i am alix steel. ♪ selloff in biotech shares disrupts our rally. joe: the question is "what'd you miss?". janet yellen says policymakers expect a rate hike, but our investors convinced? we have the charts. speaker boehner's plans to quit gives the market jitters. joe: president obama will meet vladimir putin in new york on monday. why this could be vital to global markets. alix: we begin with the markets. it has been an up-and-down day. s&p 500 little change, even within the sectors. withteresting divergence financials being the best performer.

really down. in the had a huge surge wake of janet yellen's news. they seem to like the slightly more hawkish yellen. it really gave it up -- the by a tax-cut of liberated. gothe biotech's obliterated. a brutal dive. everything sells off. everyone trading on momentum stocks now. joe: everybody blames hillary clinton's tweet, but there has been this global sentiment shift biotech's are caught in. to q2 strong revisions gdp.

the personal consumption index grew 3.3%. this is the hero of the economy, the american consumer, u.s. consumption continues near its highest level. this is a 10 year chart. we are at the top of that range. if that will see continues to be the case on monday. i want to look at u.s. swap rates, what they paid for loading rates. when the great below treasury yield -- that is happening now. the 10-year maturity shows we are below that. the two-year spread is narrowing, 9.5 basis points. what is going on? large-scale selling of treasuries.

companies issuing debts. as a result of the financial crisis. it is creating a perfect storm. joe: i want to dive back into my , speaker john boehner of the house, leaving at the end of october. this is a chart of s&p futures. fellquare shows when it after an initial burst of selling. there is fear that he is the one guy who could work with the white house. the fear is his replacement may not be able to work as well. we have a debt ceiling and budget fights coming up. people are wondering what this means. it is a jolt of uncertainty for the market. alix: for a market that's already dealing with plenty of things. janet yellen is ready to raise

rates by the end of the year. here to put it in two contexts a chief global strategist. do you think the fed miscommunicated at the last meeting and janet yellen repair the damage last night? >> when i read last week's narrative, what struck me was about global growth in china. that was the main difference. u.s. economic data between june and september, reasonably decent. she was isolating that. long-run expectations for u.s. ,dp, interest rates, inflation those were all coming down. last week's statement was dovish but an indictment of the global

backdrop. the market rallied off of that. yes, we are raising this year. asy were interpreting that the global backdrop is not as bad as interpreted. alix: we have that john boehner news, cliffs, deadlines, theoretical shutdown next week, debt ceiling, another budget , but as aecember strategist, how do you factor this stuff? butt is significant secondary to the china global-growth story. is that it took away is not about anxiety, higher volatility, not a function of rates. it is about global growth. you have to take a close look at washington going into an

election cycle, a lot of noise , and a lot of polarization and the politics, but china gdp and whether the stimulus they have enacted will be effective is everything. joe: you have been looking at the correlation between the shanghai composite and the s&p 500, not that high, but surging lately. what is going on? >> this is late august. were shooting up. things were going crazy. no news breaking over the weekend that preceded it. wasthing i was looking at how the correlations are spiking. u.s. market and chinese

equity market correlations were whichg to six-year highs, is another signal about what is at work here and driving volatility. joe: correlation is a big theme for you. alix: correlation is a big theme for you. what i find interesting in the current market, the divergence between health care and biotech, what is going on there? divergencecept of and lower correlation among sectors in the u.s. equity market and single stocks is a healthy sign. you are seeing higher volatility surge, but not indiscriminate selling. it tells me that going into august we did not have this leveraged bullish position by a a lot of big traders, so it scenariorisk-office

where there are saying get the cash as soon as possible. the financial crisis, you throughout everything. are not at stocks the same level? >> there are a lot of things that are not getting aggressively bought, but the lack of correlation here -- if you look at the relationship of realize correlation relative to lows,x, it hit lifetime which is interesting. the vicks is going up, isrelation going up -- vix going up, correlation is going up. alix: we will wait to see if it moves into october. it's some of this follow to the housekeeping and positioning, wanting to shrink balance sheets

in order to pay off a capital surcharge? could that exacerbated? volatility being sustained, unlike last october where you had a huge vix spike, then a high. it is different. more layers of resistance. it takes some time and good economic news to dispel mobile growth issues. the news flow coming out of china is not going to come overnight in one announcement. it will take a few reports over several weeks or a couple of months. so i don't think we will know how things are shaping up for several weeks. joe: what keeps you up at night? whether china can manage its global slowdown effectively, whether they are able to manage the slowdown. the possibility of a hard landing.

thank you so much. joe: it is a sign of the recovery from the great recession, states returning funds to taxpayers in refunds. why? the answer is next. ♪

>> i am scarlet fu. joe: i am joe weisenthal. trigger laws required states to return money to taxpayers. supporters of trigger laws say they help government growth. opponents say it disproportionately helps the rich. they are taking money out.

later on, a problem again. maybe it will boost the economy? chief is theand new volkswagen ceo. they are confronting an admission scandal that is the biggest crisis. he replaces the ceo who resigned yesterday. finesre facing potential and a criminal probe in the united states. ope praised iran's accord and called for the elimination of all nuclear weapons. he paid tribute to the victims of 9/11 with a prayer service. >> the u.s. and china have reached a deal on broad hacking principles.

