to commodities, investors breezing sim relief for the end of one of the most volatile orders and financial markets. ofk: was glencore the victim its own flash crash? do investors see a bargain by after the mining company's selloff? scarlet: russia launches airstrikes in syria on what moscow says were islamic state targets. there are doubts on whether vladimir putin really intended to fight isis. mark: good day from bloomberg world headquarters. scarlet: we have breaking news. sayscap it again, recode twitter is going to name jack dorsey ceo. he was internal ceo after dick costolo stepped down, but now jack dorsey will be the ceo officially as early as tomorrow.

mark: i know on the terminal, you have a look at the stock. scarlet: you can see the immediate reaction, that big spike up. that is when the headline trust. but we came down just as quickly. twitter trading above $26 a share. but that game was very fleeting. that recode also saying mr. dorsey will continue to run square. he is also the ceo there. as i mentioned a few moments ago, after dick costolo announced his resignation, it was apparent that twitter did not have a succession plan in place. this has been going on to the first of september. scarlet: it is all about how to monetize your user growth is slowing down in a concerning way. we will check in more later on as we get more details. meantime, i want to head over to julie hyman for a bigger picture look at some highlights, and i

guess which include low lights, from this quarter. julie: a lot of low lights. that is mostly what it is. these are the three main averages for the quarter, having the worst quarter and about four years time. a lot of concerns over global growth weighing on the major averages here. it is sending all of them down by more than 8% am a pretty dramatic to see in percentage terms. commodity index is set for 14% drop for the quarter. how poorly did the individual commodities perform? julie: look at my bloomberg terminal. glto is the global commodity monitor. look at the quarter to date percentage complex. having a 33%ine is drop. this column is entirely red. and thenergy, metals,

agricultural commodities, you have declines all the way down. there was no area of safety within the commodities complex during the quarter. notable, we saw platinum falling sharply, about 16%. wheat and soybeans down during the quarter. the pain was widespread, most definitely across different commodities. scarlet: that is the first time i have seen it that it's green. in terms of volatility, we saw a big return this quarter. what are you seeing in terms of that continuing? julie: we are looking at the vix when we talk about volatility. vix on thex -- quarter, you had the best quarter for the vix and about a year. the quarter, about 30 of percent. it had the biggest one-month increase in august than it has

ever had. we have talked to a number of different options traders, and some say we will see some moderation in volatility. one way to measure that is to look at the open interest some of the shares outstanding, in an verseat tracks and volatility. if you are buying this, it means you think volatility will go down. thiswe are seeing particular index at its highest level. this is a three-year chart. a big surge in people batching the volatility will go down to it whether they are right or not, of course, is another question. finally, i wanted to look at what is going on with the currencies. is the world currency monitor, and these are all versus the u.s. dollar. the japanese yen has done the best him a one of the so-called haven currencies. we have seen a gain. the euro is the second best of these major currencies. , and therean real

has been issues in the economy there, the commodity-based economies, and those surprisingly -- unsurprisingly have done the worst. scarlet: thank you so much. turning to syria, the pentagon says it is reviewing russia's airstrikes there. has the latestrs from moscow. henry: russian were planes began bombing targets inside syria today on the same day that president vladimir putin and the upper half of parliament approved the first russian military deployment in more than 30 years. u.s. officials say at the russian planes may have been targeting rebels against , rathert bashar assad than the islamic state, as russia claims. the 4.5a new front in

year civil war in syria. russia may be acting to shore up its ally, president assad. mark: joining us is nicholas burns, former undersecretary of and former u.s. ambassador to nato. he joins us from the harvard kennedy school of government. always a pleasure to have you on the program. can you put russia's airstrikes into context for us? there was a discussion from vladimir putin that said maybe there should be a ministerial meeting and countries should get together, and they should attack isis, deal with this militarily. now we are hearing questions that these airstrikes were not an attack on isis but were an attack on opponents of syrian president bashar al-assad. what is the real story here? acholas: there appears to be glaring contradiction between president putin's worth at the united nations and his actions today. indications are that the russian forces intact a syrian rebel

group that has been supported by the united states and europe and have not attacked targets of the islamic state. they are not in that region of the islamic state. president putin appears to be trying to assert russia as the offensel power, a major to president assad. trying to irritate the united states are trying to present an image of russia as this dynamic power ready to lead this coalition. i am not sure many entries will follow-up you saw statements from the saudi foreign minister and other arab officials saying that russia's activities are not welcome in the middle east. i think this will lead to more division. imf rated will lead to more refugees and a continuation of the war. russia will be fueling it. scarlet: the defense secretary is speaking in washington right now on the russian airstrikes in syria. saidhite house spokesman

earlier that the pentagon is reviewing russia's airstrikes. ambassador burns, can you tell at about fighter putin's relationship with a sawed -- a ssad? is he over representing his influence with the syrian leader? nicholas: the soviet and russian governments since the 1960's assadeen allies with the family. the russians have their only military base in the middle east in syria. the soviet union, decades ago, was a real force in the middle east, but they lost their influence after the october war of 1973. putin seems to be trying to reassert russian power and to limit the power of the united states in some of the arab countries and turkey. it is a dangerous gambit. everything will depend on the ability of the russian government and the american government to be in spirit deconflicthat we can

our respective operations. want to see a collision of russia and the united states, and it just appears to me on the sidelines here in cambridge, massachusetts , that the russians have two, and a peremptory russian, without due regard for the fact that they are also conducting error operations at that theater, and we should try to be transparent so we do not make a mistake and have our forces collide. mark: esther ambassador, difference -- defense secretary carter telling reporters that he and his russian counterpart will be holding a meeting. what is there to talk about? we understand were both sides are coming from. the white house believes that president bashar al-assad should leave voluntarily, and the russians say, we have a relationship with syria, and that relationship involves combating isis and other

terrorist organizations who are trying to overthrow mr. assad, who is an ally of moscow. nicholas: this is a very important and her medic development today. the introduction of russian military force in the middle east, i think on the defense side, secretary carter and the russian defense minister have to repeat the conversation they had last week about informing each other, being clear with each other about where we are going to be operating in the airspace over syria so that there is not a conflict created or a becausen inadvertent, neither side wants a conflict with each other. on the diplomatic side, i think secretary of state john kerry will continue to speak with the russian foreign minister about the need for a united nations negotiation to again that would sadist that the as government stop it's a barrel bombing of civilians.

