scarlet: u.s. stocks rebounding after the biggest rout since june wiped out about $5 billion from equities. joe: but the question is, what did you miss? before thee calm storm. the lead up to next week week's fomc meeting. is the quest for transparency leading to too much turbulence in the market? joe: plus, we have the charts you can't miss. and if you want know-how donald isdoing, all you need to do check the mexican peso. we will check how these assets are linked. thelet: we begin with markets. selloff. what selloff? the dow up by better than 200

points. all 10 major s&p 500 groups are higher. we will get to 11 groups later on this week when the s&p spins off greece. s&p, in terms of percentage gain move, it was the best day since july 8. joe: i think it's pretty remarkable. i think a lot of people would have expected some follow-through after how ugly friday was. they didn't get it at all. even though the speech was clearly dovish, markets were rallying before that. matt: markets had set themselves up for some kind of surprise from laelchange brainard, who has always been very dovish. obviously, that didn't happen. here you can see the stocks up the board.% across almost 2% on the nasdaq. one thing i think is interesting is that defense stocks were the biggest winners. consumer staples, telecom,

utilities. the p any ratio is up to 22.4 22.4.- p/e ratio is up to it's more expensive than the 10 year average. functionok at the sps on the bloomberg. scarlet: so much green. green, which means volume is up over the 20 day moving average. the blue is where we are today. the greenest the 20 day moving average. we are -- green is the 20 day moving average. we are trading a lot more. ,oe: let's talk about lawns because that continues to be the , because about bonds that continues to be the center of action. the story had been rising rates. more of that today. let's look at the intraday

spread. there was a lot of action. out a while. financials, the big theme is the two year yield not rising as much as the 10 year. you can see we continue to rise into positive territory. actual yield on the german 10 , similar story with japan if we look at a one-month chart for the japanese. back to flat on the japanese 10 year. the pool of negative yielding bonds is actually starting to disappear. finally, greece. we are starting to see anxiety return. people talk about concerns, backsliding, bailouts. have been out in front on this and talking about how this is something that would rear its ugly head again.

fed president has signaled it was reasonable to raising rates. emerging-market currencies extending their slide, but well off their earlier lows. in brazil, the honeymoon might be fading. a six week low after a second day of protest. has a key testnt this week. you get a sense that the corruption goes pretty deep in brazil. we mentioned the mexican peso. day. weaker for a fourth is also tied to donald trump's election prospects. let's look at precious

metals. brainerd was dovish. we saw a bit of a pop from the lows of the day's for gold. silver did better -- no, it did worse. anyway, you can still see the same pop and coming off the lows of the day, still down. scarlet: let's take a deep dive into the bloomberg. we talk about how volume has come back. participation has come back. summer is over, and global seems to beress making a reappearance. in february, there was talk of a global recession. this volatility has held for the

most part, which indicates there is more financial stress than usual. there was a big jump on friday. percentage jumps. on friday, this index jumped 112%. matt: how many days did we go without a 1% move? scarlet: 40. matt: we had a 2% move on friday and it looks like we will have a 2% move on the nasdaq. had so: the last time we much volatility was back in august of 2015. matt: and the demand for treasuries has dropped. have a chart, the bid to cover ratio. $20 billion, i think of 10-year note's and $24 billion, three-year notes. this has come down to below average, obviously. there are 11 auctions here. i think one of the interesting

things, also, is the primary deal or cut of the auction is negligible in this auction. it's a massive auction, $44 billion. the primary dealers aren't showing up. over the weekend, we had a story about someone who applied for a primary dealers license, tried for years, and when they finally got it said you know what? we don't need the stress. at whatm looking scarlet was talking about. strategy that is long equities, long treasury. it had its second worst day in the last year on friday. everything got crushed, a lot of the same degree. the last time we had a day that that was in december. for more on this and everything else going on in the markets, let's bring in oliver renick. , i think everyone after

friday imagined we would get some sort of continuation. regime change, higher rates, what does it mean? today, we get a huge pop. what do you make of that? >> pretty incredible. do you go from a zero volatility environment to 2.5% down and then up 1.5% the next day. scarlet: and this is a steady progression of gains. >> it really is incredible. theink that tells you that dip after the speech -- hey, how much more dovish could she have been? rumors sell the news, buddy. people wereaybe feverishly selling in the market on friday, a lot of stocks down 4%-5%. a veryy, things get

