matt: good afternoon. alix: we have to get a look at these markets because we are off on the dow by about 240 pounds. matt: we are around the lows. we were down 300 earlier. aboutand the s&p 500 down 25. the question is why? matt: because. alix: stocks have been relatively flat. matt: i thought that was weird too. but janet yellen came out and said the global economy is still weak and terrifying and we cannot get off the zero balance. we do have some rebalancing going on within the s&p 500. some estimates are $41 billion of shares need to be changed.

stuff like that could be part of it. matt: except you see investors running for safety. not a lot of action at the front of the curve of people piling into the middle and long end. the yield down to .13%, so getting ever closer to the two level. investors will buy to stay safer as a figure out what is going on with the fed. is it that the fed is to dovish and isn't a political needed to sway to the left or is it really that there's no inflation, so much slack. even though we are down to 5.1%, something is wrong with the structure. alix: the decline we have seen a treasury yield is also growth concern. it has been telling us something all along. matt: and the fed told us yesterday. alix: and the dollar talking

about where the money is going into. so much for the dollar selloff based on the fed's know action, it's now up for the day. a little bit of safety like you were mentioning. matt: i wonder if that has a little bit of an effect on commodities. see if you look at a broad trade come you see real strength there, gaining at 2%. that could be one of the reasons you see oil falling a bit today. alix: i want to take a chart from joe slavin. rate for three month the rates the bank borrow from each other for three months minus the yield on the three-month government bond. it has really been rising, especially in the last few days. that measures financial stress, the issue of credit risk coming

is default risk rising? in the last week, look at that spike and that says it all. matt: joe made this? alix: he did and i remade it. he pointed it out. it was an interesting point. not to a look at headlines. u.s. and russia military officials will soon begin talks over russia's buildup in syria. in recent months, russia has stepped up in syria. in most military talks between the u.s. and russia -- matt: in, it will be the second national election in eight months. they will decide the new prime minister. the two parties could end up at the end in a coalition government. no one is a sure how this

will affect u.s. economic growth. the fed has decided not to raise interest rates for the first time in nine years. janet yellen said most policymakers expect to raise rates this year but first, need more convincing on the economy. janet yellen: the committee continues to anticipate the first increase in the federal funds rate will be appropriate when it has seen further improvement in the labor market and is recently confident inflation will move back to its to present objective over the medium-term. contracts imply there is a 44% chance there is -- the fed will raise rates in september. matt: and more in 2016. column for never? alix: [laughter] no. matt: the obama administration

easing more economic sanctions on cuba. gos organizations can now down and establish a presence in cuba as well as exporters, mail and cargo services, and religious organizations. alix: petco holding merger talks with petsmart. preliminary stages. they passed on until last year and the company was worried about antitrust issues. there also can terms about -- there were also to certain -- matt: a family in india has found the perfect weekend home. $220rice was a cool million. they paid a record price for the place known as lincoln house. the state department outgrew the mentioned several years ago and hopefully the family will fix

that place up a bit. alix: it's huge. storiesose are your top on this friday. today, we spoke with abby joseph cohen. and asked what she thought of their decision not to raise rates and janet yellen's commentary afterwards. whate was asked about was going on in the economy and she said we were focused on the labor markets and one of the things we all love to keep in mind is discrepancy between the reported rate of unemployment and the u6. when you look at the broader measures of unemployment, you see many people still working part-time and also the participation rate is not where we think it should be, meaning a lot of people drop out of the labor markets. this is a fed focused in on

making sure the average american is feeling better than they are right now. >> you have an interesting structure at goldman sachs about changing equity goals -- calls. goldman sachs adjust your equity perspective yesterday after the announcement and the press conference? >> the answer is we have not made adjustments to our global view on the economies or the markets. the reason is that our chief economist has nailed this quite well. tom: he nailed this call. in two ways. one was what the fed was going to do and he has been a big point of view for a long time that it was not going to be

december 2015 or sometime in 2016 was more likely. what i think is more important preview we have on the global economy. basically, the u.s. is nevertheless one of the strongest economies in the world. we the largest economy in the world. clearly what's happening here matters a great deal but when we take a look at the other large economies -- china, for example -- there is a clear to celebration going on. we know new york is a mixed bag. germany performing far better than the others. he was economic growth is 1% higher than it is in other countries in europe. when we take a look at what is the central bank likely to do, the idea is they are probably better off waiting longer and perhaps the risk of waiting too long in their view is less of a

concern then moving to quickly. >> the typical trade on wall street is to front run what you think the fed is going to do but if we have no idea what the fed is going to do or when or why, what is the trading strategy going forward? oft is an investor to make the october or december meeting? >> many investors are making too much of it. this increase would have already been widely telegraphed and what we need to think about is where of the better long-term opportunities and financial markets. with interest rates near zero, it's hard to argue bond prices will rise notably from these levels at once interest rates rise, that is not good news for bond prices. on the other hand, when interest rates begin to rise, we go from being very low to only very low.