they have created and caused the majority of the deaths and the wounded in even more than the islamic's date. you will see these duo conversations between the defense ministers in the foreign ministers of the united states and russia. we need that kind of communication, because we agree on very little concerning the syrian conflict. garlic a we also disagree on ukraine. as carter said the syrian discussions do not change positions on ukraine. that is another area where the u.s. and russia clearly do not see eye-to-eye. what happens to that area of disagreement as we move forward with how to resolve syria? nicholas: russian military forces have been across the border in the territory of ukraine. is clearly violating the charter. the sanctions that have been in place for the last year and a half, they will remain in place. russia has done nothing to gut the european union and canada or the united states to lift them.

in a strange sort of way, in may the one reason for president putin's very decisive and aggressive actions in syria. maybe he is trying to change the story and set himself up as the great opponent of the islamic state so that people will pay less edited to ukraine were people will forgive him for ukraine. i do not think he will be up to kerry that i fear the u.s., europe, and canada are sophisticated enough to be able to separate these conflicts. mark: mr. ambassador, i would like to switch gears for a minute and talk about the migrant crisis, the refugee crisis in europe. our western european leaders handling the situation well? how are they handling it, in your opinion? what is the economic impact going to be for the european union? several countries already having their own financial problems. nicholas: we are seeing a european union that is not able to assemble a coherent and sound

strategy for how to deal with this very difficult problem of migrant and refugee flows into the countries. we are seeing leadership from some parts of europe. angela merkel, the german chancellor, has been a leader, and i think a virtuous leader, saying that germany and europe must accept responsibility and take in a great number of these people. the prime minister of hungary, on the other hand, and some of the other east european states, we're seeing, in a way, cowardice, leaders say they will not open the borders are help these people, and they will simply passed them on to germany, italy, sweden, or norway. there is dramatic division in europe and an inability of the commission in brussels to put together a consensus among the european countries. by the way, i think that the united states has to help our european allies. in most refugee crisis, nearly all since the end of the second world were, the u.s. historically has taken about

half the refugees in question. that would be about 100,000 refugees of the 200,000 that united nations wants to resettle in the next 12 months. it means the u.s. is taking about 1/10 of the refugees we would normally take. i think we have to question ourselves. should we do more to help germany? they are bearing so much of the load to mark: are right, former u.s. ambassador to nato, nicholas burns, joining us from harvard. thank you so much. we have breaking news about brazil. the central bank will consider a marginal increase in interest rates if the government fails to shore up fiscal accounts, according to a member of president rousseff's economic team. policymakers still expect president rousseff to implement tax increases and spending cuts that will reverse a projected budget deficit before interest payments go into a surplus next year. stay with us. ♪

mark: welcome back. i am mark done with scarlet fu. scarlet: we need to check in with julie hyman for another check on the markets. the bestome of performers and worst performers to julie: in the sb 500, the top performers all have to do with deals. being bought for $6.59. cablevision being bought by lt's -- altice. resources being bought. when you see outperformance here, compared with the rest of the major averages, or on average, the major averages, it is all deal-driven. this prompted me to look on my bloomberg terminal to see how

the deal flow has been this quarter. we have seen continued strength in m&a activity. this is the surge of u.s. deal activity, just mergers and acquisitions. the volume and the number of deals being done. even in a tough market environment, there were still a number of deals. on the s&p 500, the worst-performing stocks all have to do with commodities. joy global, the maker of mining equipment, killed, down 67% -- down 57%. consol energy and freeport-mcmoran are down. the company announced it would be making changes, making cuts, and carl icahn and announced he invested in the company, freeport-mcmoran. it is a tough commodity environment. scarlet: thank you. very valuable. the worst performers.

speaking of the fourth quarter, there is plenty of debate about when the federal reserve will raise rates. says thefirm cofounder central bank is gun shy. he talked interest rates with matt miller in toronto. seem justly afraid to raise rates. they keep saying it will they leadappen -- somehow or another through sign language, leading the commentators to believe it will day after next, whenever that may be, and they do not do it. mark: the fed president annual community banking research and policy two-day conference starts today in st. louis. janet yellen and james bullard are scheduled to make opening remarks. with usmckee is here now with a preview. what are they expecting to say? michael co they are supposed to say welcome. we are not expecting a lot from

them, but there is a conference getting underway this week that will make some news perhaps related to what was just said. , a paper heen co-authored is out today, suggesting the fed does care on anfinancial stability equal basis with inflation and jobs. so maybe markets a right to look at what is happening in markets to decide what the fed is going to do. scarlet: sounds like a third mandate. michael: the conclusion of the paper that it is almost a third mandate even if it is not legally written into the law. mark: the whole discussion about when the fed would raise interest rate and how much, today is the last day of september. tomorrow, october, november, december. is there any consistent just consensus on at the fed is going to move between now and the end of the are? aboutl: not at all,

50/50, slightly moving against it. a question is, could they go in december, giving year end and liquidity being a little bit less in the markets, and if you think you might upset the markets, that might be a problem. he'll dudley said we do not really know what they liquidity situation is in the markets. the banks are complaining about it. but a lot of people who are not banks now hold bonds. perhaps we will learn more once this all starts about where the liquidity problems are. he did not think it would stop them from moving forward. scarlet: we are in uncharted waters. michael: it will be an interesting time. scarlet: economics editor, mike mckee. debuts, thatodel x story is next. ♪

mark: for all the hype around tesla's latest model, the shares have been languishing all day. it has shot up like a rocket since the model s was introduce three years ago. will this do the same? allico betty liu --

scarlet: betty liu was at the unveiling. this will be a pricey, but nice-looking, car. that he cap it is. : it is very pricey. thousands gathered to cheer the model x last night. fancy features like the doors and the panoramic windshields. i got to testdrive the car myself. it is very, very fast. $142,000 version can go zero to 60 in 3.2 seconds. it in ludicrous month, and you can sit around the suburbs of new jersey and westchester in that. why isn't the stock lower, and why is it not reacting much to this begin filling? -- why is the stock lower?

