tv Bloomberg Markets Bloomberg September 1, 2015 11:00am-12:01pm EDT
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of the yuan -- we will hear from an expert who cautions against currency pay. olivia: itunes, i tv. out amay be rolling series from apple. turkishd the only company listed on the new york stock exchange. olivia: good morning. i'm olivia sterns. alix: and i'm out still. we are 90 minutes into a very volatile trading day. olivia, i thought we were done with this. olivia: september, we were going to start over, but once again economic data coming out of china since the market into freefall. the dow is down more than 330 points or 2%.
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we are off the session lows, but clearly all risk assets in the red, including your favorite, oil. let me show you what is happening with financial stocks. are looking at the biggest losers among financials. jpmorgan, bank of america, 3% to 4%. all down interest-ratey, margins are sensitive to any moves. also for oil, wells fargo earnings.15 to 2017 that ended up waiting on the sector perhaps as well -- conversation -- i think that is what move the market. he was the -- making the point to you, all of those energy
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companies will have to revise down the earnings forecast. alix: and looking at the entry day oil content -- the intraday oil. i have not seen any headline that really moved to the oil markets lower, but they are so short, so there is a lot of short covering that happens when any positive headline happens. they will have a lot of shorts, a lot of on dumping out. olivia: that is the stat where you have the biggest three-day move since 1990. what happened in 1990? iraqi invaded kuwait. geopolitical catalyst for the incredible move we've seen in the price of crude. and there were actual supply issues. just to put that into perspective, this measures the volatility for the oil price. putou max it out, it will it in perspective for you, libya. we are well below the peak we
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2000 eight. we are well below the highs we have seen for six or seven years. this is definitely new territory. olivia: let's look at some of the top headlines we're watching. american factories have not expanded this slowly indeed of years. manufacturers are getting hit. the stronger dollar making it tougher to sell overseas. chrysler has kept the winning streak alive. the north america unit of fiat rose 1% says that sales in august. analysts predicted they would fall. ford also surprised by increasing sales. they were up 5.6%. trucks and suv's led the way. general motors sales fell, but not as much as expected. gm posted the outlook for the full-year delivery. alix: the two biggest pension
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funds will vote again to let ceo ryan moynahan -- brian moynihan keep the title. banking analyst mike mayo agrees that moynahan should not have both roles and he spoke earlier today. if you were to have a mayo acxiom, it would be banks with oversights and poor should have the roles separated. banks with good returns and good oversight can have the roles combined. bank of america has some of the worst oversight and returns in the industry. therefore, bank of america board will take actions to reduce the degree of oversight. alix: the vote is at present temperature a second. shares of dollar tree taking a hit after forecasting sales that missed estimates. the second-largest dollar retailer is drained of absorb
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family dollar, which it acquired in july. its major competitor is dollar general. and boomerang employees are on the rise. boomerang employees are workers that return to a former employer. in the past managers might have written off an employee who decided to leave for another company, but now hr managers are more acceptable hiring campaign -- ex-employees than they were five years ago. olivia: fascinating. alix: it is. olivia: you make friends. you know the deal. it's a thing, definitely. when it comes to currency, but where the peg. our next guest says the peg is problematic, leading to competitive valuations or even current see wars. -- currency wars. alix: china's intervention, a oming hike by the fed
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are over the markets. we are joined by alan ruskin. this unwinding of the carry trade question mark is this what is happening to the currency markets? alan: nokia actually. the carry trade has not existed for a while. currency markets have been quite unstable. is ae china case, there specific china carry trade and that is unraveling as we talk. china's foreign exchange are being used as an outlet to allow this carry trade to unwind. olivia: what are the consequences of the you win -- the yuan devaluation? yeah, i think it is inherently destabilizing. the big problem the markets have is you have a number of markets
