U.S. Holds Syria Accountable: Surveillance (08/27)

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Aug. 27 (Bloomberg) -- Full episode of "Bloomberg Surveillance." Guests: Richard Falkenrath, former director of the National Security Council, Blackrock's Russ Koesterich and NYU Stern School professor Richard Sylla. (Source: Bloomberg)

Syria will be held accountable for chemical weapons attacks on its people.

The united states has four destroyers with cruise missiles in the eastern mediterranean sea.

William ackman says enough after a loss of give or take about 600 million dollars.

Others take advantage.

They acquire his shares at $12.90. after a meltdown, the exchange faces renewed competition.

Good morning, this is "bloomberg surveillance room" i am tom keene in new york.

Tuesday, august 27. running the sara eisen, alix steel in for scarlet fu.

Let's get through this.

So much going on with the markets on the move.

A stronger yen from overnight news this morning, chinese industrial profits rebounded.

Growth in china stabilizing.

Chinese stock markets rose to it two-week high.

Positive news out of germany.

Is this confidence increased to the highest level in 16 months.

In jackson hole, policy from around the world, we are talking about this nascent recovery in europe.

Nascent.

In terms of economic data, s&p home price index out at 9:00 a.m., followed 20 cities across the state.

Regional snapshots, manufacturing index, 10:00 a.m., consumer confidence index.

A few earnings before the bell, tiffany -- you know i like this 1 -- almost 40% of its sales come from the asia-pacific region.

Japanese spending, chinese spending.

After the bell, tivo with the new set top box that has gotten rave reviews.

20 minutes ago the markets really moved.

Equities, bonds, currencies, commodities.

Alix steel is going to jump in on oil.

Now -8. risk off trade, 2.77. euro-dollar, 1.3344. there is our american oil, west texas intermediate, 106.85. let's go on to the second string.

Take a look at brent crude.

Gold up $18, well over 1400. sarah, 97.76. by definition, the young moves stronger.

You see it a little bit ins talks falling off.

Brent crude, the intraday chart, let me move the microphone, here is a spike up.

How link is oil to syria?

It is not an oil country, but in speaking to analysts, they said brent has been trading from 100 dollars -- 120 dollars since the arab spring.

As syracuse getting in the news, if we see some intervention, with busy brent push up.

-- as serious keeps getting in the news, if we see some intervention, with brent pushing up.

If there is an involvement, what happens at a rate means are killed?

If russians are killed?

What is the trickle down?

What the trickle down might be as it spreads.

Interesting markets on the move as we begin "bloomberg survillance." record lows overnight for the ruby.

Pain for the emerging markets.

That has people worried.

There are a number of stories out there.

We have scoured the papers for the most important stories.

One comes from washington.

The window has narrowed for the white house and congress to make moves on budget negotiations after a new timeframe for the debt ceiling was announced yesterday.

The treasury said it would hit tarring limits in mid-october and be unable to pay its bills after that time.

The deadline is sooner than expected.

They had given they time frame as november.

Budgeting saying they are not worried at all about the debt ceiling.

-- deutsche bank saying they're not worried at all about the debt ceiling.

Would did they not raise it?

2011. are you remember when the u.s. got downgraded?

They eventually did it.

Will the republicans won a repeat in 2011 as are headed into the 2014 election cycle?

I will put this on twitter -- would have they not raise the debt ceiling?

Bill ackman , raised 104 money dollars in an underwritten offering of his 39.1 million jcpenney shares.

Citigroup managing offering at a price of $12.90. yesterday's closing price of $13.35, this would unfold the drama that we have been hearing about for so long.

You had morningstar saying, look, he overplayed his hand with ron johnson in the driver seat and the move to sell his stake will be the end of this debacle for jcpenney and its shareholders.

3.37 haircut off the closing yesterday, very difficult.

Take the shares, sell them to citigroup, they hold the breakup of coffee because the arab -- they have the orders artie taken.