oversold and then you want to go in and buy it. that kind of stuff can trigger that kind of turnaround. ultimately, i think there was a big concentration on the speech. aret of market participants looking at the daily trades that morning. kind of exacerbated something already happening on the back of what joe has been following going back to zero. suggested there is not more on the plate as far as stimulus goes. people will continue to suss out what the central banks will do. course, we are paying attention to the correlation between stocks and bonds. matt: or everything. scarlet: here is what you brought to us. s&p 500 earnings-year-olds in white. s&p and purple. panel youly, the top can ignore, but it's there.

this is valuations. bonds were very highly valued. stocks are highly valued on an historical basis. but if you look the cash at the bottom panel, this is the parity story joe was pointing out. getsthat correlation negative, that's a very far down in the red. one is around big taper tantrum. even though we have learned, ok, friday didn't mark the beginning of some new regime change or er interest rates, i don't think people will forget about this. this will come back. whether it is in two months before the fed actually does hike or further down the road,

when you continue to have more and more money going into bond type investments, you're going to get those deals on winding together. if they rally together, they will unwind together. lookingething you are at right now is momentum stocks. is this something that jumps out at you? >> it all blends together. monthlly, you have a six rally from january to the end of june. bond stocks are doing well. that puts them on the radar for strategies tracking momentum. momentum is just about -- pick a time frame and see what gain the most over that time frame it could be and anything. up the ishares momentum etf right now. there were no utilities in it.

less than 1% of the holdings were telekom. about 50% were staples. today, the same 50% of staples are there, but you have 10% utilities and 5% telecom. suddenly, you have roughly 30% portfolio areum stocks that are not usually momentum stocks. joe: i want to look at the two year yield, which has not moved. this is supposed to be sensitive to policy, but this is not where the action is. aren't we seeing any action? it's really about the long end, international, central banks outside the u.s.. >> perhaps the interest rate talk is not driving the two-year , but that's a great point. jobink they've done a great

telegraphing this over the past 48 hours of trading. the movement in the bond market has been much more on the longer and. withw that work expectations on friday. scarlet: when you look at the economics price monitor, you can see that the last couple of reports we have gotten, mainly jobless claims and wholesale inventory, we have a string of negative surprises. >> yes, and that has been the tram breaking the previous trend over the last couple of months. that was happening, it seems like the market was reacting pretty favorably. situationt really the now, at least it doesn't seem like that for friday. you have jamie dimon who said it's time to raise rates. scarlet: he has a vested

interest. the same time, he voices the opinion of a lot of people out there we talked to every day. they are saying let's do it for the right reasons. matt: the board said let's get the hike done and he is running a huge consumer company. surveys of cycle indicators. maybe it is not all bad for u.s. consumers. all right, olli rehn it, thank you for josh oliver renick -- all right, oliver renick, thank you for joining us. is a september rate hike off the table? this is bloomberg. ♪

mark: time for first word news. donald trump was back on the campaign trail today, wordssing a national conference in baltimore. he criticized hillary clinton for calling his supporters "a lastt of deplorable's" week. mr. trump: it was perhaps the most explicit attack on the american voter ever spoken by a major party presidential nominee. total disrespect for the people of our country. said such comments should disqualify clinton from seeking the presidency. will meet with top leaders of congress this hour as another government

shutdown deadline fast approaches. lawmakers in the white house are deal to fightng a the zika virus. also on the table, the asian free trade deal. investigators believe a fire at a mosque could be a hate crime. video shows someone approaching the mosque moments before a flash was seen in the fire started. extensive there was damage. the mosque was attended by the shooter at the orlando nightclub, the worst mass shooting in u.s. history. in syria is now in effect. it marks the latest attempt to end the five-year conflict, which has killed more than a quarter million people and driven some 11 million more from their homes. state johnary of kerry gave an update this

afternoon in washington. mr. kerry: there will be challenges in the days to come. i expect that. i think everybody does. but despite that, this plan has a chance to work. said secretary kerry also the u.s. could approve strikes by bashar al-assad against isis and al qaeda as part of the new .ease-fire global news 24 hours a day analysts inver 2600 over 160 countries. fed board member lyle brainard keeping a dovish tone -- lael brainard keeping a dovish tone in her remarks today. she said banks would be wise to keep policy loose. what can we make of all the fed speak? let's ask the chief u.s. economist for barclays. he joins us now. michael, thank you very much.

