away from the opening bell and it is shaping up to be a big day for stocks. good morning, everyone. the s&p 500. here is a look at futures right now, suggesting things will be very different this tuesday after labor day. he was equity indexed interest as you can see here, up 270 points. almost one point 7%. treasuries, meantime, are a little weaker. investors appear to have an appetite for risk. yield ticking up here the dollar index, as you will see here, is slightly down. even with a weaker euro and a weaker yen. some of that has to do with marginal strength. here are some headlines we're following for you this morning.

the european union is coming up with a plan to do with the biggest refugee crisis since world war ii. the ecb president will unveil proposals tomorrow and is expected to say the best way to handle the crisis is for all 28 countries to take refugees in. he has thus far taken and the bulk of the migrants and it wants the rest of your to do its share. >> we can handle the integration of 800,000 refugees this year in germany. it is clear it cannot be repeated every year. policy.a different germany, austria, and sweden, cannot be the only countries that participate in accommodating refugees. erik: the german chancellor angela merkel says they will spend $70 billion on refugees next year. vacation is over, everybody. it is to work for congress. nuclearte begins the deal today. president obama has enough votes already to sustain a veto.

bid to cutlso make a off federal funding for planned parenthood. hillary clinton says -- using a private e-mail account while serving as secretary of the night dates. she also said the questions about her e-mails has than a distraction. it is time for today's edition of five things to watch. with me this morning is julie hyman. and the chief international strategist at wells fargo is with us. good morning. the number one on our list, a new lease on life for old-school tv. creating the nation's third-largest owner of network .elevision affiliates this to me is about leverage. is a highlyl

leveraged company. meredith is not here at it has a low debt to equity ratio. providing $2.8 billion of financing to get the deal done. media general does not have a lot of cash or neither does meredith. you have seen media consolidation. it is a tough landscape right now for a lot of media. it makes sense from that perspective. there is a big promise for investors that they would cut costs. together, they could cut $80 of the combined cost operating budget of about $1.5 billion. just about every indicator is telling janet yellen that a september 17 move would do a little bit to distract trading.

well below the historical average. contracts are pricing in a gradual increase of two point 4% a year now. an exceptionally slow pace of tightening, just 0.6% in the last 12 months. analysts have talked about when the first one comes. it will be about the pace. the fed wants stability in the markets. it does not want to see the taper tantrum redux. erik: paul, i know it is not your job for asked what that will do, but does it feel to you that the market is prepared for a 25 basis hike? paul: that is a key question going and not just for the u.s. but for international markets. it does seem there has been a bit of a consensus around the idea of a september rate hike. we think there will be one this

year sometime. it could be december. let's not eliminate that as a possibility. interest-rate futures suggest there is a better than 50% chance we will get it in december. and much lower probability for december. 30% and more or less in between something in the 40's for october. we will move on to number three, the bear market in oil finally caught up with glencore. the ceo is raising two point $5 billion in equity and selling $2 billion in assets in an effort to reduce debt at an accelerated pace. he was pretty much forced into it. glencore's is already slumping stock price dropped 16% and investors told him he had better prepare the company for lower commodity prices. is not shared, let's put it that way. competitorsve seen

take measures. that down the hatches. sis ending lance. likeur competitors look they are preparing and you are not -- >> the charts tell the story here. 16% down in the stock price since last week here at 64% year to date. if we were to look at some of the markets in which they trade, a big trading firm in addition to being a mining company. copper is down 35% over the past five years. it shows you the kinds of markets glencore's operating in. you're looking at things on an international level, you cannot just ignore what is going on in iron or, aluminum, zinc. fors a terrible environment the bhp, the list goes on. all of these companies have made

so much money selling to china. >> that is right. the latest china scare has been an additional hit to all those companies in the market in general. i thought earlier this year, we might consolidation but note. the latest china's care has taken it lower. getting close to the point where the commodities themselves might consolidate. how long will it take for the companies to sort out the damage. another example of the idea a decided performance here this one coming from college endowments. the best paid endowment managers delivered top quartile returns. endowments are under pressure to perform better to fund college programs and financial aids in an era of zero interest rates and also compete with hedge funds and private equity. they are paying up for that

talent, obviously. but the talent does not appear to be delivering, necessarily. erik: not yet, and this is the big hope. the problem with college endowments is that you have to hire people to manage the endowments but they may have to pay fees to the managers whom , the private equity funds and the hedge funds. situation theme fund investors find themselves in. the return had better be great to justify two layers of fees. that is effectively what you're paying. i think he is making $9 million per year if i am not mistaken. i have got to double check. question is, what will the patient's be to get those returns and keep paying out? erik: that is part of the problem if you are investing in private equity. you will not read those returns for another five to seven years.

in some cases, minimum. we will not solve that problem with endowments right now. here is number five here it is it time to call a bottom in chinese stocks? seeshnical analyst says he shining in the hong kong china enterprises index, an inverse of the price pattern that appeared when the index made it back in april. too many analysts are barest -- bearish on chinese stocks. now that the last seller has sold. paul, you described what happened in china as a correction in the bull market, not a bear market. explain. paul: in the u.s. in the world as a whole, we have a correction within a bull market. in china, you certainly have a very vicious and very short by historical standards, bear market, as all of the leverage that was put on very quickly and under the direction and encouragement of the government,

which is now seeing measures , a littley rather jv amateurish. all the leverage is now coming off and we will probably see a bottom in chinese stocks as we finally laying out the last of the leverage. we may be close to that. me fororgive misinterpreting your view. i applied it to chinese stocks as opposed to stocks in a nice days. thank you for sorting it out. when you say as the leverage shakes out, here's my question to you. we can listen to technical , who factors tom and flexible's. how do we know whether the leverage has shaken out? how you know whether the market is poised consolidate and ultimately put in a bottom? paul: you do not ever really know.