Stephanie ruhle has been on the phone all night and covers bill ackman and hedge funds and has more color about who bought on the other end of this trade.

We will be following that in the next two hours.

Talking about syria, oil, the obama administration is tied to hold their government liable for deadly chemical attacks on its people that killed more than 1300, according to the opposition groups.

The u.s. and allies move closer to a decision on which entree military strikes.

We have a serious foreign minister that will hold a press conference in damascus at 10:00 a.m. eastern today.

Don terry spoke wednesday in washington.

The indiscriminate slaughter of civilians, the killing of women and children and innocent bystanders by chemical weapons is a moral obscenity.

By any standard, it is inexcusable and despite the excuses and equivocations that some have manufactured, it is undeniable.

Obviously, that was senator or secretary of state john kerry speaking yesterday about the situation.

Very fluid.

Brent crude has pulled back a little bit.

Our guest host this hour, bloomberg contributor, principal chertoff group, with experience as a white house adviser and director of the national security.

Good morning.

I have been reading about mckinley and the philippine war.

I would suggest nothing has changed.

We have trouble projecting around the globe.

We have the means to do it.

It is come along was since the philippine war.

The president can launch the strikes literally in minutes if not hours.

The political story.

The country doesn't mind -- in this case, i think will accept a quick retaliatory punitive strike.

The country and the president are not ready to accept an invasion that will go on for weeks or months.

How accurate is a cruise missile?

If we have a destroyer off israel and withdraw a missile in the air, is a plus or -12 feet, 120 feet?

It is very close.

A sickly, could fly through a window.

It is like the movies?

It is.

One thing about cruise missiles, they fly relatively slowly.

They can literally be watched from a drone as they hit the target directly.

Syria, not such a significant oil player or in terms of major economy, but clearly, there is jitteryness.

What happens at the u.s. were to take the next step?

It depends on what it is.

Here's my hunch.

The president has decided to use force and essentially launch a package of strikes against regime targets.

Then be done with it.

What they're doing now is eldon the case for that action that essentially unitive action for the use of chemical weapons against their own people.

But the president i think owns to avoid any prolonged u.s. involvement in this, or an escalation of the crisis or spreading of the crisis.

The story of the night in the new york times that walked through a scenario as the aggregated together many reports of what actually happened.

One of the distinctions is the idea this chemical attack was from a rogue group of mr.

Assad.

Does it matter that it was a rogue group versus a formal attack by this theory and government?

It does matter in that it would suggest al-assad is losing control over his chemical weapons.

If a rogue group was able to get them away from the regime and where they're stored securely, that is even worse in some respects because it suggests these things are on the loose.

It could follow and other hands.

All of these scenarios are bad.

Reports i have seen have suggested the al-assad regime's command and control is pretty good.

The question is, where does syria's economy go from here?

I was able to pull together some statistics.

$73 billion.

Just a little smaller than mexico.

Part of the main interstate is oil.

2.5 billion euros of reserves.

That is number two aside from iraq, which is one of the go- getters of the oil community in the middle east.

Right now they have shut down oil production and wells, no experts going out.

The production loss is about 360,000 barrels a day.

The government itself says it has caused some $13 billion.

Barclays said, he ran agreed to provide almost $4 billion in credit line to syria saying perhaps we're looking at some destruction in the oil and infrastructure part of the country, and that is why did the loan so badly, which does not bode well for even restarting its economy.

What will be there if we take up this government?

Over 300 different rebel groups involved in fighting the government -- including al qaeda.

Yes.

One is the most effective fighting force most of eastern syria and it will be anarchy for a time.

Eastern cereal with turkey above them, are we aiding the people that took down those two towers in 9/11? we are trying to avoid giving aid to them, but there are other groups we are working with.

It is a very complex, fragmented situation.

There are international steering groups outside the country with whom we have a dialogue and are attempting to funnel some aid, but they're disconnected from the fighters on the ground.