everyone knew that brainard has a dovish reputation. she is very concerned about inflation and the labor market. thought she would set up a september rate hike. d not do that at all. what do you make of where we stand now? would say her comments were in line with expectations, even a bit more dovish. she made an argument for caution in light of what other fmo see members have said. we think the data has cleared hurdle for a strike. -- cleared the hurdle for a september hike. it has evolved in line with forecasts. the problem is, markets are

praising it. historically, the fed doesn't move and less the markets have it appraised in. communications in recent weeks against a mildly softer data backdrop hasn't been enough. goal of all the speeches to move the market more toward the prospect of a rate hike? >> it may be. surprising inwith a speech or article, but not fine with surprising in the decision. historically, rates have hiked when volatility has been a 70% or higher. scarlet: this is something jamie dimon has spoken about in the past. fed officials had no problem surprising markets. matt: listen to what jamie dimon had to say. mr. dimon: right now, we kind of tell you it's going to happen.

we forecasted going forward. federalto look at the over. paul volcker raise rates in between meetings on a sunday night 200 basis points. there are other ways to do this. you can not make that which is uncertain certain, and we should stop trying to do that. way, you are the section chief for the board of governors watching the financial markets reaction. does the fed take financial markets reaction more seriously in 2009?id should they be as concerned 'sout financial market reactions? >> yes in the following cents. the world looks different today than it did 10 years ago or back

can 19 80 with volker. the u.s. is diverging from -- back in 1980 with volker. the u.s. is diverting from other economies, but slowly. we have seen examples of feedback in a negative manner to the u.s. economy. there is a correlation between the news and how the economy develops. about september, december. does any of it matter. of whenw, regardless they go, there is still an expectation of forward movement at a shallow pace. right now, you have action seemingly driven by the long end. i think the debate between september and december is largely irrelevant, based on what you just said. the main question this year was are we headed into a recession and is a coming soon? the labor market said no.

we are better than we have been. front-end rates should go gradually higher. markets are looking for what is the issue that causes a breakout from the environment we are in. look at a moderate growth, very patient fed, and that doesn't change things. matt: there is an important event between september and december. >> what would that be? [laughter] politics person said fed policy. in does anyone believe him? >> if you are moving the front end rate today or the balance sheet with the hope of getting financial conditions further down the curve.

think it makes sense to incorporate that. politics, i mean, everybody generally has their own bias, but i do think they tried to walk into the meeting and say what has happened and what should we do? i think they try to take the politics aside. to be a there is going lot of data that comes out that is pretty critical. saleil sales, whole inflation, tpi. will any of this be enough to sway the fed to make a significant change? crexendo think so. right now, the paperwork it -- >> i don't think so. right now, the paperwork is being developed for the meeting. moves, i thinkor the major decisions will be made before. you mentioned the interview with the fed. the data is still a little short on inflation but trending in the

direction they expected. the labor market recovered from the may swing pretty nicely. on the other hand, what's the rush? it doesn't look like there is any real prospect of inflation breaking out. brainard made it clear that 2% is a symmetrical target that can on the upside as well as the downside. why the rush? >> what you led into this segment with, equity prices moving ever higher. it's what rosenberg says out of boston. bad things happen when monetary policy is to lose for too long, and we have been pretty bad at seeing those things and judging them in real time. had a chart up that i would love to bring up again that i find fascinating. tradable goods and domestic cpi. tradable inflation is basically nonexistent.

