we are one hour from the close of trade and we start with breaking news on the markets. here we go again for the third day in a row -- the selloff deepening in late trade as the u.s. fails to build on the gains around the world. the dow jones now plunging down 300 points and more. former fed governor tells us whether this will change the fed's mind on further rate hikes. brent crude dropping below $30 a wentl a day after day bti below that number. how are america's oil and gas users dealing with the selloff? and adding to the carnage -- banking shares that jpmorgan to report earnings tomorrow. shares of morgan stanley are slumping to their lowest level in more than two years. how had is the climate for banking even as costs continue

to come down? let's head to the market check where julie hyman has the latest. we are coming off of our lows. julie: a little bit off the lows of the session. the nasdaq just a few moments it was down about 3.3%, so has come off of those lows but still steep selling across the board here. looking at some different indicators trying to get a feel for how severe it is, one of those indicators is volume. that could indicate an exhaustion of selling. we have been seeing heavy volume for the selloff. volume on the s&p 500 overall is about 38% over the 100 day average. you can see volume and all of the 10 industry groups higher,

in particular in health care and consumer discretionary, two of the worst performing groups. if you look at utilities, they have ticked lower. asy were the lone holdout they are a relatively defensive group. and consumerlecom staples, other defensive groups that we watch, financials and tack, all of them selling off. these groups are more resistant doing better on a relative basis. the 52 been looking at week high versus the lows and have seen up tick not just today but over the past several sessions over those 52 week highs. it has been ugly on all these different measures and you have to look at oil prices. here, we see a bit of a conundrum because oil was not performing as poorly as the rest of the market.

by .1% even as we saw brent touch below $30 a barrel. oil today.hman on it seems to be a market sentiment issue. betty: thank you so much. let's get a check on the headlines with the bloomberg first word news. mark crumpton has more from the news desk. the 10 u.s. sailors detained in iran are now in being debriefed and getting medical checkups. there is no sign they were harmed. the u.s. secretary of state, john kerry, spoke to reporters. secretary kerry: all indications tell us our sailors were well taken care of, provided with blankets and food and returned to the fleet earlier today. i think we can all imagine how a similar situation might have laid out three or four years

ago. mark: iranian authorities released the sailors after determining they reached territorial waters by mistake. president obama and vladimir putin have spoken by phone about the situations in ukraine in syria. the white house says the two men spent a large portion of the conversation discussing the need for russia to live up to its commitments under a cease-fire agreement and efforts to secure a political transition in syria. officials in pakistan say they have detained several members of suspected in an attack on an indian airbase. the attack began on january 2. the men in custody are believed to be members of a pakistan-based group that has target india in the past. india has long accused pakistan of failing to crack down on groups that conduct cross-border attacks. and you may have to deal with long lines to buy a ticket in

the biggest lottery ever. worth oneg will be point $5 billion. the texas state says nearly 86% of possible number of combinations have been selected. in 292 of winning -- one million. global news 24 hours a day powered by our 2400 journalists in more than 150 news euros around the world. feels like those are the odds to even get a ticket being in line. mark crumpton at the news desk. the federal reserve has let everyone know it intends to raise interest rates four times this year, but not everyone is convinced this is going to happen. larry summers told bloomberg go that markets are trying to tell the fed to rethink their plan. summers: i would be

surprised if the world economy can comfortably withstand for hikes. i think basically, markets agree with me. that is why despite the statements being made, markets are not expecting for hikes. betty: joining me now is an theomics professor at university of chicago possibility school and former fed governor. do you agree with larry summers that the markets are telling the fed that your plan is all wrong? i think the markets always take that plan with a grain of salt and even after the initial rate hike, they were more pressing in three coming up four, which is a more reasonable expectation. they give equal weight to everyone around the table and

not everyone should have equal rate. the one for janet yellen should be bigger than the other people around the table. betty: so how many do you think is possible? it's going to depend on how the economy and inflation evolved. prospect forttle inflation. if inflation comes back, the fed needs to move. we just had a recently robust labor report with low-wage pressure. wages went down slightly and so there's no necessary connection between having robust job growth and seeing wages go up. i think they are going nowhere fast and i think it's going to be a while. betty: does that mean no hike in march? guest: it's highly unlikely. they need evidence inflation is

moving up and i think it is unlikely we will see evidence of that before them. the first real likelihood would be in june. but that depends on whether we see any wage pressure or not. be toonot to conspiratorial, do you think the selloff we are seeing has the time theo with fed hiked their rates? it is kind of interesting, the timing. guest: the fed hiked rates three or four weeks ago. and markets have not been that stable sense. guest: right around the time they made the announcement, i think it was anticipated. they saw the dot plot and were afraid to going to be for increases -- i don't know why it would have taken a month to see that.