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where we do not know the fair price, we do not know the fair price for chinese equities, we do not know the fair price for currency's. if the chinese let the currency go, is it 6.6 against the dollar, 6.8%,? i think the market believes it above 7%.ell we could have a large adjustment at some point. alix: how does this plan to and in garment where we are looking risinge a dollar that is customer can you connect the dots for us? the dollar is one sign of tightening financial conditions and one of the reasons why the fed is very comfortable with the idea that if they are going to go, they're going to go gradually. you have the dollar feeding into stock markets, chinese and stability. i think that instability in the
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stock market will probably keep the fed going in september. alix: when do you think they will go? alan: if the fed has its way, they would like to go in september. i think if they do not, they will probably signal october his life. olivia: where are there opportunities to make money in the currency markets right now. -- now? ofn: i think there are lots places. commodities that had a rough ride. they have come a long way. they are further to go. -- new zealand $.50. there's plenty of room to go. we are looking at a chart of global commodity prices versus global growth. you sent this to us, actually. based on the fact that we had a terrible, terrible month for commodities, what happens to global growth? alan: i think it is good, really. commodities seeing,
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are primarily made in china. they are following chinese growth and not in decorative of great chinese growth further ahead. this time around, i think u.s. growth could hold up. the important thing about motto -- commodities, there are big winners a big losers. china is in the mix. a little bit of an embattled story, as it were. but the emerging markets are vulnerable. let's turn to the developed world. what happened to euro parity? has gone all quiet, i think. we need the fed to be in play. the less the fed is in play, the more people are looking at liquid markets and saying, yeah, this is where we need to be in. that is one thing. people are very short euro-dollar. that has helped the euro. can be a good story
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of the fed will be back in play again, but that's a big if. inside my a look bloomberg terminal for the phenomenon, and that is the euro, the new yen. you can see that the euro and the yen have been tracking each other versus the dollar. what happened there? alan: recently, it has been trading very much risk on and risk off. when you go risk off, the fed is less likely to tighten, and when you go risk on, the fed is more likely to tighten. think peopleng i do not realize sufficiently, china, when you go risk off, china is intervening and i think they are primarily intervening in dollars. they are selling dollars. i think that is also taking the dollar when you look at the risk relation with china. alix: fascinating.
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the session lows. i know you like technicals. points out that the dow and the s&p have entered their death cross. u.s. auto sales fell by 8.8 percent for toyota. once again an automaker reporting better-than-expected numbers. yes, the klein, but analysts were looking for a decline of 10%, and the story again, truck selling better than cars. here is matt miller with a look at what else is happening in the markets. upt: you definitely some get as far as the indexes. we are off the market lows. we are not even down to present anymore. forel like that is a win the s&p and the nasdaq and the dow jones. you brought us the death cross. i've got it on my terminal if you want to come in and take a look at how it appears with orange and green lines. let me zoom in a here. 50 day moving
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average and green is the 200 day moving average. we just saw for the s&p 500, this death cross form as traders call it, when the shorter-term moving average goes below the longer-term moving average. take it with a grain of salt if you like. obviously there are issues with technical analysis. but if more is -- believe in it, it what you call it? a self-perpetuating prophecy? something like that? olivia: self-fulfilling, matt. matt: thank you very much. i am sure you have been talking about oil a lot, but the biggest losers are the oil producers. exxon mobil was one of the biggest losers on the dow. exxon and chevron, both of them down big. -- it does not seem when you see the
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pullback. there is still a drop of more dollars per barrel. as far as a couple individual movers --ere were dollar tree came out with revenue that mr. the street from less to miss down 6.5%. 15.3orecast revenue of billion dollars. analysts were looking for $15.6 billion. it also said is not going to forecast profit because it's trying to integrate family dollar stores and as a result, he can't tell you when it's going to earn money. that's the kind of uncertainty the street does not like. freeport mac in rent, also a loser today. adding insult to injury. -- freeport matcmoran.
