now north, pete, of 11 so do we need to brace, as gundlach told us we should, for more volatility in the days ahead? >> yeah, and i think, you know, if you listen to what he was talking about yesterday, he really did focus on his own positioning, in terms of bracing for volatility to actually increase and he's talking about how he's got hedges out there that are going out into the future. he's not saying, necessarily, today, based on north korea, he's just saying in general, when you have volatility this low, sooner or later, that's going to percolate into something. and i agree with him 100%. we talk about protecting all the time when it's cheap, you buy it. when the storm comes, you don't want to be buying your insurance policies a lot of people end up doing that that's why you get that extra torque when that volatility doesn't increase >> just to refresh your memory, here what jeffrey gundlach told us yesterday he's expecting in the markets. >> i believe that the market will drop 3%, at a minimum sometime between now and december, from what's now a grinding, grindingly higher leve

scarlet: one of those big names gundlach.said, "if you're waiting for the catalyst to sell itself, you're going to be selling at a lower price. this is not the time. d where you say i can buy anything not worry about the risk of it. the time to do that was 18 months ago." michael: joining us now is a great bishop and coming to us from st. louis's brian reeling. is at the wells fargo investment institute. i want to start with a chart that basically shows what jeff gundlach is talking about. the yellow line will show the ration. duration is really high and spreads compressing. if the terror we heard in all those people's voices, is that justified by the sort of thing? is jeff gundlach right to start pulling back? rachel: we don't disagree. we think it is time to take risk down. we are goldman sachs asse asset management have been taking it down for the several months. we are under waiting assets, but it's new wants. we do not worry perfectly about the current fundamentals of the market. it is pretty high but not increasing. the

when everybody is trying to go big, why is jeffrey gundlach turning away money where to get in...get out. if only the signs were as obvious when you trade. fidelity's active trader pro can help you find smarter entry and exit points and can help protect your potential profits. fidelity -- where smarter investors will always be. >>> we are back on "halftime." back with doubleline capital's jeffrey gundlach i do want to talk to you about the fact that you are actually at a time where bigger is thought to be better, and scale is what a lot of people talk about. you say the other thing is where you want to go you are actually turning institutional money down and that the second part of that is that it obviously doesn't have any impact on the ability of yours to draw either top talent or retain the kind of people that you have around you at doubleline >> that's right. we started building our institutional business a couple of years ago it is a very high-touch business you need a lot of people to do it we have 27 flavors at doubleline what we have learned is that a lot of institutions c

kevin made a lot of money in the vix, that's a derivative strategy jeffrey gundlach, vix. pete and john talking about options that fully rewarded those that listened. this week, that's a derivative strategy overall, i don't think you made any draurmatic changes last wee, you shouldn't have based on the fundamentals >> but the noise, kevin o'leary, got a lot louder last week and we had a great start to this week now we're reminded by david tepper sort of where we are in the real world and it doesn't sort of change your point of view on where we are? you wouldn't lighten up your caution. >> no, my thesis is this every time we have a shock to the system, like a 40% move in the vsx, which is a derivative, but gives you an understanding that is a pent-up concern about volatility my theory is, and i could be wrong, it will not go back to the new lows it is a noise coming into the universe that will increasingly get noisier. if you're taking a position and using a derivative like the vsx to protect your portfolio. and i agree, protecting portfolios and insuring them are very expe

. >> gundlach said to us himself in an investment -- interview that generally people like him, he's wittynd funny and relaxed, and that giving him more and more opportunities to speak publicly, so it became deputy cio last year. he does a lot of podcasts. he has the sherman show through double line. he does a lot of public speaking events. as we said, he's really resonated with some investors as another person and more and more we are seeing him -- vonnie: that is fascinating. doubleline facing challenges. outline some of those for us. >> one of the things it's happening there is the firm started after jeffrey gundlach left tcw in 2009 and took about 40 people with him along with jeffrey sherman. the fund gathered a time of assets over the first few years to the doubleline total return fund, known as gundlach's total fund. it's a huge fund compared with the fund which has about $4 billion. what the firm is trying to do is diversify beyond that flagship doubleline total. us, i don'td to want to manage $500 billion trade i don't want to manage $200 billion. do what they are trying to is rea