Oil, up one dollar, brent crude.

10 year yield shows the attention this morning.

Let's get the company news.

Microsoft.

The company moving to reassure employees.

Some senior managers have e- mailed workers to let them know packers off is emitted to steve balmer's reorganization plan.

Ballmer's turnaround plan was announced in july.

He announced he would step down as ceo over the next 12 months.

Best buy founder plans to sell his stake in the chain.

Yes to the retailers will sell it undisclosed amount of stock in an effort to raise money and diversify his assets.

The move comes after shares have doubled in the last year.

He owned about 21% of the retailer.

Billabon g says its bread is worthless.

The company posted its worst initial results ever, and net loss of $772 million for its fiscal year.

That is more than triple the previous year.

They're struggling with weak demand for surf apparel after expanding its network of stores.

Coming up, $600 million.

That is the amount the weidmann's reducing square capital lost on its phil jcpenney bet.

We will discuss what is next for the company on "bloomberg survillance." ? good morning.

Markets on the move, serial link to oil.

-- syria linked to oil.

Look for that at 9:00 a.m. this morning.

The boom in et f, embarking on a major policy shift could come as early as september.

Uncertainty causing volatile archives.

We have seen money pour into emerging markets et f in the last years.

Many charts show on funds at the precipice, possibly to decline through june lows.

Chief investment strategist at blackrock no seat declining share etf when he sees one.

Give us the nuance.

As a general statement is everything is going down is wrong, what is going down and which fixed income investments are not going down?

Generally, what you're seeing right now is investors are reconsidering their five-year love affair with bonds.

We had over 20 and dollars flow into bond funds after the financial crisis.

At a slow pay some of that money is starting to come out.

It is not unexpected.

Investors are worried about the duration risk in the portfolio.

They are selling bonds but particularly bonds that have high durations.

Mostly short duration instruments, bank lows, floating rates and anything that will give you some income with less rate sensitivity.

The etf, the number of etf's, attractive to mom-and-pop, retail investor.

The fact we see outflows, do they magnify the moves in the markets?

No.

first of all, the outflows from bond funds are not limited to etf's. second of all, there's been a lot of discussion about do they cause the volatility?

A lot of the volatility we have seen in the last four or five years is not hard to explain.

Generally when you have a slower economy, you have less conventional monetary policy, these are environments when volatility tends to rise.

How do we rationalize , i had a financial planner and decided to go international, granted, ishares philippine funds down 20%, but do something else or do you write it out?

First of all, philippines is particular exposure.

I had to pick something.

Right now the emerging markets are definitely on the chopping period with the dollar strengthening, liquidity coming out, not a great environment.

However, there is long-term value in the space.

If you look at where it is trading right now, down about 35% in valuation terms were developed markets trade.

Historically, that has been a good long-term injury . -- entry point.

It is one of the places we see a very big discount today.

You mentioned outflows into longer data bond etf.

Out of.

Out of.

But what is it longer-term?

The downside is the achilles heel, the housing market.

We saw evidence of that on friday.

The recovery is gaining momentum, but it is very predicated on a recovering housing market.

If we see a situation where mortgage rates go too high and create a head wind, that is an issue not only for home builders and construction, it also hurts and simmer confidence.

A lot of what has driven this.

What have you seen inflows ? you come off the weekend, monday at eight, 9, 10 meetings about money going out the door.

What are you observing?

So far it has been an orderly selling a bond funds.

We have not seen massive liquidation.

We have seen a little bit of a pullback in risk appetite as it applies to equities.

One area where people are starting to go into, which was really sort of avoided for many years, is europe.

While people are cautious on the emerging markets, we are seeing some willingness to take risk in europe.

Thank you so much.

In a time -- futures, negative eight.

Brent crude, 111 .75. the williams sister dominated at u.s. open.

We will tell you more.