some say there were key pieces of information that was not available yesterday. for instance, how much will it cost at the base? not the ludicrous motor high performance. they company did not want to disclose the information yet. also, if you want to order your model x right now, it will still take eight to 12 months to get the car into your garage. that is a downer for people who are excited about this. it will not be instantly added to the top line. mark: you said you like it, but what have the other reviews been like? it, and iay i like have to say that i sounded more modest than some of the reviews i read this morning. people on blogs and newspapers, they were gushing over this vehicle, how practical it is ofng to be given the range the charge. we will see. but everyone can be very

impressed with what elon musk delivered. i mentioned some of the fancy features. himself yesterday said, kind of boy initially, hey, it became a toy for me. i kind of added in more than i probably should have come a but it was a lot of fun, a lot of hard work. he is proud of what he has made, which is really an suv unlike any other out there. joining us from san francisco. thank you so much. looks like she was having a ball. scarlet: right. we have a lot more coming up on bloomberg market day. we are looking at the quarter end. ♪

scarlet: welcome back. let's get you some stories making news. something we told you about earlier -- recode is reporting that twitter cofounder jack

dorsey is said to be named as the permanent ceo at he has been interim ceo over the past three months. he will reportedly stay on as the head of square, as well here and recode also reporting there will be a shakeup on twitter's board, including the immediate exit of the costello, the former ceo. drama. the white house says a house bill that aims to block implementation of the iranian nuclear deal would undermine u.s. security interests, prohibiting president obama from lifting sections on iraq until it pays to three going dollars in damages. the bill has more than 100 house cosponsors, and a vote is extended tomorrow. facebook coo sheryl sandberg is talking about how the social dollars way lure ad from tv. facebook introduced a feature this week that lets advertiser by online video ads the way they buy tv commercials.

she says companies can no longer rely just on television. >> i think the big message is that marketers have to understand that the days of "you can do a campaign with a 30-second video at the place on tv" are gone. you cannot only do that. if you do that, you are missing a unique opportunity. scarlet: she says television and facebook really go together. an american high-tech committee rejected an offer from a chinese investment group that valued it at almost $4 billion here and we have learned that the group paid s.10 per share for synaptic' maybe holding out for as much as $125 a share. those are your top stories. time to get another check on the markets, specifically commodities. gains for oil on this last trading day and a quarter -- you know what, it has changed.

now it is down. up.t is wti is still in the $45 range after starting the quarter at around $60. copper up almost 4%. gold down 1%. .lix steel is with me i wanted to get her take. earlier, i spoke with the premiere of alberta, canada. one of their most important industries is oil. here is what she says is critical. >> supply is very stable. we have the third largest supply and a very long-term supply. you invest in the oil sands, you know you have a supply for 50 years. if you look at the different elements of our energy product, we are competitive. for us, what we need to do is

pair that with a better understanding of how we can develop that resource more environmentally responsibly in earn ou wayr -- in order to earn our way. is it about oil sense? alix: they are dirty and extorted nearly expensive. with operating costs, there's some of the highest in the industry. it is these kind of projects that opec was wanting to put out of business. non-opec, non-shale. it is these projects that opec is targeting.

oilsands has been one instrumental in driving global production higher over the last decade. it has risen about 40%. shale,ion here and u.s. 70% to they have been hugely influential in the market with oil, but they are very expensive . it will be painful for canada to make up that budget revenue. scarlet: i know that tom keene told this chart of originally it you wanted to talk about the ceb index, but itrb is the old one? alix: this is so tom keene. he points to the way that you can look at commodities and the destruction that has happened in the last quarter. it is extraordinarily staggering, especially the inflation-adjusted basis level. it was all across the board. oil is one of the worst, ending up the lowest since 2004 at one point.

falling the most since the last quarter of 2014. what is goingup on in the oil community. you have downward pressure, higher production, global stock feels. on the other man, you have ever pressure. we see u.s. production is falling. you see demand globally. bad is the good and the keeping oil in a tight range. scarlet: the other big player in oil is mexico. there is an option taking place. about three out of the five offshore areas were awarded contracts in mexico. mexico is not allowed any foreign companies in for decades. this is the second option they did. the first one fell flat. it is important to see the appetite oil companies had a $50 a barrel oil. that did change some of the contracts.

so they will take less profits. they are changing how much has to be put up at the top. kind of sweetening the shot. scarlet: this chart is more about non-oil exports. even if oil rebounds for canada, it is moving to mexico because the economy is more diversified than canada. especially over the last three decades. alix: making a point that alberta really does need oilsands. i want to point out inventory data. we see an increase in product imports, and that helped drive some of the products build we saw. and the inventory build we stop your it on the surface, it seems bearish. the bullish part was that production did wind up falling. do not know-- i what the imports would be, but in terms of the inventory build,

part of that is seasonal for maintenance. but we are well above the five-year average. production did keep falling. scarlet: she is always on top of all of this. thank you so much. she will be back at the top of the next hour. we are to stick with the commodities theme. glencore's shares can't any to rebound from monday's losses. they have extended their gains for another day -- glencore's shares continue to rebound. they are looking to sell some assets. is the worst now over for glencore? a professor of economics and finance in london joins me now from london. professor, when you look at what happened with glencore, how it fell apart rapidly this week, you say this goes back to an overexpansion by the company. >> a lot of it has to do with the takeover extra a number of

years ago. it was a very bad decision. --s happens all the time takeovers go wrong. people underestimate it. and overpaid for xstrata, that is a lot of their problem. scarlet: they piled on a lot of debt him and china has been the driving engine for so much of that demand for commodities, and that is slowing down at the wrong time for the company. investors seem to believe the company must now restructure debt and possibly issue new equities. what has changed the conversation that makes people think, you know what, maybe this is as bad as it gets? >> there was overreaction to the report earlier this week. that really was a pessimistic scenario. shares should not read price on the pessimistic scenario. it could be worth 60 or 70

percent. in that is the worst case, my view. the fundamentals are not that bad. it is a good business to be in long term. if you look at the debt piles, it is manageable. it iss are not good, but a bad environment. if you take that view, this is a good company. it did get a bit overextended. it came to the market at the top. .hat is typical of what happens it does not mean it is a bad company fundamentally. scarlet: it is still investment grade. we have seen a couple of these big selloffs with prices collapsing and people are biased to look for any big company here did we ascribe a lehman moment to this company? is, lehman did not

have access to liquidity. it was all short-term debt. it is different with glencore, because it has got longform -- long-term debt here at it can roll over the debt. i would not really get as worried as looking at that report. you can value something on the worst-case scenario or you can take a broader perspective. the thing is, when everyone is panicking, you generally want to buy. scarlet: that seems to be what investors are doing, at least in the shares. we will continue to watch this. thank you so much for joining us. hour, up in the next half chinese buyers, the biggest players in the u.s. housing market, but could we see a pullback? and the third quarter is almost over. we will have a look ahead to the fourth quarter.