eric: gundlach and gross are managers we all know. hardly name and equity rockstar anymore and they are dying breed. the reason is that active fixed income is bucking the trend in terms of outperforming the benchmark. it's all about performance. when you look at the s&p index versus active report, when we looked at our data, we found the same thing. you look at credits, corporate high-yield in investment grade, bond managers are killing it. they are generally outperforming the index. 75% of them will outperform the benchmark compared to equity. you're looking at 25% over five years. part of the reason is that debt managers just have more levers to pull. they can take credit risk. they can take duration risk. they can buy bonds that are less liquid and get some of that premium. fore's is a more wild world them to choose from and indexes are constrained to do any of that. on equity side, it's the opposite problem. market cap weighted indexes are full momentum and that makes it tough to beat. the thing stocks had no waiting five years ag

we will look at that with jeffrey gundlach.oined the chorus of major investors concerned about pricing markets. we stopped about that yesterday with steve ratner. he expressed similar concern about where the market is today. is coming up right here on bloomberg. ♪ david: mrs. bloomberg markets: the trump economy. i'm david gura. south african president jacob zuma has survived a no-confidence vote in parliament in the most serious attempt to unseat him after months of growing anger and a sinking economy. on monday the speaker of parliament made the decision to allow the secret vote. the african national congress is expected to replace them as party leader. he us arrived six previous to remove him. more than 180,000 police have been deployed across the country. the coalition has accused the government of plotting to rig the vote. north korea has reportedly produced a militarized nuclear -- miniaturized nuclear warhead that can fit inside its missiles. intelligence officials confirmed the rogue nation has crossed a key threshold t

millionaire jeffrey gundlach has a warning for you. the ceo says it is time to graduate, move towards the exit. he told bloomberg "this is not buytime to say i can anything and not worry about the rest of it. the time to do that was 18 months ago. " joining us with more is bloomberg's investing reporter. it is a fascinating story, giving us real insight into how he think about the market and his career, this kind of investing. talk to us a little bit about who jeffrey gundlach is and his assets? he has $110 billion in assets , that double line. he founded that firm in 2009 after a very acrimonious split with his former employer, also based in l.a. the performance of his flagship fund, his double line total return fund which is about $15 million, that did great out of the gate. anyot to $50 billion before other actively managed fund and then it plateaued in the last year as performance has sort of tapered off, basically because it is mostly a mortgage fund and the real returns to bond funds have been through riskier assets like high yie

this is not embarrassing, it's kind of global all the things he describes, and finally jeff gundlach, i liked all the levels, great interview. scott wapner, my hat is off to you. if we dropped 2% we could see 20 in the vix that could be a tuesday, wednesday. then what? >> well, what do you think, steve grasso then what? and what role do you think the bond market could play in the future of the stock market here. i mean, the bond market has been moribund for a while even as stocks have marched higher. >> to sum that up pretty well on the bond side, we leave that to central banks and what in fact miss yellen will do and that will affect the bond market. the dollar doesn't know what she's going to do. the dollar rallied up right after the election and president trump talked that dollar down based on china, his comments with china dollar settled in, but then it legged back down again when we couldn't decide what the fomc was going to do. i'll leave the bond side to rick i'll tell you the equity side. we grind higher hand continue to grind higher thereto he's no reason for us to sell off r

i want to start everybody with a chart showing what jeff gundlach is talking about.his chart shows spreads, the yellow shows option spreads and duration, when duration is really high, spreads impressing. -- spreads compressing. is the terror we heard of all of those people's voices, is that justified? is jeff right to start pulling back? >> we don't disagree. we have been taking risk down steadily over the past couple of months. we are targeting an underweight to risk assets including high-yield investment grade and emerging markets, but it is nuanced. we don't worry about the current fundamentals. corporate's are healthy, leverages high, but not increasing. they spent the last few years extending maturity profile at a low cost to debt. we see a low default rate. we don't expect it to pick up soon. the question is are you being adequately compensated for the volatility and illiquidity. we are facing a period where all ability could be higher. high-yield tends to underperform and we see triggers for volatility to go up. scarlet: maybe it is for that reason, brian, you

jeffrey gundlach he's live and exclusive on the halftime report tomorrow the halftime report with scott wapner and the traders is back t mutes at fidelity, trades are now just $4.95. we cut the price of trades to give investors even more value. and at $4.95, you can trade with a clear advantage. fidelity, where smarter investors will always be. when you clock out, i'll clock in... sensing and automatically adjusting to your every move. there. i can even warm these. does your bed do that? i'm the new sleep number 360 smart bed. let's meet at a sleep number store. won't replace the full value of your totaled new car. the guy says you picked the wrong insurance plan. no, i picked the wrong insurance company. with liberty mutual new car replacement™, you won't have to worry about replacing your car because you'll get the full value back including depreciation. switch and you could save $782 on home and auto insurance. call for a free quote today. liberty stands with you™. liberty mutual insurance. >>> our data partners at kensho report the s&p has gained less than 1% in the first part of ea