global trade causes deflation and so forth, but the domestic cpi and services, what we do here, quite firm. should that be what the fed looks at? can it really control the other one? >> this is where the committee is split. energy, and we separated out based on value. greater import value ads are tradable's. the people who want to move now on the fed are the ones looking and saying the domestic economy looks fine. when that dollar energy starts moving away, inflation will be higher. that is what the focus should be -- what the rest of the world is saying. matt: thank you so much for being here. , do we have more to go in the bond market .apantrum

this is the chart you can't mess. ♪

♪ i am mark crumpton. let's get to "first word" news. hillary clinton will release more medical records following her stumble at a 9/11 ceremony in new york. the campaign later revealed that clinton has pneumonia. her press secretary and other staffers say they made a mistake in handling the situation. hasrace for the white house nine more weeks to go, but some voters have already started casting ballots. early voters will make up more than half of the electorate in the crucial states of north carolina, colorado, florida, arizona, and georgia, according to projections from the assist you to press.

in 2012, 30 5% of voters did so before the general election -- before thers did so general election. president obama said he will veto legislation that would allow 9/11 families to sue saudi arabia. it passed the house and senate. congress could override obama's time in his first presidency. the senate could move soon on a $10 billion water project bill million fors $220 flint michigan and other communities struggling with lead-contaminated water. the bipartisan bill would authorize 29 projects in eight teen states. -- in 18 states. powered by journalists in over

120 countries. i am mark crumpton. scarlet, back to you. bounce back from friday, and look what happened here, the dow industrials up, the s&p gaining 1.5%. the federald reserve governor, was dovish.ngly sounding more hawkish after what said.osengren joe: they said this could set up a september rate hike. this is one of the reasons they paid so much attention to it. i went to take a deep dive and talk more about the japantrum scarlet: did you just make up that word? it up earlier today.

in 2013. the blue line is the japanese 10-year. i am always a little skeptical of these charts. nonetheless, it is fun, and even if the pattern is somewhat nonsense, it does be to the idea that people are worried about, once again, a central bank not doing as much qe, not as much money coming into the market, and that is reverberating across asset classes. keep an eye on this. we will see if it continues to track. scarlet: and the 10-year -- way to go.ave a long for more, i want to bring in a global strategist with a security company. bob, thank you very much for coming in. you think japantrum is a dumb that is ok. what do you think about this in general? what is going on with the rates that is driving it and calling

the shots right now? think that is what is driving market street don't forget, we had an ecb meeting -- i think that is what is driving the markets. forget, we had an ecb meeting last thursday. i am not sure there is much left for them to do, and on top of that, there was a presentation today, which some people thought was a signal, so you had a lot of things happening thursday and friday. a market was complacent, and markets had gotten a little stale, and you have this kind of this. reversing expectations about what might happen, but i think key issue.ill a big i do not think there is much left for japan to do. : so what do they do?

there continues to be talk that governments around the world need to do more fiscal stimulus. i thought people saying over the weekend that we are seeing signs of this already. france once you more fiscal stimulus. but are we going to see that? do you think we will see the policy hand off at some point in a meaningful way? been talking about this for about six or eight weeks. empty. on i think central banks are running on empty, and i think the question is will the fiscal authorities pick up on that, and i think that is where a lot of the uncertainty comes from. france would like to do more, but they has issues within the eu. greece would like to be taking some action. greece has issues. greece is something we might hear more about in the fourth quarter of this year. i think there are governments that would like to do it, but the ones who have the wherewithal to do it are not

moving that much, and that would be the u.s. and europe. i would like to hear more about what you're talking about about greeks, and i know joe cares about this. greece, and i know joe cares about this. bob: they need more funding. there were some in -- implications last week that they have not battled all of the hurdles that were put out there for them to accomplish by now. getting some further heart stops on funding for greece, and between the imf and the eu, they are not really agreeing that they have met those objectives yet, so i think we are going to hear more about that. they have to get the imf on board. bob: well, the eu is part of this impediment also. they think there are more things that greece needs to accomplish before they give further

funding. this is something that will come and go. we may see this in the fourth quarter. we have elections in the fourth quarter. referendum italian on policy going forward. there is a lot of things happening between now and the end of the year. there is a possibility about some of this says speak, them wanting to get a rate hike out of the way in september so a lot of these other impediments do not get in the way of doing something. matt: by the way, does this /dollar, or doro you think it could strengthen? we: i think -- the thing have to remember about the euro havehe yen, both of them large current account surpluses, so it capital is not slowly out of the eurozone or japan, the natural tendency is for those currencies to rise, and i think that will be determined primarily by what the fed does and what the dollar does. i do not think we will see a lot out of the eu or japan that would change policy. to monitor and keep

