alix: calm returns to the equity markets as oil advances for a second day. treasuries suffering the biggest weekly decline in nearly four months. joe: but the question is, "what'd you miss?"

is this china's hard landing? calm has returned to global markets but will beijing be spared? alix: all eyes on the fed. will the hike be delayed? we're going to report from the jackson hole. joe: and the brazil factor. this country is crucial and we'll take a closer look. alix: but first, we begin with the markets. i did not think i would be saying this on monday, but the dow jones is now up 1% for the week. after being down 1,000 points at one point on monday. unbelievable. joe: absolutely extraordinary week. there's just too -- an overwhelming -- we saw volatility everywhere this week. and today i think a lot of people were hoping for kind of a quiet friday. maybe -- i think -- we got it. we're down a little bit. today. but the bottom line is, after four extraordinary days, some of the most extraordinary days since the financial crisis, frankly, finally a little bit of a rest today. alix: let's put that into some perspective.

we went back to 2 1/2 weeks ago and charted all the main events that led us to this day and led us to the massive volatility we saw in the market. you have to go back to august. when you had the yuan devaluation. that kind of kicked it off. joe: right. then the big losses in the shanghai composite. started crashing again. one of the fears when there was the yuan devaluation was follow-on devaluations and then we got those devaluations out of kazakhstan and vietnam. kazakhstan's not a particularly important country but it was indicative of ripple effects after that yuan devaluation. alix: then it spread over here to the u.s., you had those fomc minutes that came out and the markets seemed to take that as dovish and seemed to take that as a negative. that started the churn that we saw in the stock market. joe: right. and then you just saw a selling everywhere. alix: boom. joe: this monday everyone called it black monday. that was trending on twitter. because you had the massive crash in china, you had

countries, taiwan and brazil entering the bear market. as you mentioned, that extraordinary thousand-point down open in the dow. alix: and the bloomberg commodity index falling to the lowest level since 1998. w.t.i. actually falling below $40 on that day. and the s&p had its first correction since 2011. it was kind of just a wash-out day altogether. joe: the turning point or one of the turning points when we came back was this week when we had new york fed president basically say, yeah, this market volatility is just making september unlikely. and as it was put earlier in the week, it's a reminder, the fed still matters. once he said that and it looked like, yes, the fed is paying attention to this volatility, markets started to rise again. alix: which leads us to rally time. that is why you are seeing the dow and the s&p finishing up by about 1% on the week and the nasdaq in particular has those high flyer names up by 2.5%. joe: extraordinary. alix: i'm going to take a deep dive into my -- actually, can you go first? i lost my -- joe: sure things. there's you. alix: one second. i got there. hang out. we're getting there.

so what you're looking at here is the bloomberg world index. that is this orange line here, really tracking the volatility we've seen in stocks. and the white line, which is consumer sentiment. that u-michigan consumers sentiment we got out today. it is a good read on is the panic in the world affecting actual economy here in the u.s.? yes, we saw the michigan index fall to 91 but nevertheless it is still holding up. joe: it is holding up. and i want to go into my terminal. because i also was looking deeper into the university of michigan survey and one thing that surprised me, my white line is the household financial conditions index. which you would think would be extremely sensitive to the stock market crash. it's actually up from last month. it's down from the flash reading earlier in the month. so there seems to have been some effect.

but the bottom line is we remain close to the highest levels since the crisis still. we don't know all the ripple effects yet from the market volatility, but for now, consumers seem to be doing ok. alix: but not so much in china. so for more on china and the wild few weeks on global markets, author of "the coming collapse of china" is with us. thank you for joining us. guest: thank you so much. joe: you've been a china sort of doomsdayer for long time. is what we're seeing now the hard landing that you've called in the past? is this it? guest: this is a hard landing. china is not growing at the 7.1% that beijing claims. it's not even growing at the 2.2% that they're privately talking about in china. it could very well be even lower than that. if i'm wrong, and i could be because no one really knows where china is, it will be there in a couple months. because what we're seeing is a severe deterioration in the economy. there's the devaluation, there's

