trade in the next hour. what happened to the rally we saw yesterday? blinked you missed it because european markets are entering up our market and adding for the lowest close in over one year.the european close starts right now. betty: we will take it from new york to london next hour. a bear market already? from april but not as low as we were, down by 28%. wasere down by 3.4% which the biggest drop since august. has you say, it's a bear market. fromhinese bear market was december.

everything is selling off today. no surprises tuesday by the biggest culprits. bhp billiton, glenn karen anglo american are down by 6-12%. all 19 industry groups are falling today and falling. down by 7%,ces are travel and leisure down by 7%, automobiles down by 6%. the dax is 3% lower. this year it's down by 11%. every single stock on the dax has fallen this year led by bmw, daimler and volkswagen. betty: they ended 2015 on a low note. that's not a surprise but how bad was it? was worse than we first thought. datad market share day

today. the market share in volkswagen shrunk for the first time since 2007. it was the omissions rigging scandal . new cars sold. registrations still rose by 6.2% in 2015 but it lagged the industry 9.2% gain. 16s carmaker has lost billion euros of value since september. has you saw, it's not just volkswagen. are gettingmakers hammered because of their exposure to china. it's the china flu. about 90 minutes into our trading session in the u.s. and

we seem to be slipping down toward the lows of the session. the nasdaq is already down 10% this year. julie hyman has more. julie: this gives credence to the idea yesterday was just a snap back. the market sentiment still remains pretty dismal. the nasdaq fell near to the lows of the session. it has been the laggard consistently. a lot of large cap tech has been lagging. take a look at information technology, down more than 3% and energy is leading down 4% but financials are also doing poorly. all of the groups in the s&p 500 are lower. we have been looking at the market internals. this is the advance decline line for the market. this is the number of stocks falling versus the number rising. ande in the naked it here

it's the lowest level we have seen since the august-september selloff. that's another measure of how sentiment is. 5% of the stocks in the s&p 500 are higher today, that's it. surprise, oil prices and china are the main drivers? julie: yes, they continue to be the main drivers. it's a vicious circle we're seeing in the market. crude oil is below $30 per barrel and it keys going down. goldman sachs said by the end of this year, we could see the beginning of a bull market in oil as shelf production falls more meaningfully. it's one of the more bullish calls on oil. as for china, the shanghai composite reentered a bear market. this is the past year. you saw it enter a bear market a few months in the summer time and now the latest leg down has taken is back there and it

happened very quickly as has the selloff overall in the market. with money falling out of these assets, it is flowing into what people perceive as more. safe gold is catching a bid today. the 10 year yield, people are buying treasuries. well.panese yen as the yen is at a four-month high versus the u.s. dollar. retail sales data we got out today. it continues to show a week u.s. consumer. betty: fair not confident enough to spend a lot, thank you. let's check in on the first word news. ey: the obama administration is halting new kernel development on like lands. the administration will study the environmental impact of the coal leasing program and a

raised royalty rates come about 40% of coal mines of u.s. comes from federal lands. a rare january hurricane in the atlantic is closing in on the azores. of 60 foot-high waves, 100 mile-per-hour winds and torrential rain. hurricane alex is the first hurricane to him in the month of january since 1938. betty: thank you been let's get back to the wild markets things. we are down below 16,000 for the dow. the retail sales numbers added fuel to the fire, piling onto the declines. that december data is feeding global growth fears. chief investment strategist at beaufort wrote that most major

market industries have been erratic shifting between committed rallies and falls off a cliff within the space of a heartbeat. . he joins us now to a floor? -- are we close to a floor? you think i would know? with these things come you get a feel about the way things are moving. and one of overshoot the points i mention is that commodities will become irresistible to surplus funds. there are surplus funds in the system globally. start to come in and buy and that will be the start of -- mark: when do they become irresistible? first half of