you call it in retrospect. you can see it is getting close to where it was starting to build your let's remember all of this was driven by deliberate policies on the part of the chinese government not only to encourage domestic retail investment, but also to encourage ipo's in a more transparent way for companies to access capital market. it is all part of the chinese reform program. go back and look at the shanghai composite a couple of years ago. we're getting close to the level again. it would make sense as we wring out the impact of that amateurish way of encouraging the equity market development, nowappened very fast and the correction, the bear market has been vicious and just as fast as we get back to earlier levels, pre-reforms, i think we will begin to see consolidation your analyst are expecting. julie: you're calling the chinese reform efforts amateurish. you are not alone in that view. a lot of people have been saying that. what could the chinese upernment do to sort of move

at this point? his or something we could be doing that would be a more mature response in the market to manage what is happening better? part wasvastating doneraging the devastation in the last years. had they stepped back and realized previous -- previous run-up striven by retail investors had ended much in the same way, that that it addition of leverage really -- now the bear market that resulted, they need to go back and focus on the rest of the financial reforms, which really take into account monitored -- modernizing and making their banking more competitive so consumers have more places to invest their money and get a decent return and not a government root -- controlled return, a competitive

return, and then let companies out that the banks for the capital. erik: paul, thank you very much. an international strategist with us from wells fargo. julie hyman and i will be back in a couple of minutes taking a look at some early movers on what is shaping up to be a big day for u.s. stocks rebound after last week's sellout. ♪

erik: we are 14 minutes away from the markets open. julie hyman, i want to go back to futures to start off with. stocks are starting off a lot better after labor day. luckily, i was on vacation. it is fun when that happens from our perspective to talk about it.

we are seeing a rebound the any and china overnight. what goes on the chinese market and here in the united states, we saw a bounce back. it is hard to believe in anything the futures are doing, that that will hold until the end of the session. we have become used to this enormous amount of volatility. you look at my bloomberg terminal. i have this volatility index over the past year. for the past 11 sessions, you can see the spike here around this level. 25.nd my cursor, it is by way of contrast, you can see what the past year has it. it has been low volatility. a touch above 52 times prior to this. in 2013 and 2014. extraordinarily low. we have seen it, lorraine back with a vengeance.

to, weng on who you talk will see whether it hangs around or not. individual movers, we talked about the media deal. , 2.4 billion dollars is what we are talking about here. you can see rising about 10.5% here. 5163 shares. media general also rising. that follows on a trend we have , which used toly be much more rare. now we are seeing it happen more recently. also, this is the chinese -- up 5.6%. also, participating in the rebound in chinese shares as well. erik: thank you very much, julie hyman. next up, we will take a look at the migrant crisis. angela merkel comes with an eu

wide cyber system. more after this break. ♪\

erik: german chancellor angela merkel held talks with her coalition partners. discuss his hans nichols, our international correspondent in berlin. hans: what we just heard, talking about the moral imperative, how important it is to have some sort of distribution situation, some sort of system, for the refugees. indicatedkel has not whether when i she fully backed the plan.

to 60,000 resettlement spirit within that, germany would take about 31,000. the problem is none of the numbers make sense. the vice chairman is expecting half a million refugees every year for the coming years. a resettlement program out of brussels will fall short. so many migrants have to keep raising the numbers of expected settlers. nichols, our international correspondent in berlin. we are back after this break. stay with us. ♪

erik: we are a few minutes away from the opening bell. i'm erik schatzker. back.come

the summer is over and everyone is back to business and back to school. here we are. erik: it is time to find out what is moving the markets. tracy is here, the executive editor of bloomberg markets. what caught your eye this morning? >> we saw the vex shoot up to post financial crisis records. we have seen the volatility of volatility. i want to take a look at this chart. showing hedge fund positioning invictus futures here it is a huge about-face. it is staying at relatively increase levels. a big turnaround. now long volatility once again. what does a chart like

that tell you? >> it tells me volatility has been here and will stick around for quite some time. it is interesting to go back. when you look at that move back to monday and how the week closed out, if you were on vacation, it is like nothing happened that week. if you are living there monday and tuesday -- exactly. i think that has in the story throughout the entire year. we have been on a path to almost nowhere. >> going back to volatility -- >> it might be a little bit itwded but people are using as more of a hedge. economy,ok at the core people are looking at it and saying it makes no sense. how do you make money with

an investment strategy predicated on volatility if volatility comes around first every few months and then totles back down in the 12 15 neighborhood again and again and again, sometimes for long stretches. >> you end up with rapid decay if you cannot monetize that weekly. >> doesn't become disruptive -- >> does it become disruptive? >> and a lot of it has to do with the timing of taking them off. if your plan is to take them and -- your plan will fall away. erik: tracy, we were here the opening bell -- we will hear the opening bell in a moment. besides the pottial turn of volatility, the collapse of commodities complex. here is a slightly different commodity for you. diamonds.

we hear a lot about gold and silver prices. we do not hear much about diamonds but perhaps we should. it is apparently one of the biggest producers of diamonds. it is lowering prices. lower prices by about 9% last week. this is kind of a new thing. it normally tried protect diamond prices. that is definitely true. we are seeing the effect. is this a supply story, the same that is playing out , and base iron ore metals? tracy: there is definitely a supply and demand issue. demand in china and the u.s. has not been that strong. in conjunction with lowering diamond prices, debeers is starting a advert -- an advertising campaign in china and the u.s. your managersf

see a bottom in commodities yet? mr. nolte: i would not say that they see a bottom, they would say that oil is bottoming out. you may see the base of metals bottoming out, but they will be protracted long bottoms and no one is looking for sharp move back off of these levels. none of them that i know trade diamonds. betty: the oil prices could be oversold for a long time. mr. nolte: i think so. erik: prefer return back to tracy for number three, to tell everyone what is happening, the dow is up 230 points and climbing. opening trades are just being put in and everything is opening up. it is up 3.5%. we will be with julie hyman in a moment. we are with the schematic theme today. market istheme in the emerging markets. obviously. we have had another country

decide to devalue its currency. sri lanka. we have at others, including china, kazakhstan, and others i shall not name. the sri lankan central-bank on friday said that it will no longer give a rate and is letting its currency go. we had the chart earlier that showed the sri lankan currency weakening. this is the schematic. showinggandan shilling hit a record low. i'm sure you're watching that. erik: for those of you who wanted to know. tracy: there is a weakness and esoteric emerging-market currencies. mr. nolte: let's go to -- betty: let's go to julie hyman. in the s&p 500. we have all groups led by technology. can you tell us more?

