york. welcome to bloomberg markets. from bloomberg's world headquarters in your, good afternoon. here is what we are watching. a stock selloff accelerates with china's rock -- china sparking more market turmoil. the country is-- suspending its market circuit breakers just days after introducing them. the three-day losing streak wiping $40 billion. iphone supplies and demand. and joining us to weigh in on all of this is bill gross. first, for more on the market turmoil, let's turn to julie hyman. it has been an interesting market trajectory. after the selloff in chinese stocks and circuit breakers were triggered that halted trading

entirely, a sharply lower open was indicated. but when they finally open for trading, we saw declined half of what they are now that we have swung to the lows of the session. it has been a fascinating day. you will see the trajectory over the course of the day. that attempt at repairing the declines and falling once again to the lows of the session. that chinese regulators have suspended the circuit breakers, how far will they far -- how far will they fall? low, three or four days into the new year and stocks are down about 5%. julie: it looks like the worst start to the year for the s&p 500 since 1928. we are working on confirming that with standard & poor's. and it has been a global

selloff. not just limited to the u.s. it seems to be infecting nearly everything. the ftse is down, nikkei is down, the dax is down and emerging markets have been hit by this as well. take a look at my bloomberg terminal. slump thus far in 2016. i just want to zoom in and look at the year to date. ofs represents a decline $800 million. it goes to an erasure of about $1.2 trillion. it has infected all kinds of assets, not just stocks. oil prices, down 3.6%. $33 a barrel,

touching the lowest since 2004. if you look at the 10 year, the yield is moving lower. we have seen speculation today that we might see chinese selling of treasury, so we have seen some shifting around. gold prices up for the fifth straight session. old has had a strong start to the year. has had a strong start to the year. in 2016.p about 4.5% david: thank you very much. let's get to a check of the bloomberg first word news. mark crumpton has that at the news desk. the u.s. house of representatives will vote as early as next week on legislation imposing new sanctions on north korea. nancy pelosi of california promised there will be strong bipartisan support for the

measure. similar legislation passed the house two years ago but did not advance in the senate. 17 new york miners who had been duck -- you had been stuck hundreds of feet underground were pulled to the surface. they became trapped in an elevator 40 miles outside of syracuse late wednesday night. rescue crews told them to safety this morning after 10 hours underground. kara gill is the deepest so my in the western hemisphere. the company is closing the mine for the rest of the week so it can determine why the elevator malfunction. el niño is giving californians headaches. heavy rains from the latest storms caused mudslides and flooded rose. san francisco halted its famed cable cars. this year's el niño equals the strongest on record. then isean meat now and ok, but watch the sugar and salt intake. those are among the dietary

guidelines released from the obama administration. the guidelines back off the strictest sodium guidelines but still maintain americans consume too much salt and suggest people consume no more than one teaspoon of salt each day. they also recommended sugarbeet no more than 10% of a person's daily calories. the guidelines are released every five-year's to help americans prevent disease and obesity. this weekends powerball drawing 700 million dollars, making it the largest jackpot of any lottery game in u.s. history. $656revious record was million mega millions jackpot in march of 2012. powerball is played in 44 states, the district of columbia, the u.s. virgin islands and puerto rico. dayal news 24 hours a powered by our 2400 journalists in more than 150 news bureaus around the world. david: let's get back to the

markets. china's security regulators suspended shares after the index plunged triggering an automatic shutdown. the 29 myth of chaotic trading were sparked after china cut its yuan reference rate. joining us now is the chief investment officer of the mark funds. in new york, a senior emerging markets strategist with a focus on china who spent quite a bit of time in asia. tom keene has been tracking the market volatility since the early hours of the morning. you are like i am, this is fun. payingi know you are close attention to it the chinese government must be paying attention to -- the widening of this spread and the offshore yuan. china confused the

markets by saying it's going to move more toward the market and it was convoluted how it phrased it. didnight, the offshore one soe and the fix was lowered, they are moving in the direction off the market. in many ways, we are looking at a slow motion capital slide when they should be focused on incentives to have people invest domestically. likeg some of the controls saying the circuit breakers are not going to be in place anymore is a step in the right direction. clearly, they want to have a we needurrency, but market prices to clear and that is difficult with the step-by-step approach the chinese are taking. since are you getting any there will be any clarity in the near term? guest: after the regulatory , i think inaw

general, january is going to be a bad month for chinese equities. measures will probably take some of the large scale selling off the market but sellers will be worried about liquidity conditions and when they are allowed to drill into the market. tom: one of my themes is this idea of the change correlations out there. what hascorrelations, changed when you see gold move a certain way and dollar yen, the way the yen has gone strong yen? shows how these markets are dislocated. dollar wouldas the fall, the euro rally and the yen be a safe haven play. the yen has been a safe haven play. andeuro has since caught up is more of a safe haven play.

