alix: u.s. stocks tumbling. the s&p down over 8% this quarter. falling to its lowest level since october. joe: what did you miss. equity markets hurdle for the first quarter since 2011. alix: something is rotten in biotech. sector more than others. joe: glencore in freefall. commodities crater. can it here down its debt fast enough? alix: we have to begin with these extremely ugly markets. the dow down over 300 points. you are looking at one-month lows, the worst in the nasdaq. that thebelievable

volume was much higher than the 10 day average. s&p, 70% more in the dow. joe: it was one of those days where people were throwing out anything that isn't nailed down as they say. you saw facebook and amazon diving, we saw the home folders -- homebuilders rolling over. obviously saw the biotech. one company that got slammed was , washarmaceutical company a letter from the house wedding to inquire about drug pricing. even though it will not result in any legislation anytime soon, when you see that don't -- you see that dump. seeing sectors retest those lows, and bio tech is the latest to do that. what happens next.

the precipitate more downside. joe: we are not that far away from the august 24th morning were the dow fell like 1000 points and the market was down 10%. this is obviously broader implications for the quarter as well. we are on pace for the worst since 2011. those correlations make you wonder what is going on. joe: an incredibly ugly day all around. alix: i went to go into my bloomberg terminal to take a look at glencore stocks versus glencore credit default swap. it is a brutal and ugly story. the yellow line you are seeing is stock, and this is the credit default swap for five years. you can see it has risen immensely. this ends on friday. them risingyou saw

38%. they rose 757 basis points. that is an incredible move. getting to the point with glencore where there is some existential questions being asked about this company. as you can see, with the charge of a broader, people are starting to wonder, while equity holders be left with anything? alix: you made the point that september 16 is when they issued more shares. they are now down 46%. who would want to against -- invest at that point? joe: we talked about biotech. this is a chart of the etf -- of the health care etf. normally health care is a defensive category that does well in the time of work in panic. that is not the case at all. it has absolutely been getting slammed. the point that dan green made

was biotech is now 20% of the health care index. at one point, some years ago, it was only 8%. it was very safe thing. now when you buy into health care you buy into a lot of speculation. talk about the m&a and the home and the speculation around that. as you can see on the charge, it is not the defensive sector many think it is. alix: thank you. i want to bring in our guests to break down this market action. dan from bank of america merrill lynch. >> it has been something to watch. over the last months and years to be you've seen normal investors crowd into these areas of the market. what you're seeing now is there's actually cracks in that leadership. i think that makes a lot of sense. we looked historically at stocks using high multiple by the dream.

40% of those grow into their multiple and do well. the other 60% do not do well, and a lot of them and ugly. what you saw is with this type of run you see in the biotech stock they are basically priced for most of them doing well, not price for 60% of them not working out. joe: speaking of, we were theking of glencore, and ceo last $5 million today. a lot of these companies, on a pe basis, it is extraordinarily high. when you see these regulated areas, how far can they fall? -- speculated areas, how far can they fall? they are noty is trading on today's earnings. a lot of them do not even had earnings today. you are buying with their code-2 10 to five years in the future -- what they are going to do five to 10 years in the future.

40% in the going to do ok, 60% of them are not. a lot of the spaces overvalued at that point. alix: as we were missing earlier, we see a lot of those investors retesting august lows. what stands out is something that can shake off all the other things? >> when you talk about was expensive and crowded, you see cracks in biotech see cracks immediate, but the leadership in the market, the crowded areas, not many companies still have growth. ofay you want to be wary these social media, high-growth internet stocks. some of them are going to be fine, but a lot of them are priced for this whole new world where they cannot all be winners. alix: how overvalued you think some of these stocks are? can you quantify that? >> that is very difficult. multiples, some of

them trade 50 times, you cannot do the math, particularly for someone like me who is not doing individual company level analysis. --: in the company overall in the market overall, the s&p 500 has fallen below is 12 month moving average. the last two times, this is what we saw at the beginning of the last two bear markets. we have had this sharp break and then something that we seem to be getting. do you worry about long-term momentum decline? chart -- youype of are fairly optimistic, will you worry that this will turn into something greater? what the church are showing is that the market is worried about what could happen here in i'm not a technical analyst, but a lot of people are focused on the 50 day and 200 and moving average. the last time you had this a few years ago, we saw a retest of the levels and the market turn off -- took off from there.