julie: we have a rally that you we are talking about. it is not as large as the bounce backs that we have had over the last several weeks. it is a bounce back from last week's decline with the dow continuing to ramp up and accelerating its advance in the first few moments of trading. one deal that we were talking about this morning as trading gets underway is media general by meredith. it is valued at $2.4 billion, 51-50 three shares is what we are talking about. this new country will reach 53% of u.s. homes with a television. it is also about being able to take on more leverage. you can see meredith shares rising 10%. in terms of technology, many stories -- one in false apple. apple is having its annual product event tomorrow and there is anticipation about if it will

produce news about apple tv and other product upgrades. they are up 2.4%. at morgan upgraded stanley. they are saying that based on survey, fitbit products are holding up well against the apple watch. that the niche is secure enough that it has proved to be resilient. there is minimal overlap between the product portfolios at this point. big shares in the shares of fitbit. and the craigson moffett firm is increasing coverage of internet advertising. .hey have three picks google and twitter. i'm sorry,are -- twitter is the neutral pick. that would explain why it is not doing as well. points for a seinfeld reference

in their note this morning. over the past five years there has been a real and spectacular structural change in how consumers access content. nathanson and moffett have covered media for some time and are focusing on the internet advertising side of the equation. our senior markets correspondent, julie hyman, with the latest on early movers. the s&p is at the 32. good for 1.7%. executivethank the editor of bloomberg markets. we will be back after the break talking about the rise of the unicorn. 90 mobile startups across the $1 billion mark. scarlet: i thought that unicorns were supposed to be rare. erik: once upon a time. ♪

erik: welcome back. i am erik schatzker. and yourself? scarlet: i thought you were

going to introduce me. erik: scarlet fu. scarlet: the number of mobile internet startups valued as over a million dollars, known as unicorns, has jumped over one third, which is bad news for venture capitalists wanting to cash in early. year,ing to cisco, last the mobile and mobile traffic was 30 times the size of the in 2000.bile internet they may need to wait longer to recoup their investments. it may be the cheapest time to buy a piece of shell. according to data compiled by bloomberg, the oil is sweetening the offer for bp. trading under $22 for a share. that is the lowest evaluation of shell since 2009.

resuming strikes today. to airline has been forced cut half of its intercontinental flights. a dozen walkouts have been state over the last year and a half. they are unhappy with price cuts. erik: it has been a roller coaster ride for market investors and the volatility could be here to stay for a while. ray nolte is the comanaging partner at sky hearst capital. thank you for staying with us. we have a lot to talk about. where should we start? thelet: let's start with volatility. we have a chart that has illustrated it nicely. theperformance overall, global hedge fund investment is down about 2.5% versus the s&p 6% slide. what strategies benefited most over the past month and you -- and you see that continuing? mr. nolte: they had more trading oriented strategies that did

well, especially the currency traders. long-short equity managers were down, but less than the market. lossesfset some of the from the long books. the activist equity guys were probably beat up a little more, but outperform the market in general, but they have more long buy exposure. erik: you at sky bridge are active investors with activists and had fund -- and hedge fund managers. what does it say to you that ken griffin at citadel decided to get out of the event driven investment business? mr. nolte: i debate if they will completely get out of the business. there are times to get in it and times to be less involved. on the activist side you can look at more mergers and acquisitions. you can try to generate mergers

and acquisitions to drive them. not all acquisitions are about getting into a country to force them to get more debt, then get them buybacks. a lot of them are trying to get countries together. the m&a boom will continue. that is where many of the matters will continue to do well, especially given where the equity markets out and companies need to drive earnings through less earnings growth and bringing companies together and getting more synergies. scarlet: with the interest rate environment with the fed expected to raise in september, you see the dead doing that in september, what does that mean for investors? we need toi think put the fed rate hike in perspective. we are going from zero. we go back to 1%. it is silly we are having a conversation about a 1% rate. a view years ago that would have been massively easing mode.

they would say it was too accommodating. trades that worked at 0% work just as well at 1%. we just need to get it out of the way, get the fed to take advantage of the market conditions. the economy is strong enough to warrant it. the market level of volatility is where they want to wait another quarter or so. the inflation picture gives them that excuse if they want to take it. my bias with be let's go, get it done, and move on. erik: normalization, if it happens this month, october, december, or 2016 -- more important than normalization is the divergent task the fed is taken versus what is happening at the ecb or japan. does that make it easier for macro managers? mr. nolte: i think it does make it a little easier for macro managers. and easy is a relative term, but once we get all of the central

bank intervention out of the way and markets can get back to behaving in a more normal path, it will get a lot easier for macro. if you go back 7-8 years, since the debt crisis, it has been difficult for systematic and fundamental macro. when you get normalization of policy, those strategies will come back. scarlet: what is normalization mean for the liquidity concerns on the bottom market -- on the bond market? there's a lot of liquidity and cash. i do not see a real crisis. what you can see is vacuums develop where you will get sharp price moves. if you look at corporate balance sheets they are flush with cash. individuals are in a better position in terms of cash. if you look at the mutual fund have they show were people been building cash positions

throughout the volatility of the summer. statistics at the coming out of the wire houses and brokerage firms the client still own a a lot of cash. they're still liquidity, people just need to put it to work. erik: thank you. ray nolte, the comanaging editor of sky bridge capital. the dow is down 380 points. the s&p up almost two full percentage points. when we come back on bloomberg television, an exclusive interview. titans -- one of the they say that this is difficult days and the market and they will get tougher before the rates go up. the people realize that the reason that they are there and successful is to achieve money -- is the cheap money. if the cheap money goes, it will be like a birthday. ♪

erik: welcome back. i am erik schatzker with scarlet fu. scarlet: we have a rally underway. in u.s. equities. labor day and the summer is over. it is time to get down to business. stocks are moving on this tuesday in new york city. it is what the markets say about september 17. we have a reasonably big jobs report. the unemployment rate is down.