i think there's a lot more concerned about chinese management of economic policy and the change in the value of bigyuan which has implications and can have ripple effects that come back to the u.s. take a china part. do you think the fears of china are overblown? clearly know they have not been managing things well and they created a new body to oversee the financial management. so that is good and i think they need to have a clear view of things, but it also creates uncertainty because we are not sure what this new body will do. the key question is the management of it. the data we are getting suggest the fed is moving along at a reasonable rate. industrial reduction is done and

they are making a transport from an investment economy to a consumption-based economy. that is never easy and they are never going to grow at 7% to 12%. betty: then why have we reacted so poorly to this? think it's a combination about the concern of management. we are not sure what's going to happen next and some policies could potentially go off the rails. i think we have seen a lot more uncertainty in the middle east and so there are a lot of concerns there. if you have a major economic problem in china and have something literally blowing up in the middle east, that's a

pretty toxic combination and that is why people are more risk-averse than they were a few weeks ago. more: we are going to talk about the global economy, including how it is affecting oil prices. brent now down below $30 a barrel. up next, we are talking about oil prices and following stocks. the dow jones down 342 points. we are tracking whether those losses are going to accelerate as we get toward the close. we will be back. ♪

betty: good afternoon and welcome back to bloomberg markets. let's head to the markets where julie hyman has the latest on the dow.

down more than 300 points. continue to see the selling that has been going on, but it is not as steep as it was at good depths. the nasdaq has been leading declines and a lot of the big cap tech has been giving up some of the gains it experienced. if you look at the intraday chart, you will see the slide we have been experiencing throughout the day before a small pop at the bottom that occurred about a half hour or 20 minutes ago. looking at what is going on in terms of the movers here. in the s&p are higher at the moment. this looks at the biggest declines by index weight. microsoft and facebook down, home depot has been down. wells fargo, you see some

weakness in the financials. some of the bio techs have been selling off. i have also been looking at the dow by the same measure. there are now no stocks that are higher. all 30 stocks in the dow are lower. boeing, i'm seeing on this list, a pretty rod based selloffs as it gets toward the close of the session. much of a particular catalyst today. notable for that reason. thank you, julie hyman. we are back with the economics professor from the university of chicago booth school of business. today, brent dropping below $30 since for the first time

april 2000 four on speculation that iranian shipments will soon climb. how low can oil go and how much can companies withstand it? the joining randy is president of the american petroleum institute with us from washington. where isep wondering the stop? where are all the circuit breakers for oil? jack: i think the reality is with the energy renaissance here at ho, we have been able to produce much more in the market is taking that into consideration. term and asook long we look long term, we need to make sure u.s. policy does not in feed or hinder our ability to look for those opportunities because the global marketplace

is going to be even more competitive. predict what the prices day to day or month to month, the united states is positioned to be a geopolitical or in the world from an energy production standpoint. to make sureg hard people understand this opportunity and make sure we have no self-inflicted wounds. betty: what is interesting is the other side of oil have not been talking about, how consumers can benefit from lower oil prices. that is something the dallas fed president said today. >> there are two impact of lower oil prices. one is the immediate effect of cuts and spending and we are seeing that in companies and in the state. there's the positive effect of lower prices for the consumers

and better car sales because of that greater ability to spend on other things. betty: so why haven't we seen that? had thee have not dividend other people are expecting from lower energy prices. initially, people were not slow -- were not sure they were going to see that for a long time. i think we have seen some offsetting effect and have more geopolitical uncertainty related to the political process. 2% or sowing around because of these offsetting forces. these dividends have been hidden behind some of these negative shocks to come. the negative shocks have to stop coming and we have a lot of geopolitical challenges. an opportunity in the u.s. to really be a leader in this area and we don't want to

