bloomberg headquarters. the market selloff well underway. investors rush out of riskier assets ahead of the fed decision . the hits keep on coming for crude oil. hitting its lowest level in seven years posting its biggest weekly decline since march. can anything stop the slide? sizing of the market for m&a. downed upon our combining in a megamerger. it has been a big story today. can the deal when anti-trust approval? we are an hour away from the close of trade today as we close out the day. not just the day but the week. the major averages are having one of the worst days since september and we are off of the lows of the session. we had to the market desk where

we have the latest. >> we did turnaround from yesterday. we saw the one positive day. we are the worst day right now since of time -- september 28. markets are off the session lows. s&p 500 down in the doubt down one and a half. the nasdaq down by 1.8% and the big factor we have been talking about all month is the falling price of oil. function.k at the this is a look at the sector health. energy has been the biggest loser all day down by 2.9%. materials down the second-most by 2.2%. not changing positions. energy biggest lag or because of the route in oil prices. betty: it has been the biggest.

>> it is down to percent right now off its session highs but this is the longest losing streak we are looking at since this past march. this is also the lowest since february 2009. it has broken below the two dollar mark and rose back up. we are down to $1.98 right here. this is the biggest weekly fall since this time last year. we definitely see a knock on gas stocks.atural southwestern down and williams order ofs down on the 10%. interesting for range resources down the most in nine years. with all the falls and equities investors are pushing into runs as they usually do. driving the yield on the 10 year lower as the equities fall. the 10 year yield is down by 10 basis points. the yield is that 2.13% the biggest drop in the yields since

september. betty: thank you. mark crumpton has more from our news desk. mark: officials and lawmakers are trying to piece together what signs they might have missed that could have prevented last week's mass shooting. the couple who killed 14 people discussed martyrdom and jihad online as early as 2013 but the lawle never surfaced on enforcement's radar. the family of a black chicago teenager sought -- shot 16 times by a white police officer is speaking out. they want president obama to hold a weiss hat -- white house summit on police totality. >> the thing we need to be doing now is saying what is next and what his next is we need to change the corrupt culture that cause this to happen.

squad car footage has resulted in almost daily protest. the rest in the manslaughter case of the baltimore cop accused in the death of freddie gray. 12 witnesses were called over three days. gray suffered a spinal cord injury while writing handcuffed and shackled. closing arguments are scheduled for monday. the ap press poll show a majority does not believe donald trump is likable, compassionate, or honest but eight out of 10 call him decisive and competent. his call for blocking muslims is business overseas. huge posters were taken down in to buy and a turkish free developer is rethinking their partnership. bloomberg desk i am

mark crumpton. back to you. betty: as stocks had four weekly decline the market is trying to get its footing without the support of the fed which makes the big interest rate next week. also big value investors. you would have thought by now we rate have priced in this hike so why are we trying to find footing now? >> it is about the lack of training wheels or quantitative easing support that started in 2007 through 2009. we talked about it was the easiest bull market of my career. that stopped a year ago when they said it is -- quantitative easing has stopped. they promised back then to support financial asset prices.

that is direct. that is over. the last part of being over his emergency low interest that started on december 16. we are at crazy levels for the market. what has happened in the markets is it is not just the stock market. is some of theng detritus that will happen as the fed moves away. our traininging wheels off. is that the end of the bull market? question.s no we have had no movement in the stock market in a year. overall. we had the year started with a 10 year treasury of to 17. today it is to 17. now you have a situation where

the fed is no longer supporting prices. the market has to find its real levels and it is finding them in junk wants. junk bonds made no sense. betty: the yields do not make sense overseas either. or italy and elsewhere. it does not make much sense. is -- the bond market and stock market are in question as to how they will respond to what he and his group for people do. some question whether he has consensus, probably not. betty: you spent a lot of time in china. in beijing and hong kong. what is going on here? it is a fascinating story. missing -- the missing chairman who is considered the warren