those interest rates are unlikely to have a dampening impact on the economy. instead, there might be a contrary read of it, which is interest rates going up because we don't need interest rates so low anymore and it could be a boost of confidence and an indication the fed believes the extra stimulus isn't needed. discountms of how you the future stream of earnings you are going to get, is what we're talking about over the next 18 months really something that doesn't affect your investment decisions? >> we do a sensitivity analysis to see what would equity valuation look like at various levels of interest rates. and interest rates would have to move notably higher to make as concerned about equities. far more important is the outlook for economic growth and earnings growth. alix: speaking with abby joseph

cohen of goldman sachs earlier today. much more ahead. the dow is off by doing at 70 point -- is off by 278 points. ♪

matt: welcome back to the bloomberg market day. alix: stocks are new the session lows. julie hyman is looking all the action. this feels like a delayed reaction. it is unusual to get this reaction as investors try

to figure out what is happening next. you also have this effect around the world last night and into this morning as global markets spilled off in my continuing in the u.s. and we see the commodity related stocks hit today. we see many of the oil service shares also selloff very sharply along with oil prices today and also watching the hotels. uinta said hotel demand is weak and will be for the rest of the year and the company's ceo announced he is stepping down. he has been with the company for 15 years so it looks like there is some easiness on the part of investors because of that announcement and they are dragging down the other hotel stocks.

sitting in real estate that may be doing better than the hotel stocks. that's the sector bucking the trend. julie: real estate is doing well today. and health care. when you see the game we see in those shares in companies like hcn that own long-term care hospitals and things like that come you see again as we see a decline in rates. at theso been looking relative performance. this is the relative performance versus the s&p 500. you have that on the one hand, the relative underperformers going into today's session and

they have relatively high debt loads. if rates stay low, it will remain relatively inexpensive for them to service that a debt. matt: why not leverage up with low rates? you see very high earnings or ratios going to the sector right now. alix: and that is part of the reason why stocks -- i don't know what i'm saying. something about utilities. matt: let's just read stuff off the terminal. despite two major settlements, claims is not over. the company faces litigation by car owners. gm agreed to pay out $900 but there a result

may be more on the horizon. looking formobil show bargains in west texas. the collapse in oil prices has forced many drillers to shut down rigs or partner with a company. like exxon. this is a really big scoop by joe carol. and're putting up the cash giving some production to the producers later down the road. it's a totally different type of structuring deals. a fascinating, awesome article. matt: i feel like you are looking forward to this. alix: it's a joe's story. he did really well. matt: i have one of my favorite tv personalities from bloomberg sitting next to me right now. alix: the question being what

what the fedhey does next -- what the fed does next reverberating in politics. he spoke to bernie sanders today and here's what he had to say. >> you say you are a deficit hawk. >> i said compared to my republican friends who talk a lot about the deficit who then go to war and don't pay for it and give huge tax breaks to millionaires. >> i'm asking about your view of the deficit hawk. would you aspire to year-by-year bring down the deficit? . >> it depends on the situation. but an important issue what's more important is creating billions of jobs and rebuilding infrastructure, making public colleges and universities, to wishing free, making sure we don't continue to have the highest rate of

childhood poverty of any major country on her. those are more important to me than the deficit but the deficit is important. matt: you can watch the full interview tonight at 5:00 p.m. eastern or listen to it on bloomberg radio. we have mark here. he is always fascinating to listen to. what does he think about this current interview? he wants to spend a lot on health care and social security. he clearly wants to spend a lot and wants to raise some taxes mostly on the wealthy and corporations but isn't very specific. the most dragging thing for me was does he want to cut specific weapons programs, subsidies for agriculture corporations, he said yes to all of those things are maybe but with no specifics is ahis repetition