you could see us go higher. it hinges on growth. if you start to see the reason the markets hold off so much is because of the soft patch and global growth and the biggest shift in monetary policy in the decades, whatever that you have concerns about our government slowdown. growth is the. you can find any signs that it is in the emerging markets, that will be a huge support for the markets. alix: 20 to give a good day targets, it is when 100. it is relatively aggressive. what is the catalyst for that? and support of the markets. you need is a little change in the growth outlook for emerging markets, which people are basically pricing in for 2008 times of growth. all you need is a very little shift and you can get big moves in the market. you were talking about things

not trading at the high-yield of levels.-- 2011 as of the highest level since 2008. it gives you a sense of how bearish position as. we have an interesting chart. the chinese monetary conditions. that is a measure of credit availability, and as you can see the orange line has actually been tipping of a little bit lately. you can see compared to the materials relative performance, that materials continue to underperform. but people are looking at this as a sign that the chinese economy is bottoming out. credit is starting to flow again. interesting really indicator. i think that there are other indicators that are interesting, like if you look at the article put out recently about the chinese playbook. looking across thousands of companies, it looks like things

are getting a little bit better, and if you look at the bloomberg beginner that has been doubled in past few months as well. butto monitor those things, there is a lot to do in the long term. alix: dan, you are sticking with us. joe: coming up, what is this a chart of? it is an emerging market currency that is getting crushed. we will tell you what is after the break. ♪

alix: i'm alix steel. joe: and i'm joe weisenthal. alix: we showed you a chart of something that has slumped the most since 2008. worldt is the best-performing currency this year. it had its biggest day drop in seven years today.

the country is getting crushed by the commodities. glencore canceled a major project there. it is a total rebel effect. let's get right to the top headlines this afternoon. expiration andg offshore alaska. this comes after the company spent $7 billion ended up with a well in the arctic waters that failed to find meaningful quantities of oil. it plans toays separate into two public companies. one will be the little aluminum the business, the other will be the part that makes components for the automotive and aerospace industries. the maker of titleist golf

equipment is talking to banks about an initial public offering. bloomberg news is reporting the company is soliciting several institutions. it did take place next year and start an evaluation of about $2 billion. those are your top headlines. we are back with dan suzuki of bank of america merrill lynch. before we went to break you were talking about indicators that are pointing to so much air sentiment often the market. -- bear sentiment in the market. months, it will keep on rising so the orange line is the s&p and the purple line is how extreme selling has gotten. these indicators are not working. we're not seeing huge buying come in. >> i think the percentage of companies down more than 10% or 15% or 20% is clear with how the market goes down. the more the market goes down the more you see the high percentages go up. that does not tell you what will

happen from here. what you need to see to get those things to reverse is any sign that growth is improving. once you do i think we will see a pretty violent move toward in the market. joe: it has been a mess in the markets ever since the fed hold. people seem upset by is, irritated. what is the connection between the fed and not hiking rates and the selloff we have seen? >> i think it is usually connected. you sought a day of announcement that the markets hold off. everybody was coming to terms with the idea that is going to be a very gradual hike. what we're expecting was 25 basis points every other meeting that equates to 100 basis points a year. that is half historical rate of tightening. indicator, cause, in they will hold off. we will have the most gradual

tightening we have seen in a very long time. the markets were ok with that. withhe markets were not ok was delaying this in keeping the uncertainty overhang going because when you talk to investors, there's a general sense that people do not want to go all into these markets before ost thee what happens p first fed hike. once you get past the, after an initial length or two, they have a lot more confidence. asaying a by three months negative for markets and is where you get that volatility to say hi to stay high -- to stay high. get sliced as much as one percentage point off and all growth in the first half of the year. it did see a drag around three 3/10 of a percent. >> earnings have not been growing very well. we had outright sales declined and zero earnings growth in the