♪

scarlet: welcome back. let's look at the top stories. target is expanding its price matching holocene to meet the competition from online retailers such as amazon -- target is expanding its price matching policy. publisher says it is planning to buy a minority stake in thrillist media group. no word on the value of the deal. the springer ceo says it will further their global footprint

as a digital publisher. yesterday, it said it is buying 88% of his this insider. apple's three-month-old music streaming service is now available in china, offering a library of content including movies and e-books. answer to ais their streaming service, like pandora. it is kicking off with a three-month trial for 10 yen. that is a fraction of the $10 to $40 a month apple charges in the u.s. those are your top stories. staying with china, where the economic downturn has investors looking for safe places to put their money, many are flocking to u.s. real estate. according to a research firm, china has emerged as the second largest foreign investor after canada. cost ordere of total investments in the u.s., by u.s. commercial real estate. me, afucci is joining

real estate strategist and broker. when we talk about chinese investors, i was a surprise that they are the second biggest after canada. talk about how chinese investors are different from other foreign investors? what are they looking at? peggy: when you think about a chinese investor, they are looking for the same type of return, the same type of stability that any foreign buyer will look at in the u.s. the u.s. is a safe haven for their money. when you say chinese now is number one in stead of canada, you are talking about $29 billion invested over the last year. that is a huge number. in new york, they bought the waldorf astoria. billion.$1.9 when you see that, they are eating up companies, like construction companies. they are looking into the real estate market to buy properties

in new york and l.a., but they're also looking at the business. they are buying land and partnering up with local build this.o help scarlet: they are entering at an earlier point in the cycle. the waldorf astoria used to house dignitaries during the you in general is simply. question whether it is safe for those officials to stay there. what kind of political pushback are you seeing to chinese ownership of trophy properties? peggy: we have not seen any really. the u.s. is very welcoming to the investment. buyer, thel chinese markets have been new york and california, but they are looking at other markets, like miami, to invest. in general, when you see this type of investment and type of money being poured in by large

corporations, parents are looking at education. i want my kids in the u.s., and lead thanr corporations from china investing here? inrlet: what happened august, did it slow the flow down? did it have an impact? haiti: it was actually a very positive impact. -- peggy: it was actually very positive. i am reminded of south american .uyers buying into miami i see the chinese doing what they did. overall, there still of in the stock market, but there was uncertainty that really helped us in the u.s. moreet: perhaps pushing people towards u.s. properties. thank you so much for joining us.

ceo of one world properties in new york. much more coming up. the met opera has something interesting these days. they orchestrated a major fiscal turnaround. we will speak with amanda gordon and a member of opera america. ♪

2015et: the met opera season is underway, celebrating a remarkable turnaround. they are posting a $1 million surplus on $311 million in revenue. that is compared to a deficit the previous season. joining as is amanda gordon of bloomberg news. ceo scorca, president and of opera america, is also joining us. a huge turnaround, from a $22 million deficit to one really dollar surplus and one year.

a lot of people cannot believe it. amanda: when it comes to their budget, the main source of expenses is production. main source of income is not box office spirit rather, individual contribution. that deficit, the real cause was a drop off of $15 million in donations. what we see in the positive story that the met is telling now, which it is a good thing it is because there has been a lot of controversy about expenses and about compensation for the head of the met, and it went through very difficult union negotiations where the opera demanded that the unions had taken spear there are rising expenses. that has to do with production. scarlet: a lot of new productions. it comes down to a question of donor confidence. for the met to be able to say that there is a $1 million

surplus is hopefully sending a message that donors have returned to believe in the future of the match, to believe in the artistic integrity of what is going to be put on there. the head of the met has come up with a new set of ideas for the met. strengthens his hand, doesn't it? it gives him more room to explore creatively. great jobr has done a bringing new productions to the match. this season is off to a strong start. certainly, having a balanced budget is great for the company and for the entire opera industry. the metropolitan opera is our largest and most complex opera company in the country, if not the world. so if the met has a positive year financially, it shows us that you can balance strong business act as is with great

art. scarlet: what does this mean for smaller opera companies? relate tos hard to the metropolitan opera is the largest opera company by a factor of four. the next two are twice the size of any smaller company. many of our small companies really do not have the kinds of choices the met has. they cannot make a choice of redbridge were scale, international celebrity. smaller companies are accustomed to living on a very tight budget. scarlet: absolutely. full disclosure, bloomberg lp, parent company of bloomberg television, sponsors met, the hd series. amanda, in terms of the customer experience, we talked about how that might be aimed at some of the old guard. s isitable contribution very important. is it a sustaining business model with the changing

demographics? amanda: it has been a business models is the beginning of opera . the patriots made this art form possible. you see that with closet, music, as well. this arttrons made form possible to it first time audience is actually up at the met, people who have never been to the opera before. that is a good sign. putting art in movie theaters or on roku, which the met did this summer, means it introduces it to more people. scarlet: more platforms. amanda: the better exposure the opera has, the bigger, the better. donations can come in small amounts, from a 30-year-old, and, of course, adding it maybe $150 million in donations, you probably depend on some very big pockets. the matter has traditionally had a lot of those. many of them are in finance. i would say that for the match,

one of its plans to shore up the future is to build the endowment. it is on a campaign to do that. it is working on that over the next few years, which is critical. financiers need to increase returns for the endowment. scarlet: as always. amanda: and at the same time, keep track of where it comes from. withet: you said the met the well-served by focusing on the customer experience. how has that changed over the past two populist? in the last number of years, it has become increasingly difficult for busy people to leave the office early, to find time for dinner before or after a performance, and to be out late at night on a week night. one of the ideas that peter had is the sunday matinee to supplement the saturday matinee, which gives us two performances paris -- per week during the

day. it makes it easy for people to enjoy the art form. it is key to retaining audiences. scarlet: which show should people watch? otello."ecommend "the scarlet: thank you so much for joining us. operacorca, president of america, and our very own amanda gordon. wants to helpivo you skip television commercials. that is at 4:30 p.m. today, talking about the battle brewing in the set top box industry. ♪

>> this is the "bloomberg market day." well we be seeing more volatility in the fourth quarter?