There is a business angle coming up here on "bloomberg survillance." ? this is "bloomberg survillance." in top headlines, the obama administration says it will hold syria's government blithely -- liable for deadly chemical attacks on its citizens.

John kerry calling it "cowardly crime." the white house under increasing pressure to take action in the wake of the attack.

China's industrial profit growth rebounded in july after rising to six percent in june, net income jumped 12% last month will stop telecom and power companies help lead the way.

Assigned the second largest economy in the world is stabilizing after a two-quarter slowdown.

The unseeded venus williams upset number 12 seed kristin and opening-round match at u.s. open.

Once one of the top-ranked players in the world, venus has dropped to 60 it.

She battled injury and illness.

Serena won her opening match.

Venus has slowed down, had some troubles.

It will be interesting.

She has become quite the brand with all of her fashion a business interest.

I want to go to the u.s. open.

Worldwide, a magical time in new york city.

Special time of year in august.

They're very healthy.

They walk around with 20 tennis rackets under their arm.

And in entourage.

They look like they could chew me up and spit me out.

That probably can.

Morning must read.

I went to "the wall street journal" editorial page, talking about what the goal of u.s. mayor taylor -- military strike might be.

Interesting.

Who is mr.

Assad?

The son of the previous day eight or.

You never thought he would be the dictator himself.

Yet an older brother who was killed in a car accident and the father groomed the older brother.

I think he is a medical background, i think i want to say is a doctor.

He is married to a glamorous western wife.

He finds himself having inherited his father's autocratic system of government.

He is of a minority portion of the country.

They have suppressed the dominant, larger population sunn is.

I want to bring up my morning must read -- this as regulators try to make it safer.

Just one debate to follow.

Standard chartered from their international perspective as well.

Something to watch.

Though i can has put his stake in jcpenney up for sale.

-- bill ackman has put his stake in jcpenney up for sale.

What next for jcpenney?

? this is "bloomberg survillance." tom, we need a data check.

It looks like european markets -- u.s. markets are following european markets.

Features negative nine.

Take a look at the chart.

If you want to watch one statistic on syria, brent crude and then dollar-yen.

I will take a look at gainers and losers from yesterday and point out amgen rising about 7%. they bought pharmaceuticals for 10 point $7 million.

It gives them exposure to the cancerous drug market.

And rated new by at citigroup, price target of $60, 3d systems.

Tyson foods is the loser, but you can't forget the soaring corn and soybean ices we've seen in the last week.

-- prices we have seen in the last week.

Expedia begins trading today.

Investors had to own the stock for today to receive.

Shares under pressure, the latest twist, bill act meant purchasing square capital came out with a bombshell last night.

Alix steel, selling his entire stake.

18% stake after the failed push to trade the management from ceo to chairman.

He holds a $39 million shares in the struggling retailer.

It is estimated a $600 million loss.

Interesting, it is not his only retail sale.

We saw him make a bet on target and lose on that.

The question is, what is next for the company that are struggling to turn itself around?

Let's bring in an analyst that covers it.

William, now that bill ackman and his three your tumultuous involvement with jcpenney, ken jcp many -- ken jcp move on?

I think you can.

One thing that was a concern is whether or not bill ackman and purchasing square would attempt to make another round of activist movement with the company.

They originally made the letter public where they had tried to push to try and change ceo quickly ahead of the holiday season.

I think the threat is now gone.

Probably a good development.

I look at the sale price of $12.90 as an absolute bargain on a price to sales basis, it is trading way below somebody like kohl's. to these shareholders officially still the shares from mr.

Ackman?

No, i think right now the price to sell is an important ratio for healthy companies.

Guys are worried about whether the sales can be converted to cash flow.

What is your judgment of their ability to get to january and begin to convert to cash flow?

I feel they can do that.

They have liquidity to make it through the end of the year.

They made adjustments that needed to be made.

Into the third quarter, pretty good footing.

