stocks joined the global selloff. is "what didtion you miss." china's growth is slowing. beg fore market must the fed to raise rates. if so, when? moneyanks decide how much to lend. alix: the dow is off by 185 points. points down almost 300 at one point. moving triple digits for the 19th time. joe: that is incredible.

a really ugly day all around. volkswagen, which we will talk about. everything spread everywhere, the futures dropping and never recovered. volkswagen.ot just it spread to the auto suppliers. i charted them. this comes from bank of america, the worst four. they get 17% of the revenue from volkswagen. i'm going to zoom in here. it's really cool. i can't do it. you can see that decline. joe: people selling off all kinds of stuff. , blue-chipbonds company, you don't expect to see much volatility.

the bonds have been very stable, and you can see in this chart. just a cliff. people selling everything. joe: i have something that you might have missed, platinum. it is at a six year low. issues, buty platinum is used in diesel engines. if there is a question about the efficacy of diesel cars, are you going to use platinum to make them? joe: they just cannot catch a break. alix: that brings me to my deep dive. line,l price, that red energy stocks, s&p. oil's command of the market is huge. that correlation is picking up.

where commodities go, stocks will follow. you are looking at a live shot of pope francis arriving for the first time ever in the united states. maryland,t landed in d.c.outside washington, plane, officials in there, a line of cardinals waiting as well. joe: everybody is waiting for him. people on the internet were .atching his fly pattern he had to circle a few times because of storms. there is extraordinary interest in the event. alix: great stuff. he will be visiting new york on thursday, as well as st. patrick's cathedral. let's continue looking at the market.

i was talking about the relationship between stock and commodities. joe: speaking of commodities, we have to take a look at the glencore. it was trading around 300 share a few months ago. today, absolutely collapsing. i have not seen a stock trade this ugly in a long time. flotation,secondary thiseraging, dividend -- is like a true falling knife. you can see how violent it has been. he gets uglier if you zoom in on the left. there you go. 145 a few days ago. now at 106. extraordinary selling. it looks like death. alix: fair enough.

atdo want to take a look pope francis. his airplane has arrived in maryland. we are watching officials there. there he is. he is disembarking from the plane. you can hear the cheers. they are loud. the cardinals have been waiting all day to see him. president obama and first lady , vicele obama president joe biden, all waiting to see him there as well. alix: there has been a lot of talk about the protocol for meeting the pope. and congress, they had to pass out rules about what to do. in congress, they had to pass out rules about what to do. it is extraordinary. joe: this is only the third

president the pope has ever met. thisis a monumental moment for the united states and pope francis. what you do when you are a catholic? i think you are supposed to kiss the ring. alix joe biden, the first catholic president. vice president joe biden did not kiss the ring. he opted out. he shook his hand instead. he has a huge timetable over the next few days. tomorrow, a welcome ceremony with president obama at the white house in the morning. a papal parade at the national mall at 11:00. theren see the pope shaking the cardinals'hands.

hands. dominic, a pleasure to have you here stateside. when you look at the market, what is your take? right thingid the by not raising the rates, but there are a lot of problems out there. they recognize them. they have not fully recognize them. they can fully get things right, i think. two big issues, global liquidity, drying up, and china is part of that. inflation is too low for normalization of rates. joe: this chart shows the orange line is a measure of liquidity, and the purple line is the five year breakeven measure that is been going down dramatically. the five-year breakeven measure that has been going down dramatically. >> global liquidity is shrinking

because the fed has finished qe. a lot of other central banks, like china, now having to sell their reserves. people are not so surprised that they did not hike. people seem blindsided by the language the fed used. where you surprised by that? the extent to which they continue to sound as dovish, did that sound as a surprise to you? it right,f people got and a lot of people got it wrong. let's not forget that. they are trying to figure out what was the fed supposed to do, and they're trying to argue, perhaps there is a lot of uncertainty because they did not

raise rates. there was huge uncertainty whether they raised rates are not. i think that is a huge problem. for the fed to figure out the downside of inflation risk, global liquidity concerns. the have to keep delaying rays until 2016, in my opinion. bank economist see a hike much later. you use different models, different forecasts? >> our official view was they would not hike at the end of the day. it is fair to say that it is a difficult decision for the fed. fed presidents that are concerned they should behind king. it is an unusual time.

to be quiteseems good. the labor economy is excellent. it depends on where you fall on the side of inflation. i have always thought that the the lack of inflation is bad, so i put more weight on that. december, still possible they gold hike, but i would not out of my way and say it is 100% certain that they wouldn't. 20% probability is probably the right level. joe: you will be staying with us. , a reality check on the coal industry. that answer is after the break. ♪

weisenthal.e alix: i am alix steel. the energy groups pay zero dollars for an energy unit. they would receive 60 million if coal prices reached a certain levels. alix: you can see that coal is at a decade low. mounting regulation. global head of rates research at deutsche bank, it can never raise rates, the fed, if they discount lower breaks. rates.