truth teller taking on special interest. i found it pretty interesting. deficit hawk is a but if you are, you need to have a plan. alix: for take away is that he did not want to offend special interests, not that he didn't know yet? mark: it could be that. he is a big trailer against big military budgets and yet he did not say and want to eliminate this particular airplane. he's at maybe we have too many aircraft carriers. not the kind of chapter and verse i thought he would have ended a lot of people expect them to have if you want to increase spending so dramatically. cannot offset it with tax cuts enough. qlogic the kindest the suspects i think some people might expect. matt: it's important because usenet and neck with -- it's important because he is the and

neck with hillary clinton a lot of polls. >> i said we have growth rates somewhere between two and four. i said what would be gdp be under a president sanders? he didn't have a position. alix: you can watch the entire interview tonight. matt: or listen to it on bloomberg radio. much more ahead. keep it here. we will be right back. ♪

matt: i believe has laid out ils nine and more at bluff -- ios9. three of the top five paid downloads today are ad blocking apps. alix: cory johnson joins us now

with more from san francisco. how much of a hit will this be? advertisinghow much revenue mobile applications is the last quarter? percentagewise/ . alix: 30%. matt: 40%. 70%. when apple comes out with a new this new feature that allows for blocking of ads is a direct risk to 70% of the revenues on the internet. and these -- matt: let me get this straight because i just downloaded it about an hour ago. different font, by the way. it atght the i was had in

blocking capabilities and you are telling me i have to download them at to block ads? we're talking about the operating system or something i can add to the operating system? ad blockingd some capabilities. ads pushed out of the devices, it is those as that apple is allowing other developers to develop a platform against. to the tremendous risk companies that derive revenue. when you're talking about companies like twitter, linkedin, or companies that push out to all of the other applications, these are companies that base their entire business model on how they distribute ads throughout the internet and into mobile.

they now have a big risk to the business model. matt: and google makes its money this way. from what i understand, new app have to use a certain code and google has given its developers and way around this capability. cory: there are a lot of apps this is a significant disruption in how business works on the mobile internet and could be a big issue going forward. alix: thank you so much. matt, pleasure to chat with you. ♪

alix: welcome back. proctor breaks down today on one of the largest economic

development projects in west virginia state history. the many factoring hub is expected to create hundreds of full-time jobs. if the company's second plant on u.s. soil since 1971. construction begins next month. details of come out about the new contract between chrysler and the united auto workers. workers will get a $3000 bonus if they ratify the dealings. and thel get wage hikes deal calls for chrysler production to be moved to mexico. jamie dimon says the was thinking system is a for now that it was. he spoke this morning at a conference. he suspects have more capital and are more diversified than they used to be. however, he is concerned about what happens when the economy gets worse. >> i worry about what happens when you have a really i that environment. -- i worry about that a

little bit. be a good thing or bad thing and that remains to be seen. of hisimon said another concerns about treasuries. he says some traders have never been in an environment where interest rates are rising. coca-cola facing a big tax bill. the irs has not demanded any penalties and the sawtek maker says the assessment is about merit all-star the bill covers abouthrough 2009 -- marriage. the bill covers 2007 through 2009. air pollution is responsible for more than 3 million deaths a year worldwide. in a current trend, that death toll could double by 2050 according to scientists. china, india,s

and pakistan are the countries with the most air pollution fatalities. the u.s. is seven. shake shack hired a british chef to make a special worker made shallots. and it's only available at london's covent garden and only on october 9. the fed has released its new interest rate predictions and hr -- in a chart. we heard about the inner workings of this all-important chart. has told us about those dots. some presidents simply want to make a statement. >> it is a tool of

communication. sometimes, some things are said in the meetings that are believed to simply to get the statements in but you have a chart behind you. >> did i do ok? >> very impressive. >> let's bring it back. >> it is a stairstep pattern upward in yield. each time the yield drops cometh want tobond investors carryhe kerry game -- game. in a year, that to your yield will. down.d prices rise as yields fall.

yields are very low on the short gameo they play the carry for a short time. >> did you see me crying on the show yesterday? janet yellen says, that's a very hard question. it made me proud. >> that's what the chart shows. ot to thinkportant d about is the sixth. it's highly likely janet yellen. or the first time, the six dot is in position. they will be a rate hike at the next meeting in december. >> let's pause on this chart. this looks like something out of a jodie foster movie like going

interplanetary. >> like a video game from the early 1980's. the further out you get to the future. lazy to me.ittle sometime in the future, everything will be the way it used to be. can we still assume we can cluster around 3%? get past 2016 and the dots are essentially meaningless. they adjust them all the time. the important thing is their level is still above the level the market sees. they move around. forony, what does this mean retirees? your shop has said the great distortion goes forever. q you continue with that statement?