what many people are including is considered full employment. a stable labor participation rate, a drop in long-term unemployment. what does that translate into when we are looking ahead to september 7 teen -- of the all important date when the fed may or may not raise interest rates. i'm looking at my bloomberg terminal that shows me that if anything there has been a drop in the probability of an interest rate hike on september 17. it has been hovering around 30%. on friday it was as high as 34%. it is now down to 30%. i'm waiting to see how long it takes before expectations of an october hike take above 50%. right now they are showing the probability at 40-something if you add the probability of a 25 point basis hike. scarlet: that is what people have been looking for.

the potential of an interest rate hike that the fed will not hold a meeting in october but they may increase the interest rate then. erik: we been talking if the interest market is ready for a hike. it is hard to say. what is somewhat clear is that the bond market is increasingly prepared. scarlet: especially if you look at the two-year yield. index swap rate. that is suggesting that when the fed does hike it will be very slow and gradual. over the next year, the target will creep up ever so gradually to 6/10 of 1%. scarlet: the 2% inflation target seems unlikely. ank: that gives you indication of what the market expects to happen over time. scarlet: come inside my bloomberg terminal. the set up for the equity rally

is what we have seen overseas. this is the world index intraday. these are asian hours. this is when asia opened for be specific.o to percolated, steady around the unchanged line. then it went higher, that is when european markets, and this is when u.s. markets opened for trading. if you look at it over the longer term, the year to date it has msci world index, been fairly ugly. we have not seen the big leg lower in august that undid the game from previous months. over a five-year time you could see that fluctuate tremendously from where we were led 2010. rally on u.s.2% equities and exchanges. the s&p 500 has recovered more than 50% of its decline last

week. let's go to julie hyman. she has a look from the action this morning. aree: you mentioned that we seeing the rebound. it has been accelerating since the opening bell. it is rising to that highs of the session. all 30 stocks in the dow are higher. positiveq is turning for the year. it has been bouncing above and below. it is unchanged in the past several weeks as we have had pullbacks and recoveries alternating. in terms of individual movers, i wanted to point out a couple groups that we have been watching. financial is leading the rally. technology. bank of america is upgraded over your -- over neuron as an buy.eighter or a the company might need better positions than some of its

peers. it's capital protections are underappreciated with regards to this upgrade. we have a couple that are being upgraded. micron buying from neutral over at m km partners. they are saying that the industry which has been struggling, but that micron should achieve an industry cross structure that would be positive and potentially $5 billion in 2 years because of the 3-d chips. something that may not be appreciated by investors. upgraded to overweight from neutral from jpmorgan. they have execution issues in its enterprise business which to corporations. look at my bloomberg terminal, i want to look at micron and sandisk. conductor index is here. it is normalized to adjust for the percentage differences.

even though we do not have semi conductors performing well, these 2 high performers have been well. micron is white, sandisk is orange. you can see the analysts recommending the by given that we have not seen the stocks do very well. thiscould be a turn at point. while we are looking at the bloomberg terminal we might look at the imap as well. you can see there in the green. this is something that scarlet noticed. technology, health care, and financials are leading. one that is not up by 1% is energy. they're up by one half a percent. we started the day with a steep decline before the opening of trading in the u.s., and we are recovering to some extent. the energy prices are up but not pacing the rest of the market. the: julie hyman with

latest rally underway in u.s. and global equities. in the next hour on bloomberg television, the private equity form that takes up a supermarket king. that is intentionally a pun. we will talk about that when we come back.

erik: it is 10:00 in new york city. >> welcome to the bloomberg "market day."

♪ good morning, i am erik schatzker. scarlet: i'm scarlet fu. that's get to a market check. we have a rally underway thanks to a 3% increase in shanghai overnight. a 295 point gain for the dow industrials. 1.7% or 33 points for the s&p 500. it is all trading at at least 1% higher. scarlet: in the currency market you see that reflected. the dollar is stronger versus weaker against the other major currencies, including the euro. erik: that is a reversal. the dollar had been trading higher. scarlet: the aussie dollar is flying high. if we can pull up my bloomberg terminal this is the australian dollar. we are just off the high of the

session. there was an improvement in business positions. the shanghai market rally, even with the latest export data out of china that is encouraging people to think that the worst is over when it comes to china,ity enervated by certainly the aussie currency has been one of the weaker currencies. theaustralian dollar versus u.s. dollar. the year to date in performance, you can see a steady decline for the first eight months of the year. erik: some has to do with a diversion underway between wti and what is happening with brent. brent is up almost 2% and wti is down in excess of two point 5%. it is widening between the u.s. benchmark and international crude. international crude is putting this under the modern currencies. scarlet: industrial metals are getting a top because of the weaker dollar.