if we are going to have a relief rally, the euro is not going to plunge right away. to the markets are hostile what's happening in china and that is very new. it used to be that new york was the boss and we had midday moves where overnight, nothing was the action. to australiato get opening tomorrow morning and see what china does. has to react with long time delays and timezone delays. david: and not everyone has as much energy as you, tom. tom: i pulled an all nighter. david: are there any bright spots that have weathered this well? guest: in general, the smaller cap players have been routed. looking for safety, the state owned organizations, the banks, those with implicit

state support are the ones you want to be looking at. but when equity markets are dropping, it's going to drag down everyone. it's bestme being, not to be invested long cash. tom: it is exciting to see this at the end of the year, but there is going to be some carnage. not just the knock on effects to china, but the rest of the market, what we have seen in the reversal of the german two-year after draghi bounced that off -- the deflation, disinflation, and economic slowdown worries outside the u.s. are tangible away from what we see with china. david: let me ask about this ban on shortselling. perhaps the reason for a lot of this volatility was the expectation is that what you do and we.

we have reports from the chinese government that that is going to continue. do you expect that to placate anything? let's say it's a necessary but not sufficient condition. when you shut the exit, everyone is going to scramble. people will find a way to take their money out and short the markets and find proxies causing broader damage. before we get to looked up with china, let's remember china is part of a bigger theme -- the and that is rising why world markets are reacting so much. tom: i strongly agree that it is about china but is much more than that. i look at the headlines coming out and i don't know if you did these, but they are talking about north korea the white house -- there's a headline that

the administration is closely watching stock market movement. they are watching at the white house. this is the data check. juste doing a surveillance to harass david. bring this up. axel is the dow down and merk is having a good month, finally. the two year yield back under 1% and janet yellen and stanley fischer want to drive that higher. , did thisation we see start with janet yellen's rate increase? it is much more china-related. you saw what happened to the it did the news cycle quite robustly. aboutple were not worried

the valuation, that may not have picked up and caused much panic. i state -- i think we see some risk off trading. i'm more in the camp that we have to get off zero at some point and should tighten a bit more or the crash will be that much greater in the future. david: we heard of were meeting today in china. no real tangible outcome. what does this regulator have added disposal as it looks at the volatility, sees what thomas forecasting here, what is left in its tool chest? need anyu don't equities -- don't need any enemies when you have the government as your friend to prop up the equity markets. i think you have at least two major regulators fighting it out. one is trying to sport the right -- the equity markets and the others trying to move more toward a market regime.

you have these conflicting signals making it to the public that only add to the disarray happening there. and need a clear strategy then communicate that. that's not going to be easy because you seem to have strong voices: are markets in different directions. tom: bond investors, if rates go up, bond prices go down. as mr. gross going to have a lousy year? guest: you will have to ask him that. it is much more the fed than china. i think we are in for an ugly year. ,t started last summer and now i'm sick -- asset prices have to get down because the fed has taken fear out of the market. we are going to have big problems everywhere, so we have to have some nice things to chat about, but, as an investor, it's going to be a rough ride this year. david: you forecast this will be

a short-term dip. how long will this continue? market hasink the become unhinged and i think we should use to the notion that the remedy is going to weaken against the dollar. a medications strategy from the chinese. they have two tight net up and once people get comfortable with the notion and get the sense china's more in control, we should see some stabilization. equity melting 5 -- melting 7% is not like the s&p melting down 7%. david: thank you very much. we do -- tom keene will be back in a minute to talk to bill gross. coming up, tomorrow is jobs day, the latest non-farms payroll king bill gross

joins us for his views on the current market mayhem. ♪

>> i do my best not to comment on the day-to-day actions, but we are aware of the kind of volatility we have seen in china and that has had an impact on markets in other countries, including ours. that is something we are closely watching. : welcome back. the white house spokesperson of addressing the market volatility we have been seeing. just a quick check of where the markets are. the dow jones just off the