the plunge in the stock market, but most important there's the money coming out of china. there are various estimates, somewhere between $520 billion to $800 billion in the last five quarters. that's a lot of money. that's the chinese people voting with their feet. that's what basically they're saying is, this economy doesn't have a future. alix: we spoke to head of global rates and currency research at bank of america merrill lynch yesterday, talking about china's stock market and what's going to keep it rising in the near term, though. take a listen. >> people are not realizing, with four, five days away from the parade in beijing, the celebration of the end of the second world war, presumably the reason the chinese started to intervene in the stock market directly is because they don't want the president to look bad when the foreign dignitaries show up in beijing. alix: what did you think about that? guest: absolutely. they did not intervene on monday, tuesday, wednesday. and we saw the stock market fall. but lo and behold, in the last hour on thursday, it went up 5.3%. yesterday 4.8%. that's completely inexplicable. this is government buying in the last hour of the afternoon session. joe: one of the things that wu said in the interview is we could see a return of further u.n. weakness after the parade and that maybe the devaluation we saw was just the beginning. he was even talking about the

government letting the currency go completely. what's your take on the government's currency policy at this moment? guest: eventually they're going to have to do that because that's the way the economy is going and the currency is at an unsupportable level. they're spending, about $10 billion a day to support the value of the currency. that means in 21 weeks, you go through $1 trillion of reserve, and that number could actually increase. because as people start to realize how bad things are in china, you can see the pessimism build both inside and outside china, therefore you can see even more money coming out of the country. alix: we did see -- take a look at their f.x. reserves. there was a note out this week talking about the extra fire power that china has, that they don't actually need to support their currency. it's not quite it. but there you go. basically they're saying that

they have about $900 billion that they can play with to support their currency and help with capital outflows. do you agree with that? guest: you know, who knows what they have. because we can't really trust what they say about their foreign exchange reserves. but obviously, look, they say they've got 3. $3.65 billion. at least through the end of last quarter. they probably have a lot less now with their burn rate. and that burn rate, as i said, will probably increase. so this country, which has -- looks invulnerable now, could very well end up being the real basket case of next year or maybe even the end of this year, with the way things are going. because the economy doesn't have any support there. joe: deutsche bank was out with a note this week in which they used the term quantitative tightening and they made the argument that china's reserves have grown roughly at the same pace as the federal reserve's assets during quantitative easing but now they're coming down, as you can see, on the chart. it's the purple line, it's started to decline.

so deutsche bank is saying this is an issue for the entire world, china's reserves starting to head down. do you see global ramifications from this? guest: only because of the panic. i actually think china is less important to the global economy than most people think. because everyone says it's an engine of global growth. to be an engine you have to buy the goods and services of other countries to create growth elsewhere. china has been taking growth from other places. you know the manufacturing that is done in china, that will be done in vietnam and india and elsewhere. so the global economy will adjust. but people will panic because there is this perception that china is critical to everything. i think that that's wrong. but that's the way the world works these days. so therefore there will be problems when china has even more difficulties that are more evident. alix: in terms of the actual stock market, do you think that actually has an effect on chinese consumption? they can still grow that? they're really invested in more real estate than they are with their assets? guest: it has a marginal effect on consumption. we've seen reporting about people not buying luxury cars and not buying midsized cars because of the flaws in the stock market. people put their money there, they'd hoped it would rise, they take it out when they get something they want to buy, that's not happening right now. but also consumption really

hasn't been as vibrant as the retail numbers suggest. i think it's been growing but not at the rate that everything thinks. it's not been the pull for rest of the world. we see that in the bad import numbers, for instance. joe: you already have a very gloomy assessment of china. guest: a realistic assessment of china. joe: fair enough. what's your nightmare scenario that keeps you up at night? guest: that they have a 1930's-style crash. leaders there cannot affect the downward trend in the economy. they can slow it. but everything -- nothing's working. monetary stimulus is not work. fiscal stimulus would be dangerous because it creates debt. they can't reform. the stock market boom was a bust and now they're devaluing the currency. this is a country where the leaders really cannot affect the economy for the better. alix: how do you sleep at night? guest: i sleep very well. alix: thank you so much for joining us.