next year and we would see consolidation. we will probably start to see recovery in the second half of the year. the market is so volatile that almost anything is possible. probablyeckon it another few months before we start to see a proper autumn and confidence coming back. are: the volatility we seeing this year, is at the norm? >> if you look over last year, there have been days when it's been fairly volatile. seeing is as commodity prices fall, it has an implication for many other sectors. you see what's happening with oil and oil companies have to cut back and dividends are being cut back and banks have to raise their provisions which means less money is available to lend to other sectors of the economy. we may see failures in that area. at the same time, the fed is raising interest rates and it means that some companies will

probably disappear this year. betty: is it accurate to say is the newices subprime of 2016? >> that's an interesting question. there is a recent forecasts that the price would hit $10. it's been getting wild and some people will follow this closely to cap these resources. or even before, we have the excitement of oil prices sliding. we thought we had a dis-inflationary bonanza. we are down seeing the other side of the coin. all of these financial institutions are dependent on or doingrms of lending other things. that could be a problem. qe helped create inflationary doubles but what we are getting with commodity prices falling is

deflationary black holes. that is a big problem for the central banks. betty: mohamed el-erian wrote a piece earlier today about the market volatility and where that will lead us. he said the longer the volatility lasts and especially if it is do you agree with that? >> i think that's a reasonable observation. markets are based on confidence, investor confidence, and if they feel that markets are too volatile they will step back and that's the risk. mark: what will bring confidence back? at the shanghai market and its volatility and people will sense when they feel comfortable. have seenweek we extraordinary predictions come out from high profile names in the industry saying to sell

everything. that does not really help to shut up confidence. when they start selling you to sell everything, also the contrarian is a good way to go. >> it depends at much money you have. mark: what to you recommend from an investment stamp? could be x --s increasing exposure to treasuries. well.ld as we have had a recommendation outstanding for gold for a few weeks now. you could have the market fall another 10% and then rally strongly. unless you get your timing right, you will be dead completed mark: will the fed go even 10 -- even to times this year? they have indicated four times. we might think about the fed

handing back the interest rate rise. mark: you're the person this week who has said that. back theight even hand heights we saw in december. betty: another brave call. betty:that's a bald one and that would be a big one. thank you so much. how thetill watching european markets are trading and how europe is about to close. the dow was below 16,000, off by 407 points and back to its low of the session. all 30 stocks in the dow are lower. ♪

mark: welcome back live from london and new york.

singled most think -- constituent of the dow was rising. only 22 stocks of the stocks 600 are rising today. it's a broad-based selloff. betty: almost pack selling. it is time for the bloomberg business flash with a look at some of the biggest business stories. u.s. manufacturers are being hit by slower economic growth and a stronger u.s. dollar. factory production fell in december for the second month in a row. automakers turned out fewer vehicles because demand has started to die down and industrial production includes mining fell more than forecast. weakest year for u.s. retailers since 2009. it dropped 1/10 1%. were up to 1% but that was the smallest increase of the current economic expansion. walmart is cutting back.

it is closing to 69 of its almost thousand stores, roughly 100 stores being closed are the smaller format express outlet. inre are money-losing stores brazil and they want to focus on better coming locations and its online business. that is your bloomberg businessflash. mark: it's another day of extreme volatility. guggenheim partners chief investment officer runs more than $9 billion in assets spoke to bloomberg at the open of u.s. markets. his take on the extreme markets -- >> as an investor, i would say no, as a traitor, you may have an opportunity today. i'm paid to invest money so i will just say no. todaynie: do i look at even though things are down and say i will write to market? >> we have -- if you are

investment-grade company, we have not seen any spread widening. why would you use this dip in rates to get a bond issue out? there is so much money sitting on the sidelines in corporate credit and pension funds and insurance companies to go to work. this would be a beautiful day to bring it. mark>> howard marks talked aboue psychology of the market. he was asked if he would buy it and he said no but someone has to come in. when does being translate into that? >> i think it is when you see wholesale panic. under 30.s still david: that recently as august, it was up near 40. it has gone up and is higher than we like about it's not as

