is not easy to exit a qe, right? economically, political risks. the disruptions from outside the isted states are what

causing it. qe4 is wishful thinking. the disruption will postpone a september rate hike, but i don't think it means we will get a qe4. mention outside the united states. give us your take on the chinese economy. mohamed: i think the chinese economy is slowing and it is slowing in the context of what developing economies called a middle income transition. think of going from a teenager to an adult. it is a bumpy transition. that is what we see in china on the economic side. they will be able to soft land. finesse is very different. like we did with housing 10 years ago, they created a bubble in the stock market. they believe that greater ownership of shares is a good thing in terms of that transition and it went too far. on the finance side, they have bubbles in various places that they will have to find a way to deal with.

they are trying to do so. on the economic side, i'm a lot more positive who say this is the hard landing of china. olivia: i'm glad you mentioned the fed blowing bubbles in the market. we were just having a conversation on that with jim grant. it picks up on something in the "wall street journal" this week. they say the fed is to blame for the big swoon we have seen in global markets because they have been fueling and mispricing in high-yield markets. do you think the fed is partially to blame for market volatility? mohamed: i have a book coming out on this and it puts the fed in a very difficult position. the fed had no choice but to step in because nobody else was. political dysfunction had paralyzed all of the other policy responses. the fed had to step in with imperfect tools. when it did so, particularly when it went to qe2, chairman bernanke was very clear about

benefits, costs, and risks. the longer you stay in experimental policies, the higher the cost and the risks. stillears later, we are in exceptional unconventional monetary policy. yes, the costs and risks are very large. yes, we are seeing what it does to financial instability and resource misallocation, but be careful. the fed had no choice at the time. i think the blame is that we did not get a comprehensive policy response and we over relied on the fed. amm: let's say you are long-term investor willing to put money away for 3-5 years, what would you recommend right now? mohamed: there has been significant overshoot in the ,merging market world particularly in currencies and local debt. i would be looking at that.

i would be picking places that have strong balance sheets and good growth prospects and are well managed. there are also companies that have overshot. i would not put general beta trades, buying entire asset classes, on the notion that we will get a quick rebound. i would be much more selective. the time will come to deploy in the beta trades. right now, it is about picking good names. olivia: we will leave it there. thank you so much. mohamed el-erian, are tirelessly working "bloomberg view" columnist, and the chief economic advisor at aa llianz. pimm: robots are getting their feet wet in the advisory business. olivia: don't miss it. ♪

olivia: this is the "bloomberg market day." pimm: stocks are rallying today. following yesterday's big move higher. julie hyman joins us with a look at what is going on right now. olivia: hang on, julie. we are having a bit of a problem with your audio. pimm: the dow jones industrial up nearly tobout session highs. s&p 500 is up nearly 2%. julie: we figured it out. ok. we are seeing stocks rise to the highs of the session. you see the two-day chart of the

s&p. this is yesterday when we saw that latter day part of the surge in the s&p that took us much higher. today, much higher by 6% over the two-day period. the two-day game is set to be the biggest -- gain is set to be the biggest since 2009. let's take a look at some of the best performers. gold. and copper is rebounding. at one point today, it was having its biggest one-day gain ever. let's to go look at my bloomberg terminal. here is the last year for this stock. it is down 75% over the past

year. copper is falling, gold is falling, but freeport's decline has far exceeded. one of the other stocks that has had a terrible year to date is chesapeake energy. it is also rebounding strongly today, up 10.5%. crude oil is also having a very strong game, its biggest in about seven months. this is helped by the snap back. chesapeake come of the worst-performing stock in the s&p year to date. olivia: that is an incredible move. as our colleague points off, the dallied -- points out, the s&p is still off by about 1000 points. pimm: sergio marchionne may soon have another role. the italian supercar maker itsari may name him

