Here in the u. S. As you might expect. Or as the futures were indicating. Lets start in china. If you look over the past week or so, we have the shanghai composite. The Circuit Breakers triggered on monday and today. I want to zoom in on today and what we have seen overnight. Only 29 minutes of trading. Stocks,op in chinese 7 . That closed the market for the entire day. Drop in u. S. A 20 stocks to get a full day closure. But the chinese authorities have now suspended the whole idea of Circuit Breakers for the moment. All of this happening as we once again saw a devaluation in the chinese currency. Lets take a look at that chart as well. This is theling dollar versus yuan on the day. That is what sparked all of this. Concerns about just how worried they are about chinese growth. Betty they are indeed. Chinese Growth Prospects are spilling over into other asset markets. Oil prices tanked not all of this. Julie oil prices definitely tanking. We saw it trading at its lowest closing since about 2004. Is, you are you already have ample supply. What if the demand is falling off even more than people have expected . What does it mean now that we are underway here in the u. S. . Futures were indicating declines of close to 2 or more. Its not falling quite as much as that. The s p down 1. 3 . Nonetheless, at this to the declines we have already seen in the first week of the year and it all reflects profound concern about global growth. Take a look at the sectors on the move. Its not an energy led selloff despite the decline in oil prices. Notgy is doing poorly, but in the bottom spot. Technology is. Industrial, financial. These groups that are very affected by economic growth. It is a broadbased selloff. A lot of pain to be felt. Heres apple, which is declining. Ubs the latest to cut its estimates for iphone sales. The analysts are saying its not a matter of a lack of new customers, its a matter of people not upgrading their phones at the same rate. Betty a lot of pain in tech. A longer cycle perhaps. Im told you have been up since 4 00 a. M. Covering the markets . Julie 5 00 a. M. Betty i will see you back at 3 00 p. M. Vonnie quinn has more. A devastating bomb in libya. At least 60 people were killed. 200 others were wounded. Al jazeera tv says the bombing was probably carried out by isis. Korea will restart blasting propaganda to north korea tomorrow. This is in response to its latest nuclear test. Pyongyang considers the move and act of war. Tomorrow is the 32nd birthday of un. Er kim jong aesident obama will hold National Town hall on gun violence tonight. It will air at 8 00 eastern on cnn. Is expected tont quickly veto a bill that would repeal the Affordable Care act. The house passed it yesterday. Vote to overturn it. Republicans do not have enough votes to override the veto. Im vonnie quinn. Betty thank you. Lets get back to our big story today. Stocks are tanking in response to events in china. Not just in the u. S. , but europe as well. Regulatore Securities Just announcing that they are suspending Circuit Breakers after shares plunged 7 for a second day this week. That triggered those Circuit Breakers and shut the market down. This came a day after china cut its reference rate for the chinese yuan. That was boosting fears that the slowdown in the country is way deeper than official data suggests. Joining me now on the phone in beijing is our beijing bureau chief, nick wadhams. They announced this on webo. Why are they suspending these Circuit Breakers . It was pretty clear this wasnt working. The Circuit Breaker was set up so trading suspense after a 7 drop. But what was happening was that once you started to get to the 3 or 4 drop, that was creating panic. Terrified about the Circuit Breaker kicking in so they wanted to sell all their positions before it hit. So that just only encourage stocks default even further. It was clear they had to make a move to make some changes. Betty what happened here . We are all trying to figure out, what is this panic selling about . Thats a very good question. On the one hand, its a question of whether there really is panic selling. Because this is a very volatile market. We looked at the data in the last year. Had beenrcuit breaker in effect, the market would have been suspended Something Like 25 times. Betty wow. Moves like this are not actually that uncommon in china. The issue before was when there was not a Circuit Breaker, the market would come back from it. It would sort of bounce around. But when you have this in place, it triggers that sense of panic. Nobody wants to be shut out of the market like they were today 30 minutes into training. Betty some would say this is just a delayed reaction. Saw with the selling in august. Bans, they had put were barring institutional sellers from mass selling their holdings. That i believe is going to be lifted on friday. Maybe we are seeing a delayed reaction to this. Ban is still in place for the time being. There is a lot of uncertainty over what the government intends to do. Today they just set the reference rate for the yuan at another low. It was by about. 