let's get to the top stories. isk: let's look at what making news. the european union is coming up with a plan to deal with the biggest refugee crisis since world war ii. jean-claude juncker will unveil these plans tomorrow. he says the best ways for all 28 countries to take the refugees. germany has taken in the old and once the rest of the country to do its share. >> we can handle 800,000 refugees in germany. it is clear that it cannot be repeated every year. we need a different european asylum policy. germany, austria, and sweden cannot be the only countries participating in accommodating refugees. chancellor merkel says that the economy will be spending $700,000 more on refugees next year. europe andeast into insisting in the war against

isis according to francois hollande, the french president. he has asked the minister of defense to begin reconnaissance flights over syria today against syrian president bashar al-assad. there is encouraging news from the euro area. the economy grew more than estimated in the second quarter. revised growth for the economy 0.4 percent, above the 0.3% initially reported. banner thatr the said the pope and the annulment process. scarlet: we obviously had a neck set. .ermany and lufthansa they have forced the airline to get half of the intercontinental flights. a dozen pilots have walked out for the -- over the last year and a half. they're unhappy with price reduction. -- eted is unhappy with

determine the contracts for 140 thousand autoworkers. it is a major retrenchment at glencore. this was minor and trading company. they put the dividend on hold and when to cut to billion dollars in debt through the end of next year and selling assets in more stocks. glencore has been under pressure from investors. the market value has gone down more than half this year alone. we have more coming up on bloomberg television throughout the next hour. law school anyone? erik: who needs law school when you have the internet? website serving as your own lawyer. theave the scoop on some of sexiest vehicles from the studio themselves. and the tv station media general is buying magazine publisher and

yellow tv owner the meredith corporation. coming upies and more on bloomberg television. let's talk about private equities. guy hands, the chairman of terra firma, said he is hiring the former ceo of stansberry just as his vice chairman says he is going nowhere. he explained to guy johnson what king brings to terra firma and what it means. >> private equity today is incredibly competitive to win deals and to do well on the deals. is 2 things.rings on a dealmaking specter he brings the ability to make the transformation faster, quicker, and with more certainty. that means returns could be higher and you can be more competitive. within terra firma it is important that we have, alongside me, a group of people

with big personalities who can challenge me and be complementary. dustin provides the right balance of challenge, and at the same time he has skills which i have, and hopefully i put skills that are not his natural points as well. >> is that job number one? >> my job is to look at what opportunities are in the business. guy has a long track record of choosing the right time to sell businesses when they are in great shape and new ownership. i look at if there is a way to improve businesses before selling them. i play a part in the decision of when we sell them, too. >> does bringing this man in change the funds and your profile of your ability to go to investors and bring them in? i've seen commentary suggesting that is the case. thatvestors are saying

what they wanted was private equity firms demonstrating how they add value. what they are saying particularly to terra firma was we want the best terra firma, not the average terra firma. justin will allow us to be the best. it is very important. >> so that is a yes? >> yes. >> guy, there has been speculation about your future and where you see yourself going. does bringing justin and provide an opportunity for a one out. is this part of your exit strategy? >> it is not part of my exit strategy, but it helps in terms of long-term development for the business. people talk about succession, i'm only 56. compared with the average reader of a private equity firm in the u.s. i am 15 years younger. there's plenty of time. what it means is that you have broadened the bench. hopefully, having just in their will not -- having just in their

there willing justin attract other people as well. younger people. >> the firm will get bigger? bigger, it will develop. over the next 10 years we will develop. maybe in 10-15 years we can talk about an exit strategy. for now, it is me. >> you talk about tax being a moral case. do you prefer the morality around paying taxes? does that go hand in hand? of terra firma and guy, i'm comfortable. i would not join if i was not. i've been vocal about the fact that the tax system for the u.k. to be retailer to a legacy system would provide a competitive advantage to those who do not have stores. i have been vocal about businesses that run in the u.k. but make no profit in the u.k.,

when clearly they do. the difference with the guy's position with terra firma is he has money funding the business from all over the world. the businesses with guy are all around the world, but they pay taxes in the jurisdictions where they do business. i think that is a moral position to be in. >> the world is seeing an increase in turbulence in the financial markets in the past few weeks. the turbulence looks like it will carry on with the fed coming up. what do you make of the landscape at the moment? >> it is a difficult investment landscape, probably the most difficult in my lifetime. what that means, in terms of private equity, is there are opportunities. the opportunities are short-term. you have to grab them to be able to execute quickly. i do not think that anyone feels incredibly certain. the people who are bears at the

end of the day, it has been expensive over the last seven years. that thee who realize reason that they are there, and successful, is to achieve money. if that goes, it will be like a balloon bursting. it is an uncomfortable situation to be in. the good news is that the alternatives have more opportunity to add value than the traditional markets. as long as you have the right people to do that, you can make money. you have to be reasonably quick. we have seen opportunities in the last six months, but we have not felt completely comfortable on the operational case. bringing in someone like justin means we can make the operational decisions quicker. erik: that was guy hands and his new cochairman. that was an exclusive interview with guy johnson. coming upe have more

on bloomberg television. stocks storming out of the gates with the dow up 268 points. what is the durability of this rally? global reagan, our u.s. stocks editor at large will join us shortly to talk about what is and what theuy fed does next. ♪

erik: it is not quite summer anymore. scarlet: it is going to be 90 degrees all this week. the: we will slug it out at u.s. open, and they know very well. i am erik schatzker. fu.let: i am scarlet

let's go to julie hyman who was keeping an eye on the market activity. mainly all highs because of a 3% rally in shanghai overnight. julie coleman it has -- julie :. it is part a rally in the u.s.. it is hanging onto gains and broad-based rally. we're looking around for movers. on the bloomberg terminal, there is a bloomberg social media monitor. just to point out a couple of movers, a netflix -- netflix is one that is rising. microsoft, fitbit. let's move through eight few to show you the mentioned -- let's move the review to show you the mentions on social media. in terms of what is going on with the media companies -- microsoft, they are expanding service to include

purchases on amazon.com and microsoft. you can see that these are on the rise together as we continue to see the media partnerships, content partnerships in particular, a new way for them to get content out there. disney has had a pullback on concerns over the old versus new media models. disney is getting its content new were media models. investors are viewing that as a positive move. it is another one that you saw on the social media monitor. the stock is rising to over weight saying that it is holding its own against the apple watch. witht has minimal overlap the apple product line thus far according to analysts. a big increase, in part because we saw high short interest at fitbit. when stock rises you get a short squeeze. we have been talking about the deals this morning.

one we have not talked about as much as that was on a social media alert was blackstone. billion going up to $6 billion, if you include debt. rising almost to that level. strategic owns properties. in half moonton bay in california. you can see the shares are going higher this morning. scarlet: julie hyman, thank you. the question is, how long will the rally last. theing us now to discuss is bloomberg stocks editor at large, michael regan. you have been doing research. we know that september is a weak month for equities. now that we have everyone back at business and at work and trading, it will feel like history would dictate that this would be a short-lived phenomenon.