squander that. it seems as though you are trying to find some of the positives. how can the u.s. show their leadership and how can the oil producers show their resilience? i wonder if the saudi arabians are surprise at how resilient u.s. oil producers have been so far? randy: i don't know how resilient we have been, but how cost effective we have been and our ability to continue to produce and compete with the rest of the world. as we look at this longer-term, there's a lot of unpredictability in that process and we need to purge that and make sure in the decision-making processes, there is some certainty we will get positive decisions in a reasonable time. betty: what do you mean purge that out? randy: we need to take that

uncertainty out where there is politics around issues like permitting. number 1xl pipeline is -- there's no reason it should have taken seven years and then finally a denial. and then even though it was was made the decision on lowering carbon emissions, it is increasing carbon emissions because we are still moving product. we're just doing it by rail, barge or etc. betty: how does that relate to lower oil prices hurting producers? the unitedou look at states today, there are billions of dollars per appeared to be invested in infrastructure. we become more cost competitive when we can move the product from areas that have not historically been big producers. dakota, no at north

one would believe they had become the number two producer in the country. but now is the time to come together and governments say from a geopolitical perspective, we have a chance to position the united states even though we are in this down market. let's not be rash in political judgments. let's position the united states so that when certainty comes back, we can be the dominant player. that is a great opportunity with billions of dollars to be invested and to keep the job machine going. much. thank you so , markets are dropping today but coming back from the lows of the session. the nasdaq has been hard hit. we've got your options insight

on that. ♪

julie: this is bloomberg markets. joining me is scott bauer joining us from chicago. this is a crazy day with this steve selloff we are seeing. there's no catalyst here. what is going on? scott: we are all saying the same thing. we had consumer discretionary than transports that let this thing and it has just snowballed. two, so ita tick or didn't come from there. firstlmost like this by cell mentality and then recover and figure out what you are going to do. does it feel like capitulation to you? scott: no. even because volume is not as high as it has in, we are not

seeing that excess volume. lookingome people are to earnings season but there is some pessimism around earnings. weore we get to your trade, have been looking at bank earnings estimates over the past six months or so and we have really seen them take a dive. you are looking at j.p. morgan in particular and jpmorgan tends to be the knight in shining armor. is this time going to be different? scott: i don't see a downside here. jamie dimon always seems to have something up his sleeve to keep this one from blowing out. standout. will be a i don't see any big upside that i do see it as a standout. putgoing to sell next week

and call. it's known as a strangle. they expire on january 22. i can do that for about two dollars. the downside, i raked even at 55.5. technically, that is a great place to get in. other side, 61 would be my break even. out to see any big low the upside but any sort of weakness at all, especially down error --5.5 percent area. ♪ .

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live from bloomberg world headquarters here in midtown manhattan, you are watching "bloomberg markets." : mexican officials say they

are constantly moving drug chapo" joaquin "el guzman from cell to cell. he is back in the maximum-security prison from which he escaped in july. the present has 24-hour video surveillance, which covers every inch of his cell. meantime, mexico has begun the process of extraditing him to the united states. an avalanche that struck a school group skiing in the outside has killed two french high school students and a ukrainian skier. three others were injured. indications there was a warning in the area before the snow slide. 60 rescue workers have immobilized in a search-and-rescue operation. u.s. defense secretary ash

carter is heading to paris to meet with his counterparts from europe. he also says a special commando force has arrived in iraq. former u.s. attorney general eric holder is throwing his support to hillary clinton. senatorl, vermont bernie sanders, and clinton have been collecting endorsements all week. holder is set to campaign for mrs. clinton in the upcoming swing to south carolina. on the republican side, donald trump is the new favorite to win the party's presidential to antion according internet betting exchange, which puts the odds of a trump victory or 34%. eight previous favorite marco rubio is at 11 to five with ted cruz