far up as we have seen it in recent times. stephanie: have you define wholesale panic? surge start to see a huge volatility because everybody is trying to get the excess and they're putting prices down just to get out of their positions. we are not there. look at yesterday. at the end of the day, people run to me and say it's a bull market. markets don't move in a straight line. stephanie: perhaps there is so , it will bet there hard to see how you get that wholesale? a gentleman i was with last night is a sophisticated investor and he said i think i should reduce some of my exposure it that is not panic. stephanie: because he's down the

market or simply thinks things will go down and wants to buy cheaper? >> he thinks that uncertainty is rising and things don't look as sure has a thought they might. have been a few months ago so take some profits and go home. i will take heat from asking did in 2014 in what has the s&p 500 done since then? >> i would say it has gone virtually nowhere. >> is there a story there? >> the question which i try to answer to myself is, with the -- was the end of qe monetary tightening? it is behaving that's the market --behaving as if qe ended hard -- started tightening. mark: the stocks index is up

15%. we are not at the highs of last year. that's after china d value its currency. a 56% leap in villa volatility is worth noting. betty: it shows that fear and panic in the markets. while the volatility index is going up, we are coming down to our session low. we will hear much more on this global selloff with the senior portfolio manager at sky bridge capital. $13 billion of assets under management and he will weigh in on the markets. ♪

betty: stocks are still sinking and we are bobbing along the lows of the session. equities are taking a big hit and there's a big flight to a new let me get

perspective for you from sky bridge capital, and alternative investment firm with $13 billion of assets joining us on his phone from new york get on a day like today, do you want to sell everything? >> you don't want to overreact too much that it's very much adeja vu all over again moment. the fundamentals of not deteriorated as much as prices in the first seven or eight trading days of the year. is ayou are seeing negative reaction started from thechinese devaluation and u.s. and manufacturing industry is in contraction and there are some overseas worries with regard to the south and north korea. like you saw in august-september, you see various quantitative strategies selling aggressively. one of the contributors would be systematic cpa's.

we were long equities and finally went short and they coupled with 30 managers and they are driving a lot of this price action to the downside. betty: you say there is some robotic selling going on? is what makes the most sense to us in terms of the price action. you very rarely get straight down followed by straight down. you have not seen much of a meaningful bounce. investors should be concerned about the impact on the chinese hard landing and currency devaluation and weaker growth. we would say that today might not be the best day to sell. you might want to wait for a rebound before lightening up your long equity positions. mark: what is going to do that rebound? five and $6 trillion of value has been in equities this year.

what is the sign for the rebound? >> you have to let technicals play out you have not seen the or reach extreme levels perhaps it needs to push into the low 30's or mid-30's. levels wherersold it exhausted softening of -- and then you have a technical snapback. there is very little other than earnings that can turn this around. china will still be lurking over the markets. the u.s. manufacturing and trade will not improve anytime soon. the dollar will still be a head wind so fundamentally, earnings are the only fundamental and technical's should have a snapback and buyers will finally come in. mark: what about the price of oil? it's a big factor in the 2016 market turbulence. reboundsnds a floor or

, will that trigger gains across all asset classes? >> it's possible. how many -- how much energy assets have an marked down, it's difficult to argue that the oil cell of his driving health care stocks down this year. what does oil have to do with health care? that may be the case technically frome would caution anyone bottom feeding on oil and reading too much into a short-term oil rebound did we have had multiple bear market rallies and oil. we don't see that as a trigger for stabilization. betty: thank you so much, we will be back. ♪

mark: this is the european close. the markets are wrapping up for the day. have a look at european stocks.