>> the senate passes a spending bill hours before the deadline for a government shutdown. can a long-term budget deal be reached? >> emerging markets still have room to run. goldman sachs thinks so. we will talk to the head of the newest emerging markets etf. ♪ scarlet: good afternoon. i'm scarlet fu. alix: julie hyman is looking at the markets. we want to look back at the last quarter. august has aged me like 10 years. julie: i don't know that we have any guarantee that the fourth quarter will be any better. we are seeing some optimism in the market today.

we saw little bit of a faltering in this rally about an hour ago, hour and a half ago. we saw the major averages trimming their gains but they come right back again. quarterke a look at the and see how we have done. if you look at the s&p 500, it suffered its worst order in about 4 years. 7% drop for the s&p 500. this is a quarterly chart of the s&p, 7.3%, the worst quarter since the third of 2011 when we saw a 14% drop. there aren't any big surprises here. energy andr materials shares, health care lead lower -- led lower. utilities, the only major industry group in the s&p 500 that traded during the quarter

higher after we saw the yields lower. we will talk more about that in just a second. alix: obviously the interline commodity prices have been taken out for the woodshed. you're comparing things to 2008 to 2004. it's really bloody. julie: it has been nutty here in terms of the decline. oil has its worst quarter since 2009, 21% drop great gold futures fifth straight quarterly decline. -- drop. gold futures fifth straight quarterly decline. groundlar gained some but not that much ground. here is the dollar index, up 9/10 of 1% on the quarter. there still is a lot of indecision about the federal reserve and interest-rate increases. the yield seeing its biggest pullback that we've had this far -- thus far this year. down 30 basis points

during the quarter. even as the fed was trying to communicate and be nuanced in its communication, most recently fed officials saying there's a likelihood of a federal reserve interest-rate increase. obviously this is not really reflecting that. fed and speaking of the nuance, janet yellen, the fed chair, is speaking right now. about community banks at a st. louis conference. one headline that would utter to investors here, -- matter to investors here, the economy has seen significant improvement. janet yellen coming out last week and saying i wanted a rate hike in 2016. this is a progressive reach to say, we do want a hike.

bullard alsos speaking. he does not mention fed policy or economic outlook. that is the take away from janet yellen's speech. alix: the fed has a huge impact in the markets, almost $11 trillion have been erased from global shares in the last months. as a ride just begun? christine lagarde gave a grim outlook when speaking at a conference in washington earlier today. >> global growth will likely be weaker this year than last. a modest acceleration expected in 2016. scarlet: the chief market strategist with jones trading joins us. are you of the mindset at the federal reserve cannot possibly raise interest rates?

guest: they are afraid to do it and they missed the window to do it. step down in the economic data in 2015 -- they missed their window of opportunity and they're afraid of financial markets at the last fomc meeting. one number is not a trend, but they're going to be more cautious going forward. alix: today and yesterday, we do have repositioning. michael: we were testing the lows from august yesterday. it's not the healthiest type of ounce you want to see. you don't want to see the market rally 1.7% off a technical level. futures are up big overnight. rallies almost every day since the fomc meeting.

we are not seeing the best trading action out there. alix: 19 days of the dow moving triple digits. the s&p 500 has not posted an annual decline since 2009. we are heading into the fourth quarter with big losses. what is the psychology in the fourth quarter? it's a really interesting environments. the previous three years everyone has an playing catch-up . the liquidity trend is rising high but no one can keep up with it. you see a lot of passive indexes and etf's that everybody is trying to keep up with for hedge funds. as far as mutual fund managers,

they should be defensively position. there's a chance a market can rally. will there be a difference if the s&p finishes down 5% or 10% or 15%? people are fearful of the downside here. kind of a bear outlier but now sentiment is so negative. this white line is the s&p and the orange line is the percentage of stocks on the new york stock their 200 day moving average. moveu can imagine, they relatively in tandem. on the right side of the chart you can see a divergence. , meaning is so low don't stocks have to rally because everyone is so bearish? michael: i would not say everybody is so bearish. i think what people have to realize is, the environment that was 2012-2013 with the fed seeing on your side is done in

2015. the main catalyst of the bull -- monetary policy was very aggressive and easy. you had earnings growing every year, then you had an economy that was improving. the fed wants to tighten, whether or not they will get a chance remains to be seen. the united states, europe, china, japan are 60% of the global economy. then you have earnings will decline year-over-year this year . on top of that, the economic data -- it is slower than it was last year. scarlet: if you look at the performance in the third order it is any much dominated by resource type companies. oil and gas companies up by 23%. 11%, mainlyoff by as a pullback after this big momentum run.

what we're looking at in terms of leading beyond the stock market -- are you looking at high-yield credit, currencies, commodities? michael: the biggest trade out there is the dollar. at the beginning of the year talking to betty liu about it and that has been a big shift that occurred last year. in the summer of last year the fed was shadowing. that helped fuel the drop of oil from over $100 to its current level. q4 earnings missed last year. that's a big trade people have to be aware of. on top of that you have the european risk. that is the key thing i'm watching. the dollar has been going sideways. the market has been experiencing turmoil. scarlet: thank you so much,

chief market strategist at jones trading. we were talking about janet yellen and her comments about the economy. it seen significant improvement. ually not began speaking. we get a copy of her text big -- before she begins speaking. she should be starting to speak any minute now. alix: good clarification. here are some of the stories making headlines at this hour. the pentagon is reviewing russia's airstrikes in syria and the white house says the administration will have more to say in the coming days about what the targets were. russia says it is targeting islamic state positions but ash carter says the strikes had little strategic purpose. >> fighting isil without pursuing a parallel political transition only risks escalating the civil war in syria. with the extremism and instability that moscow claims