third. iowa caucus-goers cast the first votes of the 25th -- the 2016 election in less than three weeks. news 24 hours a day from the first word desk. i'm mark crumpton. betty: thank you. we are less than 30 minutes from the close of trading. was the hardest hit among the indexes. abigail: that's right, betty. not just for the massive volatility but for exactly that reason, the losses outpacing the dow and the s&p 500, both for the biotech we have on the nasdaq and the heavier weighting for big tech is back. the nasdaq composite index is in official correction territory, down more than 10% from any of last year's peaks. taking a quick look at biotech, the bear market has intensified. is down about 30% from its july peak, reaching the 2015

lows, which suggests selling may intensify. ,eading the losses today companies that offered information that has disappointed investors at the j.p. morgan health care conference, but the frenzied pace of selling suggest this could be as much a reversal of the momentum trade up over the last year as anything fundamental with a bloomberg analyst saying fun of the -- some of the fundamentals remain relatively strong. now looking at big tech, some of these stocks are the biggest point drags on the index including amazon, apple, microsoft, and facebook. just 11% of the s&p 500, explaining some of the discrepancy between the losses today. somewhat stunning is the turnaround in both microsoft and apple. both of these stocks higher on positive news, but it appears

the big selling and amazon, one of last year's top performers, has had somewhat of a contagion effect as we have had somewhat indiscriminate selling intech here at the nasdaq. so much.ank you staying on markets, the dow is butging, as we are seeing, it is coming off its low of the session. it is still down about 300 points right now. in oliver and mike. ok, guys, let's sort it out. there is really no catalyst for this huge selloff. what are people telling you? you are working the phones. all of her: it is an unusual day. oil has been pretty flat. .ave not seen any huge moves i would point out one thing -- a very clear move

in general. small caps now in a correction across the market. there are teen of things i would point to that are interesting. one, the performance of most hedge fund stocks right now. if you break up the s&p, the top 20 hedge fund stocks are down about 20%. if you look at the companies were a lot of these managers have then, they are unwinding a lot more than the benchmarks. then there is also some pretty strong demand for bonds today. mike: i think it is one of those rorschach test days where you see what you want to see in the market. we were talking earlier about the anheuser-busch bond sale. huge demand for that. obviously, it is taken as a signal that if you want to be in beere asset -- i guess a

bond, people will be drinking forever, so sort of that demand out there, maybe people selling a little bit of that, but that said, the story is very much about momentum, and when it reverses, the momentum starts going the other way all of a sudden, and a lot of evil have been talking about the strategy .rom jpmorgan yesterday these guys has then really out in front when it comes to identifying nonfundamental issues, and like trend-halloween and momentum and various strategies. betty: they were saying momentum is over with. mike: right. the curious thing to me was they were saying be prepared for more episodes like this where there are wild swings in the market that you cannot really attribute to fundamental reason. when companies are not buying back their shares, it's a big crush for earnings. that is negative for the market

where that has been a very .ositive catalyst companies have then this steady source of buying shares, and when they are prevented from doing that around earnings, it obviously pulls the rug out. it does, and it also begs the question more and more as we see this volatility -- when does this in the markets really start the economy,or right? right now, it is just stocks. oliver: from equity's two economies, it's very hard to nail down, but what we can see if you look historically is that bear markets and stocks -- most of the time you have a bear market, it predicts a recession, but you cannot go the opposite way. just because there is a bear market does not mean there is going to be. this time, we are going to want , so youback at history might start to ask questions.

for the equity market right now beyond the economy, usually, when you go into earnings season, it is pretty positive because expectations when they are negative get pushed down really far. the bars down low and they do pretty well. if you see some of the cracks start to form in companies and question the underlying fundamentals, that could be a negative catalyst. could be a wake-up call to people. this nasdaq, though, down over 3%, talking about the momentum trade, do you think that basically anybody who benefited from that momentum trade is getting hurt in the nasdaq? oliver: i would assume so. obviously, it's your facebook, netflix, google. biotech is even worse and fundamentals have not changed at all.

