>> welcome to "bloomberg markets." volatility hits global market. the philadelphia semiconductor index just turning positive on the day, so some of the fear really abating. let's check the markets. the s&p 500 off of session lows, only down now about 1.8%. dow, nonetheless, remember, the nasdaq 100, if you woke up early this morning, you saw futures turning as low as 6% lower. a lot of those losses really starting to be paired at 1.5% lower on the day. the russell 2,000 still seeing more pain, 2.2% lower. but remember, you saw the nasdaq 100 down more than 2% the last two sessions.

today you're actually doing just a little better. the russell 2,000 down more than 3%. the last two sessions now only down 2.2%. the philadelphia semiconductor index, as we said, turning green. let's look across as settings, because the v.i.x. is still above 30. certainly higher than it has been most of the last year, but we did earlier today touch 65. those are very rare levels. historic levels, but bare levels nonetheless. the 10-year yield, the bond market is starting to turn around. we saw the two curves disinvent a little earlier today. let's show you exactly what's happening across the curve. yes, there's a little movement, but the short end of the curve is stunning. you are seeing now a five basis point rise in the two-year. this is part of the curve. earlier today, that habits lowest 364. that means we have jumped more than 30 basis points. we are hanging out now nearly

five basis points higher at about 393 on the day. after that data and more market moves, let's turn to abigail doolittle for a look at some of the midday movers. abigail: on a regular day, if we were looking at the board, we would say it's pretty bearish. the s&p 500 down more than 4%. the nasdaq 100 futures overnight down 6%. now the indexes really having their worst day in just a few days, because of this period. but take a look at the big decliners, the pressure today really coming from the chip space earlier, but we do still have intel and nvidia lower, but earlier nvidia had been down 13% too far, too fast. intel last week reporting a disastrous quarter. that stock on the year over the last 12 months down more than 70%. apple and super microcomputer, this one is slipping, but apple is interesting, because that chart really points to the idea. but right now, sellers taking a

little bit of a breather. we're not seeing any kind of panic. what we are seeing is a lot of breadth. berkshire hathaway, which reported over the weekend, talking about selling much of that apple position, much of that selling starting at the end of last year with the stock in a correction. apple in april of this year, this stock down about 2.7%, despite the stockpile. really a sell on the s&p 500 overall. but it's also healthcare. it's energy. it's also retail. investors selling. but you made that interesting point about the stocks turning green. let's look at some of the stocks that are helping out the s&p come off the lows, and it's all about the chips. lam research now up 3%. advance microdevices, which had been down shortstoply earlier, up about 5%. you see some bargain hunting in here, so to speak. and then there's one stock on this board that's not like the others. sonali, they're up, so it's not

all bad. we have some green, but for the most part we're still under pressure. sonali: we're going to discuss this more. we've been talking about some of the sentiment over the surface. we've been talking about that slow drip of selling we've seen in the prior weeks. has something changed after we saw the payrolls report on friday? and after we saw the unwinding of these carry trades head into monday? >> it's certainly possible. the first thing i would say is we need to be mindful that every 18 months or so, there is a correction in risk assets. in the stock market in particular, this is healthy, this is good. there are excesses in markets. we want them to be taken care of. and so what we might be seeing now is a garden-variety correction. last time i looked, we were in correction territory. the nasdaq is probably healthy, given where valuations were, and that may spread over into the s&p 500. i think people are asking a different question this morning,

the turnaround in markets notwithstanding for the moment, which is are we on the precipice of something bigger? are we on the precipice of either a systemic seen or a valuation-based reprice ago cross the broad market? that would be like the 2000 and 2002 period. i don't think anyone sees some systemic shock on the horizon now. oftentimes markets are ahead of us, so that might be revealed. i don't personally think so. i think it's possible if this gets out of hand, if this goes longer than anyone thinks, then i think it's probably a repricing, which in certain aspects of the stock market we have long been overdue for, keep an eye on the v.i.x. and see. as you mentioned up front, the v.i.x. was really high this morning. that may signal a garden-variety correction. but we will know this week for sure. sonali: are we out of the woods? you mentioned systemic and the