they ended with a bear market in stocks were plunging. they were led by the basic resources. but percent,n down glenn cori down by 7%. gold was gaining with a flight to quality. it was a broad-based selloff which is demonstrated why this chart look at all the industry groups. a bear market from the april record high last year. the shanghai cop as it entered into a bear market today as well and every industry group fell today we had basic resources down 7%, travel and leisure down by 7%, automobile down by 6%, germany'sdax falling 11% this week, every single company fell this week and this year. quickly check on the u.s.

markets. well: we got a selloff is and the three major averages are declining sharply today. if you look at the year to date the s&p and the downer each down about 8% and the nasdaq is down about 10 and 6% in 2016. in terms of today's decline, we are looking at some of the big in bigpanies dropping percentage terms. marathon oil down 14%. moran hasmac resumed at the downturn after rebounding yesterday, down another 7%. citigroup and wells fargo, people are looking to the company's coming out with earnings to help matters, it's not happening. they both the estimates.

the headline numbers look good but both of the stocks are down. betty: thank you so much. let's check in with first word news. we start in europe where the european union has not come up with a billion dollars in aid it must turkey november. the eu governments are talking about getting more. there has been no let up in the number of refugees crossing from turkey into the eu. there is almost 2 million refugees and asylum-seekers in turkey. the head of the dutch freedom party says it's time for the netherlands to lead the european union. he says he will pull the country out of the eu immediately next year if he is elected prime minister. his prey the polls with what it bordersclose to dutch for the refugees the searches of the people missing when to marine helicopters collided off the coast of oahu.

the helicopters went down late last night. they spotted debris and searchers are being hampered by high waves. d by her 2400gggbal journalists in more than 150 news bureaus around the world. betty: thank you. europe isg story in the markets. 600 is down to the 1%. growth and -- is down to the 1% 21 percent. thanks for joining us. the red ask you about ic on my screen today.

market your take on the villains in 2016? >> across the board, this is a classic time when we have to look for the market to the underlying financial and political fundamentals. recognitionwith the that since the global financial crisis, the central banks, the fed, the bank of england, the ecb, have been grotesquely overburdened as the sole institutions responsible for getting us back to recovery and back to growth and back to the employment. as a result, they have competed in armistice torsion's in the financial markets. the price for borrowing dollars or sterling or euros has been so low that nobody has been borrowing them. the people borrowing them are in the emerging markets were they don't have cash flow in the currencies they are borrowing. this happened the late 1990's.

original,ists call it borrowing a currency that you cannot print. what we are seeing is a spill over from a recognition that we have been on a path that is unsustainable even if all we look at is the economics of it. we would be seeing growth to load to generate any inflation. if only we could have some inflation but the central banks cannot tell the world what inflation we will have. the fed does not have much left in the tank. >> this is terminating when you could afford to borrow dollars without fear and giveaway at interest fees that were negative in real terms. you may have to repose

definitely doesn't dollars that are more expensive than at something excessive. don't look to the stock market for the fundamentals, it's a barometer of confidence and confidence will swing widely between the fear and greed and extremes we experience all the time. this is one of those moments but the underlying fundamentals are the political paralysis that is meant that those who should be borrowing those dollars to reconstruct the infrastructure of the developed world. for green tech and cleantech have been paralyzed the u.s. is completely paralyzed. in europe, they are somewhat ideologically paralyzed. one process works for the government can make a decision and turn it law happens to be great britain. they're the policy is austerity. mark: we will come back to that. betty: on that theme of being

paralyzed, do you think it would be a mistake or could it be possible the fed might become paralyzed and what they see in the market? >> i think there is a real concern. some of the economists i respect delongt including brad have been very worried that the fed was moving too soon and had talked itself into a position where it had to raise rates. yellen willanet look at the data. down, data says it's slow don't get committed to a track that could be self-defeating, i think we will have a high degree of confidence in her pragmatism. that can bring some restoration of stability into a highly volatile financial market. betty: you are here to talk more about economic policy and the i want to tapbut