to be concerned about and aspire to fighting. president obama and former putin met at the u.n. earlier this week and made little progress on how to proceed. it was their first formal meeting in more than two years. scarlet: a house bill that aims to block of limitation of the irani nuclear deal would undermine security interests, it is said. the bill has more than 100 house cosponsors and a vote expected tomorrow. the forecast for global trade has been cut in 2015 by half a percentage point, the geneva-based trade body revised or forecast to 2.2% in april 2 2.8%. -- april to 2.8%. 's economic slowdown, a

volatile currency market, and plummeting commodities prices are some of the reasons behind that cut. we had the chicago purchasing manager pointed out, the low 50's. alix: pretty ugly, chicago pmi. we have jobs friday coming up as well. scarlet: coming up in the next half hour of the "bloomberg market day," the senate passes a --will the house avoid even bigger battles in months ahead? alix: stocks higher into the last month of trade but it has still been a most volatile quarter for the markets since 2011. ♪

alix: we want to go straight to julie hyman with a look at some

of the notable movers of the day. julie: there are some fundamental stories to point out. 50%ern digital is getting a stake in a buy in an affiliate of a chinese university. watching ralph lauren and gap. watching this story since it broke late yesterday. ralph lauren, the founder giving his name to the company, stepping down after five decades there. handing the reins to the former head of the old navy brand within the gap. a lot of analysts have been not commenting favorably on the change. those shares are down. ralph lauren is up. why did the company perhaps need a change? ralph lauren shares are down about 30% year to date.

this is the relative value calculation for the company. the blue. you see is ralph lauren itself. -- blue dot you see is ralph lauren it self. peersee it lagging peers, -- this is the s&p 500 here. you have the v.f. corporation which has been outperforming in both estimated earnings per share and sales growth. you can see why it might need a change of pace, guys. scarlet: big breaking news in the last hour involving twitter. twitter's interim ceo, jack dorsey, will become the permanent ceo. rico said an announcement on this could, soon as tomorrow. shares have really been rising today as a result of this on this relief that perhaps now we

will get some stability at the company, if you look at the intraday chart of twitter, you see -- you see the big spike we had this year has come back down to some extent. let's go back to that terminal chart. this is year to date for twitter, the stock is down 27%. and want to take you through step by step what we have seen happen to the stock for the year. the company cut its sales forecast and that caused a tumble in the shares. a big tumble in the shares at that point in time. down in theped summer. then dorsey came out and advised caution on growth. then it fell below its $26 ipo. it's been a rough year for twitter. scarlet: thank you. alix: talking about another

horrible performing country over the last few years, brazil. a rate hike could be coming to the country. the country by central bank is considering a marginal increase in interest rates if the government's budget plan derails. scarlet: a brazilian economist joins us. you just joined the company and welcome. put into perspective the brazil central bank may be raising interest rates. the brazilian currency has been depreciating quite fast. i'm talking over a valuation. this has a major impact on in nation throughout the next x, seven months. year, werrive at next could have major inflation. they have hiked seven

times so far in the last meeting and it has not worked. inflation is ill overnight percent. -- still over 9%. do they need to try other monetary tools to help growth? marco: i do not think the tools will help grow. at this point in time it is just inflation. the central bank relax a little bit when reacting to inflation pressures. new surprises in brazil have contributed a lot to our inflation and they are not going to be the same thing next year. i think part of their job is already done. inflation since the target we choose, 4.5%. scarlet: there's also a structural downturn with a lot of questions about the leadership in the country, including the stability of the administration. her finance minister, will he be fired? how important is that to

investors? marco: the way that he's implementing fiscal policy in brazil is something that means requiring credibility. alix: at what point if you're dealing with political turmoil, interest-rate hikes, do we see brazil selling dollars from the reserve to prop up their real -- riyal? the demand is in the derivatives market. thank you so much for joining us today. bloomberg intelligence's brazil economist. great timing. marco: thank you. scarlet: as we had to break, a look at janet yellen, who is speaking right now at a conference in st. louis about

community banks. ♪

scarlet: yellen said the economy has seen significant improvements. the government has dodged another shut down. hours before the deadline the senate passed the u.s. government spending plan 78-20. the bill now goes to the house, were speaker john boehner promises to pass it even though fellow republican subject. they want a provision in the bill that would defund planned parenthood. joining us from washington, phil mattingly. for the moment it looks like lawmakers will avoid a

government shutdown. how long will we be in the clear from the crisis once again? phil: looks like we will get a two-month reprieve. the house has the bill, they have passed the key procedural hurdle and now it's only a matter of time before they clear and send it to the president's desk. tonight there will not be a shutdown at midnight. all this sets up is a lot of problems going forward into the next couple of months. at the end of the october he will have -- at the end of october, transportation funding will run out. on december 11, assuming this passes the house today, government funding will run out again. as everybody looks to the key story now, who's going to be the next leadership team of the house republicans, there's no doubt that what will be on that team's plate when it is decided next week during elections is going to be a very heavy haul in the next couple of weeks. alix: that was my next question, when you have speaker boehner

out of the picture and the next debate when it comes to december, how does that end up changing the dynamic in the conversation? even look at the shutdown possibility. i think you need to focus on that ceiling right now. the odds are that they will be paired together. the white house will not negotiate on a debt ceiling demand that it will be a clean increase. there is no bridge the right now. just as john boehner left the dynamics on the ground don't change in that matter. there is still filibuster proof minority over in the senate. republicans are very arrested. there's a lot of problems going forward, no matter who's in the leadership team. he has a difficult job ahead of him no matter what. scarlet: what is the response from the white house on what is happening inside the house republican leadership? as are scrambling on inside?

phil: what has been interesting to watch is over the last i were six days there was some celebration, jane -- john boehner is out, is good for broader politics. at the white house they're looking at december, november, these key deadlines, key cliffs coming up. the one thing about john boehner, he would eventually get it done. there's no sense of that exists anymore with his departure. mattingly always manages to put the mess in washington in perspective for us. alix: watch for more politics at 5:00 p.m. eastern with "with all due respect." scarlet, i'm saying goodbye to you.