s&p. that has to do with the currency. the last couple of quarters, we are estimating of the currency headwinds are about four to five percentage points. hugely impacted by the dollar. we look at the performance of the multinational companies in the s&p relatively to the dollar. that is the correlation for performance in the dollar is that the strongest level we've seen in decades. the dollar really matters. but because of information is that although it will continue to strengthen, we think the pace of the strengthening is not going to be anywhere near the rapid pace you have seen over the last nine months. the worst is probably behind us. right now we are ready for percent or 5% headway. that, the headwinds will start to a base, and that is what you can get earnings accelerating from the fourth quarter into next year. joe: what keeps you up at night? in the verys me up near term is china. i would like to the indicators

out of china start to improve a little bit. there is a lot fretted out there. a lot of is focused in emerging markets. i would like to see -- what keeps me up is any sign of that would turn into a systemic crisis. i do not see any of that except for the news we have on a day-to-day basis that i am monitoring very closely. joe: thank you very much. in as bada may not be as she investment bank we have a charge you cannot miss, next. ♪

alix: i'm alix steel. joe: i'm joe weisenthal. alix: we had a chart that shows he hasina may not

been a position as you think. this orangeed line is rising. it shows that credit is growing again and hopefully it could show an increase in growth. you can leave the gdp. alix: one company that is happening for a stabilization and chinese economy as 14. -- is glencore. its stock fell almost 30%. joe: i have been battered after investors were treated to commodities after the slowdown. us to the question of how much value will be left for equity holders of commodity prices do not improve. in the current climate data is becoming the most important consideration. alix: all of their money's going to be paying off debt, forget

about equity value for shareholders are that is a crazy call. joining us is our bloomberg columnist from san francisco. i must say that peter is the lo.irman of p. you have a car today. today. them out >> think that is a short-term issue that needs to be dealt with. love, -- measures last last month, it has not stopped the flag. the bigger problem is really around business models. while all of them are down in the road -- in the current commodity selloff, when glencore few years ago, it was meant to be a slightly different beast because it had a treating -- trading business

1970's and 1980's. it was not to do well whether the market was up or down. it whole business model, makes a question if it makes us to be a public company. joe: is there any reason to think that glencore could have any sort of stomach -- systemic qualities that would make it price well to other companies? glencore on its own does not seem like that big a deal. what you see markets selling off more broadly, could lead elsewhere? bleed into the water commodities market? moore create a systemic type risk. >> as possible. tended to write under the radar. this section actually the strange thing about glencore.

it was surprising that they became a public company because typically these large commodities have operated behind closed doors. any hard to say whether problem that glencore would cause a wider dislocation in the market. it is generally unhelpful. if you look at the headlines just today, you have shale shellck -- pullback in alaska. a lot of companies went out and spent a lot of money during the boom. a lot of them are money on these big acquisitions. it is already coming home to roost. alix: absolutely. that was at the core which anded how glencore's debt commodity prices will instantly increase while the market cap will steadily decrease. with this assessment for shareholder value could be completely wiped out?

>> it is definitely possible. that is the second time glencore messiness and then passed week. golden it on a similar note last week. -- goldman put out a similar note last week. is now in the position where resurgence ons a the south side to docket of its value. that is not a position it is used to being in. they are going to have to move really quickly to get ahead of this. alix: what is so fascinating is that you were calling for them to go private. do you think their ego won't let them do that? >> that is a good question. i think in the end, necessity is the mother of invention, and i think even egos get trumped whatever the market says. alix: do they have any other kind of hope in the meantime? to had a share

equity offering, and that is now down 46%. what investor will loan the money at this point? have greatstill assets. one thing that i raised in the go out andhey can sell some of because physical aspects that they got, particularly some they got with a strasse. ironically, the bull is out there and waiting to buy assets. alix: talk about ego. thank you or joining us. we will be right back.

alix: do not miss this. consumer confidence out at 10 a.m. tomorrow. joe: make sure to tune in

tomorrow morning. we will have live coverage of shinzo abe on bloomberg tv on the 40 5 a.m. thank you for watching. juliealix: have a good night. ♪

>> the tech industry rolled out red carpet this weekend for india's prime minister. i am brendan greeley. this is bloomberg west. sells 13 million