worries about something being broader based. where else the worry here? when you see a broad deleveraging like this? every, one worry that is underpinning the market is where is the floor? >> right, and i would say the most likely outcome in my opinion is some sort of repricing that's valuation-based, that might have to be more severe than a correction. one way to quantify that is to look at the forward earnings estimates for companies, let's say in the s&p 500. in general, when you look at those, what you'll see is when you take their growth into account, in general the pricing tends to be roughly along the lines of the historical p/e for stocks in general. when you look at different p/e's today and you see that one is 50 or 10 other whatever it is, usually the difference is in expected earnings. if you look at expected earnings and you look at the p/e's, one question you can ask yourself is, what does the decline have to be in order to get for the long-term average p/e of somewhere in the range of 16 to

19 for all these stocks. taking their growth into account. my guess is it's some number less than the s&p 500, but you i'm actually going to run those numbers this week, so we'll see what they say. but my best guess for you right now is that those numbers are going to say we need some rethinking of the multiples that we've seen in the s&p and we're in the process of refreshing them. sonali: even today alone, you have had obviously people step into this market and say, hey, i will catch that falling knife. at what point do you start to buy into these opportunities? >> well, there are several ways you can do it. what you want to do ideally is look at some sort of mean variance analysis. you want to say, ok, here's an average, here's a standard deviation, and where am i far enough out where you can be comfortable if this gets ugly, ugly and already occurring, this is an important question. because during the financial crisis, that took more than a year to get to. the high of the market was 2007.

during the pandemic, the whole thing unfolded in about four weeks, so it's really not enough to look at in terms of duration, you have to look at it in terms of severity. and i would say if you want the simple there is, it's just a decline in the s&p 500. a bad line is 50% decline. i think we're probably at about 5% to 6% last time i looked. so if you're looking to bottom feed, to get bargains, whatever phrase up to the use, i don't think we're there yet. sonali: what about the bond market? you saw the massive bid come into the bond market this morning, and it was the only haven you had. a lot has been erased already. at what point do you find entry levels in the different parts of the yield curve? >> well, depends on what you're at. in general, my buys tend to be in favor of credit premiums and not term premiums, because interest rates are very difficult to predict. they're very unstable. in general, the term premium tends to be not high, and in fact, in this environment, his

negative. so that might change. you mentioned earlier the disinversion, so investors should definitely keep an eye owe that. but if i were looking at the bond market, i would keep an eye on the credit premium. they've gotten very shallow recently, probably overbought, and they will widen for sure. certainly they widen during recessions, but they tend to widen also during garden-variety corrections. that's what i would keep an eye on, both as a signal of the values in the bond market and also as a signal of what we're looking at. is it a correction? is it a systemic event? is it just repricing? sonali: the chances of a recession, something that looks harder than the soft landing that investors had initially expected, you watch goldman bringing up the recession odds, not to alarming levels, to 25%, do you start to think differently about what a landing could look like here, and if it's a little bit harder than what you initially planned for? >> well, i mean, i think we have to be open to that possibility,

but i think we also have to be mindful of the number in front of us, and the first thing i would say is, we do need -- we need to disconnect the market from the economy, because the market doesn't always necessarily follow the economy closely. but we do have a set of numbered in front of us, and the market can be a leading indicator, but it can also be a false flag. and so my advice would be to look at the numbers in front of us and see what they're telling us, and i think in general when i look at it, i see inflation heading to a good place in general. i see unemployment that's still relatively low, moving higher, but still relatively low. i see g.d.p. numbers that are relatively healthy, although the g.d.p. numbers, the g.d.p. now numbers put out by the atlanta fed, that's something to keep an eye on as a more real-time indicator. but for me, it's way too early to say that we have not had a soft landing. i think that what the fed has done so far has been extraordinary given what happened to the economy, and i think it's too soon to say that we are falling off a cliff

economically speak. sonali: cooler heads prevail. that is bloomberg opinion, thank you so much for joining us on this crazy monday of trading. coming up, shares rising to intraday highs not seen many northern 35 years. snap company mars is weighing acquisition, and it's our stock of the hour, up next. this is bloomberg. this is bloomberg. ♪ when you automate sales tax with avalara, you don't have to worry about things like changing tax rates or filing returns.