inflation under wraps, and you're looking at the headlines cbi out of the eurozone, and we have a chart that track that. italy, france, greece, and pretty much, all are congregating around the same line. got theu have negatives, but nothing anywhere in the vicinity of 2%. exactly, but i also think they are coming to realize there is not a lot more they can do. i think they see the negatives of a negative interest rate. they do not want to go further into negative territory. they are running up into some constraints about the number of bonds they can buy. it is not about getting inflation higher. it is really about what they can do and the implements they can use to push the economy forward. think onegrowth is i half of 1% to 1%. they have been doing a pretty good job. it is just not enough to get inflation moving higher.

joe: with the various things to watch, the french elections in the next year. people talk about real possibilities that marine le pen win, depending on who the conservative nominee is. what do you think about that down the road and also this idea that centrists, standard parties do not seem to have found any way to stem the bleeding and that the other party gains with every election? bob: i think what is interesting is the may administration in the u.k. vote, itin the brexit was that things were not working, and they went for something radical. in this case, leaving the eu. i think a lot will depend on what she can do in conjunction with the eu to making this

process work, keeping sovereignty while maintaining growth and coordination with the eu, so i think we will see more spasms with this. i really do not think that le pen has enough support to win in france, but again, it it is the uncertainties that the markets are going to have to deal with, and i think they are pricing some in. talk about have to what is happening in the u.s., and one of those is about using the peso as a proxy. what you make of this idea? you want to see how donald trump is doing, just look at the case so. bob: yes. i am not convinced. if you look at oil prices and changes in expectations about u.s. interest rates and u.s. fed policy, i think that explains the bulk of the movement in the mexican peso. i do not think there is a lot to

be explained by the political agenda. matt: what you think about neel kashkari's comments this morning, that politics plays no role, and he was also forecasting gdp kind of luke warm, at 2%? the new york fed has a forecaster think of 2.8 percent, and the atlanta fed is diverging a little bit from that. what do you think? bob: well, look. they have not been great. but we are in the middle of september, and we are trying to forecast third-quarter gdp, so, hopefully, they have got a handle on this. white line here. bob: the new york model is a little different. we are gravitating around 3%, which is a nice rebound. my colleague things it can be a little higher than the atlanta fed numbers. good solid a situation in front of us, and i think those numbers are important, he goes those are

from two said regional districts, and the fed will probably rely on that in thinking, ok, we have probably got one quarter of 1% or more growth ahead of us. thank you.nche, and after concerns about clinton's health, donald is back on the attack. he says that she looks down on americans. this is a not about her health. it is about comments she made. this is bloomberg. ♪

anchor: what'd you miss? on friday, hillary clinton said

trump's12's -- half of supporters were deplorable, and he is also fanning the flames about her health, and clinton is --ing to learn the hard way i do not think she is going to learn that the cover-up is worse than the crime. -- joining us is our bloombergpolitics reporter. is she learning that the cover-up is worse than the crime? reporter: there is no indication this is going to change as the campaign goes on. this has been a persistent problem for her. she has talked about having a zone of privacy. she thinks politics should be about governing, and her policy is to relay as little about her as possible, and this is a perfect example of how that causes trouble. there was a video that showed

her stumbling that did not match the campaign claims that everything was fine, this is a case of how her own instincts sometimes get her into trouble, and the campaign did say they regret the way they handled this, but i would not bet on this changing going forward. a close she has such circle around her, that there are people who do not have a different point of view. she has stuck with this loyal point of view. joe: even before this, there was a lot of criticism about how they handle inside information. and then the 9/11 memorial, the talk of the weekend was her "basket of deplorables" comment, which some likened to the mitt romney comments, but others say why that have a conversation about how much donald trump's campaign is fueled by bigotry and racism? is that a conversation that the clinton camp is willing to have

and that that is not necessarily such a bad gaffe after all? yes, the clinton campaign released a statement today. donald trump a positive campaign released an ad, and they are going at it hard. want to have at conversation about the ugly ase, but in trump's b there is a time of data, and it varies from pole to pole, that they have expressed or told theses -- pollsters items. now, she did walk back very crucially the part where she said half of trump's supporters were in this basket of deplorables, but she is holding to the rest of it. they are trying to paint her as out of touch and condescending, and it is always easy to rally the base when you see an opponent talking down to their base. hil, you were at the

