speaking moments from now. >> server be annexed to a war zone. the fighting in iraq turns a rare real estate boom went bust. >> you have never seen a classic auto collection like this one. cars.building his own car storiesclassic are completely separate. makers."e to "market first, we want to get to the breaking fitness peer janet yellen is about to start her speech. ors are watching closely. >> if you are looking for something new from janet yellen that is going to change the debate or move markets, you did not get it here today.

janet yellen begins her speech by making the case that the labor market still need improvement. but how much or how the fed might accomplish that is a tricky question third "as the recovery progresses, assessment to be labor market needs more nuanced because of the considerable uncertainty about the level of employment consistent with the mandate." she spends the rest of her speech discussing those nuances. why has labor force participation dropped? she says that is a key question for policymakers. what portion of the decline in labor force participation reflects structural shifts and what portion reflects weakness in the labor market? she runs through a number of other indicators asking why part-time employment remains so high. why the quits rate is moving up.

she talks about wages. you should see wages go up, but if they don't, maybe it doesn't mean there is lack of the market. she doesn't say that wage inflation is a problem. she says the fed has 19 indicators they're looking at. improved market has significantly over the past year . those indicators also suggest a decline in the unemployment rate somewhat overstates the improvement in the overall labor market conditions. essentially, the simple recipe for the fed going forward. >> janet yellen is talking as much as she possibly can without getting us this giving us any hints as to timing of a possible rate increase. it looks like she accomplished what she set out to do. what she does is and the speech by quoting from the federal reserve statement.

they could raise rates more quickly if economic conditions don't recover as fast. the stance of policy will be guided by our assessment of how far we are from our judges -- our objectives of maximum employment and the pace of progress toward those objectives. when you saw the fed statement -- auple of weeks ago couple weeks ago, you saw the importance for the market. >> an interview with the president of the san francisco fed. >> let's analyze the breadcrumbs. we will find out when the fed will actually start raising rates. the head of u.s. economics at renaissance macro research and

asef market strategist at -- mike was reading one of the panels on labor slack, it remains, you started laughing. >> it is the same song and dance. is noid previously there mechanical formula for rate increases and then she sticking by that view. the important question from an academic point is, number one, economist's have not figured out how to bottle inflation. we don't know. it was stronger than we thought early on. softer than we think given the economy now. another big question is, do all of these indicators she is really provide any additional useful information beyond what payrolls and unemployment already do? the answer to that question in

my view is, not that much. if you look at something like the quits rate, it is telling us the unemployment rate is about right at 6.2%. the laws of supply and demand, even in the labor market, have not been revealed. the unemployment rate continues to fall below 6%, we will get to the goal sooner than later. >> do you see a rate hike earlier? >> a second quarter is within baseline scenarios. i think it will be april. we are two articles and jobs a month on average. 000 jobs a month on average. >> why is the market not doing anything? is everybody in the hamptons? >> there waiting for this for a picture.

errari this for re picture. let's go to the speech. i can take a stab at your question on the balance sheet. this beach is exactly what people thought it would be -- the speech is exactly what people thought it would be. that -- i don't think anybody should have expected that because this was a labor market conference. we are all debating slack and how much slack there is. there are a couple of papers that are interesting that came out. looking very interesting, suggesting there is not a lot of .istory in the labor markets people were worried if you get unemployed for long, you can come back very quickly. those two authors are suggesting that might not be the case. itre was talk early on that

is higher. which is considered to be 5.5%? >> depending on where you sit. this paper is pushing at lower . there is a core set of people on the committee that think there is not a lot of slack and a core set of people that think there is a lot of slack and there is something they can do about it. is nots that think there a lot of slack are not in control. we will have a world that is .ominated by janet yellen thating to take some risks inflation will pick up and it will bring that slack into the economy. generals with janet's viewpoint on what that policy is meant to do. ofimum limit in the context

price stability. we are not going to have an inflation scare going into the end of the year. >> unless you drink coffee. >> if you can substitute corn, you're good. >> you see the fed balance sheets and the s&p. you have seen them rally together. question -- there is no question that fed balance sheet expansion is reflection or he. charts.e looking at >> the fed balance sheet going tois sufficient conditions death it is not a necessary condition. there are other reasons why we can have an equity market rally. go back to the 1990's. the fed balance she did not do anything -- balance sheet did not do anything. 1985, thek at 19 --

fed balance sheet a percentage of gdp fell from 20% to 5%. it was getting smarter as a percent of the economy for one of the greatest times in our economic history. i don't think it always has to be the equity market goes up only because of this. it will go up when you give it a steroid shot. there are other reasons in the economy that can generate a market rally. >> bottom line is, the economy doesn't look that bad. of 5% thel growth last few quarters, unemployment back to its normal rate, almost. it is the,to frame the economy is normalizing much faster than the monetary policy.