i do i will be here >> are you still looking at that gundlach article >> no.ur e-mail >> well, let's not do that on air. >> we can exchange that afterwards. >> coming up, house speaker paul ryan speaking to cnbc yet about the nation's tax system and the push to reform, a recap of his comments and reaction straight ahead. and we're continuing to watch hurricane harvey as it nears the texas coast. you're looking at live pictures there of preparations under way in houston "squawk box" will be right back. so you miss the big city? i don't miss much... definitely not the traffic. excuse me, doctor... the genomic data came in. thank you. you can do that kind of analysis? yeah, watson. i can quickly analyze millions of clinical and scientific reports to help you tailor treatment options for the patient's genomic profile. you can do that? even way out here? yes. even way out here. twitter downgraded to hold from buy at jeffries. the analyst says facebook will be the clear winner in social media. he suggests twitter will also lag behind google and snapchat when it come

you've had gundlach come out and say that he's betting on a 3% to 5% selloff before year end he bought puts on the vix because he thinks the vix is going to go from 10 up to 20, so when it began to move, everybody had that as a backup and that i think gave it a booster factor that's why i think the vix has moved quite as much as it has. but the whole concern is what's going to happen out of north korea? i don't know if we have enough time -- i don't mean here, but in -- in geopolitics these sanctions that have been on, the koreans have managed to escape them by using certain chinese banks to launder things that are going on. if we can either get china internally or somewhere to crack down on those banks, then that -- that administration and north korea may crack like a plum. >> wow, jason, same kind of question to you. how do you weigh the risks there while still looking for opportunities in these markets. >> yeah, i mean, i have to say, unfortunately, as far as north korea is concerned, i mean, that's a little bit above my pay grade. i'm not particularly -- i guess, i'm not particular

says.effrey gundlach it is time for investors to because just before it is too late.eact positively to the secret no-confidence ballot. we are live as members of parliament cast their votes this hour. and time to unwind. fed officials pressed the case for reducing the balance sheet, despite the low inflation challenging the central bank's credibility. this is "bloomberg surveillance" indi'd i'm francine lacqua london, reunited with tom king in new york. we have to talk extensively about the inflation figure out of the u.s. on friday. tom: the numbers are there and on we go. there is an august dullness to the market. some of these trends are still in place against the political backdrop. strength is aeuro significant because we are a month and a half away from the german elections. let's get straight to the bloomberg first word news. reporter: president trump plans to wait at least a week before going ahead with his investigation of china. according to an administration official, that is because china supported the u.n. security sanctions on north korea. the white hous

speaking of dull, can i pick it up for a second one of the things that's really important, jeffrey gundlachputs, playing for a dull 3% options are cheap -- >> so apparently a dull friday last week, must have been watching the show. >> we're never dull. up next, "final call." hey gary, what'd you got here? this bad boy is a mobile trading desk so that i can take my trading platform wherever i go. you know that thinkorswim seamlessly syncs across all your devices, right? oh, so my custom studies will go with me? anywhere you want to go! the market's hot! sync your platform on any device with thinkorswim. only at td ameritrade steve, other than making me move stuff, i'm here at the td ameritrade trader offices. what are you working on? let me show you. okay. our thinkorswim trading platform aggregates all the options data you need in one place and lets you visualize that information for any options series. okay, cool. hang on a second. you can even see the anticipated range of a stock expecting earnings. impressive... what's up, tim. see options data like never before. with thinkorswim only at

what do you think of what jeff gundlach just said i don't think many would be surprised if we took a 3% breather >> i think it is clear we are in the later stages of an economic cycle. before you batten down the hatches, we can be in the later stages of an economic cycle for several years. s&p fundamentals were okay one of the other things that jeff said was he doesn't see any signs of an economic slow. it wouldn't be surprising to see some volatility. >> let me ask you tactically two questions. what is your average holding period for a stock i ask that in the context of what he did say there, which is i'm beginning to move to derisk in those areas that have gone up the most are you doing any of that? >> two questions our average holding period is several years. we are long-term investors. we have also been pivoting the portfolio a little more defensively. i see large cap growth intact. many of the megacap tech names, it is hard to argue they are inexpensive. we have been looking a little bit lower for names that offer good value and good growth >> of your top five holdings, the bigg

