alix: volatility in the markets. let's talk about the whiplash. the s&p 500 van saying, bounces up. is, but the question "what'd you miss?" a stoxx whiplash. a huge surge lead in the day. with so much turmoil, will the fed still raise rates? we have the chart. factor. the volatility one bet most traders think will fail. alix: stocks rallying for the second day, joe, yes, but this was a very volatile trail. at one point, we had the dow up 350 points. we sold back. the dow was up only 100. now we clawed back almost 400

points. joe: we just had four days of extraordinary market action. five if you count friday, which was also dramatic. today was another crazy one. alix: i was thinking that yesterday. i'm so grateful i get to be in the middle of all of this kookiness to try to understand it or he julie hyman have highlight to put this market moving context. julie: i will try and do what i can ,alix. we had all of this volatility throughout the day, all of these with saws. when all was said and done, the s&p 500, the dow, the nasdaq the biggest days and two month. after the drop just after 3:00 p.m., things coming back and then some. i have the intraday chart of the s&p 500. things look really good.

again, 2:30 or so, they start to rallying up,fore but that is what we have become accustomed to. it couple days ago, we were plugging on with the rally and then it fell. yesterday on the rally, we saw a midday dip for things recovered. it has become more the norm over the past several days that we have seen this type of volatility. people have been calling for this return to volatility, haven't they, for quite some time? they have been calling for the correction in stocks. but we have not been used to it for a very long time. alix: a great point. thank you, julie hyman. part of this story, joe, was about oil. the s&p 500 of over 4%. i am looking at oil prices versus their eight and 10 day moving averages. i want to point out this part

right here. that is the move above these averages we's top. -- we saw. it says to me that might be more of a technical move very yes, venezuela -- a technical move. yes we have the report that venezuela was trying to pressure opec for a meeting. violent buying yesterday. really remarkable. i want to look at my terminal. stoxx 600, european stocks, up for the week, remarkable. still not above where it was before friday, but look at this. european stocks are up .27% on the day. markets crumbled on monday, but again, evidence of the extraordinary comeback the second half of this week. also yes, stocks selling much, they are cheaper. ok -- joe: and all of these miners based in europe, though stocks

surged, and i imagine that helped. alix: julie was talking about the volatility and let's talk about future volatility. this is the forward curve of the vix, and it is quite high right here in the current spot. if you look at september 2015, it gets much lower if you go out into 2016. it's called evaporation. time, we were in contango, which means volatility was more intense the further you went out in the calendar month. it just goes to show the extreme moves could be here to stay. view ofup and did the the market. --ant to ring in david wu bring in david wu. what you make of the last couple days? you know what, the fed still matters. there is no question.

i do not think we would have had such a violent spike in equities across the board. you are besieged by the market or china's slow down, they cannot be hiking rates at the same time. another big take away today, the market going up into the close, people not realizing we are four or five days away from the parade in beijing, celebrating the end of the second world war, presumably the reason the chinese started to intervene as they do not want the president to look bad. it will be pretty stable he next few days. as dovish as dudley, maybe that is more the investor thinking over the next few days. alix: what is interesting, the --atility due to program it program excelling. jpmorgan had a note out saying

tore could be $150 billion $350 billion worth over the next few days. what you think about that? david: it is crucial in understanding. that is where china plays a big part. think about this. there are to that really weird things going on the last two weeks. notwithstanding the chinese stock market, the aggressive monetary easing by the chinese, yes what? the seven-day repo rate is still higher than it was when he chinese stock market started falling. the second weird thing, despite the big crush we've seen in u.s. stocks, and guess what? 30-year treasury yields are higher, but if you look at real yield, they are higher, even though the fed pushed out all the way from october to december. alix: your favorite chart. to my terminal.