we are talking about the bounce sheet and the link between that and equity prices. i agree with david. the stock market could never actually decline because of the fed's ability to extend its balance sheet. gdpou look at nominal growing over 5%, we are on track to grow around 5% nominally in the third quarter. population of this country, that is more than enough to keep lowering the jobless rates. the problem right now is janet yellen is saying there is no uncertainty around the prospect of rates going up sooner. the markets are saying there is a high probability that rates will stay low for a while. have control still have control and those who don't still don't.

people thought, wow, will she raise rates sooner? she should, right? but she is not going to because she is just as dovish as we knew she was before. here.have to leave it matt has the last word. hise are going to show ferrari collection. he's building his own cars. >> thank you very much. we appreciate it. things for joining us, gentlemen. a boom comes to a grinding halt. what islamic rebels have done to a thriving part of iraq. on their longest weekly losing streak in nine months. what does that say about the global economy? ♪

capital has been the boomtown of iraq. developers were pouring billions of dollars into the city. calmerged as an oasis of in a chaotic country. the threat of isis has brought the cast of the north and put those ambitious plans on hold. north.chaos to the >> just a couple hours from the iraq he combat zone, a small slice of the american dream. the first self-proclaimed subdivision. >> how much does one of these houses cost? around $300,000. between the land and the construction. >> he's put his time between

northern virginia and northern iraq. where he founded the american village outside of the british capital. developments in the gulf area. they start to move to do business in the region. sank $6uropean partners million into this gated community and received in the $10 million for water, switch electricity from a private lending arm of the u.s. government. in recent years, the oil economy helped the surrounding area develop a supermarket, walls and high-rises at an unprecedented rate. -- thisof the projects is going to create cash and

business for the area. >> today, many of the city's cranes stand still. >> when isis decided to attack the area, many people worried about the situation. they decided not to invest their money. >> in 2012, the most expensive property sold for $600,000. thel kurds hoped to rent properties to workers at oil companies. rendered three of the homes unsellable. ,> when they are leaving everything goes down. >> the café here currently ,aters to far fewer customers leaving developers to debate curtis dance future -- kurdistan

's future. we're going to be boosting business and the whole region. >> across this region, stability may not return for some time. -- it seemeds from like it could grow as much as 3% a year pre-2011. i justly, we are not going to see that growth right now. what is the government going to do to help ? >> a lot of the funding here comes from the government. lot of private companies are involved. that will slow down and a lot of people have been speaking saying we would rather operate without government. this is a very business friendly environment already. even so, a lot of private companies would rather do things without the government regulating the middle.

-- regulating them at all. >> what is their biggest challenge? i would think demand is high on the list. there is that, obviously. the most shocking thing about being here is the fact that they have no access to capital from banks. you can't borrow money. you have to keep a huge cash reserve. when you're looking at huge infrastructure projects, that is a lot of cash to have lying around at home. >> it was great to see you. stay safe. we hope to see you back here in new york shortly. >> the hunt is on for the islamic extremists who brutally murdered james foley. they're using modern technology and some old-fashioned police work. peter cook has been looking at the clues left behind. is there a trail to follow?

>> there is a trail left to follow. it will be difficult. it starts with the video of james foley's horrific murder. the militant at the center of that video, a former french hostage. -- i spoker hostages with patrick skinner, a former cia case officer. scrubbing the video for a time stamp,ome other identifiers on the equipment used to shoot and upload that video. they want to know who downloaded it right away. you will focus on the production and background in the video. the cinema style shooting in broad daylight is distinctive and bold. they were not worried about being spotted by the air. that and the desolate desert background suggests fully was , most likely.a

shadows and weather conditions can help identify the exact time and location. that would allow investigators to review communication traffic in the area. that could be critical in the manhunt here. maybe the best clue of all, the voice and that video. >> this is james foley. american citizen. >> the british voice with a slight accent suggests a linguist. most likely from the southeast of england. u.k. intelligence official tells bloomberg it's possible the voice and the man in the video may not be the same person. >> the executioners face was covered. you can see his eyes. is there anything you can do with that? >> there is definitely something, difficult, but not

impossible. analysts will go over every single inch of his physical appearance. there is no real chance for a retinal match your given the distance from the camera. the a's could lead to a facial recognition match. rish authorities have a passport picture in their database, for example. he covered his eyebrows. this is going to be difficult, but not possible. changedoley's murder the equation for the u.s. and our involvement? >> it is pretty clear that it has not changed a specific policy goal. it certainly has changed the tone. hagel,d from chuck talking a pretty dramatic terms about the threat posed by isis. called it an imminent threat. heard from martin dempsey who said that the only way isis is going to be contained if there is an effort to go after them in syria.