joe: gourde chang, author of "the coming collapse of china." thank you very much. alix: when we come back, a question, mom and pop investors are withdrawing money from mutual funds at shocking rates, so how big is that number? the answer after the break. ♪

alix: i'm alix steel. joe: i'm joe weisenthal. "what'd you miss?" before the break we asked that mom and pop investors are pulling their money out of mutual funds at shocking rates. alix: the credit suisse estimates $1.6 billion in stocks and $8.1 billion was withdrawn from bonds in the first three weeks of august. $6.5 billion left in equity funds in july and 8.5 billion was pulled from bond funds. that is quite a retreat. and the reason why i felt like it was really significant is you tend to want to buy bonds when stocks are selling off and vice versa. this is just a total wipeout panic. joe: yeah. some of the big themes we saw, massive outflows everywhere, massive volatility everywhere. and a breakdown of traditional

correlations. those were the big themes over the last five days. and this is just another stat that emphasizes how extraordinary this week was. alix: well said. now to some afternoon top headlines. bloomberg news has learned that baxalta is a target of a $30 billion takeover offer. they're said to be looking to boost its oncology business. it's unclear how the acquisition would affect the pursuit. joe: the head of the company that owns ashley madison will step down. the stepdown of the c.e.o. comes after the break-in to the customer database that exposed personal information of 30 million members. alix: and the head of the minneapolis feds says central bank should not take steps based on recent market volatility. >> we should be telling a coherent story that we're not about what happened the last 10 days on wall street. we're about trying to shape

inflation and employment in a year to two years, which is what our usual tools are. if we tell that story convincingly, then i think we can have the right effect, which is upward reflection on inflation expectations which i think is needed that the time. alix: he isn't a voting member of the open market committee. he is set to step down from his job next year. and those are your top headlines. joe: and now we go live to jackson hole where bloomberg's mike mckee is standing by. what's the current mood at the summit? how are these monetary policy and economic big wigs reacting to the turmoil that we've seen in the last week? reporter: you know, people on wall street get paid to worry. well, people here and people at the central banks get paid to do

what he was just talking about, think a couple years ahead, about how things are going to happen. so their mood is relatively sanguine. markets go up and down. they'll also see the impact of what happens on the economy as it plays out over a couple of years. so at this point they don't see really any moves that are going to damage the economy. and while wall street may be really worried about what's happening there, the central bankers, the fed officials we've talked to aren't worried about how it's really going to affect their decision making on september 17. unless it's actually happening at the time. joe: the big theme of this year's jackson hole conference is understanding inflation dynamics. we got some fresh inflation data out this morning which backslid a little bit. what do you make of that number and how do you think monetary policy leaders will look at that?

reporter: well, it's interesting, because they've been telling us the story that as slack disappears from the economy, we're going to start seeing inflation pressures rise. but they don't seem to rise. the p.c.e. is the number that they follow. so there's a little bit of a disconnect there between what they say is going to happen and what we're actually seeing in the numbers. but everyone i've talked to, except for that man, says that it's going to what it will start to happen slowly and that maybe the drop in energy and commodity prices has fed through even into the core p.c.e. just a little bit, just enough to bring it down. they still insist it's temporary. alix: what about wages? is there a similar story there? or are finally those minimum wage raises trickling in? reporter: that's the bright spot

in today's report. people took note of that. the half percentage increase in wages and salary more than double what we've seen over the last couple of months. if that's going to be a trend, and of course you have to caution, one month isn't a trend, then they're finally starting to see what they expected to see and that's slack in the labor markets disappearing, companies have to pay more to get workers and we start to see a little inflation pressure there as well. joe: thanks to mike mckee, our economics editor, live from jackson hole. ♪

alix: i'm alix steel. joe: i'm joe weisenthal. "what'd you miss?" before he the break we asked, who made close to $40 million during the market crash? alix: the answer is a japanese day trader known by the handle c.i.s. he told bloomberg news that i do my best work when other people are panicking. and i heard this from other traders too. they were like, if this week hadn't happened, i wouldn't have made my salary for the year. like, this week made day traders' lives. joe: a lot of traders who love volatility. i particularly love the story of this person, guy, girl, we don't know who it is.

someone in japan who goes by a pseudonym. but is apparently this extraordinary trader making millions. reminds me of some of the old stories of online poker players. we didn't know who they were but they were making crazy amounts of money. it was fun. alix: it was fun. that trader benefited from volatility in china. brazil, which is a big exporter to that country, stands to lose from any slowdown in that economy. joe: brazilian stocks briefly fell into a bear market after the u.n. was devalueed. joining us now is alberto, chief latin america economist for goldman sachs. i want to start with the economic data that came out today, a weak g.d.p. number, missing expectations. what do you make of it? guest: horrific. shows that the recession is deepening. we have a very severe contraction of all the components of domestic demand and it's not over. we expect the economy to continue to contract for a while in the second half. it's very unclear what the conditions are out there to sustain a recovery. we may only see positive things coming into 2017. alix: you do only expect a