mike: september is generally the worst month. this is far from your average september after the august that we saw. china is the big news. it is interesting that everyone has come to the understanding china are rallies in the work of the government propping up the equity markets. people seem to not care too much as long as that market has stabilized they're happy to come in today. i do not think it is all china. predominately it is, but the mergers that are here today, techno energy getting a bit. it is merger tuesday. it is not monday. scarlet: one more day to make deals? mike: exactly. a lot of these deals have been in the works for more than this recent volatility that we have seen. it is confidence inspiring that people are not backing away from deals like that. they're marking 8% or 10% off of

the high, it makes you wonder if there are more strategic deals that could go through. scarlet: 82 deals, and worth $40.4 billion around the world. how much value is there in these historical comparisons? mike: not much. worth, thehat it's last time he had in august like that was 2011. the s&p 500 cratered. mike: we don't want a repeat of that. to me, the fewer data points that you narrow down the circle study to the more ridiculous. i've seen a million studies about stocks have done this after interest rate increases in the past -- erik: nevertheless, people appear to be very well compensated. mike: you boil it down to half a dozen points in history. percent,ge might be x but when the dispersion is this

a wide i put less faith in those types of comparisons. scarlet: how much favored you put into the relative performance of different sectors? you're talking about utility stocks and what it says about what the fed does next. what we have is a custom index that showspleted utility stocks performance is relative to the s&p 500. utility stocks have underperformed the s&p 500 since late august trade in the last couple of days they have flatlined as most people took off for the labor day holiday. mike: two things are going on. utility had an amazing run last year when it became clear that interest rates would not be increased. utilities are viewed as a proxy to the bond market. they pay 3% yields for the s&p 500 utilities. treasury yields, 2% or below, is attractive. thatist of the story is

this makes investors and utilities look like they are more confident about an interest rate decrease was coming rather than the fixed futuresr folks treating that are not as convinced it may be september or december. utility investors are backing off and saying you might get a better yield in the on market soon if things go the way that we plan. was the assumption that you were talking about earlier about a rate hike in september? erik: there appears to be, mike, i have not run the correlation between the probability of the september 17 rate increase and the performance of u.s. equities . we are having a 260 plus point plus in the dow and 1.5% in the s&p 500. it has gone down from 30% before the open to 28%. it is not a meaningful move, but nevertheless --

mike: it is noticeable and gives you a read on the phenomenon of the risk on risk off thing. if the fed makes its decision next week, there are not a lot of data points between then and now that will change there is thinking. -- change their thinking. you can break through the lows that we saw the recent volatility. that is the one reign thing that i think people think a change the fed's thinking between now and then. if the market is in a freefall the odds of a rate hike will come back a little bit. i think they are highly correlated. is what ray nolte was telling us. if they hold off it would be because of increased volatility. thank you. bloomberg u.s. stocks editor at large, michael reagan. erik: flying without a map. scarlet: small businesses have a lot to worry about, but getting legal help is not one.

why a large number decide not to incorporate when we come back. ♪

erik: you're watching bloomberg television, i am erik schatzker with scarlet fu. this time of year is back to school for business. the small business administration says there are millions of small businesses in america, and it may surprise you that many do not have full protection of the law. trying to getare cheaper legal services for assistance. ceo of moore is the rocket lawyer. let's begin with the idea that a business would not incorporate itself. they want to stay as a private partnership. what are the benefits and why would they risk that? and the complex economy we are in it does not make sense. of the 28 million small businesses, most operate in a ship.te

if you are operating as a full proprietor you are not taking advantage of limited liability protection in our system. it is not how it handles success, it is how it handles failure. the ability to dust yourself off and start again without putting the most important assets in your life at risk because you are taking an entrepreneurial risk. do not incorporate your business and separate your business from your personal documents. assets.-- your personal that is the sales pitch. at rocket lawyer the sales pitch is to resolve the legal market. wealthy individuals and large companies, they have lawyers that can afford to use the system to their advantage. poor people have access to some resources, not enough, but some.

it is the folks in the middle. the 28 million that we talked about. the middle class people and their families, we are making legal services more affordable and simpler. scarlet: what complicated legal matters are you usually requested to do? mr. moore: incorporating business is important. contract negotiation is really their biggest concern. after that, collections. if you are putting contracts in writing you can use our network of attorneys around the country to help you with those contract negotiations. that is probably one of the big ones. erik: thank you. charley moore is the ceo of rocket lawyer. we will be back after this quick break. ♪ the only way to get better is to challenge yourself,

and that's what we're doing at xfinity. we are challenging ourselves to improve every aspect of your experience. and this includes our commitment to being on time. every time. that's why if we're ever late for an appointment, we'll credit your account $20.

it's our promise to you. we're doing everything we can to give you the best experience possible. because we should fit into your life. not the other way around. erik: welcome back to read you're watching bloomberg television, i'm erik schatzker. scarlet: i am scarlet fu. let's look at how the markets

are faring. we opened strong with a bump up following the gains in shanghai overnight. the dow industrial, 270 six point again. inside the bloomberg terminal you can see on the intraday basis this is a chart of how the three indexes are performing. we are off the high of the session which is 951. -- 9.51. we have not seen a lot of volatility on thursday and friday. today we should have a pickup in activity since most are back from the holidays. we are back to where we were when trading began on thursday morning. erik: the green line is the nasdaq. that is positive for the year. scarlet: i was just going to bring that up. better thans faring the other indexes and is above the zero line. 0.8% so for this year. the dow is down 16% -- excuse me, it is down 8%.