i have that chart ready to go. we have the white line, which is the 30-year treasury yield, and the yellow line is the s&p, and boxeated this red-shaded around the area. you would expect as stocks plunge, you will see a fall. instead, yields rose along treasuries, even while stocks were falling. a very unusual thing. explain that a little further. what is this unusual activity cause such a problem? david: exactly. i would argue the insensitivity of the chinese to interest rates and then u.s. interest rates to equity volatility are very connected, in fact directly linked. china -- the reason china is not going down, even though you're cutting the liquidity is because -- guess what? we are seeing massive intervention by the central bank. they are taking liquidity out of .he system

this is the reason rates are not going down in china. but in order to sell, they have to raise dollar cash. meaning they have to liquidate u.s. assets. they want to be selling treasuries as well. this is the reason why u.s. treasury yields did not do all that much while the u.s. stock market was going down. in our point of view, this is where it gets interesting, because it comes back to your point about volatility. if you are basically a risk parity guy, they are by -- alix: what are risk parity guys? are investors to invest on the basis of risk parity. put it this way. they base a lot of bonds and a lot of stocks, and they depend on the negative correlation between these two. ais is why they generally do relatively low volatility

portfolio, which is the reason why they might be very leveraged. guess what? markets were plunging in treasuries did not perform as they should, all of a sudden, there was this big bar shock, which would force them to liquidate assets. i think the selling we saw earlier this week is related that. i would argue you draw a straight line to china. alix: amazing. lots more coming up. you're not going anywhere. we do have breaking news on copper and gold. julie hyman has the latest. julie: carl icahn is taking a stake in freeport. what an incredible day for this company. he is reporting a stake of 6.5%. it looks like he is seeking representation. he may seek board representation. ahn says he will discuss the

company's high-cost operations and he may discuss the size and composition of the board of the company. as of august 26, he had's not company. with that wife is important? they had their best day's performance ever, so that is something to consider. i am not sure we have any charts or how thet-mcmoran stock has been doing -- apparently we do not. let me call up a chart of what this stopped did today. take a look at my bloomberg. the stock was up 29% today, and record one-day again. here you have it. freeport-mcmoran copper & gold. the company was cutting s, it said today. it is far outpacing declines we have seen in copper and gold. alix: good stuff, julie.

i should point out that carl icahn also took a stake in an lng export terminal. joe: commodities. alix: totally. when we come back, the biggest offlows from the week september 2008 when lehman filed for bankruptcy? ♪

alix: i am alix steel. joe: and i am joe weisenthal. "what'd you miss?" before the -- break, wherethe were the biggest outflow since 2008? joe: what a week. that is the crazy thing about this week -- we've seen this

incredible so often is made in the big news. alix: unbelievable. we are back with david woo. theas been talking about global market turmoil. deutsche bank was out and they use the term quantitative tightening. they argued china built up these huge reserves, the same amount the fed has, and now china is selling them and that is causing the turmoil. that's a little different, it seems to me, from what you have been describing. what you think of this thesis? think we are saying the same thing. this is the notion of the impossible trinity. what is that? fixed rate, launcher monetary policy, and open cap at the same time. meaning it cannot have its cake and eat it, too. meaning was there are lower interest rates -- which is something if china needs to do, it has to let the currency go. they cannot maintain the

currency and lower interest rates at the same time. we will soon be reaching that point. i think beijing will have to let the currency go. alix: what would that mean? what does that look like? david: it will look like they cut the interest rates by 200 basis points and we do not care what happens to currency. i think china did what it did to the weeks ago to pave the ground for a chinese-style qe, because it's very clear they want to go down this path of they want to put a floor under the stock market. but the only way they can do and youey have to -- know, it's not easy. joe: what are the aftershocks of that for the global economy? david: i think that will be a big shock. again, we're talking about the celebration of the end of the second world war. and then he is coming to meet with obama. i think we could soon reach that point. it could go down another 5%.

people are literally going to start to think about competitive evaluation across asia. you will see basically commodity prices going down again because china will erode its power for commodities, and in our view, it will be highly deflationary. the fed hike will push out even further. i don't think the fed knows. i don't think anyone really knows because so much is riding on what happens with china. and we do not know what their reaction function is, but i think if i trust the bloomberg articles i've been reading the in beijing,days, they are favor in moving more quickly to liberalize. if you are not going to liberalize interest rates, there -- between where we are now and letting the currency go down and bounce. alix: amazing. david woo, bank of america

merrill lynch. joe: what currencies are most at risk? we tell you after the break. ♪