emergingt was the msci markets, down 21% on the year,

17% in the third quarter, and we will be talking to steve sax, goldman sachs asset management head of capital markets. he's introducing a new etf that goldman is launching in the emerging markets. that chart looks pretty ugly. you want to look at the other top headlines this afternoon. oliver bloom the new chief executive, he will take office for porsche. jack dorsey expected to be named as twitter ceo tomorrow. dorsey has been serving as interim ceo the past three months. he's also the ceo at square. china may have banned facebook but facebook operating officer sheryl sandberg says the social network still manages to maintain a thriving business thereby selling ads to chinese companies. sandberg spoke at advertising

week in new york. she was asked how long before the chinese been will be lifted. >> we don't know at all. we have been clear that our mission is to connect the world and a lot of people in the world live in china. any kind of timeline, we don't know. alix: there are an estimated 600 inlion users of the internet china. the federal reserve has approved the long-delayed margin between m&t bank and houston city bancorp, a deal repeatedly stalled. it was first announced more than three years ago. the founder of the world's biggest distressed asset firm said the firm is a bit gun-shy. [inaudible] they keep saying -- they lead

somehow or other through sign language, they leave the commentators to believe it's going to happen month after next, whatever that may be, then they don't do it. this has been going on for 2 1/4 years. alix: mark sisi hugely anticipated increase -- marks says a hugely anticipated increase is not happening. the debut of goldman's emerging markets equity etf comes at a time of heavy volatility which does not appear to be letting up anytime soon. the imf managing director christine lagarde warned of a slowdown in emerging markets while speaking in washington earlier today. likelyging economies are to face a fifth consecutive year of declining rates of growth. fifth consecutive year. china is slowing down as it

rebalance is away from export led growth. countries such as russia or brazil are facing serious economic difficulties. growth in latin american countries in general continues to slow sharply. alix: joining us for more from chicago is steve sax, head of the markets at goldman sachs asset management, plus bloomberg's stock market reporter joins us here. let me start with you. why was now a good time to try to get into the highly competitive etf for the emerging market? >> it's a great question. there are three things we have looked at and considered. date of the active data etf products are a response to decline and demand. clients have been demanding access to the goldman sachs asset management invest in expertise in the etf.

it the potential for outperformance at very low cost, and thirdly, we really think that these etf's are really part of the next generation of investing of etf's. alix: when you look at the landscape of emerging markets, it's been a brutal year, brutal quarter, especially that august low. was the reaction to the kind of etf when you saw the market selloff? >> we are coming out of the summer here when etf's had a stress test. for the most part, they passed it. there were a lot of questions raised, especially with the dip we had on august 24. we had a day in which there were companies opening on the stock market even just looking at domestic companies that were opening up, 21% down. as we saw some of these stocks go through, some of those etf's,

perhaps some of the less liquid ones, you did see the halt and you did see the confusion as to investors wondering, what is the stock really worth, and if that is unclear, the etf is basing its price on those underlines will get out of whack. on the flipside, the greek market was closed for a while. when it came back on, they had done a [indiscernible] alix: in some ways the etf is addressing inefficiency or like in the market. steve, as all of her is mentioning, there's a lot of smart data etf's in the marketplace to now there's 400. what makes yours different? >> we really think the differentiator is in the active beta strategy itself or it is multifactorial like many other etf's out there in the smart beta sector. four factors, value, quality, momentum and low

volatility. portfolio in ahe way that equally risk weights those four factors. if we look in particular not just at the emerging markets etf we large cap launched last week, it really is an attractive option for reallocating and getting that opportunity or potential for outperformance. alix: at the end of the day the etf world is dominated by three main players and the rest of those guys are really trying to claw your way in. the lower fees do help, but how do you wind up making a profit on that? steve: goldman sachs asset management has always been a somewhat wrapper agnostic solutions provider to our clients. the etf space is responding to that demand. from an individual product perspective, we don't look at it from a profitability and product perspective. it went to provide a solution to the client base, and the active beta strategies relative to the

etf wrapper made sense. alix: steve, you've got to make money at the end of the day, right? steve: we do. goldman sachs has scale across the entire organization. we have an advantage relative to other new entrants in the etf space. we don't have to worry about it on a product byproduct basis. when you look at a smart beta landscape do you see more investors coming into that space -- >> that's a good question. it comes back to the timeless premise of investing, even if something is working, if everybody is interested in it, how much else is there, how much can you gain from that. there is one side of it which is the creation of etf's. the other side, you look at people who employ etf's. looked to financial advisors.

77% of those are in some way investing in smart data. as more and more people become aware of this strategy, it's probably going to be more difficult to extract some of the core components that makes smart data. alix: as we do see the field get more crowded, what is goldman sachs' goal for etf penetration? ve: it's a great point all of relative to smart data in particular, all alpha-based strategies. and what we really think we can add value in this space, this is the core competency of goldman sachs. multifactor stock selection is something we have been doing for a long time as something we have offered our entire client base from institutional clients down through the financial advisor

and registered investment advisor community. we think our value added is continuing to provide these types of strategies at that high quality level into the marketplace and we think we can differentiate ourselves doing that. alix: it seems like yes, keep going, we are going to keep growing our etf base. steve: that is the plan, yes. alix: coming up in the "bloomberg market day," is the volatility in the energy credit market actually expanding to other markets? the credit contagion, next. ♪

alix: a look at some of the top stories making deadlines. whole foods plans to stop selling products made by prison labor after protest. the company says the products should be out of stores by april, if not sooner. american companies added more jobs than forecasted in september including -- including -- according to adp reports. number was revised slightly downwards and this is the first of three data points, unemployment this week, the government's job report comes out on friday. three-time nascar champion tony stewart is retiring after the 2016 season. the last few years have been challenging for stewart. ast year he hit and killed sprint driver during an event in new york. quote, his retirement is