it is sort of this technical reversal of momentum that i think is at least exasperating things. is a true reflection of where people want to take the market or just an overshoot and sell everything type of mentality, that will eventually see a rebound, it's hard to say, but it is certainly what is driving things now. is driving things now, but it also seems that the lower we go, the more difficult it will be for janet yellen and company to raise rates in march. oliver: absolutely, yeah. mike: i was going to point out, some of the stocks that were not so hot over the past couple of years -- you have seen utilities staying pretty strong. utilities and stables have done pretty well, which could possibly be a defense of trade. maybe it is a vote that the fed is not going to go that many times on an interest rate hike and maybe the market is thinking that they went too soon. there's all kinds of things out there, and i think it is

definitely different than it looked four months ago. much forank you very joining us. -- light is on the bloomberg is on the- gaslight bloomberg terminal. we are one in 24 hours away from the start of anchor earnings. jpmorgan's first up. what is going to happen? as we had to break, here is a look at how some of the banking stocks have traded over the past year. you can see the huge drop-off for jpmorgan, bank of america, and jpmorgan stanley with shares shedding about 1/3 of their value.

betty: good afternoon and welcome back to "bloomberg markets." it's time for a look at some of the biggest business stories right now. bush started -- anheuser-busch started offering bonds that will back at stake over miller, a sale likely to stretch and a europe and become the biggest corporate debt offering on record. the brewer may sell about $46 billion of denominated hans, according to people familiar with the matter. with jet fuel selling at record lows and carrier profits to the group, airline pilots want payback for sacrifices they say they've made during the recession. american, the largest u.s. carrier, and now unions representing some 34,000 pilots of the three next biggest airlines are asking for more.

ge has been in connecticut for more than 40 years. the company threatened to leave the state after the legislature threatened to raise taxes on companies and wealthy individuals. bank of america and morgan's emily are selling shares in -- morgan stanley are selling ubers in bloomberg -- in to their high-end clients. they're asking for a minimum purchase price of one million. morgan stanley is requiring them to buy $250,000 in shares. that is your bloomberg business flash update. stocks selling off or bobbing around at these lows of the session. the big mystery has been wide. is the catalyst? in the meantime, let's rochus on the high-yield market. is it time to be bullish again? one of the many things that

miss" will be talking about. joe weisenthal, the cohost, joins us. some people may say it's premature. joe: you are obviously taking a pretty big risk if you are buying. it's interesting considering where we were when the selloff we were seeing in high-yield was really seen as something to worry about. is this the start of something bad happening in credit? high-yield has certainly been week, but it is interesting that this year, with this very dramatic selloff to start the year, i think we are down 7% or something like that. it has held up decently, some of the high-yield etf, it's rising. high-yield has obviously spread to widen dramatically, but they have stabilized a little bit, so that is interesting, not only in light of the stock selloff, but

in light of the oil selloff, too. because they were closely connected. betty: right, very closely connected. does this seem to be some sort of decoupling with the energy route? : one of the things that is interesting and deutsche bank pointed this out, is that we look at high-yield as though it is this asset class, but it is a very fragmented market in terms of return. you have one area that has destroyed,lutely spreads totally blown out, and a lot of the high-yield market really has not gotten slammed that much, so people might look and say that high-yield has gone up this much and it is tempting thingst there's a lot of very dispersed that average out to there, so it is a very tricky market. it is indeed, but the fact that it has not gone down as much as people expected leaves a buying opportunity. is anyone asking what areas in

high-yield might be the most attractive? joe: i'm not sure. i don't have a clear answer. people are going to look at the retail stuff, some of the utility stuff. if energy were to stabilize and , we keepnue to go down thinking that is going to happen, but it has not. i keep thinking that anyone who tries to tie -- time the bottom of the oil market has been wrong. joe: pretty much. betty: coming up, talking about the high-yield debt market and exactly what is happening there. the close of trade just minutes away. as we head to the break, here's a look at the most actively traded stocks and how they are faring. ♪

betty: welcome back to "bloomberg markets."