they can only raise rates when the market is begging for it. how do we know when? you have to give the market a lot of credit that it understands things better than -- and it would be good if the fed were not too shocked the market. obviously, there is a danger of that. k thepeople thin selloff was because of the fed. we were going to go down regardless. the market will tell the fed when they are ready to hike. of communications and being very open about communications. alix what do they need to do? what would you need to see? >> the recognition of the problems out there is a good one for janet yellen. they should continue to

recognize them until it is clear the problems have been resolved, inflation, higher wages in the chinaand the model with problem with china. joe: the market is now observing itself from another angle as an observer of the observer of the observer. colleague -- i had to read that a couple of times. fedng the same point, the has to think about its actions in terms of how it affects expectations in the market. at the end of the day, market expectations will determine if the fed can do anything. saying, don'tt is

raise rates, without the risk that things are damaging in terms of reaction. you could have had a big selloff if they had raised rates. alix: didn't we see equity prices rise, money come out of the treasury market. it seemed like game on. issue around how the fed framed its concerns or why it was not raising rates. they said it was a dovish hike. one, i'm not raising rates because i'm worried about global growth and inflation. another dovish hike when you say, things are great, but i higherre comfort, inflation target, higher nominal growth. equitiesad done that, would have continued to rise. which you can in

do a dovish hike. at the margin, we felt between the two. nighthat keeps you up at as you look at the market and monetary policy? inflation, excluding housing. it is falling, and will fall more next year. 60 basis points is all we have for export. yet?the fed is not there alix: what if they don't go until 2017? >> it's possible they missed the window. what happens next? productivity does not go up, we will stagnate.

look at walmart. those are some of the issues. alix: thank you so much for joining us. thank you so much. we appreciate it. china's much is metalsng appetite for hurting other countries? ♪

alix: i am alix steel. joe: i am joe weisenthal. hurting mongolia, indonesia, and kazakhstan. suffer a 2.7

percentage point decline in gdp for every 0.27 percentage point in expansion. that is a crazy correlation. the second part of our series focuses on a critical time for oil companies. banks will assess how much to lend taste on reserves and prices. lot ofs down 50%, so a companies could find themselves in a big cash squeeze. the names in the index, we will see a three-year average default great of a percent. issuersl be about 45 over 2015, 2016, and 2017. we are well on our way here. we think that it gets worse before it gets better. now is ryan, as

houston-based energy advisory firm. he has advised on restructuring. thank you for being here. when a company constitute comes to you and says this is my debt load. i am looking at bankruptcy. >> great question. it is one that we are getting increasingly, and one -- we've had a number of these conversations over the past year given where we have seen oil september,ense october, november of last year. what kind ofng is liquidity position are you in? that is the first that. it is cash and liquidity that determines whether a company will be able to restructure and stay out of bankruptcy.

we like to get a hand on capital structure and how much cash and liquidity is available. at that point, we have some ability to age how long a company can last in terms of trying to pursue out-of-court that may options forestall having to file bankruptcy, which may have an offense, but at the same time it is an expensive process, can be unpredictable, and results in undesirable results for creditors. joe: the bankruptcy is undesirable for obvious reasons. what do you see as the prospect for mergers and acquisitions to scoop in and buy up cheap acquisitions? mergers andl be acquisitions opportunities going forward. and the past 12 months, a precipitous drop in oil prices. the price of wti is closer to hi, and we are14

at six and a half year lows. year lows.a-half they have taken advantage of what was a robust time in the capital market, february to july timeframe, and gone out and recapitalize their balance sheet , taking advantage of loosely written junior in dentures and layering in senior debt, intorting the junior debt discount, and sometimes issuing new debt in the market to pay down the reserve base lending facilities. that being said, these are the companies that are not going to be focused on mergers and acquisitions activity.

strategics,larger conoco phillips, shell, exxon mobil -- those are the ones better situated to take advantage of the struggling producers in north america. the categoryone in that i just described, independent north american companies, have been loath to sell at the valuations we had seen. we are seeing asset sales as a t-ditch effort. alix: these are the second liens for some of these. now the capital markets are drying up. happynths, everyone was to shuttle cash to these guys. in the last few months, not the case. what brings the money in? is somebrings it in believe on the part of the -- wee-equity investors

have reached the inflection point and we are moving towards a recovery. looking at what happened last billion dollars or so of mergers and acquisitions activity compared to year to 12-$18 billion of activity. billion to $18 billion of activity. march, april, july, so when oil goes back to 60, that's when they put private equity to work. alix: thank you for your time. ♪

alix: i am alix steel. joe: i am joe wiesenthal.

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