5 . You are seeing a lot of uncertainty about why the government is allowing the yuan to depreciate so much. Is it that the government is guiding it lower or are they furiously trying to defend it and they are just sort of keeping a finger in the dam thats breaking apart . Are seeing isou responsive concerns about nobody really knows where the yuan is headed at this point. Messageslot of mixed going on about the growth of chinas economy. Nick wadhams, thank you so much. For more on china, David Rosenberg joins us. I donts reacted know if you saw his remarks at an economic forum. Basicallyaid, he said, i would say this amount to a crisis. When i look at the financial crisis, there is a serious challenge which reminds me of the crisis we had in 2008. Would you agree with him on this . I wouldnt agree at all. Anduse the collapse in 2007 and was a Global Financial banking collapse of historical proportions. You could argue that we have duress,m of stress and questions over chinas economy, the spillover impact to emerging markets. We have been talking about this for some time. Accelerating right now. This is the year where we have doddfrank. If you look at the Banking System today, not in my lifetime have the been this transparent and this heavily regulated. Almost like utilities. Is goingu believe this to turn into a gut wrenching financial event, there is not a snowballs chance in hell that this looks anything like 2008. Betty and yet you have acid prices, oil prices hitting 12 year lows. Pricesyet you have asset , oil prices hitting 12 year lows. That would normally indicate some sort of recession. David i would tend to disagree with that. These are not levels we havent seen before. We saw levels of oil like this 12 years ago. Tok in 1986, oil was down 10 a barrel. 1999, oil was down to 15 a barrel. We have seen oil at these levels before. Betty but the direction was different, david. The direction was different. David you called oil and asset. Oil is not an asset. A house is an asset. You get the costs upfront. The winners are consumers. Its a doubleedged sword. Oil is a consumable commodity. Most of it goes into an automobile. A houston is not going to an e does not go into an automobile. Its a different asset class, different set of problems. A supplys been think aboutn they if this is truly a demand situation, how is it that Global Oil Demand has only gone up during this period . If you believe the shanghai index is telling you something nefarious about a hard landing in china, you will get oil prices down a lot more. It will be a demand event. It hasnt been that way so far. It has been purely a Global Supply shock. Betty so to you its all about supply. What oil is an indicator of right now. David unless i need a new set what thels, thats data have been telling us. Atc has been pumping out oil 32 Million Barrels a day above its quota seven years in a row. You have not had a supply response in the u. S. You will find the inventory numbers turning the other way. The numbers themselves are telling you it has been supply. Demand is not contracted yet. You believe the shanghai index is actually telling you, its going to go down a lot more than it is right now. It has been a supply shock. Shanghai indexhe has a huge correlation with the s p. The bottom line is last years price action in the u. S. Stock market we never resolved the chronic overvaluation. The schiller,at we are trading above historical norms at a time when you have tremendous global uncertainty in every aspect. Part of thek problem is you have an overvalued stock market going into a period whether it has been north korea, the tensions of the middle east and saudi marka a big question over china. Betty thats what people are saying. At the markets do seem overvalued and we are seeing that adjustment. Just hang on for a minute. We need to take a commercial break. I want to talk about the u. S. Markets. David rosenberg. As we head to break, a quick check on how stocks are trading right now. Can see the s p is lower by 1. 4 and the dow is off by 200 points. We will see if we stabilize at these levels. We will be back. Betty good morning and welcome back to bloomberg markets. Lets turn the spotlight on u. S. Markets. We talked a bit about with David Rosenberg, chief economist at gluskin sheff. Jeffrey lacher was speaking this morning as well. He says he is still certain that inflation will hit the fed target. The future is uncertain and we know that the appropriate path of Monetary Policy should depend on how Economic Conditions involved. So one should expect that the rateal reserves interest target is going to rise at a pace that is gradual but dependent on the economic outlook. Betty in his remarks, he described gradual and still a one percentage point increase per year. Realisticthat still given what weve seen over the last week or so . David you know whats interesting is, when you read the fomc minutes that were released yesterday, what was really striking was all the emphasis on the Downside Risks to inflation. And since then we have only had the commodity complex take another big leg down. So we do have Service Sector inflation up in the u. S. It has been the good sector. And that antidote just got a lot stronger. Elusive movee ever towards the 2 holy grail target is push that much further into the future. Toy two rate box as opposed four rate hikes as opposed to four is looking pretty prescient right now. Betty is that where you stand on the number of hikes this year . David it is so situational. Number they you a could be none and i could give you a number that could be four or five. It is so situational and its not even dependent on the data. We saw in september, the fed was ready to go because of the data but was held back because of Global Concerns. Voila, the Global Concerns are back on the front burner. No matter what happening on the domestic side, as long as we have local turmoil, the fed is going to be on the sidelines. In the next few weeks is beijing releases if beijing releases a huge fiscal package or anything changes the