the forward it get to the market close -- the focus on one consumer company, the maker of huggies, kleenex, and much more doing with challenges facing the company including the stronger u.s. dollar and slowing global growth, particularly in markets like china. the ceo sat down with mike mckee today and discussed these challenges, including china. >> i am very bullish on china. we have a terrific's nest, great team, a strong track record of growth the last several years. good organic growth in those markets. i think you are still seeing per capita growth, which means more people entering the middle class and can afford byproducts like ours. we are still seeing double-digit category growth. we had innovation on top of that and expanded into more cities in china, and that has been able to fuel that growth at a high level. there's no question that

emerging markets are slowing down a bit, but we still are bullish on our growth prospects in that part of the world. again, that was kimberly-clark's ceo. another stuff we want to look at is twitter with shares hitting a new record low. rights twitter has failed to communicate its value to the broader user base and struggled with product execution. so far, wall street is not buying jack dorsey's return as ceo. overall, andarkets as we are getting toward the close of trade, we are seeing these losses accelerate. accelerate, right? we had already seen these bursts of selling occurring throughout the day. if we look at averages, here we are right back at lowe's throughout the day with the nasdaq leading declines.

we made an attempt at paring the declines, but, yeah, we are right back at those lows once again. in addition to some of the smaller cap tech stocks and momentum stocks like twitter, we are seeing amazon down 6%. remember, it was the second-best performer in the s&p last year. apple continuing to lose momentum as well. wells fargo also down more than 3%. a lot of the banks falling ahead of earnings reports coming. take a look at my bloomberg terminal, the groups on the move -- utilities barely negative here, but as of right now, all of the groups in the s&p are negative. discretionary, health care, industrials, financials -- a lot of groups and individual stocks exposed to economic growth and vulnerable if it weakens, have been doing poorly today. another couple of examples -- transports and biotech. transports are seen as an economic barometer.

the dow jones transportation average down 3.7%, and biotech is seen as more of a momentum play. momentum obviously right now is decidedly to the downside, so they are vulnerable. finally, the biggest losers on a point basis -- apple, amazon, the biggest losers in terms of basis points. on a sure percentage basis, concern declining on over its acquisition by energy transfer. will that go through? there is no shortage of pain today. staying with stocks and bank stocks, there's an awful lot of pain going on in that sector. morgan stanley shares today hitting their lowest level since october 2003, and it is not just morgan stanley with a weak start to 2015.

fourth-quarter earnings estimates have been declining over the past few weeks. to the reasons why i want bring in our bloomberg wall street reporter. let's start first with morgan stanley. what happened? >> when company cut their recommendation on the stock to sell. i think that represents if the ce -- some doubt as to if the ceo can pull off his possibility target, which i believe is 10% return on equity, given that they just that they are going to cut 25% of their fixed income staff. essentially, their opinion of cutting pretty 5% of the business will actually hurt them in the end. ok, shares getting hit, dragging down other banks. what do we expect from the likes of jpmorgan?

>> some concern about bank earnings. their profits have an cut for the past couple of weeks. pain andseen this bleeding in a bunch of different areas. high-yield. oil plunging. what that shows is they expect trading revenue to be bad and they expect bond issuance, bond underwriting, which is a huge part of investment banking, to be cut. come? more job cuts to >> yes, for jpmorgan, they are pretty good at cutting in the 1% to 2% range. i think for banks like morgan stanley, bank of america, citigroup, you cannot rule out job cuts for sure. i think what people want to hear, the stocks are down. jpmorgan is down 12% for the year. morgan stanley, same thing. they know the fourth quarter was a tough one.

what they want to know is what the fed rate increase in december is going to mean for 2016. our managers, who know more about this business than anyone else, are they bullish for 2016? paying a lotl be of attention to the conference calls been. that is it for "bloomberg markets." the market close is next. here is a look at major averages. the losses were accelerating in the last half, so the s&p is now year.ore than 7% for the the nasdaq today is the one .etting most hit by the selling we will have the closing bell next. ♪ we live in a pick and choose world.

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[closing bell] s&p 500 falling below 1400. selling was heaviest intact. joe: the question is, "what'd you miss?" scarlet: stocks tumbled. we dig into the selling action and find out what is ahead. joe: big banks guerra for earnings. -- dear up for earnings. has seen harold hand $60 oil prices by the end of the year. we will tell you why. scarlet: we begin with the markets. there are different ways of measuring how broad of a decline this is. if you break it into 24 groups, utilities were unchanged. everything else