into your technology background and ask you about the private markets. i imagine they must be nervous what they see in public pricing? >> it's a cliche. a few months ago, it was a thatng clever thing to say the ipo was the new down around . environment that was fundamentally unsustainable. the idea of public market investors, great mutual fund companies paying premium valuations to buy shares with no liquidity never made any sense at all. the phenomenon known asfomo - fear of missing out on the next thing like facebook or amazon or motivationsuch, that

has run out of steam. we are now in the process of marking the unicorns to reality. public, one going active trading market liquidity, the second, where is the positive cash flow? show me the money, don't show me the money -- the number of users. that's what twitter is facing right now. let's get back to politics with the dutch freedom party leader leading in the polls in the netherlands. he says he will take the netherlands out of the eu which leads me to the possible big political event in the u k this year, the referendum. how big a risk is this? is this reflected right now? are the markets pricing this in yet or is it too far in the distance? tryingout deliberately

to evade the question, i want to say i'm not an expert on current british politics. i am a reader of the news. i think there is clearly a risk. a kind of us and the view on this. i am embed it at the university of cambridge. it is not only one of the world's great universities but it receives more money for research to feed the engine that drives the cambridge phenomenon, all the startups, all the jobs. it gets more money from brussels than any other institution in europe. from the interview of cambridge and the point of view of britain's innovation economy, leaving europe would be a disaster, unequivocally. that says it as clear as you can. oil because it's yearopicdu jour and of the

how low, how much is it affecting your thinking and what's going on here? >> it cuts both ways. it's a gift to consumers around the world and the gift to industrial producers around the world. we have clearly had a fundamental shift again in the politics of oil since 1973. bisping producer and a dominant force in the market was the saudi arabia and led opec. -- politics of saudi arabia i'm not a nice but saudi arabia politics. there has been a change in leadership there. in the marketplace, the phenomenon of the u.s. becoming something of a swing producer is still not fully absorbed. the dynamics of the americanfracking of oil and

natural gas, those dynamics are different from the persian gulf. they are a much shorter cycle and there is more flexibility in moving in and out of that market and bringing production onstream. say where theto low is. clearly, it is politically as much as or not more than fundamentals in the oil industry. mark: great to see you again. bill janeway. hold your thoughts because coming up next, it's the battle of the charts. i will look at which pushes metal has the best -- which pushes metal has the best process -- prospect in 2016. ♪

welcome back, this is it's time forty: the bloomberg business flash. the emissions scandal may be hurting both dragon and the market. their market share dropped for the first time since 2007 and it has fallen by one percentage point. it lost ground since the emissions test cheating was revealed back in september. oil producers in norway are now worse off than they were during the worst of the recession. norway is the biggest oil exporter in western europe and ahead of the country's oil directorate says the industry is in crisis. have cutgest producers thousands of jobs.

album david bowie released days before his death his grace it'sa e number one adele the top spot. sales rose after he died in this be his first number one album in the u.s.. . that is the latest. we are looking at global banking today the mark: we are in u.s. -- u.k.nt banks investment banks must rethink their services as regulators are forcing lenders to separate risk your from their consumer banking units. ofard davis is the chairman an's largest taxpayer owned lender, the royal bank of scotland he sat down with tom keene and they were joined by the chief economist for deutsche bank. they started by asking when the shock and all in markets could end.

>> i don't think it will end soon. i think there are still some fault lines in the world economy which have not been corrected since the crisis. the biggest and was the amount of debt. that has been shifted around from the private sector to the look sector but it has not been removed and not much deleveraging has occurred. there is that large debt overhang but you find that what happens in financial markets because of the sheer volume of debt switching around the system. until we work off that debt, we will continue to be vulnerable to this kind of volatility. the swiss franc finished 10% stronger last year, what does it teach us on how central banks should be looking at this new world order? communications there were somewhat wanting.