executive. fiat-chrysler is ferrari's parent. tiffany, it is getting hurt by the stronger u.s. dollar. the luxury jewelry retailer chain posted profits in the second quarter that missed estimates. it has kept foreign tourists from purchasing jewelry stores in the united states. facebook is hoping to offer a service similar to apple's siri. it is testing a personal digital assistant to run inside its mobile messaging app. ." is to be called "m it is being tested in the san francisco bay area. mayia: now, robo advisors be the single most disruptive trend in the financial industry. loewe artificial intelligence driven services could put

investors in h-appropriate i'm a risk-appropriate -- age-appropriate, risk-appropriate centers. pimm: cory johnson is standing by. cory: every time i talk to the money managers, they are talking about this rise in the robo -advisors. adam nash joins us right now. the whole business model is built on, we can handle the risk, we can handle the volatility, we can make better decisions. how did you do on monday? what happened? >> markets go up, markets go down. there is nothing an individual investor can do about that. we believe people can take control of keeping their fees low and staying diversified and being smart about taxes. down the market opens up

1000 points. my friends are texting me and e-mailing me freaking out. traffic must've been up on your website. >> humans get very emotional. they care if the market is up or down. an automated system just does the math. , buty was a big day for us not because of a lot of traffic, but because it was a high-volume day. our service did a huge number of trades. we traded over $290 million that day. base of $2.6 billion. cory: you have taken the business from nothing to $2.6 billion in three years. >> about 3.5 years. it is swapping between different ats to take advantage of tax

losses. we saved our client several hundred thousand dollars in taxes on monday alone. cory: you would sell this stuff where you have a loss for the day and buy into something similar to have the same exposure. >> that's right. cell emerging markets if they etfs. bad day and buy the ultra wealthy have been doing this for a long time. it has not been available for consumers before. levitt was saying that the ats need to be looked at. do you feel that the overall world of robo-advisors has added to the volatility that we saw this week? doubt that the growth of etf has been a huge boon to investors. you can buy an etf for free that trades stocks all in the united

states. while front uses a couple dozen etf's on the broad indices. there has been a proliferation of etf's and not all of them are high quality. rigorous process. cory: is it all vanguard etf's? >> mostly. for every asset class, we pick multiple etf's. we look at the expense ratio, the tracking caret wrist x -- characteristics. cory: did you see a lot of inflows or outflows? >> we had a huge increase in sign-ups, so it has been phenomenal coming off an incredibly strong july. the more people see volatility in the market and the more they realize they should not be able to do this themselves and they should use an automated service. robo-advisors, we will be

keeping track of them. olivia: thank you so much. that was cory johnson speaking with adam nash, the ceo of wealth front. pimm: coming up, you heard of china's fake rolexes? olivia: now, there is a fake goldman sachs. we are not making this up. that is after the break. ♪

olivia: china has been accused of producing plenty of knockoffs over the years. they can backs. also these fake watches. course, let's not forget the pirated movies. now, you can add goldman sachs to the list of things that have been ripped off in china. pimm: this has nothing to do with the goldman sachs in the united states.

the point that they have no intention of copying intentionally the goldman sachs name or logo olivia:. though it is called the goldman sachs shenzhen financial leasing core. the characters it uses in chinese to write goldman sachs are identical to the ones of the global investment banking center. pimm: there was a report in july about the chinese authorities going after fake apple iphones that are being produced in china. all of the other fake goods produced in china. you put those under a steamroller and get rid of them. it will be interesting to see how goldman sachs, if they do respond, what action they take to have this site taken down and this follows another fake in china were someone put together an entire fake bank branch. olivia: right. pimm: it had nothing to do with

the actual bank. they made an actual branch and made it look just like it with tellers. olivia: people were using it as a commercial lending. it is frightening. pimm: it is also frightening that there is no policing going on. olivia: pretty punchy. maybe they will be getting on the case. olivia: the folks a goldman sachs confirmed there is nothing to do with it. that does it for me. pimm: we have more coming up on "bloomberg market day." what is next for china? ♪