Global Markets and causes them to stabilize, we are back in december. So are we in september or are we in december . Predicated onbe how the Global Markets are responding. Im not worried at all, by the way, about the u. S. Economy. Not one iota. This is going to be the year of finally where the wolf shows up at the end of the story and we get the wage breakout. I think Consumer Spending will hold up very well. Went markets stabilize globally probably raise Interest Rate. I dont think they will move more than three or four times if they move at all. Betty and it is contextual. If we were looking at jobs data alone, then we are talking about a pretty gradual and solid rate Interest Rate increase. We are not. There are so many factors. David, we are going to have to leave it here. We will have you back on again. Thank you so much, David Rosenberg, chief economist at gluskin sheff. Still ahead, a shakeup at Morgan Stanley and why that led to the departure of one of its top executives. We will be back. Betty welcome back to bloomberg markets. Im betty liu. Morgan stanley shares are down at this hour following news that greg fleming is leaving. Of course, the markets are down in general. He led the firms retail brokerage unit. In may, he talked to Bloomberg Television about growth for the Investment Management division. I think were on track. Our Investment Management business sometimes gets less attention because of the size of the investment bank. A really good Investment Performance in most parts of Investment Management and the Investment Management business, if you manage money well for your clients, you tend to get more money from the existing clients and you tend to get new clients. We feel like we are on track for that target. Michael moore, who covers Morgan Stanley for bloomberg news, is here with more. Tell us about this shakeup that led to his departure. What happened . You had greg fleming talking about the Investment Management there. In october, that part of his empire was taken away and given to another executive. So there have been a little bit of foreshadowing here. Part of this is, fleming was seen as the potential mediumterm succession candidate. But the indications are that jim gorman is going to stick around longer than perhaps people thought. Maybe even five to seven years or more. Betty was there speculation he might step down soon . Not soon, but maybe more like the three to five year range. Timeline, he wanted to have a president in place to allow him to focus on longerterm things. Inwhen he put Colm Kelleher that position, that in the extended timeline is kind of what prompted fleming to leave. Betty hes a year older than gorman. Hes not younger, hes older. So it doesnt really seem like gorman is saying, im putting summit in place was going to be my successor. Right. Thats not the longterm plan for him. R is a Morgan Stanley lifer. Having him at the top of the house provides reassurance to some of the longtime Morgan Stanley people that its not just about the brokerage. Its also about the trading division. I think it allows some room for that next generation to kind of be groomed over the next few years while gorman is in place. Betty we know the stock is down. Its kind of hard to tell today because there is selling going on in general. If some of this shareholder unfriendly at all . Dont seemysts overly concerned. Morgan stanley had a very strong threeyear run between 2012 and 2014. And 2015 was a down year for them. I think investors are kind of waiting to see some of the improvement that has been promised in the roe. Its more about the Business Results right now. Roey have set that 10 ar target. The Investment Business has done a lot better. You hate to see him go because he had made so much progress, or it is in a much more stable position for the new people to take over. Betty thank you so much, Michael Moore on the shakeup at Morgan Stanley. Much more ahead on bloomberg markets. We have the ceo of Pandora Media , positioning itself as the artist friendly music service. Betty live from bloomberg World Headquarters in manhattan, you are watching them or television. Im betty liu. Money quinn has more from our news desk. A vonnie quinn. Irans diplomatic isolation intensify today when some all you cut all relations. The saudis cut ties to iran sunday when the consulate was attacked. By saudis prompted executing a shiite cleric. One year after the trolley up to attack charlie abdo attack from an attacker was killed in a paris subway station. Two civilian jets landed on the airstrip of a new island china build in the south china sea. The plane made the twohour flight earlier test flight saturday drew angry protests from vietnam, the philippines and japan. Major League Baseball looking east to expand they will stream games live in china. Deal is backed by a jack ma. Global news 20 hours a day powered by our 2400 journalists 50 news bureaus around the world. Cor johnson has been at they Consumer Electronics show all week in las vegas. He is standing by with Brian Mcandrew interesting, the Company Dominates streaming, one of the leaders. Talk to me about why you guys are here at ces. This is a hardware show, not a software show. Mike pandora isnt streamed through a lot of hardware. Pandora is streamed through a lot of hardware. 40 of automobiles today roll off the line with pandora integrated into the dash appeared really excel a ration of connected cars. Cars having their own connection. Cory you use the events to make certain announcements. Mike we do a lot of meetings with our partners here. Everyone