the s&p 500 is down 5%. erik: so goes apple, so goes the market. apple is leading the s&p 500 higher. it is one of the big movers in the dow. scarlet: there will be making a big announcement on its new products. apple tv, apple iphone. erik: now that we know details, i'm not sure how big the announcement will be. analysts.t will be to 300,000 workers for federal government contractors will be paid sick leave. president obama attended a union rally in boston after signing an executive order on sick pay. companies such as boeing and lockheed martin, the top two government contractors. hillary clinton and her private e-mail server. congresswoman pelosi spoke to clinton about the democratic front-runner. -- congresswoman pelosi spoke

about the democratic front-runner and says the issue is being overblown. -- i feelvery co very confident she did not receive or send any e-mail marked classified. i think the other side is trying to make something of it. north and south korea are ratcheting down tensions after the military standoff last month . they're holding the first reunions of families divided by the war in two years. each side will send 100 people to a north korean resort. 56,000 south koreans are on the waiting list for such reunions. bon jovi's first performances in china have then shot through the heart i communist officials. they were going to play shanghai and beijing, but they are not happening. it is apparently because wenzhou the used the backdrop image of

the dalai lama at a gig in taiwan. gigs in china after showinged support for the dalai lama. scarlet: that's a shame. erik: the resident bon jovi fan among the two of us. scarlet: media general announcing it will buy meredith corporation. it is a stock and cash deal. there will be a lot of leverage involved. years after the great american housing bust liar loans are creeping back in. what does that mean? we will hear more about warren buffett from his annual charity lunch. erik: rolls-royce is rolling out

a new car. the ceo claims, it is the sexiest rolls-royce ever built. matt miller has the ceo of rolls-royce. matt: i'm sure there are many rolls-royce fans. owners thatyce would think their own is the sexiest. this is a good looking car. the unveiling. typically you would roll out a new car at one of the big car shows in frankfurt or geneva. you have decided to do this one online. why? a couple of reasons. the number one reason is that you know better than me the media landscape changes dramatically. you see more and more blogging and demand for information and streaming information quickly

into the world. it is raising. for that, we were catering to this demand. number two, you would see that our clients, who are getting younger and younger over the years are also very much used to modern devices -- online media and all that stuff. we are catering for new needs in the market. honest, i think a car show is great, but for the future it is no longer sufficient to make a big noise around the unveiling of a car. matt: this is the second drop head. and one has more legroom the rear end reminds me of an old boat. what do you think are your favorite design choose? -- design ques? definitely what we call the water for panel.

it is lovely. we put the handling outside onto the roof and into the interior of the car. it is gorgeous. it reminds very much to what i -- what i for would call professional crafting on a yacht. that is the feeling when you're driving. it is gorgeous. under the sunshine, sitting in this car, driving down the pacific coast highway -- no better place on earth. matt: of course, with as much , we read that you're aiming toward getting more female and younger buyers. 70% of the buyers are men. as this dawn head in that direction for you? definitely. we already made what i would call quite a lot of changes within our demographic

structures in our customer base. race,ticular, girls and changing the demographic profile. we are seeing younger customers into the customer base. that is the reason why we were able to quadruple our worldwide volume. of course, dawn would cater to what i would call lovely female customers for the reason that is clearly our intention, too broad in that field further. matt: will disclosure, the ghost 2 has been my favorite car. this one i have not driven, so maybe i will change my mind to the dawn. year, a 12%00 last gain. the u.s. is the biggest market. china is the second biggest and they are having issues. the united arab emirates

are the third. how are those markets doing? china and the uae? and we all know, that the china market is currently seeing quite a contraction in the luxury goods -- and the luxury goods businesses. many reasons behind that and we are affected by it. i would even say quite substantially. for that reason, it is hard to say how much of that we can compensate. emirates, thebian situation there is much better. this home market is our second biggest market right after the united states. we have seen nice growth figures only in thebut not uae, but the broader middle eastern region. i am satisfied with that.

all in all, china is an issue and something we are watching carefully. think it much do you will drop? stocks moving from her second biggest market down the ranks. what are you expecting as far as sales out of china? , that is very hard to predict. but we have seen in china was faster than we would have thought it would be. the whole movement into the market, and i would say movement that goes the other way, down, was much faster than expected. customers,dealers, and other people in the china market, many people were quite surprised about what happened. how quickly over the last couple of weeks, when you look into the stock market, what happened in shanghai and so 1 -- there is a big contraction going on. matt: in the u.s. i'm sure people will be clamoring for the

new dawn. when will they be a dealers and when can i get behind the driver's seat? matt: i think you should get in the driver seat and at least try it next april. april 2016 is when we will see the first cars on the ground in the united states. and then we will deliver to customers. we have already shown the car to quite a lot of interested customers in the united states at closed events. the pickup was excellent. we have nice looking auto books. for joining us. the ceo of rolls-royce showing the new dawn. an online launch. it is indeed a new dawn for rolls-royce. still ahead on bloomberg television, a multibillion-dollar deal in the media industry. media industry signed meredith. 48rlet: it is one of the

deals that we are tracking. ♪

scarlet: welcome back. we are one hour into the u.s. trading day. probably know u.s. stocks are rallying higher. let's get you caught up. we start in asia with the shanghai composite 2.9% and the nikkei dropping. one big story is economic data out of china and japan. bloomberg's director filed this from hong kong. >> china's latest trade numbers show august exports down 6% with imports plunging. it tested domestic demand. one reason why economists warned

that beijing may miss the 20 15 growth target. beijing's decision to devalue the currency in august led to a decline in foreign exchange reserves. this as china steps up to support the yuan. second quarter gdp reports have been revised. the economy contracted at an annualized pace of 1.2%. bloomberg in hong kong. we are 45 minutes away from the european close. let's go to mark barton in europe. i see the stoxx 600 is up by 1.3%? mark: it is rising for second day, for the fourth day in five. investors ignoring the week chinese import and export data and focusing on the fact the shanghai composite rebounded from a 2.2% loss to a gain of 3%.