I like their chances to have a decent holiday season and get to a cash flow positive position by the end of 20 14, beginning of 2015. so some optimism this morning.

Our guest host, chief investment strategist at black rock, but in general, should we pause and be skeptical of some of these activist strategies to try to push themselves into the companies as corporate visionaries?

I think it is less about the active strategy or more about the space.

We have the environment or the consumers coming back, but it is a slow recovery.

Personal income growth after adjustment for inflation is barely 1%. i think some of these middle-of- the-road retailers that find themselves eating squeezed in an environment where there's not much topline growth and really you're fighting for wallet share.

That is tough.

But these hedge fund in numbers -- hedge fund managers, and sears, another struggling retailer, it doesn't seem to translate.

The common factor is the sears.

Similar company in a similar position.

Again, depending upon sales for middle america.

Where is that coming from if we don't see the organic income growth?

So far the recovery has been sufficiently weak that that is yet to occur.

Bill ackman made friends among shareholders.

Kerry capital has a 7% stake and allied in his call for change, what is it likely it sells its share as well?

I can't really speak to that.

My view is, there'll most likely be a change in management over time, probably after the holiday season.

I believe they are probably playing a long game.

They have a long-term goal in their investment, probably working fairly diligent to achieve that over time.

What is your back-to-school view?

I have been stunned at how cautious most analysts are.

It doesn't seem to be a very explosive back-to-school season.

In the context of jcpenney, they need to regain some share.

They have a very low base to start from.

Year-over-year is relatively easy considering how poorly they did last quarter.

A don't really have to achieve the same level as other retail company's have to achieve at an order to get to a number that is acceptable to shareholders.

Bill ackman had a messy road would make him do what he was pushing for jcpenney.

His latest demand is mike ullman was only supposed to be the interim ceo and needs to leave and bring in a new ceo.

Do you agree the company needs that?

I think the company needs stability.

That is what ullman is able to provide.

What bill ackerman did was try to create a new kind of company, the first time ullman was in charge.

Returning to a growth profile will be tough.

Great of you to join us this morning.

All of these conversations are about a lack of growth, lack of nominal gdp.

What is the black rock view on the spirit of american growth and how does that fold into the markets?

I think right now you're likely to probably go through little rough patch with some of the volatility in the fall.

We think things get better toward the end of the year.

You begin to lose this fiscal drag, which is one of the factors that has kept growth from perhaps being faster this year.

You get a little more support from some of the international markets, europe, china that both appeared -- germany this morning.

So it is not off to the races, but it will probably be a marginally better environment than we have seen in the first six to nine months of the year.

How do you respond today and single to cash?

Av not a bad idea.

Long-term, zero yield, losing purchasing power.

Equities are no longer as cheap as they were.

It will still do better than cash and bonds over the long- term.

Markets on the move, futures to a new low.

Stronger japanese yen.

In the next hour, founder of the yes network will be our guest host.

We will talk about all a card pricing for cable.

Is the industry adding in that direction?

That brings us to our twitter question -- tweak us.

-- tweet us.

? this is "bloomberg survillance." top headlines, german business confidence rose to its highest level in 16 months in august, better than forecast showing a sign the recovery in europe's largest economy is gaining traction.

Coffee stockpiles may fall to a 13-year low as torrential rain in indonesia hits the supplies.

Rain was as much as twice the 30-year average since april and inventories are forecasted to tumble 34% by the end of this year.

That is the lowest since may 2000 according to estimates compiled by bloomberg.

Drivers and washington, d.c. are the most accident-product any u.s. city according to ranking by allstate.

Motorist in the nation's capital get in a collision every 4.8 years, more than double the national average.

Phoenix drivers are the least accident-prone.

I've been almost hit by two buses and washington, d.c. do you think it is the anger?

They need to drive like they do in london, and they don't. except they go the wrong way.

What do you do about that?

Take the train?

I don't know.

The mass transit is basically commuter system.