alix: i am alix steel. joe: i am joe weisenthal. "what'd you miss?" alix: before the break, we asked what currencies are most at risk? libya, the gulf of oman -- alix: one of the reasons behind volatility and the global start markets is currency. saudi arabia is not immune from this. falling oil prices have put pressure on the country's currency. joe: this week the country came

out and said it will maintain the peg. our: recently we talked to thet about the chances of currency becoming undone. >> the probability is very low, but there is a probability now. it is implying and less than percent move at the moment. for that to say, you would have to see much more political tension in saudi arabia, because it's much a pride issue maintaining the currency where it is and they have the resources to do it. eman, why is it so important a maintain their pay. why, for them, is maintaining at such an important part of the economic strategy? eman: they need to have some level of stability. for another, saudi arabia imports most of its food, etc., brings, in turn, inflation. finally saudi arabia does not

have a yields curb at all -- yields curve at all. they would have the monetary resources to maintain the economy. if we see saudi arabia's budget continue to struggle as we see oil around $40, $50 a barrel? eman: it isabout -- about $260 billion. however, the saudi dollar is a bit wet. 60 billion dollars on energy subsidies. they have a lot of absorption capability and they also have $60 billion in net assets. this is not like chinese reserves which are a balancing item on a balance sheet. it is net cash. it's like you took in huge amounts of income tax and stored

it away for a rainy day. in addition, they don't have any debt and an economy of $500 billion. compared to any developed market peers, theymarket have a lot of capacity before they are in a really stressful environment. joe: why then the need to cut the budget if they have all of this big cash piled up they are sitting on? who is potentially threaten to doing the budget cuts? i saw some talk that defense vendors could be at risk. who stands to lose here? spend more on defense than england or the u.k., for example. it's too high as a percentage. clearly just increased dramatically high since the arab spring. where cuts will happen will probably be in defense in these big state asset investment projects. building brand-new cities. these are not what is required

for social stability. they are nice to have. this is what is required for ultimately the majority of the population is employed by the government. eman, when you take a look at the country, is the rate breaking point where you see more dramatic steps could occur? eman: i think right now about $40. especially when oil curves up. panic on the streets. when he gets to be $30, 20 dollars, then you would see cuts. they have added $1 million -- one million barrels over the last two months. we are worried about half a million barrels coming from iran? so, it should drop by a million barrels by the end of the year.

if you're headed toward $30, then i inc. you see germanic cuts in production and more -- than i think you see dramatic cuts in production and more try to increase the price. are sanguine about the situation in saudi arabia, but other regional players might be more liable to break their pegs. oman. eman: defense spending is at 12% of gdp. basically they don't have enough money to cover anything and they need to borrow huge amount of money. the same thing with iraq. and they are fighting isis. the collapse in the oil refiners 95% of the budget. they have to cut back the budget. they have to pare where they can and a de-peg makes sense and senses.--in those alix: what keeps you up at

night? what are you most worried about? i suppose regionally my key concern would be the syria,ration around maybe up toward turkey if you start to see terrorist attacks there and around jordan. at the see it contained moment, but you could see it spread rapidly. there is not that much concern. every single government has tightened the hatches in terms of security and stability. eman mos thanks to taque. joe: we will be right back. ♪

alix: i am alix steel. joe: i'm joe weisenthal.

"what'd you miss?" don't miss this. carl icahn taking a stake of freeport-mcmoran. a huge rally. today we saw a huge rally over joint 5%. the day. after hours, we are seeing another rally well up over 19%. joe: major jackpot for freeport-mcmoran holders. another thing you do not want to miss -- the university of michigan consumer sentiment survey comes out tomorrow. take a look inside my bloomberg terminal. pretty high. well off the lows of 2008, 2009, the 2011 debt scare. why is it important? mightl get a reading that take into account this market volatility we have seen. the new york fed president will dudley mentioned he was -- built of mentioned he was watching it.

people always pay attention to the sentiment report, but it will be a big one because we will get an early look at how people are reacting to everything going on. alix: totally, and he mentioned the global oil as well. joe: thanks for watching. alix:

endsy: apple s invitations to his next big thet, while is former ceo competition. i am emily chang. this is "bloomberg west." ising up, president obama about to speak in new orleans on the 10th anniversary of katrina. we will hear how local leaders regulations. plus, amazon may be