buffett of china literally disappearing from the face of the earth, what is going on here? >> he is purported -- purportedly the 30th this year of high-profile people who have disappeared at least for a while. they go incommunicado and you cannot get hold of them. betty: he might be eating authorities in some sort of correction robe. >> he is getting information but nobody knows. that is the way they do things over there. this is part of the larger program. xi jinping, the guy who runs the country is trying to get rid of corruption. ande is insider trading thievery. this is part of how they do it. bizarre. is >> it is kind of bizarre. risk, but is it a big this is a risk factor. a lot of people say china might

is ae one to watch >> it risk factor. , i wouldeople overall say no. there is nothing new. a totalitarian country ever since we have been alive. i have heard all kinds of reasons you have to watch out. it is a hard landing. the buildings where they are building buildings and no one is in them. they have been there. the country right now has over $3 trillion in savings. they have a reserve ratio requirement mechanism a could provide arguably something like $3 trillion of more liquidity to the system. they have plenty of things they

can do to keep the economy going and overall it is not as bad as it used to be with respect to all these problems including the corruption thing. betty: it is painful now, in the for run it may pay off china. getting back to what we are doing. >> that market has been 25 and 30 times earnings. right now it is less than 10 times create a lot of the concerns are built into the price. is the least expensive of the major markets. betty: here in the u.s. are you looking forward as a value investor, are you looking forward to the fed finally raising rates? >> i am in that camp that said they made a mistake by not doing something last time around.

not strong enough. the quick answer, i believe they should do it. if they did not do it the markets would tumble but that is a guess on my part. i the end of the year the markets will be relieved that the fed did what they were going to do. they will not do much in the future. the markets will believe that. will talk about that big m&a news this morning. but also in the next 20 minutes the two largest chemical companies agreed to merge. well government regulators give the thumbs up? shares of goldman sachs are down. scott bauer will tell us if he thinks this is a buying opportunity. oil dropping below $36 a barrel. global oversupply of crude could

worsen next year. ♪

betty: good afternoon and welcome back. time for the bloomberg business flash. a look at the biggest stories in the news. more problems for men's wearhouse. it was downgraded from be plus to be. the company struggling. market capouse's phil. that is when it completed the purchase of the retailer but lost more than what it ought the company four. stanford university says $1.6

billion in donation for august passing a record set by harvard. universitieshest have been funding higher education attracting gifts. it is one more way jack ma is following thes -- the footsteps jeff bezos. the paper has been struggling to attract advertisers two years ago. jeff bezos but the washington post -- bought the washington post. you can always get more business news at bloomberg.com. shares of trading down today and dupont after they agreed to merge in a $130 billion transaction, the ceo of dow chemical will be the new dupont's ceo will

be the chairman of both. >> both of our companies we have known for a long time strategically fit together. it just so happened our stocks are basically trading on top of each other from the market cap standpoint. we could do a tax efficient transaction to our shareholders by merging first, capturing all the synergies, and doing a three-way split up. it is efficient from that standpoint. guest we're back with our . shares are down right now. why is that? >> you have to bear in mind first of all it is a down day today. shares rallied this week. there is some slight disappointment expressed by analysts but there has been some disappointment. people are saying there could be

more and there is transaction risk. this deal is complicated. the merger itself could be completed late next year. aboutompanies are talking 24 months after that before the three-way split. we have a long ways to go here. what did you think of this deal? >> we have been thinking about this. the end of the process which simon reports will happen in 2018 so you cannot get excited about it today. the three businesses they are , there will be a $41 billion revenue business. it is the commodities business but it is the sexy business and the others are agricultural and specialty chemical. businesses butee that is 2018. you have a government that does

is this going to be an easy thing to get through washington, the answer is no. balance thisy on will get through. >> they gave some help to obama. betty: are you suggesting he greased the wheels before hand? >> i am stating it. balance view is that on it will get through. they are going to have some -- to offload some assets. the $3 billion in savings is understating yourself? >> i think some of the analysts were looking for more. they have been agitating for a

long time. they're looking at $4 billion in savings. maybe they are lowballing this morning. there was some of the notes coming out this morning. but note thatelp in your fund you're not in this area. you have gen berkshire, but you're not in this space. not -- i do not have to own everything. in this area i have not been excited about it. within the next three years those three businesses, i may be back into this one. when they put things together the history of the split out, you can make a lot of money because they are undervalued. history not the that favorable to these kinds of mergers?