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as copper drops -- if you did grasp the 2 -- actually, the receive i can pull this off. here is a graph -- can you go back into my terminal? i will show you freeport-mcmoran over the last year and white, copper, and orange. they are moving in tandem almost the entire time. you see the problem. the analyst over at citi does not think that they will stop making copper, so that the problem for freeport-mcmoran. and resorts, the casino hotel business, it had macau revenue that was lower than the street estimated. as a result, you see a drop in 4%. back to you. alix: thank you so much. i should point out that we did see carl icahn buying a stake in rallyrt and it had a big
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on the news. everything that did really well during the rally is selling off. giving back the gains. there may be another reason -- olivia: there may be another reason to cut the cord. apple is said to be investing in original programming. the company, which is that to unveil another version of it that top box, is looking to fund a number of high profile series. big a game changer could this be? why not ask bloomberg editor at large cory johnson? cory: in the world of streaming we have netflix, 36% of american homes. you have hulu and amazon prime also making a really big effort. all of those three companies, all of them invest in original content and making shows like "house of cards," "daredevil," other things they are having success with.
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hulu making big investments in original content and amazon prime as well with shows that won an emmy this year. apple is the only one that is not doing original content of any kind, but as we increasingly say, these guys investing -- i sat here yesterday. we talked about netflix making investments in original content and exceedingly more investments -- olivia: but that is what netflix does. cory: it is. apple has arrangements to distribute content and it looks like more and more they will have to get content. you see how apple could have these discussions. they have not done anything yet, but they're starting to. olivia: who is in charge of that? cory: eddy cue, who runs the relationships with the music world, famously had an argument people are swift -- having to report to him, so it's probably under him. olivia: is there anything about
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apple getting music content? there is news that they are bidding on top care. the talent running top care -- olivia: the former talent. they went to the u.s. to try to get the money for a new show. amazon ended up winning, but apparently apple was a bitter for that. will this butx: other players on the sidelines? they want to hold onto the cash. they can just sort of bid out the other competitors. cory: we will see. the fact that they are having meetings does not mean they will have a product. we're looking forward to those cars. apple cars. cory: there is that, too.
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olivia: turkey, like many other developing countries, has found markets,cing skittish political unrest, and an uncertain outlook. plus the mobile sector continues to encourage growth, with 16 registeredile phones . they are perhaps the most avid users of mobile in all of europe. the seal of the only turkish company listed on the -- york stock exchange joins the ceo of the only turkish company listed on the new york stock exchange joins me, kaan terzioglu. kaan: thank you. alix: you are looking at for
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elections indeed of years. there's a lot of unrest. how do you do it? focus on customers. we make sure we provide the best service, the best technology and it seems to be working nicely. troubles,there are but there are also fantastic things. i think technology is all about making sure that people reach out to better things in a cheaper and faster way. i see our company as an advocate of that. that is what we have been doing and that has been playing nicely for a brand, our shareholders, and growth. olivia: 68 million mobile users in turkey. is the market saturated? kaan: friendly speaking, i do not think so. if you look to growth, the drivers of growth, we still have growth on these levels, 42%, year on year with internet data consumption. as a look into the turkish marketplace, turkish consumers
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love to watch video and tv. no longery screen is the tv. the primary screen is these smaller screen. olivia: what is your growth forecast for the next year? top linecan grow the as six never securing your. we have different revenue streams of different behaviors. how do you combat the currency? the lira has really slid against of the dollar -- against the dollar. what does that do to your customer base? hedge ourjob is to position, and we do a good job in hedging our financial voters. we have actually acquired our subsidiary and converted all of the foreign currencies. these types of things help us manage. a lot of u.s.a: telecoms are under criticism because they share user data