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five-week high. individuals were more optimistic about personal finances and the buying climate. poll was conducted before the stock market selloff this week. walmart is giving customers a bit of a head start on holiday shopping. they are launching their annual layaway program two weeks earlier than last year. shoppers can put items on hold beginning tomorrow. amazon is cutting back on the development of smartphones and other consumer devices. dozens of dismissed engineers who worked on the amazon fire phone. the company has stopped were scaled-back work on other projects, such as a large screen tablet. mcdonald's is saying no to the mcwhopper.

they offered to sell the hybrid sandwich at a pop-up restaurant in atlanta. mcdonald's chief executive responded, we love the intention, but think our two brands could do something bigger to make a difference. a simple phone call will do next time. stories atour top the moment. the markets are closing in europe. let's go to mark barton in london. mark: what a day. more specifically from a u.k. perspective. the ftse 100, the biggest increase in four years. you heard that right. up by 3.7%. the big constituents, oil companies, mining companies, they have been hammered in the month of august -- not so today. the biggest rise in four years. the big thanks has to go to the rebound in chinese stock market and those comments from bill

dudley, the new york fed president, on new york -- u.s. interest rates. here are some of the big movers. one of the world's biggest developers of security software for sim cards is down 12.4%. nod recorded profit that missed estimates. improved sales in china could not offset weakness. ues, a french bouyg building, media, and telecoms conglomerate. shares up by 5.5%. i just want to get back to the mining industry. in europe, what an incredible day. the biggest gainer on the ftse 100, one of the world's biggest miners, shares finishing up by .lmost 10% for angelo american

it is still down 39% in 25%. -- in 2015. pimm: thanks very much. in china, the government has devalued its currency, it has taken other steps to maintain liquidity and keep borrowing rates down. this is all amid an economy that does not seem to be accelerating as much as anticipated. the global crisis that sparked the selloff is a "false alarm" according to our next guest. thanks very much for being here. what did you mean by this? jens: we had a panic for a couple of days when this news was announced. pimm: the devaluation of the chinese currency. jens: a lot of investors were taken by surprise and then you have a 2%-3% move.

the message we wanted to send was that china is in control of this currency. i give you two numbers that prove it. -- $3.5 trillion in reserves. pimm: that is a lot of money. jens: if you look at the entire liabilities, it is $1.1 trillion. they have them covered three times over. it is not that they are going to lose them. reserves. trillion in jens: a pretty big number. pimm: yes. $1.4 trillion -- let's say $1.5 trillion for total liabilities. jens: yeah. pimm: so we are at 321. jens: compared to any other country, this is robust.

they will have control of the situation on the currency side. what is going on in the economy might be a little different, but on this issue, you can be pretty sure that for the next several quarters, where they want the currency to go, that is where it is going to go. pimm: if the chinese government has their finger on the currency and can make it do what they wanted to do, how about all those currencies that are packed to the u.s. dollar p --egged -- pegged to the u.s. dollar? jens: we have been through a period where the dollar has been through a big move over the last 14 months and a lot of currencies have been under pressure and then you have these explosions. , things have a peg happen very quickly when the peg breaks. if you take a look at the malaysian currency, you saw the

preg come under threat. , we have had an ongoing depreciation threat. the one that is focused on now is hong kong. they have had a peg arrangement since 1982. right now, there is quite a bit of speculation on the market because of what has happened in china and the linkage they have to china, that peg could come under pressure. pimm: we were just showing the chart looking at the hong kong dollar. it is kind of just where it started. it certainly has had a lot of volatility. julie: when you have a --jens: when you have a peg currency, you have to look at the forward, which reflects expectation. i would say this is why it is

important to china is in control. if china is in control and that implies that we will have a ,ouple percent or that china there is no great need for hong kong to move. hong kong comes into play if it were to have a 20% move or something large. the view on hong kong is going to be closely tied to what is going on in china self. that is white is important to know the numbers. pimm: i want to take you to russia. what is going on with the ruble? jens: if we look broadly speaking in currencies, the clearest trend we have had over the last couple of months is that the ones most closely linked to commodities have the most pronounced weakness. we have seen tremendous collapse and the commodities that matter to russia. the ruble has weakened accordingly. move, but fully consistent with the commodities space. it is an example of a country that has become more flexible