>> they will do a split up in two years. >> it is fairly unique and for the scale of transaction we are talking about it is unique to do a merger like this only to turn around and split the company up three ways. >> you have the opportunity to have this underestimated in terms of what it may produce in terms of profits to shareholders. betty: thank you so much. you covered this and broke the story. andks are headed lower lower. we are headed for a weekly loss here. the s&p down 3%. we will have your options trade. that is next. ♪

betty: welcome back. it has been a wild week so far in the markets.

on pace for the biggest weekly decline in a month. now standing by with today's options. today'sng me for joining me from the cboe. let's talk about volatility. it is up 60% which is the worst in a few months. how are you feeling and do you share the scare and where do we go from here? >> i do not and we are standing in the mix. casual.ers, everyone is it is a must business as usual. i do not think anyone here has a scare. 25, the vicks approaching 26, 27 are the highs we saw two months ago or so. they feel this is a great point to sell it. >> goldman sachs is your trade. i am curious what is interesting about it. you said you point out cash flow

is growing at a rate that is slower than the industry average. 8.5% year to date. what is so interesting about it for you? >> from a technical standpoint i treating and there is some big-time support around the 175 area. next week when the fed does goingrates which they are to do, i think we are going to see some of the tank stocks, andcially the goldman sachs jpmorgan's of the world, they will react favorably. some of the scare in the market is maybe the fed is not going to raise rates now because the uncertainty in china, the bad news that came out there, commodities, oil pressure, all that. when they raise rates leaders in the banking sector, these things are going to take off. i am not saying that goldman sachs will hit all-time highs again but there is a lot of room to the upside and technically with the support below here it

is a great time to get in. >> what are you going to be playing? >> what i want to buy is the january 1 85 call spread. it is lower but probably about $1.70, that is the most i can lose. to fiveng can go dollars. the expected move with the option market is pricing in right now between now and january expiration is about a $12 move or so in goldman sachs. that does not mean that it will go up. that puts us up above my higher strike their at 185 which means the spread would max out at five dollars. fed raises interest rates, how might that impact your trade? --goldman sachs will go off up and it will be positive for the trade. >> we will lead -- leave it at that. thanks for your time. betty: a quick check on how the

markets are trading. the current cash market is trading ahead of the close. let's take a look at how the dow and s&p are shaping up. this might be the worst week so far. since september. the s&p is hitting its low of the session down 2%. the dow off 324 points and gaining. we will see how we close here. still ahead. a brutal week for oil. wti and brent crude posting decline better than 10% as of the -- opec refuses to cut production. how can it recover at all? ♪

betty: you are watching bloomberg markets. i am betty liu. let's start with a check of the headlines.

mark crumpton has more from the news desk. mark: congress has sent president obama a short-term spending bill to keep the government opens your next wednesday. the measure was approved by voice vote hours before the deadline. a vote on a 1.12 in dollar omnibus spending bill will not take place before tuesday at the earliest. republican presidential candidate chris christie is showing signs of life in new hampshire. and a new survey released today the new jersey governor is in a three-way tie for second place. christie and senators marco and ted cruz have 11%. donald trump still way ahead of the field with 27 percent. there is some other good news for governor christie. he is back on the main stage for tuesday's debate in las vegas. in paris the climate change conference has been extended by one more day. the talks have been said to end today but france's foreign minister will present a final

