[closing bell] u.s. stocks closing higher after hawkish comments from fed officials. joe: the question is, what did you miss? confusion, the markets just don't know what to make of the rate hike. alix: will the new syriza government able to enforce so much austerity? alix: and the single biggest risk for the u.s. energy business is laying out right now and everything is on the line. alix: we have to begin with the markets. the dow is recording a triple init move for the 18th time the past 23 sessions. the idea that we are moving these immense volatility daily sessions not necessarily

fundamentals, yes, we obviously do market rally -- it did see the markets rally, but obviously . it was not as crazy as last friday, but we keep getting these interesting move. hillary clinton tweeted a new york times article that said she was going to do something about prescription drug prices. you can see the charts selling all. some interesting stuff happening there. alix: and it makes sense that the market is rather flat. another stocks that moved quite a lot, and i will have to show you in my bloomberg terminal, because it is the today intraday chart -- can you guess it?

volkswagen, and that is on the news that they have averted regulation and are under .nvestigation by the doj unbelievable move that we saw today. it cannot be over, right? --joe:and this story is this story is absolutely unbelievable. we will be following it for some time. into the s&p 500 chart. butidn't move a lot today, right here at my cursor, that is presidenttlanta fed came out and said we are still looking at rate hikes this year. we are sort of in a fascinating moment and will talk about it with our guest, david servos in a moment. said wehas come out and

are priced to hike in the markets seem to be liking it. alix: is it technical or actually fundamental i'm looking -- or actually fundamental? theirators have increased short positions in stocks to the highest level since 2009. and it really echoes what came out of citigroup saying, look, investor sentiment is so horrible. you actually need to buy stocks right now, but everyone hates it when you need to be in. are these shorts and winding here, or aually fundamentals? when there's this much hate, you tend to be bullish. isx: here to break it down zerbos.

they didn't just punt, but in a bizarre way. they gave us a very dovish, downbeat message about the u.s. economy and the market initially tried to take the dovishness possibly -- positively. sentimentnk the turnover of people questioned. if there something much more sinister looking behind? i think it plays to our expectations in the end stages of tv. qe might havehink something lurking behind it that will cause some real damage and i think that the fact marked hiking and the fed did a lot to damage market psyche. joe: i love this quote that you wrote and i will read it again. it, janet yellen

appears to be coming around the corner with another round of jell-o shots and instead of cheering, it just or dry heaving." heaving?ry david: we wanted our central bank to endorse this idea that the economy is on track for recovery. has largely qe produced an amazing recovery out of the greatest recession since the great depression. we have things that could have gone a little better, grown little faster, or distributed itself of -- itself through the economy other bit more evenly, but by and large, we came to this rather unscathed compared to what they predicted. hey,ow they are saying, this is worse and we thought it was, or at least open to interpretation. now lockhart is coming out doing some damage control.

tom williams is doing damage control. to walkyou expect her back a little bit from her corrective language? answer, yes, i hope so. i don't know if there is something janet is trying to do with the massaging of the statement that i'm missing, but i do think this was a miscommunication with the market. it was an attempt to be dovish and coddle the market when there was a lot of volatility, but the market took it as a sign that something more negative was going on. i think the fed has to know that those sorts of sentiment indicators are really important during this transition. i don't think they took that into account. they said there's a lot of volatility and a lot of slack and we can wait a while and the market will probably be happy. then they will come one day and said, wait a minute, the stocks are down 2% in the dollar did not do what they thought. it ended up rallying. have one of the ideas i

seen floated as if you actually razor target for this -- raise your target for the fed, it actually gives use the space. david: there was a time for all of these things. ben bernanke used to talk about raising the inflation target and he got shot down and that was in 2011. you take risks and do crazy stuff when unemployment is high. when your unemployment rate is at five and none of the models are predicting anything very well, you probably want to step back and say there is risk management to be done. then you want to step back even further and say, this is not the time to double down on to en get extra devilish -- extra dovish right at the end. market wants almost endorsement of all that has been achieved. and that endorsement is sort of taking the stimulus away in very small increments and showing the market they can handle a 25 basis point move.