session lows. the s&p 500 down 2.15%. a big story today with all of this market volatility. that has put added significance on tomorrow's jobs report. as the first measure of the u.s. economy. will it add to the turmoil or provide relief? my guest joins me now from florida. let me ask you whether you think this is noise or something more here. it's obviously having a profound effect on the markets today. negativeina's having ramifications all over the globe but i don't think that's the total story. we entered 2016 with some of the iny same headwinds we face ,015, namely these were stocks valuations are excessive and the fed is no longer in a friendly

mode and technically, last year, the markets advance was very narrow, the breadth was very poor and all of those items continued for 2016. david: let me ask about this jobs report -- mohamed el-erian writing today about how tricky this jobs report is going to be. and street is watching this if the number is low, that's a good thing. what are you looking at for when that job report comes out. the consensus forecast is for 200,000 new jobs. in the current environment, disinflation is on investors minds. a stronger report would be better suited for the market and a week report would suggest global weaknesses entering our markets and that would cause

investors a lot more concern. david: let's look at what the fed may or may not do in the new year. if several policymakers -- do that has faded into the background or are we looking at inflation or do jobs still matter? yellen's appears that primary focus is on jobs but i don't think the fed can ignore what's happening elsewhere. the fed raise rates in december and that may have in a mistake because deflationary pressure headwinds were building in december. it now appears the momentum generated has dissipated. the fed probably made a mistake by raising rates in december and now they are in a box. if things worsen, it will be difficult for the fed to immediately lower rates.

is problematic in this environment here. thank you very much. bloomberg markets will have plenty of analysis. mohamed el-erian will join us with his take tomorrow at 11:00 eastern time. ♪

david: welcome back to bloomberg markets. taking a look at the major almost at the dow session lows. for more, want to go to julie hyman at the markets desk. good state is a someone on my team just sent me. 15% of the s&p 500 made 52 week lows today. is very negative as we see the selloff. we have been talking about the selloff in oil as well, but how about copper? to china andxposed

we see it down 3% and its lowest since 2009. it's a stock that trades in tandem -- freeport-mcmoran down more than 70% and continues the 12% in today'swn session. everything else at all exposed to china has been declining. casinos are on that list and at resorts at see wynn the top. all of them expose in macau. all of them thinking the chinese consumer will have less money to spend at those can -- at those casinos. sun edison is falling after the company says it plans to pay off 700 $38 million in debt by issuing new shares. sun edison was one of the most volatile stocks in 2015. david: still ahead, janus

capital possibility grows weighing in on the market turmoil. he will join me and tom keene here in just a minute here on bloomberg markets on bloomberg tv. ♪

from bloomberg's world headquarters in new york, this is bloomberg markets. art crumpton is standing by the news desk for the headlines. mark: for the first time, the

u.s. congress has sent president obama bill repealing most of obamacare. the house of representatives passed a measure yesterday and the senate passed the same bill a month ago. the president said he would veto the measure. the white house press secretary, josh earnest. mr. ernest: they have voted 50 toes to replace the 2 -- repeal the act. we have heard republican presidential candidates on a campaign trail talk about how ineffectual the republican congress has been. in this case, they are right and there's no clearer illustration of the ineffectual republican leadership in congress than this. mark: democrats in both chambers have enough votes to keep republicans from overwriting the veto. a man armed with a butcher knife was shot and killed by paris police today as he tried to enter a plea station. he was wearing what officials thought may have been an

explosives vest, but the explosives were determined to be fake. it happened shortly after francois hollande spoke at police headquarters honoring please officers killed last year in terrorist attacks. it was one year ago today that 12 people were killed in an attack on charlie hebdo. david cameron is pushing his campaign for changes to the european union. he has committed to holding a at the end of 2017. he's seeking welfare limits for other eu nations in an effort to control migration. he hopes to seal the deal at an a summit next month and hold that hold an election next year.

-- the deadline for the election is too short, making his candidacy impossible. global news 24 hours a day. back to you. david: commodities markets are closing in new york and the story is all about old and oil. crude having his worst ever start of the year. prices rallied slightly toward the close with brent closing at $34. the daily basket price fell to the lowest level in almost 12 years. all of this is pushing gold up. precious metal has gained every day so far this year. more now on the markets with the dow at session was. tom keene joins me now.