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with a government. what is your relationship like with government centers? do you share user data? responsibilityhe rests on the operators. all of the requests are going to the correct judiciary platform and procedures. we have procedures in place -- olivia: have you ever said no to a request? kaan: if there are court cases where the judges and prosecutors have worked on it, of course we cooperate. otherwise, we stick to our good practices. olivia: thank you so much. we appreciate your time this morning. kaan terzioglu joining us. do not go away. ♪
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you're looking at the dow off triple digits, the s&p off 36 points. the selloff started overseas in china. the market is in contraction territory, at the lowest level in many years. it continues in the u.s. and is moving lower, especially when you have the isam data coming out, dropping to its lowest reading since may 2013. that is really a result of the stronger dollar weighing on the sector and all of this weighing on stocks again, which -- we cannot seem to escape the selloff that started in august. the other part bringing the markets lower has to be oil, giving up its gains after the biggest three-day rally and 25 years, down over 7%. analysts attributed the rally to nothing fundamental, but really just speculation and sentiment, so you could make the argument that the rally today is the reverse of that. we do want to look at other top stories making headlines at this hour. american factories hit a speed
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bump last month. they have not expanded this slowly in more than two debeers. manufacturers are being hit by the slowdown. it is making tougher for u.s. companies to sell overseas. meanwhile, the construction business is booming. it rose in july to the h ighest level in seven years. private construction was up while public construction fell. homes pushing to get more and devices connected to each other. the new nest thermostat will have a larger screen. it can link up with other devices, and all can be controlled by single mobile application. and weight gain in middle-age may influence not only if a person develops alzheimer's disease, but when. being overweight at age 50 may affect the alzheimer's threat. the study did not examine
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whether losing weight lowered the regret -- lowered the risk. those are your top stories. the markets are closing. for more, we want to go to bloomberg's mark barton in london. c-h-i-n-a.letters -- dictate howuing to every group felt today. look at the collar on the screen there. last month, the biggest fall for european equities in three years. the same thing. look at the dax in germany. it is 19% below its highs. 14 out of 18 of the main equity markets have sunk 10%. china not all about today. we had manufacturing data out of france -- contraction. germany, expansion. eurozone.nt in the
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something for the ecb to consider when it meets wednesday and thursday this week. have a look at the big movers in europe today. it was not all about the decline. on the 50 stocks rose stoxx 600. the swedish maker of medical devices forecast a return to growth. ncore, the globe's biggest commodity trader. it has been hammered since china devalued the yuan. -- 36% of its% value. the largest hedge fund manager down 7%. into took the chairwoman its unit to deal with volatility. their stock losing 300 billion euros of value today, the first-day of september. oh, dear. alix: oh, dear is right, mark.
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now for a look at the selloff, i'm joined by bloomberg news stocks editor mike reagan, and on the phone, a manager of global fidelity investments in boston. take a look at the last few days in trading. what do you make of it? is it over selling or overbought? guests: i think what did it -- we had this trouble in the .arket, china devalued i think it was in anticipation of the fed lifting rates in september and then the odds of the september lift off went down becameand the markets orderly again last week. then we had a speech by some fed putcials who wanted to september back on the table, and it's almost like the market is
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testing the fed to not raise rates. if they do, there is a risk of a policy error. it's that nice edge of, will the won't? wanted? -- or we could argue that that's a lot worry over nothing, september are october. i think that's the interaction between china and our markets today. alix: mike? interesting, some of the biggest bowls out there are starting to blink a little bit. if you look at the strategist, adam parker is the latest, lowering from 2200 from 20 to 75. not a huge reduction. it puts it right at the mean of the strategist. strategists. basically admitting this volatility, it will be tough to
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make those targets. these people are still relatively bullish though. you figure the 2200 year-end estimate is a 12% gain, close to 14% where we are now. it's really strong gains toward the end of the year. course, people trying to catch up with the rally they might have missed earlier in the year -- alix: that is selling. mike: there is also the matter that this is a week part in the market you're it are lowering it's gdp estimates, but really fascinating from morgan stanley across all of their strategists. they are predicting five rate increases by the end of next year between now and then. so, really a similar story to what they had expected, but a little slower and a little less momentum than had previously been believed.