mark: let's talk about jeffrey gundlach. risky assets, debts are overvalued. what is your message?vestors is that right now, on fixed income, there is scarcity of field. .lobal equities still flush as we look across different countries, investors are looking for yields and looking for yield pickup over the markets. they still favor em and local debt, where we still anticipate greater returns than other fixed income sectors. mark: what are your preferred em stories now? yacov arnopolin: brazil has rebounded nicely. potentialter a accusation had surfaced, now we are seeing the central bank has resumed cutting rates so we are still favorably disposed towards brazil and we hold positions in places like indonesia and, i think another story that has become compelling is argentina. primaries are this sunday and we have legislative elections in two months time. markets are concerned they may take the upper hand or gain a senate seat. in two months time. which is why we see weakness in the currency. we will see how that plays out but it could also be interesting as an entry point into argen

promote diversity just back fire code's "must read" are ahead >>> and the interview with jeffrey gundlach's today at 12:00 "worldwide exchange" will be back i founded lendingtree 20 years ago, and i've never seen a better time to refinance your home, than this summer. why? because right now we're seeing our average customer save $20,000. but with the fed already talking about raising rates, this window will not last for long. lendingtree is the only place to compare up to 5 real refinance offers against your current mortgage - for free. are you sure you have the best rate? take 3 minutes and find out right now. because at lendingtree, when banks compete, you win. exchange." i'm domenic chu alongside seema mody time for the morning must reads, stories in the op-ed columns catching our attention my story is "usa today," congrats google, you found the worst way to build diversity this is controversial which is why i chose it writing among other things, quote, the message to white engineers and anyone who agrees with them violates the rules of working with google and maybe even the law this i

." ♪ gundlach saying the time to reduce risk is now. and he u.s.ed chair janet yellen to chew on. where does that leave the central bank now? we start with a big issue.

i want to start everybody with a chart showing what jeff gundlach is talking about.hen duration is really high, spreads impressing. is the terror we heard of all of those people's versus -- voices, is that justified? is he right to start pulling back? >> we don't disagree. we have been taking risk down steadily over the past couple of months. we are targeting an underweight to risk assets including high-yield investment grade and emerging markets, but it is nuanced. we don't worry about the current fundamentals. portraits are healthy, leverages high, but not increasing. they spent the last few years extending maturity profile at a low cost to debt. we see low spending and don't expect it to pick up your the question is are you being adequately compensated for the al attila the and -- for the volatility and illiquidity. high-yield tends to underperform and we see triggers for volatility to go up. scarlet: maybe it is for that reason, brian, you are underweight and high-yield. how much performance have you had to give up? >> we have been underweight, high yield since e

ackman did just like gundlach does. so when they do that and when the vix drops down into those 11 ranges, which we damn near slammed down to that again yesterday, as we broke down. that's the opportunity, judge. >> we'll step away for two minutes. when we come back, footlocker sales tumbling this hour sales disappointing the street two downgrades for the retailer, as well. we'll debate it in our trade of the day. we created the ripple: the doughnut in a doughnut in a doughnut. right away, it was a success. i mean, it really took off. what people don't know is that it all started with points from my chase ink card. i bought the ingredients, utensils, even custom donut cutters. wow! all with 80,000 points. what will you create with your points? learn more about the ink business preferred card. >>> all right. we're back on the "halftime report." shares of footlocker plummeting as the athletic retailer falls short of street expectations the worst day for the stock since november of 2008 also gets three downgrades this hour

is cash going to find that level in credit, with a 220 ten-year, gundlach says go 220, 230. you're not making money there. and i would say your risk is much greater there than it is in performance, obviously not no risk loss of capital. but than in equities because i think equities can keep going where the global economy is improving and to josh's point, that wasn't even a correction. we were down a few percent it's a blip. >> it had people thinking that something was coming >> it does, underneath -- the same people every time so let's just stay on the apple thing. $200 for the stock is that inevitable, jim? >> well, i do think it is. now, look, predicting the future is kind of tough, but let's talk about this >> no, it's not. >> if -- you know, if sellside analyst jim lebenthal puts out a note on apple, is that the headline look at this new record run. is $200 inevitable >> here's what i think is going to happen, scott i think the next 10% is based on the iphone 8 coming o out ae ii being a supercycle upsale. we've had analysts that disagree but when you get that next 10% a

it's the point that jeffrey gundlach was making on the stage at sond back in may when he was talking about that very issue and making some of the exact comments or close to that you -- >> this is why the others amongst professionals, the standard & poor's 500 is the most successful momentum fund in the history of the world that's essentially what it is. each year, they're re-weighting it towards last year's winners the stocks that have gotten the biggest. it's not passive in and of itself so is vanguard posing a threat to traditional asset managers? 100% but it's also posing a threat to other passives >> i read his comments just a little bit differently you're drawing a distinction between active management and passive management i look at eliot singer as an activist, who is a distinct subset of active managers. i mean, remember, this is the guy who went after argentina -- >> paul singer >> who'd i say >> eliot singer. >> excuse me >> the name of the firm's eliot. >> thank you very much but the point i read in his article is, look, it's harder for a guy like him to go in and actually