francine: there were none. just a follow-up, there has been an important structural change. institutions that normally would step in when there is a market dislocation just do not have the wherewithal or the capital concerns to do that. i have been sitting on the banking committee for the last 18 years. in 2003-2 thousand four, there was an appetite to step in when you saw dislocations. today, we are aware of dislocations. othere of volcker and circumstances, we no longer want to step in or are prepared to finance those hedge funds. you will see these episodes of volatility that we have seen. you will see this throughout the year until it's done and deleveraging is an important component. francine: someone argued this is

a healthier place to be. it's a case of be careful what you wish for. in its, it's a healthy or place. much better capitalized banks and this is all good stuff and i'm sure david would not disagree. the problem is, we're in a lengthy transition phase where we need different kinds of and playons to come in up her role and shock absorber role the banks have played in the past. that is not yet in place. we are in a long transition time which can be quite uncomfortable. tom: you mentioned faultlines. what are the faultlines you are most focused on? there is the media drama of this day but what are you focused on

that would be the fault line that would end with some catharsis to clear the markets? ne is clearly the adjustment in china. we talked about the idea that the chinese economy cannot carry on growing in double digits. actually, adjusting to a lower level of growth -- tom: is currency the only way to adjust? >> that is one but their overseas investment will be another. i think we will see less of that for a while. we're adjusting to that changed role of the chinese economy or changed growth rate emperor for a lot of economies around china that will be affected. that is one thing we're adjusting to. coming back to deleveraging, that is something we are still suffering and a third one is the change in the financial sector.

banks have to be more strongly capitalized and are more constrained in the bets they can take. chairmanat was the rbs sir howard davies. as we have been talking about, the euro stocks index is now in a bear market. we look like we are following your lead the mark: china started it earlier the shanghai composition win into a bear market from the highs in december. the stoxx 600 is falling into a bear market from the highs in april last year. that was a record last year and we came down through the year and today it's down by 20% from that level. at what happened today, it was worst earlier in the session. the stoxx 600 was down by 3.4%

but finished the session at 2.8% with stocks falling for the seven day in 10, for the third consecutive week, the longest losing stretch since october because of the decline in oil and the china bear market. we are down to our lowest level in over one year and we have fallen 10% in 2015. almostlists that cystic, one trillion euros of value has disappeared from european stocks this year. there you go. betty: we are also down 10% on the nasdaq now. in terms of the dow, all 30 dow stocks are in the red. of those on the s&p 500 are in the green and we're bouncing along the lows of the session. it will be interesting to see where we close in the last hour of trade. we will return in a few moments. >>

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betty: this is the european close. how stocks check on are trading now t. all the indices are flirting with their lows of the session. >> we are looking at a major stock selloff at the nasdaq. leading the%, losses for stocks in the u.s. is exposure to biotech and the bear market playing out and the overweight into big tex. the worst drag is the biggest of big tex, apple. hard down on news that the company may 08 billion dollars in back taxes on a probe.n this is after the company paid hundred 84 -- $300 million last

month to settle an italian tax bill. the company has said it does not gimmicks. the timing of this news is poor for stocks which are down 20% since early november on concerns around the iphone. betty: thank you. numbershrough the final on this european close. byk: the stoxx 600 is down 2.8% which is the biggest fall since of december and fell to the lowest level since december, , 200 50 billion euros of value disappearing. it has fallen by 10% in 2016 and that is one trillion euros of value did that's it for the europe close. ♪

betty: you are watching "bloomberg markets," and i'm julie hyman. are watching what is going on in the markets with this market

selloff we have been seeing. the dow and s&p are out 8% each for the year to date. the nasdaq is down nearly 11% thus far this year. it's a broad-based selloff we are seeing again today. allou look at the i map, the industry groups are lower today. that are seenups as economically sensitive -- also we been watching the market internals. more decliners than advancers. we been looking at the high-low ratio. this is over the past year, we saw a spike in the lows around the august-september selloff but it only lasted a few sessions. it's just as a grinding declined we have seen in the beginning days of 20