-- do you continue with that statement? >> investors should be thinking especiallyand europe. the ecb will probably have its policy rate around 1% in 2020. for retirees, income will not be rising over time. a signaling function there that if the fed came down to 2% right now, everyone would say what's wrong with the economy? since they don't know, they might as well leave the rate higher but it gets to the question, are you ever going to get out of this zero rate world? down -- ght did come neutralink a long run rate where we are happy with the environment where we don't want

to push on the brakes or gas is 3.5%. four years ago, it was 4.25%. 2% -- pimco says 2%. staying on the topic of economic and markets, i want to bring in joe weisenthal. in 15 minutes, we're taking a look at one interesting call by david swall. telles what it is. : if stocks were doing well, bonds would typically do well. we haven't had a year where both stocks and bonds are down for the year. if you called the beginning of the year, this would be a negative year for both.

he is looking pretty good on that call so far. also to your point, when you do have these assets selling off at the same time, it does do a lot. that can explain in part of the velocity of the move we have seen since august. jpmorgan has been all over it. joe: when you have a move that has not been seen in the market in decades, you have to figure in the trading strategies are going to not do very well and this is such an unusual environment. alix: especially when you have a triple digit selloff in the dow like today. but we did not see this kind of move yesterday. this was a very flat market when we ended the day yesterday. joe: and also a surprising day

because the consensus was that it was a very dovish non-today, we see the dollar rally and stocks dive. wouldat you expect to see after a move by the fed. alix: we're going to talk to the man who called it last year about what assets are moving in just a few minutes so stay tuned. and be sure to tune in with us at 4:00 p.m. eastern. coming up, it's amazon's most aggressive attempts to undercut apple. we will show you amazon's new $50 tablet. what? ♪

alix: welcome back. .ime for look at the markets 15 minutes before the closing bell. we will go to julie hyman looking at all the action. we're looking at stocks really deteriorating. not want toe do belong into the weekend as we see the selloff continue in the wake of the fed announcement. this to be the worst post fed basins last july's fed decision -- this looks to be the worst july'sd day since last fed decision. it is the expiration of futures and options contracts, which can cause an increase in volatility and volume. sector see volume by

in the s&p 500 versus the 20 day average. up versus nearly all of them, we see an increase in volume. all of these bars are higher at the moment. this illustrates what's going on as a result. in terms of the measure of volatility, we see that on the rise. on -- vick's 12% up by 12% almost. it tends to be exacerbated at the close of trading. something to consider as you look at the action today closer to the closing bell. i want to point up some of the movements we have seen in various markets. -- two-year drop we have had today dropped we have had in yields over the past two days has been the biggest since spring. over the balance, yields are not

much changed. i also want to talk about the u.s. dollar because you would think that the events of this week would have a depressive effect on the dollar and they have but not by much and we see a dollar rebound today because -- at least in the words of some investors, rates are going to go up, just a question of when. yellene idea that janet said the economy seems to be doing ok, it's intentionally -- it's essentially the global economy. and we see a set a lot and oil and copper today. trade on thexed week. oil looks like it will finish higher by a bit and gold having a first weekly gain in a month. that looks to be thanks to the youral reserve because if are going to look for safety, people are going to treasuries

and gold. alix: and i should point out bank of america just cannot with a note saying copper has not bottomed yet. has not broken out of a multiyear bear market since falling in 2011. thank you. actively look at some top stories. the virtualcided currency will be regulated. what that means is if a company wants to operate a trading platform for bitcoin come it will have to register for the agency. next up for the irs and its search for offshore tax che ats, belize. expectsates the irs americans may be using accounts to god's taxes. and geneva tops the list of the world's most expensive cities.

thanily of three pays more $3600 a month to live in zürich before rent and the third most expensive city on the list, new york. and those are your top stories. and its azon about products and one of them a seven inch fire tablet that costs $50. is this the next next inc. from jeff bezos before we get -- the next best thing from jeff bezos before we get delivery jones? point, $50 ise hard to compete with but the question is do people want to buy amazon tablet and doesn't make sense if you don't have amazon prime? they're also offering tablets for a price of $41 if you buy a sixpack of them.