ten-year chart of php, you have a stock that has plenty of room to break out to the upside and jeff gundlach was just talking about, there is room in many of these material names, he doesn't feel like that we're covering it enough, we are on halftime, because we've been talking about all of this unusual activity the december 45 calls, very, very active, 7,000 of those were purchase today, $1.12 all the way up to $1.20. that gives plenty of time. stock was trading around 72.40 during that trade. there is a lot of enthusiasm and continues to be in these industrial metals. >> hey, what's your holding period for this one? >> i'm out there to december i'm in the exact same options. i actually love what i'm seeing here it just sort of solidifies what we're thinking right now in the materials space. we've seen that growth, we've seen that strengthen we've seen many of these names move to the upside i think this one has plenty of room, when you look at where it's trading and did not have to dilute at the bottom like so many others, this is a stock that has plenty of power behind it right now >> pete

julia: billionaire jeffrey gundlach has joined the chorus concerned about a pricey market. erik schatzkerth he warned it's time to move towards the exits. he is also bracing for market turbulence. volatility is about to go up. that's my highest conviction trade right now. what do other high-profile estimates have to say on this? joining us now is head of allocations for black rock. everyone is saying volatility is going higher. we could've had this conversation six months ago, a year ago. julia: do you agree with him? >> yes. volatility looks too low. i have to put three caveats on. the first of which is we know the vix is around 20 over the long-term. the average masks a lot of differences. volatility tends to be low for a long time and tends to be high. part of the reason volatility is low is because economic volatility is low. factors like inflation and gdp growth has been remarkably stable. stability in the real economy has translated into stability in the markets. that could go on a while longer. needet: does that mean we to have economic volatility in order for there

is sort of a page out of the his playbook if there's another step, of course when you heard jeff gundlachabout a 3% drop, we haven't had anything, even a black swan event is capable of doing that rather quickly. a -- that company contributing to a lot of the point loss there. but would you go so far as to say that people who were of a mind to lighten up in equities got the excuse they needed yesterday to do so >> i would agree wholeheartedly. it's been a losing game plan if you lighten up and this market has gone straight up in your face, but what are the catalysts? forget about what the catalysts are for a sell-off what are the catalysts for a rally right now? tax reform, health care reform we don't know the likelihood we know the likelihood haz diminished proportionately to what we have seen in the marketplace that's your risk to the up side. the truth is there's a buyer on the dips >> steve, great to see you >> we just got a statement in from governor scott walker regarding the story that the state senate says they may not have the votes required to pass it this just in governor walker

gundlach once to keep his funds at 100 $10 are now billion. he says he has been turning money away.tep with an industry that prioritizes asset growth. alix: thank you so much. i found that interesting, david. you hear a lot about scaling up, he said i would rather own 10 $15 billion funds. david: you look at vanguard, blackrock, they have the opposite approach. alix: exactly. the story, reading you think that guy is a so smart. it is a better strategy? just strategyiven and investing and mortgages, you run out of space. he is being there to his shareholders -- being very fair to his shareholders. david: if you don't watch out, you end up making bad deals. let's turn to president donald trump. while he is on working vacation in new jersey, he left behind council director gary cohn. he will continue working on the tax plan promised for early in the fall. a bloomberg report overnight will haveption corporate tax cuts that are permanent lawmaking individual tax cuts temporary so they can comply with complex reconciliation roles. joining us are chris kettenmann and krishna memani. if at

. >> by the way, he mentioned jeff gundlach said he agrees with him in some of these areas cin going >>omg up, we'll talk about the tech trouble in just a moment ♪ ♪you are loved ♪ when you're clocking out. sensing your every move and automatically adjusting to help you stay effortlessly comfortable. there. i can also help with this. does your bed do that? oh. i don't actually talk. though i'm smart enough to. i'm the new sleep number 360 smart bed. let's meet at a sleep number store. >>> i miss that song a lot actually welcome back to "squawk box" right here on cnbc we're live at the nasdaq marketsite in times square among the stories front and center among the earnings reports out this morning here's what's going on ralph lauren i'm wearing the suit right now reported quarterly profit of $1.11 per share. that was well above the 94 cent consensus estimate revenue beat forecasts even with a 7% drop in same-store sales. the luxury goods seller says it is still in the process of addressing challenges in the business and of course retail has been hit so, so very hard. also, small busine