and has been allowed to adjust. the same thing in latin america. it has been a global trend that has been incredibly clear. pimm: dollar-euro? jens: in the euro, it is about the probabilities. on monday, a crash in the stock gotet and people really doubts about september left off and december left off. pimm: where are we now? 1.12. jens: we spiked up to 1.17 on monday. pimm: yes, yes. jens: there was a full-blown washout and we have broken 1.13 again. if we get a little bit more stability in the global equity markets in the u.s. data comes into play, we will be discussing whether december is really the timing. it is that comes into play, we could go down to 1.10 again. pimm: can you do the yen in one word? jens: with the fed hiking in

december, it will probably go higher. pimm: pound-sterling. jens: we are quite constructive on it. pimm: does that mean kind of bullish? [laughter] pimm: well you are kind to be here. an expert in the foreign exchange. still ahead on the "bloomberg market day," how much is the tractor in the window? well, hundreds of thousands of dollars, which is why some farmers are starting to rent out there tractors and farm equipment being called the airbnb of pharmacy rate. ♪

"bloombergis the

market day." i'm pimm fox. ukraine's creditors will be taking a haircut after five months of negotiations. they have agreed to a restructuring deal and will write down $18 billion of euro bonds. the redemption date will be pushed back by four years. ukraine's economy has been devastated by fighting with pro-russian separatists. u.s. and turkish fighter jets will begin joint airstrikes against isis, according to officials from both nations under pressure from the united states. turkey moved to the front line of the war against isis in july and granted the united states access to air bases in southern turkey to reduce flight times. must stay in a south african prison at least three more weeks. the decision to release them to

house arrest was delayed by a technicality. of as served 10 months five-year sentence in the killing of his girlfriend. a decision will be made next month. those are your top stories at the moment. being a successful farmer requires not only just good ability and agronomic's, but good equipment. new tractors and combines can cost hundreds of thousands of dollars. farmers own about $250 billion worth of heavy equipment. in their off harvest period's, some are taking to the shared economy. think of it as an airbnb for the agriculture industry. alan for more from washington. explain how this all works. it,hen you think about agriculture has one of the biggest capital utilization of anys and problems industry. farmers will spend $100,000 --

hundreds of thousands of dollars .n equipment the sharing possibilities have been historically limited. we are seeing the emergence of possibilities from farmlink. it is connecting farmers in one region to farmers and other regions the maybe the e whitman can get a little more use in the course of the year. harvest patterns are not the same in oklahoma and alabama. if you can spread it around a bit, this is for farmers to save money and other farmers to make more money. are there any restrictions on being able to rent out equipment that the bank owns? alan: if the bank owns it, they would have to be a participant. that is one of the things this service is doing. it is signing up implement dealers and farmer cooperatives

to work out some of the bugs and questions that arise, like the ones you are asking. the fall progresses, they are starting to solicit individual farmers to take advantage of this service. if you have a half-million dollar piece of equipment, how will you feel if it breaks down? have dealt with this before as a company. it feels like they can get over these hurdles. pimm: can you describe a little bit having to do with the business of the company. these pieces are of farm machinery. alan: they do a lot of transportation coordination. they will help get one farm's equipment to another farm. they can do it. some of this equipment can range

anywhere from 100,000 to $500,000. some of the newest tractors and combines need a lot of maintenance. you needed intensely at a very's the civic part of time. if you can get it there on time, .ou have created a service area this is the backdrop of this emerging. commodities were on a boom for several years. along with the overall drop in profit, you saw a 32% gain in

what farmers are getting for other farm income. farmers are looking for other ways to make it back. a service like this fits into the model. pimm: based in kansas city, correct? alan: overland park. pimm: i beg your pardon. janeiro'sd, rio de costs for the olympics are ballooning. the games are facing a pollution crisis setting up a political and economic mess for brazil. ♪

the "bloomberg market day." brazil is preparing for the olympics next year. it is spending millions and

billions of dollars to prepare the country for a wide variety of sporting competitions. one competition is getting a bit of a spotlight and not for a good reason. many of the venues have been infected by pollution and poor planning. here to tell us more is matt miller. this is an interesting story because you talk about price increases. the estimates for spending is -- $3.6ree point billion. matt: all of these olympics go way over cost. boston is dropping out of the bed for 2024. l.a. is not quite sure if they are going to get involved. pimm: they got political scandals having to deal with petrobras.