it is so interesting they're trying to sell it in bulk, it just makes me question how well amazon tablets are selling overall. they also already have an eight inch tablet and a 10 inch tablet and a seven inch kids edition so a lot of different products out there. it's interesting they're going after a consumer market where with apple, we see them pursuant enterprise market. -- pursue an enterprise market. appletainly seems like tacklinge there the business market. what is the thought process here? what is the angle of the $50 tablet? emily: it looks like they're trying to drive amazon prime.

if you have one of these and you have amazon prime come it easy to access all of this amazon original content. they also came out with a new updated fire tv. unclear how well it is selling and how it stacks up to apple tv but if you have a fire tv and are a prime number, you can get this content easily. it is integrated with their digital voice assistant, alexa. they also have a version that comes with a gaming controller. a number of different kinds of the same product but from my perspective, it looks like jeff bezos is trying to drive traffic onto amazon prime and once you're hooked on it, you buy everything on amazon. alix: that is one under percent true. -- 100% true.

tune in tonight for bloomberg west for much more on amazon. still ahead, we're watching these markets. the dow right around the lows of the session. ♪

a veryt is turning into ugly day for stocks. u.s. stocks tumbling as investors digest the fed rate decision. joining us now with more, lisa abramowicz and mike regan. this statement came out yesterday. we did end lower yesterday by the selloff was very orderly. we were down yesterday on the dow so why today? >> the fed statement comes out

and there is always this spasm of trading that doesn't -- isn't indicative of where the market really wants to go after a statement like that. it's this statement of random moves up and down and you come in today and people have had time to digest it and read the research coming out and the reaction i have read today from investors that we called is basically that the focus on the international stuff in the statement really spooked people. they were hoping for a vote of confidence the u.s. had focus on bad and the the problems overseas has a lot of people spooked. quote from a great

bank of america article today that said this was one of the worst things that that could've happened for high yields. there is a feeling that what does the fed see that we do not see? how that is the economy that they are so nervous and cannot raise interest rates by 25 basis points? you have seen a general weakening and credit beyond high yields and more than stocks have an even though it's not just isolated to energy any more. that was sort of the argument for why credit was underperforming for so long and i think we have a chart. can see the yield on the s&p 500 versus the yield on bonds. the orange line is bonds. we can see how far that has rallied. at this,take a look

that spread its widest since 2011. investors ares is demanding the greatest amount of extra yield to own junk bonds versus a similar measure on the s&p 500. either junk bonds are cheap or stocks are expensive and possibly its that both are too expensive and both selloff more. frankly, especially with the fed coming out and saying they are not convinced the economy is strong enough to withstand a quarter of a percentage point of a rate hike. is leading people to believe or have these companies will not be able to increase their revenues enough to justify their existence and size? . >> barclays came out today and

earningshe forecasted saying there will be zero growth this year. we're looking at a potentially big drop in earnings. it is clear people do not what to push that too high. but before this correction, the market was fla for most of the year and people reacting to this late cycle phase we're in right now. is a lot of the story but excluding energy, it's not a bust profit growth. you talk about energy. the chart of the relation between the s&p 500 and the oil price. , the white, is the s&p 500. what is in this historical relationship we see? >> they're usually pretty

positively correlated. occasionally during really weird times, they can be negatively correlated like in the financial crisis or last year when oil was falling through the floor. obviously, what appears to be happening now is the correlation meaning back up, an their moving in tandem more often. and really coming back to all the things we have talked about. alix: thank you for helping us get a handle on this for today. much more coming up. we are following these markets with the dow off by about 300 points. stay with us. ♪

alix: we are moses -- moments away from the closing bell. i am alix steel. joe: and i am joe weisenthal.

alix: u.s. stocks closing down across the indices from caller to oilwell treasuries rallied. joe: the question is what did you miss? the day after stocks fall as markets react to the fed decision. the watch begins for a possible october rate hike. dark forecasts. that stocks and bonds with both fall this year, something that has not happened since 1969. joe: we take a look at europe involved in the refugee crisis and why it matters. alix: we begin with the markets. saw things go lower. it really picked up some steam in the last half-hour. jo