It is the people who live inside the district that cause the problems.

Let's get to a brutal single best chart about a brutal market.

We're talking about airlines.

Take a look at european and u.s. discount airlines, specifically jetblue, southwest and easyjet.

This chart shows net profit margins of the 3 airlines, pretty much in line until 2010 where there is a new ceo of easyjet.

There you go.

You see it take off and margin land by how much?

About 6% margin or easyjet compared to 2% for southwest.

I was taking a look, the last quarter was a rural blowout for easyjet.

It added 400,000 plus strangers -- 400,000 passengers.

He knows every terminal.

Manus is joining us this week in new york.

Easyjet, heathrow?

Tell him what easyjet is.

It is a huge discount airline which was founded by a guy that flies out of gatwick.

A discount airline.

This is a smart woman.

She has baked a cake and put the layers on it.

She is going after the business travel.

She is adding the layers.

I just wonder, is this a moment for dave to give carolyn mccall a call?

Exactly.

They're going after this new york-l a route.

He is going to go hyper flexible.

I think this is a moment.

We got the story on the bloomberg terminal today, could gently be a takeover target?

It looks at the changing landscape in this country were we are seeing consolidation from the major airlines.

If the department of justice is able to block the major merger, who can be the next takeout target that whittington the web the government and lead to these -- and asset management sang perhaps it is jetblue but there are some problems with it.

They're a totally different market than say american airlines and us airways.

They have that east coast exposure.

We go mergers, squeezes prices.

One and one does not make two and the airlines.

In the airlines, yet pensions, unions, and historical's. we look at these kinds of potential deals, the last open together was american -- i'm sorry, cannot continental.

The fuel spike wiped it out.

It is not a one plus one equals two.

I think the jetblue story is really a precipitous moment.

Badger has to pull something out of the back.

He is buying planes.

The jetblue is nonunion, right?

Is a union shop going to buy a nonunion?

Presumably, you negotiate with unions if you're going to see that go through.

$341 from gatwick to milan.

That is good value.

That is like cap as much to go to cincinnati.

-- that is like half as much to go to cincinnati.

You have to book early, six months in advance.

The takeaway is it is half as much a cincinnati to go to milan, italy.

And that is the strategy.

Where would you prefer to go to, tom, milan or cincinnati?

I love the cincinnati reds.

They are playing great baseball.

Yep.

Great to see you.

Great to have you here the u.s. to talk about those discount airlines.

It has been a bad few days for nasdaq.

First the halt in trading last week, three hours long, now i merged to create the second- biggest u.s. exchange come a knocking down nasdaq for number two.

What does it mean for the future of the exchange industry?

That is coming up on "bloomberg survillance." ? this is "bloomberg survillance." i and sara eisen.

Alix steel has company news.

Bitcoin goes to washington.

Members of a trade group on the digital currency yesterday at a meeting, described as a way to help washington better understand bitcoin.

Microsoft moving to reassure employees and senior managers have e-mailed workers to let them know microsoft is committed to steve ballmer's reorganization plan according to people with knowledge of the matter.

Ballmer's turnaround plan was announced in july and last friday he announced he was step down as ceo in the next 12 months.

Best buy founder plans to sell some of his stake in the chain.

He told a retailer who will sell an undisclosed amount of stock in an effort to raise money and diversify his assets.

It comes after best buy shares have doubled in the last year.

He owns about 21% of the retailer.

That is today's companies news.

What a turnaround story that has been to watch.

Uniting teed up of the biggest american exchange operators.

The merger will be the second largest in the u.s., surpassing the nasdaq.

Is in the shadows of nasdaq's recent troubles.

It was close for three hours after the trading glitch.

How does the landscape change?

Joining us as a longtime professor financial institutions at the nyu school of business.

To you, now that we're seeing this consolidation and exchanges, is this a good thing they are less complex, less dangerous?

I think there's a tendency for them to merge.