he regularly interviews bill capital.janus i'm going to hand the keys over to you. tom: i like how you mentioned the dow with a new intraday low at 2:30 eastern time. bill, good morning. the more urgent matters of this market. china ands this about their stock market or is there more going on+++

specifically. the global economy is still highly levered and central banks are artificially keeping interest rates low. let me tell you the story from last night. my wife and i saw "the big short" and she said she understood what went on in terms of subprime's and homeowners not being able to pay their bills and how it all collapsed. there is a similarity to today's market and basically the same thing is going on except homeowners are being replaced by central banks. central banks are writing endless checks, supporting stock markets and you could ultimately make the market that they don't run out of cash. distortions in the global economy we see with oil and other commodity prices. dow david mentioning the down 400 points. in that movie, there's a scene at the end were the gentleman is on the deck overlooking central park and he has to make the decision to get in and out of

the market. firstre you doing in the three or four trading days of this january? bill: we are trying to keep and by safe investments. , we want of thinking to focus on treasuries and we know treasuries are doing well. some funds that are treasury .elated 7.5%.eld is about it still provides some type of return. had a call on the 10 year. they said it may happen sooner than they thought. are you positioned for the full

lowerand credit driving consider being -- considering the global slowdown? bill: we have benefited over the past several weeks in terms of being long-duration. we have had some option out the and we are basically flat duration. tonight, there's a big surprise in terms of the chinese market and treasury rallies. think treasuries are a good investment as we wait throughout this particular episode. tom: the correlations that have become a new here with copper dropping down today and gold moving higher. there seems to be a correlate of mix in the market. do you agree with that assessment? bill: there is a specific

correlation to oil and commodities. in terms of foreign currencies, many emerging market currencies are not really oil exporters. affected by the price of oil as it goes down and these andelations reflect interlinking of global financial markets and finance years and hedge fund managers have them on in terms of relatively levered bets. they have two basically hedge in another direction and that is why you see such volatility in prices ass and stock hedge managers are trying to get even. it is a highly levered world and when something gets out of whack and you see these movements

everywhere. tom: do you see any sense of an immediate catharsis to clear markets or is the theme that we slog along with this rolling movein search of an abrupt in search of clear markets? china announced this morning that they are going to let markets clear. tom: what will we see out of australia tomorrow? go longer thano seven or 12 minutes. what do you predict we will observe? based on the etf in the united states, china is addicted to be down 5% or 6%. it depends on whether the chinese are good to their word. china is an artificial market. all global markets are

artificial to the extent we have a catharsis depends on central banks giving up in terms of what they do. draghi is in it what ever it takes. they see a problem, china will get into the market and if the have a catharsis, japanese buy stocks and bonds like they are going out of style. -- to savebanks to's the day. to my way of thinking, that's it allows thing but for zombie corporations and zombie reductions we are seeing in terms of the oil markets. stated,h what you just with the responsibility of central banks, giving -- given the market turmoil and after the jobs report, will there be the responsibility of chair yellen

to say we are one and done and that's what we are going to do with our rate rises? she's not going to come out with one or done. someone will perhaps come out and acknowledge the fact that global markets and global financial conditions are an important consideration, but i don't think they will divulge that they are not raising interest rates for time. tom: i look at the bond market and have to convince are less sophisticated viewers the idea that they can be protected by being diversified are buying unconstrained. there's a real sweat out there framehis is like 98 or -- this in the history that you worked in at your previous .mployer and now at janus where are we in terms of level of crisis?

that's a great question and if you have a -- if you have a minute, i will go through it as quickly as i can. career in i began my the early 70's and the fed relaxed and was off the gold standard, it has been the function of a carried trade for investors. they tried to, that in carrying the form of credit spreads and lower quality instruments, in the form of volatility and ultimately that produced a substantial bull market. captured carry relative to overnight financials. now in some cases, it sets up the situation where carry is not

positive but negative. you see a market and this happened with hedge funds last year. funds ands for hedge hasr investors, the carry collapsed. so what will we see on days like today when markets go down? losetors will start to money and that is ultimately what the financial markets have taken us from the early 70's. was beautifully explained but we have to get to an idea where we get back to normal. do you suggest, as lawrence summers suggests, that we are not going to get back to the ca we are in somese

form of secular stagnation? is this something we need to get used to? i have been saying this for years. not to preempt larry. he's a smart guy. oldnew normal from the pimco days basically said the same thing -- growth will be low and interest rates will be lower and we have to get used to a world of low returns. not see that because of quantitative easing and the dropping of interest rates. it has taken a while for that to take place. secular stagnation in terms of demography and low interest rates and in terms of technology, all of that is producing a situation which growth is low and stock prices are relatively high and returns suffer. : let me ask you one more