draft of the agreement tomorrow instead. there are a number of issues still to be resolved, among them, how to get deeper cuts in fossil fuel production and how richer nations will help pay for once to clean up their air. nearly 1000 women are seeking counsel seats but saudi women are not allowed to drive and they must get permission from a male relative to travel alone overseas. the russian foreign minister is praising the us-led coalition for increased airstrikes on islamic state's assurance during a news conference in rome. he said moscow is pleased to see that the u.s. and its allies are targeting oil facilities and trucks in territories controlled by isil. if you get more on these and other breaking stories 24 hours a day at the new bloomberg.com. from the bloomberg first word desk i am mark thompson. back to you. betty: thank you.

let's head to abigail doolittle. more on several stocks on the move on what is a down day. we are looking at stocks near the session lows and on composite index is off 4% the week. the index is below its 200 day moving average. this could the a bearish signal. it made this dip and bounced back very quickly. if we look at a five-year chart of the nasdaq composite index and it's moving average it has held that support nicely. two notable exceptions. inad of a formal correction this past august around black monday. it seems as though there could be some big volatility ahead. let's take a look at bright side of things. pretty unusualis on this big down day. one stock hitting a record high. adobe systems. they topped its fourth-quarter profit estimates.

lots of price targets were raised. shares are trading at a significant premium. you could say that the stock's price to perfection. turning to another big winner, whole foods markets, the stock the quarter was tracking above expectations. they are heading out of negative territory. it is one of the top performers through this week at the nasdaq up 14%. betty: thank you so much. abigail doolittle at the nasdaq. oil prices are extending their freefall. after warning that the supply of crude could worsen. breaking 36 a barrel. falling to a seven-year low. let's talk about this intense decline.

in an independent firm. he was the first economist to write extensively on the u.s. emerging as an energy exporter. good to have you joining us from san francisco. phil: it is good to join you. i have seen you many times. betty: quite a resume you bring. has the entire structure broken down for oil, where do we go? phil: two things have happened. the first is the oil exporting countries, saudi arabia and so on have lost control of the market. they do not have market power. you are talking about the merger between dow in dupont and the lookrust authorities will closely at that and decide whether there is competitive pressures. countries could

emerge, they could lift the price of oil. when saudi arabia asks for other countries to help they were only cutng that if they production, their income will go down unless for every barrel they cut other countries combined three barrels. one barrel in three barrels. they are like a big farmer in iowa. they have no control of the market. the second thing that has happened is we used to say oil in the ground was worth more than money in the bank. this drove the arab countries for years. now they know with the client -- at the climate change conference and the need to limit hydrocarbon and missions, much of their oil will stay in the ground so they are in a race to produce oil before everyone else produces their oil. it is a race to produce as much as possible. the final thing is consuming countries have gotten market power. one producerff

against another. all those put downward pressure on prices and they will keep , maybedown through 2007 2017, maybe 2018 and you will get price spikes but it is a competitive market area no different than sugar, week, or corn. one of yours statements, oil is the new corn. >> that is exactly right. betty: given that, are there any benchmarks by which you could set the price of oil? is it the marginal cost of producing oil, what is it? >> it is always product prices. if product markets get tight they will bid up the price of crude. that may be another six months or a year away. it will be down. there are no benchmarks. they moved as with corner any

other commodities. prices fall until production shots. venezuela is my bed for the country that will give up. they almost have no foreign currency. to guess is venezuela goes one million barrels a day. 2002, 2003 and maybe the market starts to strengthen. up, isvenezuela gives that sometime next year? early nextll be year. there was an election. the parties opposing the president got a majority so they supreme court ministers. they will be a revolution. their production will drop off when that happens. betty: is there a domino effect? necessarily. venezuela is a special case. they have made such a hash of their country since president chavez has been elected.