100% his choice. referral appeals court has upheld a lower court ruling that ncaa rules limiting what college athletes can receive violate antitrust laws. the three-judge panel ruled that member colleagues of the association must compensate student athletes only for cost in attendance. critics say the ncaa scholarship policy shortchanges athletes who risk injury. in the financial industry regulatory authority blames the configuration error or indirectly giving more than 200 candidates failing grades in a series 24 exam. it is correcting individual records and notifying the affected firms. the exam covers rules and regulations for supervising broker-dealers. those are some of your top stories. a tough order for the bulls and it is finally coming to the close. if you are short, you're happy. with hyman is standing by a recap of all the action today. julie: let's talk about today

for a moment. a pretty good and to what has been a terrible quarter. her having the best performance at least on the s&p 500 then we've had since september 8. take a look at the intraday action. for a least a little while he was a bit of a nailbiter, right? after a strong opening this morning we did the a midday dip. yesterday we were bouncing between gains and losses throughout the day. at that point it wasn't clear we are going to see -- there still a few minutes you never do know. it looks like we are headed towards the strong close. of thelook at the imap various sectors and how they've done today. consumer discretionary has been the leading group. energy is the worst performing group of the quarter. now one of the best performing on the day. elsewhere -- healthcare, likewise materials. people are starting to buy them. we have a letter rebalancing on

the last day of the order as people those out the books. is ther discretionary best performing group. i want to dig into that a little bit further and take a look at some of the top performance. we mentioned ralph lauren earlier. stephs down from the company that bears his name. advance auto parts also on the rise, after starboard value said it had taken a stake of 3.7% in the company, might seek to push for changes there including improving operating margins and successfully made changes that other companies. pbh up about 5%. that is what is going on in consumer discretionary. also worth mentioning, today's movement in biotech stocks. finally breaking its eight-day losing streak, gaining 4% today. pretty strong bounceback for that group. we have seen the cell of in

biotech sparked by the hillary clinton tweet. i think you and joe talked about it yesterday or he talked about on our programming. not clear that was really the reason perhaps just a catalyst or excuse for some investors to dump out of a group that had done very well over the past couple of years. alix: absolutely. biotech makes up 20% of health care. it does something different to that safety title of the health care usually sense to carry. thanks so much, julie hyman. with all the trouble in the stock target, what about the credit market? can the risk we have seen an energy actually spread to other areas? joe weisenthal helps us break it all down. versus x at energy energy spreads for high yields, saying the correlation happens to be rising, the contagion perhaps is spreading. times this year there have been charts and it will have one line and another

line, x energy. the troubles and energy seemed to be bleeding into the rest of the economy, or at least people are getting more nervous everywhere. in addition to energy yield, high-yield energy selling off, we're also seeing that in other high-yield. alix: we're looking at the fourth straight month of losses. that will be the first time in about 20 years. and it's going from energy, it's also going to retail, media, telecom. contagion spreads, what kind of default rates are we going to see? joel: the story of the year is that nothing has been spared. there's almost no area of the market anywhere in credit and currencies and stocks that avoided pain during disturb a quarter.

-- this terrible quarter. alix: i do want to point out that cliff and reno batson came out and said, corporate credit has been dominated by volkswagen, let cord petrobras. glencore and volkswagen have been totally destroyed. the question is will the eventually shift into a high-yield bond instead and lose that credit rating. they are dominating it, so that's part of the issue. joe: these are interesting, unique stories. petrobras, glencore, they have their issues. go bad, suddenly you discover more of these problem areas, so it goes in both directions. alix: we will be talking about all of this coming up on miss?" in 15 minutes. we will be talking to the head of credit strategy i wells fargo. -- at wells fargo. as the third quarter comes to a

close, we will take a look at the global equity markets and find aware investors might get the best lu. ♪

alix: u.s. stocks still headed for the worst quarterly decline since 2011. the cofounder of the world's biggest distressed asset investment firm said the head needs to move for the sake of the market. howard marks of oaktree capital offered his perspective to bloomberg pass matt miller at the conference in toronto. >> another reason they should bite the bullet and start doing it,s when they don't do everybody takes that as a signal that they believe the market is too fragile to do it. that is why i think things have been week. joining us with more is a

global equity portfolio manager at newberger berman. always good to have you here. what is your take? >> i don't think there's a lot of lay in 25 basis points. the fed has sent when they move -- has said when they move -- clearly the are going to take steps not to diss large the market -- dislodge the market excessively. dollar ands a strong the no hike. what you think the themes will be for the fourth quarter? benjamin: the strong dollar will be a factor and a fed hike will accentuate the strong dollar theme. that will undermine profits in the u.s., particularly for so many us-based multinationals.

overseas currencies will be damaging for u.s. earnings. earnings look quite good outside of the u.s. and i think the relative robustness of earnings outside the u.s., europe having reached stocks to get investor attention. alix: you're wanting to put money into europe. what happens we see the euro get the state laid we have gotten that has gone up with the yen when the dollar fell a little bit, what happens then? the euro not that long $1.35. now it's closer to $1.12. you're still well below european products and businesses. the euro, i don't think anybody is talking about it going past $1.20. i think the exporters are still in good shape, including the

domestic businesses. for dollar-based earners you get the benefit of the currency. alix: is any of that based on more qe from mario draghi? benjamin: if you get more qe from the ecb, i don't think you get the strength in the currency. you probably have one or the other. no move from draghi. currency moves up here at some stimulus from draghi. currency does not move but maybe things start happening on the ground. alix: you still feel like there is potential in european stocks? benjamin: absolutely. earnings are still at depressed levels. you have the economy bottoming. you also like japan. we get disappointing data out, industrial production down .50% in august. we're looking at japan on the cusp of a recession. why japan? benjamin: as a japanese exporters. i don't like japan. i've been a long-standing negative on japan.

i think exporters are in better shape. the weaker yen, and the yen went from 80 to100 to 125. it strengthened back to 120. japanese exporters look in good shape. alix: what happens when china is slowing down, when the rest of the emerging markets are slowing down, when the u.s. is crumbling along here? who is going to buy? benjamin: the consumer is still solid here in the u.s. think about autos, u.s. consumers is a big end market. europe getting past the worst and maybe some of the struggles of volkswagen helps the japanese, launch or gain some share there. clearly machinery, factory equipment into china is going to the investment phase. the chinese are now much more expensive, chinese labor is more expensive.

if you've got an expensive worker, you need to add more value. you need the factory equipment to move up the value curve in terms of you manufacturing output. that serves to the benefit of the japanese exporters into the market long-term. alix: thank you. always a pleasure to have you on set. coming up, we will be talking about credit in the high-yield market and where it might spread next great stay with us. -- next. stay with us. ♪

.joe am alix steel.

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