The new york stock exchange has has competition over 200 years and usually get absorbed the competition.

There is an argument you can make for focusing most of the trading on one market because all of the traders can be together, there will be more trading, better price discovery.

We have had a little fragmentation, but it has been held together by computers.

What we learned recently is that computers don't always work.

Anyway, this is going to create a strong rival for the other two big boys.

Especially for nasdaq.

It is been a pretty bad run.

First the facebook ipo and through our trading glitch in out displaced as number two.

And he tried to take over the nyse but was told he could not do it.

In the years and years you have done this, you're the eminence on this.

What should the s ec do?

We have a new activist chairman.

People are begging for her to come in and tell people what to do.

Is that an appropriate path to take?

I don't think so.

I think the sec should look at this and say, well, there were two smaller rivals to nasdaq and nyse, and now they're getting together and will be right in between nasdaq and nyse in terms of the amount of trading.

In some sense, the competitive environment might be getting stronger.

When we see a more competitive environment, what does that do to the security and equality of the exchanges?

It focuses trading on the exchanges.

Batson and direct edge are basically were treated by big banks and trading firms because the big banks and trading firms thought they could save money on their trades compared to nasdaq and nyse.

So i think in some sense, this will make a stronger competitor.

Is there an incentive to prove they're more secure after we saw the nasdaq glitch come and now that there are real player?

The interesting question, these exchanges a sickly feed their information to nasdaq and nyse -- essentially feed their information to nasdaq and nyse.

The information got transmitted to nasdaq.

It will be interesting to see whether they try to create the information, taking with that lucrative business.

Henry kaufman says we need to go back to simpler time, a partnership time, and yesterday we talked about skin and the game.

How do we get the exchanges to represent investors interest instead of high-frequency trading and deep liquidity interest?

The high-frequency traders and investors are both customers of the exchanges.

So i think these exchanges are probably saying we're representing our customers interest, it shows that more and more the customers are beginning to be high-frequency traders rather than individual investors.

I think that is where mary jo white might say, the little guy has to have some of the same advantages that the big boys have, and that is -- could be were the sec will look at this merger.

Why is this happening?

It is not just in the u.s., china had a fast finger episode in the derivative exchange for europe.

Why is this coming with more frequency?

I don't think that is what we need to worry about but the potential for contagion into other parts of the financial system.

That really comes from the exquisite efficiency and speed with which you would exchange.

It is the principal engineering of how major failures happen.

When something becomes so efficient, sell your stuff and less often, but when they do, they're more catastrophic -- they happen less often, but when they do, they are more catastrophic.

Last week was terrible as a whole.

There are not so many of these, but too much of them.

You have a holistic education with this.

How does this affect the little guy?

All of the sophisticated stuff, the greatest story -- historian, great foreign-policy expert here, your expertise on the market and the little guys going, when is the next flash crash?

I think the concern for the little guy is twofold.

One, you have these events, the flash crash, worried about market structure.

But on the top of it, a rough environment for the last 12 or 13 years for equity investors.

Think about someone who wins the market at the peak in 1999 or 2000. they just started to come back in and re-committing capital.

These events tend to undermine the confidence.

Obviously, the fewer flash crashes you have, the fewer of these events, the more likely are able to see that money come back and stay in the market.

That is key.

Thank you for coming in on a busy day.

Richard, thank you.

Why do i think i'm going to see you tomorrow?

Is researching syria and bitcoin.

I will in their on this report because you can see some of the nervous is -- nervousness showing up in the currency market, the litmus test, tom, of the broader market, stronger japanese yen on those worries, goes below 98. the indian rupee hitting another record low overnight.

So did the turkish lira.

Or pain in the emerging markets as those flows come out of the emerging world.

That's i continues to be a theme.

Coming up, we will talk about this idea of all a cart pricing when it comes to cable.

Which three channels would you choose if we were to go all a cart?

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This text has been automatically generated. It may not be 100% accurate.

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