they will go down than the prices will strengthen. the u.s. independent oil producers have brother costs down. likeaid it had something 300 wells that were not completed. prices go up a bit. they start busily completing their wells. they have futures forward and that tops the price out. the scenario is venezuela drops drops down andn prices spike up and there is a lot more activity in the u.s. and prices go back down. maybe 20 or up to 50 or 55. betty: what do you think opec is thinking right now? >> opec is irrelevant. they do not have any market power. this is not new. lots of organizations attempting to restrict commodities have

existed. they succeed for while and they fail. what opec thinks is irrelevant. the question is when will the countries stop supporting opec and the offices close? betty: that is quite a dramatic statement. if opec is irrelevant, who is relevant anymore? phil: who is relevant to the corn industry, i guess there is a national corn association but everyone will be producing, every man for himself. every woman for herself, too. betty: every country for itself. thank you very much. from san francisco on oil. up next, we are wall street closely as we head toward the close of trade on what has been a day of very steep declines. we are coming off a little bit

of our lows. we will be right back. ♪

betty: good afternoon and welcome back to "bloomberg markets." a look at some of the biggest news stories. shire is in talks with [indiscernible] . they are preparing an approved author that could include a significant cash component and may come within the next several weeks. artie billion all stuck proposal was rejected five months ago. it are a regular so looking at

walgreens' plan to buy rival drugstore chain rite aid. it made a second request about the acquisition. experts say that suggests there are serious concerns about competition. both companies say they expected the request. americans are spending some of what they are saving on gas. retail sales -- where the best in three months. internet retailing led the way. you can always get more business news at bloomberg.com. before we talk about the bond markets i want to mention again take a look at what has gone on in the equity markets. we are down now on the dow 325 points. this has been the worst of since late september. the s&p is off by 2%. look at the nasdaq. that is the worst performer

right now in the markets. now to bonds. the junk-bond freezeout is sending chills through the market and adding to a sense of posted arl icahn tweet. matt: everyone is getting nervous. making it worse. this is the story of the day. that 300 point decline of the doubt. you cannot ignore that but the real action today is in the credit markets. there has been concern about them for a lot of months if you look at high yield. you have seen this disconnect ever since that august selloff. equity rebounded, most of those losses not the case with a high-yield which has been very weak. the news this week about that a tinynue bond, it is

fund. every time you hear about a fund limiting redemption to do the liquidity, that brings it back. there is a lot of these high yields, distressed, john, whatever category bonds that do not trade very often. .rices are debatable if you would have to liquidate them perhaps they would sell what they would consider to be out of market prices. is not good for investors if they had to liquidate them all at the same time. people nervous. where else might redemptions be limited? betty: there is something going on etf's as well. >> that is a concern. the ongoing disconnect between values of etf's and underlying fondly hold. you see a lot of selling of them. j and k or at the

the gateway t etf's, they have been getting slammed. that: all that a warning there might be pain in the equity markets? >> one of the express goals of fed policy over seven years is to make people search for yields, to take risky bets, to encourage people to take riskier lending. it is not entirely surprising pull back, as the fed prepares to tighten, presumably they will hike next week. the tide is coming out as they say. betty: you will be talking more about this. much more ahead on the bloomberg markets. we are heading toward this really ugly close here. stocks are selling off. here is a look out -- of how the traded all session long.

♪

betty: occam back. markets are closing in about 10 minutes and it has been a rough ride. all three major averages posting the worst day since september. >> it looks like we are closing out friday in the red. we saw an uptick in the green daysour of the past five will be ending a negative territory. all this means is investors will be looking forward to the weekend. causing a drop in equities. down nearly 2%. the dow is down and the nasdaq is the biggest loser as a has been all day, down 2.2%. looking at oil and the superlatives get worse area nymex crude is seeing its worst week in the past year.