you had all those demonstrations against dilma rousseff in the streets of são paulo. you are looking at pictures, this is supposed to be part of the rowing facility for the olympic games. matt: we have a graph of protests and they have climbed and climbed and climbed. it is not only important for the olympic bid, but also for the investment climate. most places, people will be looking at earnings reports and gdp reports and economic stats from the nation. investors in brazil are looking at political polls and news about the scandals at petrobras and other things involving the olympic spending scandals, as well. it is more important to investors than actual company earnings. down -- thealities

real is down. it drops with the support in congress. down, down, down. pimm: there you go. good times. sorry. it is time for the options in sight. let's go to julie hyman. julie: let's take a look at what markets are doing to kick it off. 009, ift two days since 2 we keep it up, that is. that is the question. speaking of volatility, joining me today is scott bauer, the senior markets strategist at teh he cboe in chicago. we have been watching the fix very closely over the past several sessions. we saw and in normal -- enormous spike in volatility and it has come back down. what do you think is next? julie, there is lots of

paper both ways here. that is exactly what they said here. the retail paper is trying to feel out what is next. there is a lot of two-way paper going on. lots of called by an, lots of put selling. i do think, overall, if we were to take out six or eight weeks from here, we are going to see vix down below 20. in the next 3-5 days, we may see a spike over 30. there is a lot of two-way paper in this. traders and retail paper trying to feel out what may be the next move. work that was subtle not necessarily down at the 12-13 level, but maybe in the mid to high teens. julie: what about the volatility on the direction of stocks? we were talking about the volume

on the upside. i'm seeing it about 46% above the 100 day average. it is a fairly good indicator that it is not just a blowoff rally to the upside. there is some conviction behind it. there is a lot of buy in. that is a good thing for the marketplace. maybe the market has set in a short term bottom. it really seems like this is not just a bear market rally. the last few days, throw them out the window. it has just been so large. julie: cool. making a declarative prediction. that is hard to do in these markets. let's get to your trade of the day. you are looking at ulta. ulta salon cosmetics is a chain of cosmetics stores. the shares have done well year

to date. it is out with earnings after the close. months,ver the last 18 if you look technically at the chart, the 50-day moving average has been an amazing level of support. it breached that with the whole market drop -- throw that out the window. going into earnings, ulta is a retailer which comp stores have been unbelievable, revenue growth has been unbelievable. they are signaling for continued growth in the 30%-30 5% range. facing and market is about a $16 move. it could go down, it could go up. wide calle dollar spread. my risk is completely limited. if we get that moved to the upside, this spread expands to five dollars. if it doesn't, it fails down and i know my dollar risk.

from a risk and reward basis, this is a big-time opportunity to try to play this to the upside on earnings. julie: we will see what the earnings show us. thank you so much, appreciate it. scott bauer coming to us from the cboe. a quick note about ulta, we heard from other retailers that did not do so well, but ulta is only based in the united hates, so that should be a relative advantage. stay with us right here on bloomberg television. we will have much more on "bloomberg market day" as markets continued their rally. ♪

♪ pimm: good afternoon. it is noon here in new york. matt: welcome to "bloomberg market day." we are searching for answers in jackson hole. beautiful mountains and a very

volatile market, plus a potential rate hike. pimm: donald trump is taking aim at wall street. he said he would make hedge fund managers pay more in taxes. matt: it is been a decade since hurricane katrina devastated new orleans. we will look at how the city has recovered economically since he catastrophic storm. ♪ pimm: good afternoon. matt: we want to look at the markets right now. equities advancing after a much stronger gdp number then we got it the first reading. the s&p 500 up 2% now. 1977.