quick question. you told me to buy the 1918 inverted postage stamp. am i safe still holding onto it? it doesn't go up all the time either. it reads -- it recently traded for $350,000. it was as high as 450 $5,000, so there can be a bear market in stamps as well. tom: thank you. he is great. he cashed a huge check for charity, including the san francisco 49ers. david: tom keene, thank you very much. be sure to tune in for a bloomberg markets special report on today's local selloff. bloomberg television, bloomberg

radio, and streaming live on bloomberg.com. stay with us. ♪

david: welcome back to bloomberg markets. on's get some more insight the markets in the wake of that interview with bill gross. what was your main take away? tom: you heard mr. gross talk about things are changing. in his defense, no one knows how they are changing. you look backwards as you observe them off the bloomberg terminal. but this is part of the special report tonight. what happens in australia doesn't stay in australia. it goes all the way across asia in a distributed affect.

will go right over to the buy and over to london tomorrow morning and across assets is what i would really watch. oil was a little soggy. west texas intermediate is ok. david: i want to bring in my guest who covers oil. what do you make of what we have seen over the course of the day? guest: it has escalated pretty quickly and we are off to the worst start putting much ever on the s&p for the first four days of the year. it is some contagion spreading out from countries like china in particular as they try to to devalue the currency and signal to the rest of the world that things are not great there. these guys are talking about globalization. you can inc. of -- you can't think of stocks in a capsule. the effects on the dollar and

the companies bottom line, whether it is commodities -- that's one of the things that's a little different now compared to what was going on in august. we are still concerned about chinese growth stemming from the currency issue, but we have a real bad route in oil. oil only declined about 5% in that time but you have that going on in the fact of the matter is a big part of it is sentiment. it sounds like a copout. tom: this is important. one noted economist emphasized to watch wti versus china. i think we should watch china but it's about oil dynamics. larry summers was adamant about the underestimation of a fragile global confidence. david: we have sat around this

table talking about the ecb or the fed. when you look at the central bank in china and how ineffectively they have been able to communicate, have we lost all hope? communicate in a way any restricted regime communicates. they will make the decision when they have to. david: tom keene will be on our special tonight. i want to go to julie hyman at the markets desk. look at the s&p 500 with her spider sector report. julie: looking at a particular sector in the s&p, kb home is down by 11%, the most in a year. we have all of this going on with global turmoil, but what can kb tell us about what is going on in the united states? weatherany cited bad

and said labor shortages delayed some deliveries. really interesting commentary there. that means costs are going up as a result. if you look at the other homebuilders, we are seeing them under pressure as well. a raymond james analyst says it's probably not an isolated issue. it could affect other builders results as well. to thethis circling back etf that tracks homebuilders. homebuilder stocks down more than 2%. just want to end on the broad still a decline of

2%. homebuilders -- maybe they are telling us something about the jobs report tomorrow and the u.s. economy. david: thank you so much. a program reminder -- join us for the bloomberg markets special reports on the selloff. please stay with us. ♪

david: welcome back to bloomberg markets. it has been a rough week for apple. the company fell for a third straight day over lessening demand for the iphone. shares of the tech giant dropped below 100. emily chang joins me from san francisco to talk about all of this. this is crystallizing what we is some real there

softness in the supply chain with apple and the iphone. you have a few bad days and you are the most valuable company in the world, that means $40 billion wiped off your market cap. this is what we have been hearing from jpmorgan and morgan stanley about softness. there is a cycle and this happens every year -- apple makes sure there's enough phones to make demand in the holiday quarter and in the first order of the following year, they pull back to wipe out excess inventory and bring production back to normal in the following quarter. the question is scale. -- apple is cutting production by 30%, is that iphoneg? we expect the seven to come out later this year and perhaps customers are already gearing up for that. the question is can the iphone

70 different enough to excite customers once again? gene munster that question and he said maybe. maybe they make it bigger or get rid of the home button. maybe they do something with wireless charging. otherwise, the iphone seven is not going to be that much six s.nt than the iphone david: coming up, betty lou speaks to the chief investment officer at pride land investments. his thoughts on today's market turmoil is coming up next. don't forget to tune in tonight for a bloomberg markets special on the turmoil. ♪

>> it is 3:00 p.m. in new york. welcome to "bloomberg markets." ♪

betty: good afternoon. here is what we are watching at this hour. breaking news, tanking again. the third major slide to start the new year as the s&p has its worst yearly start since 1928. the dow off by 400 point -- 400 points at one point. situation,economic is it taken out of context? china may simply have a communications ichiro -- issue with the world. lowest dropped to its level in 12 years. it is just a matter of weeks before we see oil in the 20's. breaking news, stocks are plunging again