that is all we want to see. joe: right now, the markets are forecasting still close to a 50% chance of a move by the end of the year, either october or november. does that sound right to you? david: i think it is higher. i think the market got spooked. they delivered a message that was probably not 100% intended to be delivered that way and it will cause reaction in the market having second thoughts about what they did. the storyline for me -- i loved with the cursor at the bottom and dennis lockhart coming out and giving us almost a damage control speech and saying, we are still on track here. in the market goes, thank you for telling us we are actually ok am look at a gradual rate hike. the market wanted to hear that. alix: are we in a low rate environment for the long-haul? yields on october and through

december death are negative. they turned negative on thursday. andd: cliff is a smart guy i think there is reason to believe the funds rate will be a lot lower in the cycle than it has been in previous cycles. one really interesting piece of the fed meeting that not everyone talked about, which dot.andnegative it is only one guy. janet in her press conference is very open to the next time cannd if we need them, we raise rates. that is huge for the markets. people think the fed committed some big mistake at its last meeting. is this a temporary market hiccup that they can easily fix? david: absolutely a temporary

market he got. it was a communication error when thinking about sentiment versus models and it just kind of backfired on them in the way they judged march -- market sentiment. they got cut down at the knees when they were told that the recovery was not nearly as good as they thought it was. that was a sort of nasty piece of news for the market to digest. and it outweighed the extra dovishness that came from the speech. but i think john williams, and a number of other people -- jim bullard was out. but he was already there, so we do not count him as much as the other two. they are going a little extra these days to try to unwind this misperception. joe: david will be staying with us after the break. alix: coming up, of bit of good news -- a bit of good news to report. we have the chart that explains it. ♪

alix: i'm alix steel. joe: and i'm joe weisenthal. people and started bringing money back into the country. take a look at this chart last year through june. outflows amounted to 77 billion euros. in july and august, the flow reserves -- reversed and about 6 billion euros came back in. in no changing of the guard tsipras execute the necessary reforms? david is here with us. david: i think they have a good

chance. he abandoned most of his marxian principles, because they would have driven the country to abandon him or bankruptcy, a growth -- or both. -- i think het comes from a different breed. think he has a chance of knocking the oligarchs down and doing some things that could make a difference in greece. he haseful for it, but had to change his stripes completely. he is a different guy now, and we will see. but if there is someone who could actually do it, it would be him. it doesn't make me super excited about investing in greece, but it is probably a lot safer than the current crisis. obviously, it looks like

the government could be more stable and there is still this lurking radicalism. the golden dawn party, which is described as neo-nazi, got third. the vote share compared to january, big jumps on all the major refugee destinations. how concerned are you about that? david: it is terrible and it's a party that is a really awful , but the idea that you have people floating around in the far right of the hungarian political system or the austrian political system, or even the dutch political system, they are there. and probably hiding in parts of the u.s., there are plenty of people like that. they just don't have a political party to vote for, whether it was the old david duke story or how the story goes. that a phenomenon unfortunately exists everywhere. and in greece, because it is so fractured an open and the parties -- the party system is

the weighted, you see it come up to the front of the polls a lot easier. alix: enter your point that it is kind of -- and to your point that it is kind of everywhere, take a listen to what one political analyst had to say. >> price of donald trump on the right, bernie sanders on the left, the labor leader in the u k, this is what i call a little bit of flat earth politics. these people are campaigning on policies they really cannot implement. what is interesting is their followers do not terribly -- do not seem terribly perturbed about their electability. alix: what do you think about that as these parties keep gaining momentum david: we always have the nice love or hate distinction. as economy feel and things get better, the fracturing of parties to the hard right and hard left tend to disappear.