it has been four weeks to the day since china devalued the yuan. since then european stocks have fallen by 10%, equating to 1.2 trillion euros of value. today we have data for the euro area for the second quarter, showing an uptick in growth to 4%. that is thanks to an increase in spending thanks to exports. the european central bank is inflation and growth forecasts because of emerging markets, because of china. this is one of the currencies i have been focusing on in the last 10 days. fellgh friday, sterling for nine consecutive days against the dollar. that was the longest losing run since 2008 and is now rising two thirds of 1%. to bank of england is going announce its latest monetary

policy decision on thursday. the revamp of communication will have the minutes as well. what will the minutes tell us about the intention of the bank of england when it comes to interest rate hikes? investors are pushing out when they think the first hike will be, at least the third quarter of 2016. it is happening in the bond market. spanish and italian bonds are rising. u.k. bonds and german bonds are trading lower today. julie: let's switch to u.s. stocks. we're seeing a rally sparked by the chinese gains overnight. coming up on the high in the session gaining across the board. i have notice as we watched the s&p go deeper into correction, it is down 8.6% from the record high in may. we are seeing a little rebound today, but are nowhere near recouping all of the losses that we have seen over the past month

for major averages. the nasdaq is higher on the year, but lower from the highs of the year. looking at the imap on my bloomberg terminal, all of the industries, technology is helping to drive the gains. industrials and financials are doing their part. energy is gaining more traction up three quarters of 1%. of,re seeing a rebound sort depending on where you are looking within the commodities complex. robert is higher. , there is ais lower bit of a division between oil traded in the u.s. and in london. little changed, but after the kleins that we saw after the gains in the chinese stocks overnight, we are seeing a rebound somewhat. producers are doing better. the company will be resilient in

its aerospace products, and that is known for recent acquisitions. engineered products from reliance onsus its making aluminum itself. copper and gold are on the rise. apparently people with the matter say that jpmorgan is working with the country to review its strategy following the revelation that carl icahn had taken stake and was the seeking changes. we will look at the 10-year and the gains in the yields. the biggest one-day gain in two weeks. 1.8%. we are growing ever closer to the next fed meeting on september 17. senior market correspondent, julie hyman. a multimillion dollar deal. media general is buying the meredith corporation valued at $2.4 million. scarlet: the meredith ceo will lead the new company and have high expectations. >> the new combined company is

expected to generate approximately $3 billion in total revenue. scarlet: let's bring in bloomberg intelligence's paul sweeney from princeton. we saw a lot of tv stations merge in 2013 and 2014. it has been fairly quiet this year. where these companies combining forces now? paul: we have two companies that are more than 100 years old with proud history in print and broadcast journalism getting together. it shows the continued trend for obtaining scale in the media space as various media companies try to compete in what is an increasingly digital world. in terms of broadcast television, tv operators, one of the biggest servic -- one of the biggest services of new revenue. the cable space

was consolidation. carter get it -- charter getting time warner cable. have seen a consolidation on the distribution side of the media business. we think we will see more consolidation on the content and broadcasting side. noticed, ating i least until now, meredith has been trading -- has not been very levered. they have an enterprise ratio of 25%, whereas media general is pretty fully leveraged with about the same amount of debt as equity. is this really just all about cheap financing and ability to lever up? paul: i think this is really a strategic transaction. i think that the broadcast television business is a healthy business. there are major issues that it needs to deal with. most notably that consumers are changing their behavior and

getting more content over the internet. all contact players, including meredith, need to compete in that world. it was -- it will result in a a lot of leverage. they are saying when the deal closes will be close to 5.5 times, generally much higher than the company's prefer. we will have a billion dollars in the next three years. the company should be able to de-lever quickly. erik: $80 million he year? scarlet: that is part of -- paul: that is part of it. there are cost energies that can be achieved. deals,it in other primarily on the program side. the bigger you are the more leverage you have over programming companies. when youe on the side

sit down with the comcast's and directv's where if you are a larger group you have more leverage over operators and can get a higher retransmission fee for your station. scarlet: thank you very much. paul sweeney giving us insight on the media general and meredith transaction this morning. erik: a flashback to the sub housing crisis. the return of the liar loan. it is not a catastrophe, but it is causing concern. ♪

scarlet: welcome back to the bloomberg market day. i'm scarlet fu. this is erik schatzker. see, i did it before hand. erik: your member that liar loan. lenders writing mortgages with little to no documentation. scarlet: mortgage companies have not gone act in those wild west days but there is a variation on the liar loans. they're popping up.

is different this time? what are these liar loans and how they they differentiate? >> it is a twist on what used to happen. this is different. liar loans was given to income loans were people would fill out a line or the mortgage pressure would -- the mortgage broker with the lad a line saying how much they make, and that would be enough. now, it is not even looking at income. now, it is about whether people are planning to live on the properties. they're giving loans without any checks, because these are loans person is either going to occupy the home and rent it out or use it as a business like a dental practice were something you are invested in. if you do that you do not have to apply regulations that are supposed to outlaw liar loans.

it is not a loophole, per se. in theory the should only be going to these people that are doing this stuff for these reasons. not to live in a home, but to run a business. it is hard to catch. all along, there will be opportunities that people are going to look to exploit. we see that that might be happening. erik: for the protection bureau the involved? jody: in theory they're not supposed to be in charge of the loan. on the other hand, it is turning out that it could be. we will see. scarlet: thank you. his story is available on bloomberg.com. more coming up in the next hour of the bloomberg "market day." . eric, thank you for joining me. ♪

scarlet: it is 11:00 a.m. in new york, 4:00 p.m. in london. him: welcome to the bloomberg market day. a stock prices rising. the price of oil also rising.

scarlet: angela merkel says we are faced with a defining moment. she urged the eu nations to share the burden of taking and refugees. where lawmakers have just 12 working days to conclude a deal to prevent the shutdown of the federal government. scarlet: good morning. i am scarlet fu. pimm: i am pimm fox p we are 90 minutes and the trading day in new york. thatstocks rising after late rally in chinese markets. s&p 500 gains 1.5%. the dow jones adding more than 1.5%. 50 points away from the 2000 level. nasdaq gaining