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sonali: this is "bloomberg markets." we had the philadelphia semiconductor index in the green for just a moment. we are back down. these moves have been swift and volatile. the russell 2,000 now really

more in line with where you're seeing declines in the s&p 500 and the nasdaq 100. it is the third day in a row you're seeing nasdaq 100 declines of morn 2%. we're going to talk about these markets with our bloomberg equities reporter. very close to the strategy community. it looks like after so long, the bears are out to play. >> yeah, absolutely. it's very important right now to distinguish between the near-term view and the long-term view. the expectation right now is that things could get worse before they get better. the v.i.x. soared to as high as 65 earlier today. it has since retreated, but that's a level we haven't seen in years. a lot of the selling is caused by volatility tracking funds, selling off their positions that can always exacerbate the kind of rout we're seeing today. that might continue over the next few days, there's so much uncertainty with the fed, the economic data disappointing a little bit. the fundamental view is so far it hasn't changed.

so when you look, obviously this disappointing jobs report, but we aren't seeing any kind of mass layoffs happening right now. g.d.p. came in at 2.8% in the second quarter. earnings are still good. they're broadening out beyond the magnificent seven stock. the fundamental case is still intact, especially with the fed that is prepared to cut interest rates. so once we get through this kind of seasonal weakness. sonali: what are they saying about these tech heavy names? >> we're really seeing the perils of this concentration risk that everyone has been talking about. it's been a very top-heavy market, so many of the gains have been led by the so-called magnificent seven stocks. when we do have these elevated valuations, any kind of sense of uncertainty about the direction, anything that sources the sentiment could lead to very steep losses like we're seeing in tech, and that's bleeding out into the rest of the market. but so far, again, when this recovery happens, the picture

still looks good for those names. they're still delivering on earnings, and the economic outlook is still there. sonali: what does this mean about the leaning of the strategy portion of wall street here? do they feel any pressure to buckle? >> yeah, it's been really quite interesting. a lot of sources have been reaching out to me saying that isn't it interesting when you have the most prominent and outspoken bear on wall street leading the firm, now suddenly this happens. sometimes that serves as kind of a contrarian indicator. he's someone who, when he changed his position from bullish to bearish, the stock market soared after that, so the same way he leads the firm. sonali: who's going to call it? >> exactly. but you still have j.p. morgan maintaining its bearish stance. they still have the 4,200 target on the s&p 500, and they're saying that there are concerns about an economic slowdown, starting to play out. sonali: thank you so much. we're going to switch now to

talk more about the stock of the hour, taking a look at shares of kellanova. the shares are having its best day in 36 years on the heels m&a rumors. mars weighs expanding its candy and snacking empire with a buyout of kellanova. analysts are reacting positively to the news with one saying that a merger could boost valuations. both companies have declined to comment. joining us for more on this story is michelle davis, senior correspondent from the desk for us. you look at this kellanova deal, what are some of the implications? this company is newly stand alone, isn't it? >> kellanova completed its spinoff last year. it's been an underperformer among peers, the multiple is down compared to peers. but it has an outperforming on a sales perspective. some of the hurdles are, obviously antitrust. any time you have a big deal like this, it's guaranteed that regulators are going to want to take a look. analysts are saying that mars

doesn't have too much overlap with kellanova the way some of other consumer packaged food companies would have. but in an election year, any time there's a big, flashy deal, big numbers, consumer facing, there's always the risk that the presidential candidates talk about it. you just run the risk of it becoming a talking point. so that's something that could make it harder for the deal to get through. sonali: especially a consumer-focused company. what are the rationale for mars? is there a significant rationale besides valuation, and how do investors feel about it? michelle: for mars, a deal for kellanova would help its expand its geographic footprint, but also expand beyond its bread and butter, which is candy bars. they make the mars bar. they make snickers. kell anova is all about the snacks, so this would help them expand into the lucrative area, especially always chocolate sales have come down.