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morgan stanley downgrading a little bit. what will help us find the bottom? i think the important thing to notice is energy is really an important transitioning mechanism from what is happening in china to earnings in the s&p. energy is only a percent of the market, which you would think is a small sect were. contributed so much, now that oil prices are down, it is taking away as much as well and when oil prices first went down last year, i think it was considered a one-off. overall the earnings expectation, if i look this up on bloomberg, you see it's only askarnings growth, but
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energy has been more like 1.5%. i think the risk is that bleed continues and that is why you are seeing some of these estimate cut from the sell side. to quarterone-off event, but it ends up being a three or four or five quarter event. these ugly this year will not see earnings growth at all, and fair, it's hard pe's expanding. that argues for a flattish market. mike: energy has been as big a deal in the credit markets as the stock market, maybe bigger. we see jumped at rising above treasuries and a lot of people worried that is a bad omen for the stock market. do we really need oil to stabilize to stop that credit widening?
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is that as key to the stock market as many people believe? jurrien: i think there is more an this in high-yield th energy. it is really in lockstep. to really this big question for the fed and we have been in this position for a while where the fed is looking at two opposite signals. off thisr the osm was morning, but the labor has been robust, consumer confidence recently was good. -- the break even is down to 1.2% and the high-yield spread is down to 500 basis points. it's not just energy. it's across the board. the markets are telling the fed, you know, don't go so fast. i remember a time recently when the fed -- we are wondering
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where the fed is going to go. usually we know where the fed is going to go. but a couple weeks before the fomc, i think it will be a real nailbiter. mike: do you think the fed will listen to the markets and will be a littlencrease shallow if we do see a september increase? jurrien: i think that will be the case. the fed has set a signal they prefer an early, but shallow path to a late, but steep path. whether they do september or december should not make that much difference, as long as they clearly articulate this is a slow and gradual path, ultimately 1%, 2%. as is where the fed funds futures curve is as well. so, the market looks at the signals.
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markets lower has been oil. it seemed to be in freefall over the last four or five hours, down over 7%. that was really waiting on the s&p energy sector. r ofust heard jurrien timme fidelity talking about that. there is a lot that needs to happen if the slide in oil is not a one order event and that will bleed into -- one quarter event in that will bleed into estimates. that is what you are seeing revisions. at top stories crossing the terminal at this hour. in kentucky at county clerk is to find the supreme court over same-sex marriages. kim davis is refusing to issue licenses for same-sex marriages despite a ruling from the high court last night. davis says she is acting "under god's authority." record for the video music awards sunday night. it was the most tweeted nonsports program sends september 2011 when nielsen
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began tracking twitter activity. 27.7 millionn tweets. only the super bowl is ever generated more. and it turns out a liquor store in ohio had nothing to worry about. in colorado had nothing to worry about. there were concerns in the alcohol industry that selling nurse wanda would -- selling marijuana would eat into their profits. a new reality for money managers as asset vigilance managers compete with the enormous success of static investment. aner kraus is the ceo of active money management fund and this morning tom keene and company asked how his firm is competing. day,: at the end of the it's really how does the
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investor do after fees? we think an active management you can earn more money after fees than you can in passive. so, it's typically a function -- you would say that, right? you are in activist investor. peter: of course. the data is missing the point. the data does not exclude or identify managers who control capacity and managers with a high active square. just but it's a question of audience, too, isn't it? you want some days to be at least were you are not going to lose a ton of money. i don't know that that is accurate. if you look at managers who actually concentrate their holdings and have a high active share and also control their capacity, we think there is a .uch higher probability
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tom: im going to go back to sequoia, -- i'm going to go back to sequoia. deworlynch's arch phrase seification, the idea that we have too much. to find the 50 or 60 that matter? made a very lynch good point. nobody owns all of the stocks in the market because you could not research them all. active managers tried to own a small segment that they have a conviction about. tom: how do they become successful enough to change the tide of the public moving toward passive management? managers, it's just one manager. nobody would say, i'm going to put all of my money in one manager. that would be kind of risky. but when you put your money in