pact marks a first step towards resolving a major issue. they outlined measures to reduce global emissions. a state dinner is tonight. one of the big headlines was the resignation of john boehner, one day after the pope addressed congress. >> we witnessed the awesome site of pope francis addressing the greatest legislative body in the world. all heed hise will call to live by the golden rule. last night i started thinking about this, and this morning i woke up and said my prayers as i always do and decided today is the day i will do this. it is as simple as that. >> here with us to discuss this move in context is the chief global political analyst, tina.

backdrop, ader the fractured republican party, wide-open race, in the credit front runner losing steam, when you calculate the geopolitical risk, how big is the divide in the u.s. government? >> it is on the lower end. it is part of the political cycle we have been following for a few years. could we go for another shutdown? maybe. it is not until the end of this year. looking at political developments, we won't worry about it until closer to the time. it as to the generalized uncertainty in the context where we have a lot to worry about with the china slowdown and what the fed might do next. it doesn't help. ,lix: in the global context people are talking about john boehner not controlling his

caucus, perhaps he was too friendly with obama and the more radical wing. would you put with what is happening with john boehner in his party in the broader pattern , where radicals are taking over. >> i put it in the context of this umbrella concept of fragmentation within the republican party. republican more conservative, ,ore orthodox, election year chest beating, credentials, funding, defunding planned parenthood, now folded into the debate. every time there is a variation. wall street has started to price in the shenanigans from washington. we ought to remember that ronald reagan raised the debt ceiling 13 times. this is relatively new. fractiousgn of our

political times. alix: what you hear from your clients about the possibility of president trump. >> traveling as i do, the rest of the world is utterly confounded by our political and asked me if it is really possible that we could have a president trump. i explained the dynamics. jeremy corbyn, who is just ascted labor leader, because ,etropolitan global-ev types this is political theater, but there are few data points in this trend. part of it is that people are willing to consider leaders they know are not electable. people understand that these people may never make it into office, but one of the reasons

that we see the rise in the polls is because they reinforce the views that people hold themselves joe:. unelectable. or corbyn becoming prime minister, how small of a chance, 1%, 10% to 20%? we have different political systems. we will not have elections in the u.k. in five years, an attorney and politics. in the u.s., interesting, because if you had asked washington pundits, there was never no chance. now they are backpedaling. well, you could imagine statistically. most washington insiders say he will divide the party and make it more likely for democrats or it that is probably right. the most important thing to take away is how trump can break the rules and everyone loves it.

corbyn, the center of his campaign getting goat together, but elected by a landslide. what is going on there? alix: tina ford, thank you for your perspective. you will continue to talk to us about russia and vladimir putin. joe: coming up, the commodities is belaboring glencore in reducing its debt. when we come back. ♪

>> i am scarlet fu. i am joe weisenthal. "what'd you miss?".

glencore shares trading at an all-time low. to de-lever. we will see if it is enough. >> we are back with tina fordham. we want to turn to russia. vladimir putin will meet barack obama on monday, the first face -to-face gathering in a year. putin requested this meeting. does obama have the upper hand? >> that is what the white house would like us to think, about how talking they disagree. russia wants to talk about syria. the white house wants to talk about ukraine. we have some indication that the white house is letting us know

that putin is not setting the agenda. joe: what is russia's economic situation, interest rates spiking, currency a mess. how does this affect the meeting? >> we think it undermines his leverage more than it does. we in the developed world, united states, see all developments through an economic lens. >> russia doesn't? >> putin has time and does not have to worry about elections in terms of when they happen. furthermore, if you look at the sources of public support, lots of emphasis on his skyhigh approval rating. when you look at why that is, is major driver is how he perceived to restore russia's

place in the world. having this meeting is important. what way does the white house strategy of isolating the moves in ukraine effective or not? >> strategy depends on what you want the outcome to the. if the desired outcome was that russia not take further territory, then that has not happened. the white house, state department, said the sanctions were to impose cost on behavior as opposed to change behavior. the official line is they would never change behavior, just make it expensive. i could go on like this. the pressure is on, currency weaken, oil prices down probably for a long time. the multiplier effect of these two things is significant. putin's publicin

support. what is interesting is that the kremlin is changing the story with a focus on syria. the how does putin see islamic state, isis, does that potentially dovetail with the u.s.? >> you would like to think so, the united states and russia have plenty of overlapping, shared concern about isis and terrorism is one. russia fought two wars in chechnya. russia has been trying to convince the united states to deal more pragmatically with bashar al-assad. you could argue that the white house limited its options by saying some years ago that it would not deal with bashar al-assad. beyond that, not enforcing the red line on chemical weapons.

syria is looking quite difficult to resolve diplomatically, but it looks like there could be some space for discussion. russia will want it to be their idea. joe: tina fordham, thank you so much, fantastic stuff. >> you will be getting an address tomorrow with jack markell at the u.n.. will be back.

>> don't miss personal income and personal spending numbers on monday, august numbers, what impact will market turmoil have on these numbers? vote for sunday, the regional elections in catalonia, a quasi-independence vote, part

of deterioration, separation of politics,". close vote. thank you for watching. >>

>> gunning for google again, the searchlight for the second time in as many years. ♪ >> i am emily chang. this is "bloomberg west." the latest iphone, but another sales record? ron johnson joins us. blackberry confirms it is making an android phone. the worstlls me fo is over.