value voters summit. can they really get behind a candidate who is a new yorker at heart and who has been married three times and has five different children from three different wives on stage with him at the convention? it is interesting. there is not a lot of enthusiasm for donald trump. they all admit he was not their first choice. they wonder about his commitment of his christian faith, and his principles, he almost never mentions them on the campaign trail. having said that, yes, they are willing to get behind donald trump because they are terrified about a hillary clinton presidency. they are worried about the vacancy on the supreme court and things like gun rights and things that matter to conservatives that hang in the balance. the are three other justices who are potentially nearing retirement age, 70 years or older, and that is what is getting conservatives behind trump, however reluctantly.

from the cover-up, what do we know about hillary clinton's health? she does not just stumble in that video. she absolutely collapses to the ground. all, they sayf they will be releasing more information about her health. what we heard from her doctors is that she has pneumonia. she was diagnosed on friday. she canceled a trip to california today so that she could rest. there is a limited a lot of information that they out. she has hypothyroidism, and she takes blood centers as -- blood as a precaution, and she has seasonal allergies, nothing that would affect her ability to do the job, so let's see if the campaign something else out there. matt: thank you, sahil. and donald trump and

real estate stocks. should investors take his advice? this is bloomberg. ♪

♪ scarlet: i am scarlet fu. what'd you miss? at stake? be hong kong, according to a manager who has property equity globally, and this is one of the many topics that betty liu will be discussing i'd a break asia tonight. she joins us now. so tell us about it. it is kind of indirect. have got a dutch portfolio manager commenting about the u.s. presidential election that could affect the hong kong market. just try to wrap your head around that. so, basically, --

matt: it is a global world, betty, a global world. betty: it really is. that invests in real estate around the world, half of it, by the way, in the u.s. and canada -- he says that if donald trump wins the white house, be careful with hong kong real estate stocks, and the reason he says is because there will be a rise of protectionism. global trade is going to suffer. that is going to hurt china. china has been pumping a lot of money into hong kong real estate, and therefore, that is the domino effect by which you will see property values their fall. now, as you know, hong kong real estate is already in bubble territory, so it does not take much to get it knocked down. scarlet: yes, it has to deal chinese, wanting to

their money somewhere safe. investigated been -- investing in their property. betty: right. they were preparing before get out of their real estate holdings there, and they were right. not as much as we saw, but there was a bit of a hit in real estate stocks. they offloaded some of their financial services, exposed real estate companies or landlords, and they moved it more into that german landlord -- in fact, they said it was better to diversify throughout continental europe. about 10% inve hong kong, over 50% of their holdings in the u.s., that he did say u.s. landlords that are most exposed to global trade could be the most vulnerable and that the u.s. is not as much of a concern for them. book?just talking on

if donald trump wins, he is not concerned about the u.s. betty: yes. is lessd trump wins, he concerned about what will happen in the u.s. trump is going to protect the assets here in the home country, and so, perhaps, it might actually be a safer bet to stay into the u.s. matt: this is according to him. none of these are our opinions. betty liu, 7:00 a.m. hong kong whichor "daybreak asia," you can always watch right here on your bloomberg. scarlet: coming up, a close trend. anchors, andiss?" i took a plunge from 13,500 fee t, and that leaves joe weisenthal as the outlier. this is bloomberg. ♪

♪ what'd you miss? joe weisenthal not taking any risks. this is bloomberg. joe: yeah! scarlet: back here on earth, do not miss the numbers due out at 10:00 p.m. tonight. joe: and inflation at 4:30 a.m. new york time. and a huge focus on the finances of argentina. we will be live all day. i try to say that correctly, and i mess up all of the time.

the argentina business and investment forum. we have got exclusive interviews bob the president, macri, dudley, and more. don'

john am -- i amemann i john heilemann. .ark: and i am mark halperin for those who think they have a body -- thanks, guys. we will take it from here. ♪ a beautiful day in new york, and we are feeling great. we are not trying to get too grossly generalist it, as we look at what is defining the presidential race. one poorly