sonali: michelle davis, of course, when this m&a market is just coming back, and deal talks in a volatile market nonetheless. coming up, some people are betting on an emergency rate cut from the federal reserve, but there are others who say no way. we'll discuss that next. ♪

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sonali: this is "bloomberg markets." a quick check of the stock market once again, because the intraday moves have been stunning. we have the s&p 500 off session lows, but dipping lower once again on the day to 2.5% nearly on the day. and nasdaq 100 dropping. the two-year yields, we're watching it now, up two basis points at 3.9%. we had hit as low as 3.54% earlier today.

we've had roughly 30 basis point swing, just staggering. the 10-year yield now flat ad around 3.79. investors are betting the federal reserve will turn more aggressive in cutting interest rates amid mounting signs that economic growth is faltering. but bloomberg opinion says an emergency rate cut would be a mistake. and he joins us now as well. marcus, you think about this idea of an intrameeting cut. what would it take to get here? isn't the worry if they did step in and cut drastically or at all before the september meeting, would that not be a sign of weakness? marcus: it would be. the other day, this is the yen. why would the u.s. want to panic itself over what was an overly weak yen and move down by the bank of japan to correct that slowly but carefully? and a lot of that,

unfortunately, the yen trend is because people have been borrowing it and buying u.s. tech stocks, which have been overbought for almost as long as i'm old, but at some point they need a reckoning. that is not the fed's job. that's if stock market weakness really revolves into proper economic, systemic issues, as we may have seen. we saw it during the pandemic. sonali: here's my question about this as well. on one hand, if you have a trade unwinding and unclear how far that goes, margin calls do take a couple of days to really start hitting the tape and processing, and therefore, it's really the extent of the pain is unknown. at what point, when you see all the retail money that's gone into large stocks that are otherwise also involved in the carry trade, at what point does that become a bigger problem? marcus: no one knows, and the point here is that this is not

what the fed's job is to do. there are liquidity problems. i think one of the reasons why this has become harder is the bank of japan announces it's going to cut back by half over the next two years its own purchases of j.d.b.'s. they've been providing liquidity to the world for many years. again, you go back on that, perhaps we might see them slow that down. that would being not the fed's job, but the bank of japan's job, but i'm sure they talk. the federal reserve needs to cut interest rates, absolutely. should have cut last wednesday, possibly upon reflection. certainly should cut on september 18. doesn't matter if it's by 25 or 50. if it's 50, then great. if it's 25, but it needs to come a little bit more surety, not necessarily cutting every meeting, but also get on with lowering overly restricteddity

rates down to a level that's more personal. sonali: to that end, we have only 30 seconds left here, how concerned are you about a recession today than maybe week a week ago? marcus: less. actually covering the services sector, the payroll number wasn't great, but wasn't terrible either. we have a hurricane to possibly affect it. i think recession is a potential, want for a while yet. i think corporate earnings season and g.d.p. growth now is pretty strong. the fed doesn't need to panic and shouldn't panic. sonali: once again, cooler heads prevail. bloomberg opinion's marcus, thank you very much for your time. don't miss his column on bloomberg.com and on the blood vessel terminal, one of the most read today. that does it for "bloomberg markets." stick with us through the close t. has been an absolutely stunning day of trading. not as low as we were before, but lower nonetheless. this is bloomberg. ♪

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>> from the world of politics to the world of business. this is "balance of power." live from washington, d.c. joe: donald trump blames the market rout on kamala harris.

welcome to the faster show in politics as we follow prices lower on wall street and wait for an announcement on a running mate. i am joe mathieu alongside kailey leinz in washington, d.c. it is only monday and we have a lot to talk about. reports say that kamala harris has the veepstakes down to two. kailey: josh shapiro and governor tim walz. this is according to reuters. what we know is that is getting tighter. but we also know is the market is not doing very well today. you alluded to it. donald trump is calling it today the kamala crash, although we are not crashing as hard as we were when the bell rang. joe: although we do seem to be reaching our way back towards the bottom with the s&p 500 down more than 2.5%. bond yields have been wobbly, looks like they are turning lower. donald trump points to not only kamala,