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passive, you are running your money in one manager. they do only one thing and they have biases. reporter: is it better and a down market? peter: active management is going to perform when stocks act differently between each other. that is what we are seeing today. what our active managers are doing is outperforming right now. there's a lot of research pushing against you. in analyst at princeton and others as well. autumn, is that your friend? peter: i think volatility and diversification between stocks is absolutely our friend. course,ory -- which of links the capital market theory and diversification -- are in porton. but that does not vitiate the
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opportunity for an active manager. it may make it better. the issue with passive management is it is a free rider. it just owns a stocks in relative or portion to which they exist today. what drives capital allocation is active management. active the ultimate manager, the active management aes have come down to be revolution of vanguard? active management fees have come down. this morning we were talking about hedge funds. hedge funds are active managers. hedge funds are concentrated managers. they use leverage. we are very happy investing in hedge funds. we are very happy investing in private equity. >> do you see a trend toward active etf's? they are a style of active management. -- thely the fcc is not
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welcome back to the bloomberg market day. i am alix steel. we continue to watch the markets . overall you had morgan stanley downgrading their target for the 2270 five. adam parker over there joining the fray as analysts downgrade those estimates. morgan stanley looking at lower growth, higher inflation. expecting five rate increases from now until the end of 2016. a slower path, and all of that reflected in stocks. what ist to point out really moving the markets, and that's energy stocks.
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take a picture of the last week and a half of energy stocks. we saw the big selloff. then we see stabilization. when we get to the level where the selloff started last time, bam. the cell of starts again. it is time for the options inside. hey, matt. first off, i would a look at the major averages and how they are performing. obviously it has been a big down day. they are down 318. at 1935.00 down 1.9% joining me today, kevin kelly, the chief investment officer at recon capital partners. kevin, we were talking about the vix curve being inverted. why do you explain what that is in what it means to you as an investor? kevin: it means in the future
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that vix is expected to be lower. around the 25 level, you could see it going to april of next year, being lower, indicating the futures market is seeing totally coming down, but still above historical averages. this can be inverted for a while. it can be inverted for a couple weeks to a couple months. it's not a time to go in on the short vix. it's an indication volatility is here to stay. matt: ok, you don't just look at index for the s&p. there is a volatility index for the russell, the nasdaq, we learned this morning, for european markets. for everything basically. kevin: yes, there is pure xypically you see the nd ticker, but there volatility is the vxn. the russell isrvx.
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two timesthose trade higher than the s&p 500. what is interesting, for the first time ever, last week, we close lowerell 2000 on the spot then the s&p 500. and now we have actually seen it 6 days. out of the last it's not the domestic story people are worried about. it is the global story. matt: we were talking about the fact that the s&p vix is super liquid and not necessarily a lot of people trade russell vol, so -- kevin: people look at it as an indicator of where vol is going. obviously these are names -- what happens to the belichick, they are smaller, more vulnerable to economic woe. we know the economic story in the united states is doing better than the world. tradelet me get a quick
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from you. you brought in a paypal idea? kevin: they were spun off from the parent ebay. they denigrate apposition with braintree a couple years ago. they just bought zune, which is going to compete and do well against western union. you have the january 30 five call. it includes the first earning announcement and got it as an independent company. zero debt, a lot of cash on the balance sheet. matt: kevin, thanks a much. kevin kelly from recon. more of the bloomberg market day on the other side of this short, volatile break. ♪
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growth concerns, particularly in china. we will look at why oil prices are down after their biggest three-day rally in three years. what many tell you democrats are asking the fec to make this a requirement. >> good afternoon. i'm alix steel. >> i am betty liu. equities are bouncing around at the lows of the session. you can see that the dow jones industrial average is off now by 329 points. financial energy stocks are leading shares lower. beenicks index, we have tc
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