alix: we are moments away from the closing bell. i am alix steel. u.s. stocks have been mixed throughout the day. oil tumbling below $45 a barrel. joe: but the question is, what did you miss? the great big volkswagen scandal may be huge enough to affect the euro. china's manufacturing

numbers disappoint. joe: my capital markets have all of the power when it comes to oil -- why capital markets have all of the power when it comes to oil. alix: i cannot believe we are not seeing a triple digit move on the dow. joe: did anything happen today? it was so boring. a little decline. alix: we did see the dow moves. but not the volume we are used to, incredibly light. nevertheless, they have closed at a two-week low, the lowest level since september. most s&p 500 sectors are lower, you have tech, utilities. overall, native data. -- overall, negative data. joe: i want to look at my terminal, because something interesting happens you look at futures.

we said pay attention to china pmi. everyone is watching chinese data. including janet yellen. that came out at 9:45 a.m. new york time. instantly, futures fell. the worst numbers since the crisis, well into contraction territory. the market did eventually rebound, but i have never seen u.s. futures react like this. alix: new export orders were down. the idea is if you have a lot of inventory, not a lot of new orders, what does that mean for factory production? nothing good, that they recovered, which is puzzling. joe: we had some solid data in europe, maybe that helped a bit. see the eyes of the world on chinese data. alix: that is what led futures

lower. i charted the intraday s&p versus the oil price. the white line is the s&p. right after we digested the inventory numbers, initial reaction was a leg higher. you really see this big drop lower within stocks as well as oil. that is definitely an oil-specific thing. this, oilning to winds up leading the market. when stocks are down, the first thing i look at is what oil is doing. it wasl looked like going to regain some strength, but it has not been able to thrive. one company moving markets today, volkswagen. the auto company engulfed in

scandal is weighing on the euro. he is head of currency strategies at brown brothers harriman. what do you think of this idea? not see it happening. look at what happened to the euro today, it rallied against the u.s. dollar. alix: there was optimism. -- remember the ford pinto? joe: i don't. . recall reading about it >> somebody in the u.s. was indicted for selling food knowingly contaminated with salmonella.

story, whyteresting is it that we hold individuals to a high moral standard? if the banks, car companies, food companies, we are finding violations. it undermines people's trust in authority. alix: nevertheless, we have seen volatility across the currency markets. you can see what it has done to emerging-market currencies. this is starting volatility for the last week. boom, that is no joke. >> i do not think it has anything to do with volkswagen. i think it has to do with the federal reserve and with china. the fascination lasted about a decade, that it is over. -- but it is over. we need to have the federal reserve easing.

we need to see a weaker dollar. and you need to see higher commodity prices. currency,ing market they have not done well since we got this dovish hold. >> most people agree with what the federal reserve said. 13 out of 17 fed officials expect a hike this year. does it really matter so much whether the fed raises rates in september or wait until december? joe: do you think it was more of a hawkish hold? >> the federal reserve through us a curve ball. -- threw us a curve ball. in the statement, they cited the

market base. they seem to emphasize the international variables. it is a repeat of what happened with the tapering. -- fordy expected to bernanke to announce the tapering and then he thought they would do it in december. sure enough, they did it in december. alix: you are not of the mind that the dollar -- they are throwing in the towel? banks are looking for parity for the euro-dollar. >> i do not see it that way. parity was looking for this year. i thought it was a bit of an exaggeration. to say that the dollar -- look at the futures market. you can find it on ips. the euro, the market is still net short all the major

currencies, including the euro. joe: something you brought up, the fed is looking at market-based measures of inflation, if you point out -- two days after yellen spoke, the san francisco said came out with a note that said there is no predictive value in that. do you agree with that? >> that is -- listen to what mario draghi says. the break evens, but there is a lot of noise as well as a signal. there is an assumption that the fed hits its target, a better predictor of future inflation than market based. because there is so much noise. the best guesstimate is what it was last month. watchesave -- the fed

core inflation because it is a true signal. i think -- it reminds me of a time earlier in our careers, paul volcker was the chairman of the federal reserve and he was tightening interest rates, tightening monetary policy despite having double-digit unemployment. i do not really want to do this, but these rules i am using makes me do it. the federal reserve wanted to make. they were scrambling for excuses. excuses.very weak joe: you are staying with us. alix: what do you get when you divide the price of a town of copper by 1000? it is a very important number, when we come back. ♪

what do you get when you divide a ton of copper by 1000? is a correlation between chinese growth and copper prices. china is growing at 5%, not the 7% estimate. alix: i love this, i am totally fascinated. the country's growth outlook has worsened after weak economic data came out of her night. manufacturing falling to a six year low. mark chandler's still with us. how much more downside -- these numbers are ugly across the

board. mark: this is -- this survey measures small and medium-sized companies. out is what we will find next week when the official survey comes out. my guess is that the chinese economy is stabilizing. they have monetary easing as well as some fiscal support. i agree the chinese economy is not growing 7%, but i do not think it is contracting. look at those retail sales numbers. it puts most of us to shame. housing prices, the stock market bubble is a reflection of the end of the housing market bubble. i think a lot of people, the sentiments swing so widely in the markets. a year ago, china could not do

anything wrong. and now china cannot do anything right. the truth is often in the middle. joe: speaking of the chinese stock market, you think there is a correlation between chinese stocks and u.s. equities. mark: i think about what happened in the first half of this year, chinese stocks rallied. u.s. stocks did not go anywhere. you have one capital market in many ways. in the chinese were cut off from that, but now they are more integrated. correlation, the percentage change of the chinese market, the shanghai, it is point -- .45 correlation. relationship.able i think we could become decoupled again.