contraction of .87%. what changes? guest: we have minus.4% for next year. what changes to bring positive growth? i think a key variable here is sentiment. sentiment is very depressed in brazil. also the capacity of the authorities to manage and to stare the fiscal son sol -- steer the fiscal consolidation that is so needed. joe: emerging markets all around the world have been getting slammed. would you say brazil is in a uniquely bad position due to not only the macroeconomic forces but politics? guest: that's right. brazil in particular, you know, the domestic fundamentals are weak and dysfunctional to some extent. what we're seeing right now, i think it's to a very large extent a reflection of a populist experiment. after a populist experiment comes adjustment. it has very little to do with external drivers. they are making it more difficult for the economy to

adjust and balance. alix: what about the weakening riyal? if yes, of course, on the margin it's a negative. but in terms of exports, that was a bright spot. i keep hearing how much sugar and soybeans they're exporting and it's helping their competitive valuation? guest: that's right. i think you know they should welcome the depreciation of the currency. the currency right now is around fair value. 3.5%. but there's nothing fair in the economy so fair value is not fair. they need more than that. they need the currency to depreciate further. i'm not calling for a massive overshooting of the riyal but the riyal would speed up the adjustment and make it formidable, contribute to the fiscal adjustment, would create the conditions for an eventual export recovery, even though brazil is a very closed economy, so i think they should not resist further currency depreciation. of course it will make the inflation picture a little bit

more difficult, but to be honest, inflation is around 9.2%, 9.6%, if it is, a reflection of the weaker riyal. it's not a big deal. if the currency needs to move, this is the right time to move. joe: in addition to a weaker riyal helping exports, what else would help brazil right now? guest: validating and embracing the adjustment. unfortunately there are no two ways about it. they have to adjust and adjustment means economic pain. adjustment means a recession. adjustment means higher unemployment. adjustment means lower real wages. but that's redeeming in itself. you basically are paying for the excesses that were created by a populist experiment. populist episodes always create a fake sense of a franchisement and prosperity. they create imbalances in the economy. inflation, a deficit and then you have to correct. the way to correct them is through a recession and damage to the labor market. but that's what will create the conditions to rebalance the economy enough to initiate another balanced growth cycle for brazil. joe: how much is brazil exposed to china and how much, if china continues to have a hard landing, how much does that hurt brazil? guest: it is exposed to china but probably less than, you

know, people presume. brazil is a very closed economy. exports are 10% of g.d.p. the overwhelming majority of the goods that are exported to china are commodities. commodities are called commodities because they are -- [inaudible] -- everything you produce at the global clearing price. so the brazilians couldn't care less where their -- build their soybeans go to shanghai or baltimore. china has an influence in the marginal pricing of commodities and the significant deceleration on china, as much as it affects commodity prices will impact the performance of brazil. i think the impact is indirect. alix: you mentioned what the government needs to do to help the economy but in the midst of scandal, having a really hard time regaining producer and getting anything done, is that at all realistic in how does that play out? guest: the capacity of the administration to implement and further the adjustment policies is limited.

makes it more difficult and is also a source of uncertainty. keeps confidence depressed and if the animal spirits remain contained, it will take longer. joe: how are things going in terms of the olympics? there's been a lot of talk about all the spending and the pollution and the water. what's your take on how that's going? guest: we'll be fine. there will be the olympics. people will have fun. they'll enjoy the games. like they did in the world cup. as these things go, there's always a level of anxiety before the event, that some of the facilities are running behind schedule. that's normal. but in the end there will be the olympics and games and people will have fun. alix: just a matter of whether or not they have any money is the real question. thank you so much. chief latin america economist for goldman sachs. joe: and we'll be right back. ♪

alix: i'm alix steel. joe: i'm joe weisenthal. "what'd you miss?" alix: do not miss this. unemployment data out next week is going to be awesome. joe's going to be on vacation but we're going to be covering it here. the expectation is it to come in 5.2%. joe: and there's a ton of other economic data next week. i can't believe i'm going on vacation next week. other thing to watch, this saturday, your saturday is ruined because fed vice chair is on a panel at jackson hole. he's going to be talking about inflation, the fed, people are going to be following every word of that panel in terms of

getting more clues about what's going on. pay attention. alix: watch those fed fund futures.

>> from our studios in new york city, this is "charlie rose." charlie: his role in 12 years a slave and academy award nomination in 2014 for best actor. the stars in the post-apocalyptic drama z for zachariah. here is a clip of the film.