i'm hopeful that a lot of the hard work that has been done by central banks and i our economic agents who have reacted to the incentives that central banks have given them will give us the growth probably necessary to keep this stuff from becoming significant in the political arena. it is always a danger, and in any downturn you saw with places like greece, the radical on both the left and right rises and it is a scary phenomenon. but i'm an optimist. i'm an optimist on the outlook for growth and on the outlook for success in the western world and the middle east, at least in the markets, and i think these guys are going to find themselves without a lot of people to tell to when things get -- to sell to when things get better. alix: thank you very much. joe: when we come back, is the china slowdown real question mark weeks explain why one group

says it is a myth that the nation slowdown is intensifying. ♪

alix: before the break we told you about a new york taste research group that said it is a mess that china's slowdown is intensifying. joe: a survey by china's facebook said pessimism is divorced from facts. referredhairman yellen to concerns over china last week when the fed didn't raise interest rates. if you look at this chart from bloomberg, the nation's official gauge slumped to a low last month. alix: but is it real? in daschle headline, scott walker will -- international

headlines, scott walker will drop out of the presidential will dropstop you -- out of the presidential race. scheduled a news conference for this evening. shareholders have approved a deal awaiting regulatory approval. alix: green to u.s. officials, with cooperating regulators probing diesel issues on the road and lab tests affecting half a million cars. it is the biggest event in the oil world and is happening right now. thanks are deciding how much money to lend to the oil companies based on reserves and the price of oil. he cut the price of oil has an yearnearly 50% in the past

, it could be ugly. alix: barry patrolling could be the worse off -- the worst off. citigroup's says their borrowing 15%,could be cut by 5% to putting a squeeze on the company. joe: joining us to discuss the capital markets control on oil .s brian we are in this predetermination of bank loans. what could it be? be bad or notd that bad. we saw in the spring was oil down to $60 per barrel in the spring. we did see a reduction of about $10 or so. this time, the oil prices are again about down another 15% since the spring. when you look at the high-yield en index, there are about

560 players and about $200 billion worth of debt. then you look atthe reserves and that is about $100 billion. you are looking at somewhere between $10 billion to $15 billion that could be wiped out. alix: wow, that is a lot. you can see money flowing out of high-yield into investment grade. this startnt does hurting investment-grade companies? about 20 or 25e major sectors in the investment index. it is one of the worst returns in the sector. cap blanc -- the yields have blown out to about 20%. right now about 225 basis points over. what are they doing about

regulators breeding down the next and being tough -- down ck and being tough ons borrowers. brian: what we expect to see happen is they are going to be working these borrowing bases in terms of the current strip price, which will be the base. and they will go to sensitivity analysis. historically, that has been about 20% discount. -- atwe only come in a 15%. maybe they give a little more credit to their risk factors. those are the types of things that they might be looking at for some mobile room. and what we are looking at is the debt of these companies tanking in the market.

there are these four lines here and you can see the worst is energy 21, trading around $.18 on the dollar. getting close to bankruptcy brian: -- getting close to bankruptcy? brian: we think they are getting close. we think there will be about 45 issuers over 2015-2017. we have already had 15 default this year. we are well on our way and we did he gets worst -- worse before 2017. joe: and there become buddies to come in and buy up the cheap assets? then: the dollar value in m&a is a record, but the deal count is down about 40% on average. there is too much debt on the books. there is very little equity value.

i think the m&a that we will see will be car -- will be concentrated in the larger cap names. thank you so much. we will be right back. ♪

alix: i'm alix steel. joe: and i'm joe weisenthal "what'd you miss?" the set you apart speaking again tomorrow. joe: get a thing you've got to watch tomorrow, the richland fed index -- the richland fed

manufacturing index. expect a slight uptick from last month, but we will see about that. that is all. thank you for watching "what'd you miss?" sure, tv has evolved over the years. it's gotten squarer. brighter. bigger. it's gotten thinner. even curvier. but what's next? for all binge watchers. movie geeks. sports freaks. x1 from xfinity will change the way you experience tv.

>> stakes are high as china's president makes his first president to the u.s. this week. is there hopes of a cyber arms deal? ♪ emily: mrs. bloomberg west. i'm emily chang. coming up, alibaba shares down today as the company and its lockup. what is yahoo!'s next move? plus, apple drives ahead for his plan with an electric