it is better than flipping a coin over which way the u.s. market is going to go. alix: they are now trading in tandem. the gap between the offshore and onshore value of the u.n. this is when they devalued back in august. what happens when we wind up seeing these come together again? mark: ultimately, behind what is going on, china wants to join basket currency. they have to be a good exporter, but also some operational needs. you have to provide a market-based coat to the imf imfy day -- quote to the every day. during the spot and the fix was very in porton. the onshore and offshore r&b and

b and wants to -- rm china wants to close them. we have seen some currency shrank -- strength. joe: i want to change the subject to something completely different. this is almost seen as a defect out independence referendum. what should we be watching for? >> the independent parties are going to likely win. it is a question of, what is the next step? withind of the coalition 18 months of the election, independence. i think it is a big mistake and i do not think it will happen. other parts of italy want to break away. parts of germany want to break away. once you let one country

breakaway but still have the benefits, it encourages others to do so. what does this mean for the december election in all of spain. spanish assets, stocks, they are underperforming italy. italy is like a paragon of political stability compared to stain -- compared to spain. thank you so much for being with us. what unfortunate investment led to that? the answer is next. ♪

alix: i am alix steel. joe: i am joe weisenthal. alix: before the break we talked about -- joe: the third-largest shareholder of volkswagen and recently lost $4.3 billion in recent days. check out this one week stock chart of the plunge. this is also the largest investor in beleaguered glencore. alix: ugly. top headlines. china's president says that the country will work to remove barriers in property protection. speaking at a conference in seattle, said the chinese economy has the potential and progress will not be possible without reform. he spoke before scores of top business executives. joe: joe biden has not said

whether he will run for president, but he is getting support from democrats. according to a new poll, 25% of democrats say that biden is their top choice, hillary clinton leads at 33%, and bernie sanders at 24%. alix: and instagram has surpasses 400 million monthly users, that is more than twitter. many are outside the u.s., the growing growth is from brazil and indonesia and japan. the last part of our series on capital markets and power in the oil market. how muchs are deciding money to loan to companies based on their reserves and the price of oil. alix: at the same time, investors are running away from energy debt. they snapped up more than $37 million worth of bonds in the first six months of this year.

only 5.9 billion has been raised since then. joe: joining us on the phone from london is our next guest. what do you expect over the coming days of loan redetermination? >> you will see what the banks have used, they have come down. it will still be reduced dependent on the bank. it will be a very significant event for some of the companies involved. for the broader commodity oil, it will not be terribly significant. alix: about 500,000 barrels a day could be shut down, this is the bad assets. can you put that in perspective? >> the problem for the oil

markets, 200,000 barrels a day are at risk in terms of the companies that are facing stress, capital market tightness is affecting their ability to bridge the gap between cash flow and index. outside of the united states, opec production keeps going up and non-opec production is looking extremely healthy. in the short-term, it does not solve the problem. joe: one area expected to get hit hard is the so-called stripper wells. what are they and why will they get slammed? >> not too many of them in new york state, but in oklahoma or wells these are old producing anywhere from 1-30 barrels a day. high maintenance costs.

it is a nice legacy to be left by your grandfather. shutof them are getting in. joe: how much oil comes from these stripper wells? >> it is over a know you and barrels a day. for: what has to happen bigger u.s. production to be shut in? the junk bonds are being squeezed. when does a trickle to investment grade? -- you are notnk going to see those guys running up into the same kind of constraints the littler guys are. the guys who are really leveraged account for minimal

volumes. those who account for the bulk of the volumes are in good shape. not only are they in decent shape, there is an awful lot of private equity money and even big oil money that is looking to get into the space. if there was the prospect of distress for the big players, there would be a lot of money looking to bail them out. citi had the definitive fourth quarter outlook. there is still more downside to go. how do we get to the trough for oil? >> to feel like there is a bottom, you have the shale and the rest of non-opec and you have opec and opec seems to keep going up.

it is not going to be shale, it will have to be non-opec, the other bucket. that is your canadian conventional. -- they haves the done nothing to dampen that supply. you will need some bankruptcies in the shale sector. you will need to see companies raining and cash flow. -- raining and cash flow. reining in cash flow. non-opec is going to have to take a hit. joe: thank you so much for joining us. >> we did want to show you this live shot of a mass held by pope francis.

it is being celebrated with 25,000 people. --e francis joe: incredible images all day. >> we will be right back. ♪

joe: janet yellen will be speaking tomorrow, her first comments since last week's controversial this is in. that is

>> from our studios in new york city, this is charlie rose. charlie: francis arrived in washington today, coming from cuba for a visit to the united states. president xi jinping of china came to the united states. his first stop is seattle. cyber security and china's actions in the south china sea will be on the agenda during bilateral talks. in syria, russia stepped up its support for the assad regime. the kremlin says it is a campaign against isis. more than 4 million syrians have