it is down 11.2%. this time last week opec set aside oil quotas and that let the bottom out of the oil price. the glut will keep going through late 2016. not only that, let's take a look at natural gas. it is on track for its worst week since january. it roque below the mark today. 9.5%.down by it makes sense with all the turmoil that basically the fear index is seeing its biggest weekly gain. just the opposite. 67.6, 68% have this past week and looking ahead to next week, we might be seeing what the fed can lend some stability to the market with some possible fed rate action. betty: keeping with that fear, markets are worrying about that

moved by 3rd avenue to freeze its mutual fund. this hask about how permeated through other asset managers. been -- this has affected other asset managers. tracy: there is 3rd avenue deciding to close down its high-yield distressed mutual fund but we had a proposal from the sec saying it would limit the use of derivatives used for leverage by asset managers. quite a bad mix of pressures on asset managers. we know a lot of them have loaded up on corporate debt. allocations to corporate bonds reached an all-time record just this week. the week ahead of the fed which is kind of amazing. bad timing. we are seeing some of the air -- taken outsset of asset managers.

betty: there is nervousness about the fed hiking rates. down for over a week. very sharply. it has been every day this week. we are talking about how much oil has been detrimental to the market. you have commodity fears over global rose in china. maybe the slowdown will bleed into what is going on in the rest of the world and the u.s. you have from materials companies getting nailed. it could not come at a worse time with the fed coming up next week. people are nervous and if you look at the probability of the hike, some are pushing that off a little bit. tracy: it would be hard that the fed would break -- back down from the rate hike. betty: that is the million-dollar question. have threeorse you

more trading days left until they announce their decision. how much -- what is enough to get them to say hold off? tracy: the fed is in a bind. there is a very high chance that you would get a bad market reaction from investors. betty: almost everyone has priced it in. tracy: it is all but certain they will hike next week that this is not welcome news for fed that has been concerned about its ability to extricate itself from markets went all its policies have been pushing asset prices up. describe why this announcement would hit the asset managers so much. tracy: some etf products have been using derivatives to boost their leverage and thereby boost returns and we have same -- we have seen some examples. you can see the amount of swaps

upthose balance sheets going through the years. the sec is concerned about that and liquidity risk created is concerned about all these credit risks we have been talking about today. assetis a worry here that managers might face a tougher time listing returns in the future. this: are you seeing nervousness in the credit markets, can we say that is spilling in to the equity market? joe: we had really good economic data. sales even today's retail numbers. joe: that was strong as well. you would think with the strong economic data it would be a no-brainer. the tale of the market this week has been the global stresses outweighing economic data.

betty: are there other avenues out there? tracy: people are asking whether or not third avenue is the coalry in the cold -- mine. it was down 30%. i did speak to an investor who thought -- got out early and he thought the writing was on the wall. it is not necessarily indicate above overall weakness but here's the thing. we have seen corporate bonds pushed up like joe said earlier. the tide goes out and you get to see who is left exposed and who has not been managing their risk as well as they might have. betty: time will tell and we will see after this fed rate hike. thank you so much for closing forthe show and the markets us. we are a few minutes away from the close and it has been a close your eyes if you are long

this market has the dow is about moreose down 330 points or which would be one of the worst sessions so far this year and certainly the markets have been the worst in late september. the s&p is down by 2%. the nasdaq which so far among the averages has been the one to keep holding on to its gains so far. loss of 113.3%, a points. we will be keeping our eye on the market. the market closes next. ♪

moments awayre from the closing bell. i am scarlet fu. joe: and i'm joe weisenthal. alix steel is off.

u.s. stocks tumbling to a two-month low with the dow jones industrial average dropping 300 points. joe: the question is, "what'd you miss?" scarlet: the countdown to the fed decision next week intensifies. joe: markets after the fed decision -- the guess is equities should be ok when the rate hike happens. scarlet: south africa in turmoil. viruses financial advisor wishing the country to contain spending. what is next? we begin with the markets. what a selloff it was. stocks, commodities, high-yield debt all tumbling. the catalyst, if you had to pick one, was oil prices, extending the drop to a six-day. it seems like as we get closer to the fed rate hike