a change inuggest policy was imminent, but that is the debate happening here. it has toughened the tone here in washington. peter cook, our chief washington correspondent. >> coming up, we will talk about touristyworst -- most countries in the world. ♪

>> coming up, warning signals. at the global price of oil may be telling us something about where the world economy is headed. it might not be pretty. >> having a garage filled with plastic cards is not enough for 1 wall st mogul. he is building his own.

car.u could build your own then right around in them. we meet a guest who is living my dream and 15 minutes. ♪ .

is "market makers." >> welcome back. i am alix steel. >> i am in for steph. fore going to talk about next halfraris in the hour. oil is telling us something interesting about the economy. world gdp pretty much follows oil prices. as you can see in the chart, oil

prices are actually moving lower. that is despite faster global growth, despite joe political risk in a rock -- despite geopolitical risk in iraq. joining us in studio, great to have you here. experience in this business. take a look at that chart and what do you think? >> it is a driver that crude oil along with copper and certain other metal markets are leading indicators for future economic growth. we have two things to keep in mind that drives any commodity price. supply and demand. here globally, we have fabricated market. north america is an island unto itself with regard to the supply we have. the oversupply, i might say. we also have a situation where it is a bit challenged more with regard to the other markers. certainly, with the pullback in print market in light of the extreme clinical threat, geopolitical threat we have, i think is a telltale of concern.

>> concern of which? you can make the argument both ways. storys really a demand that we're seeing a global oil demand much weaker than we thought it was? >> we have two factors on the demand side to affect consumer behavior. first and foremost, we need the price shop. since hurricane katrina 2005, we've had the price shock. to impact the price, you need a substitute. prior to that, we do not have substitutes. now you have tesla, hybrids, clean diesel. that is impacting, stretching the oil barrel even further. now we juxtapose that with regard to our conception behavior, now with demand. here in the u.s., the consumer is still extremely challenged. "new york times" came out with a study about a month ago that households in the u.s. are worth one third or two thirds of where

they were just 10 years ago. the big problem is the job situation. knows the ande limit number is 6%. but let's talk about those who jumped out of the workforce. it is still 11%. look at income. we have inflation where we don't want it. at the grocery counter, fuel pump. we don't have it where we need it with wages. wages for the past five months have failed to keep up with the cost of inflation. getting tougher and to ever for us. that is going to have an impact on price. >> i have heard a lot of market watchers go to great links to explain why the oil price is so low right now. the turmoil in israel, iraq, ukraine. before you get any deeper into supply and demand -- >> you said it. i did not a it. dibly complexincre

things, is it fair to say this is a surprise to see oil this low as the entire middle east erupts backup as we enter a new cold war -- >> absolutely. >> you see oil as an asset that rises. >> remember the arab spring 2011. >> one year ago i must to a day, oil prices in europe for $112 a barrel. concerns with pipelines and the canal in egypt. that segued into the situation in syria. is there a red line or not? i think what the u.s. has demonstrated over the past year is, we are conflict of leaders. in order to have a significant in price on the commodity, we need to see a disruption to the flow of that commodity. an actual disruption. ofh u.s. being a conflict border, chances we will see a disruption are minimized and why when you're later we still have the geopolitical headlights much worse --

>> no prescription priced at all in oil on a consistent basis? >> oil prices are following a seasonal pattern. as we get through the fourth of --y holiday >> that is not from oil. on theo up on the curb access. around late june, fourth of july holiday, crude oil demand peaks. if we were going to have disruption, this is the best time of year to do it. this is when crude oil demand from the refiner is at its weakest. we are at the summer. discretionary money for gasoline is going to fall. refineries will shut down to retool. they're really not in the market. hence, why we don't have from a fun a mental enough demand in the market. >> which is what we assume with the forward curve. or you're just seeing basically -- >> i said contango. >> lower prices and october

versus later in the year. i have a chart that shows it. >> i saw you working on this. you are seeing it illustrates less demand. >> looking at that chart, really what is demand, what that chart is telling you, there is no demand in the spot market. you are better off buying the oil today and sticking it in the tank. i want to point out i did not say that. visit cyclical or structural? >> it is a cyclical market. >> this is normal, no future change. >> we still have a couple of more weeks were we have to burn summer grade gasoline. prices have been falling because of relatively weak demand. as you get into october and

november, we will be burning cheaper gasoline. that will be easier for the refiner to consume and therefore, you'll get more demand. once the refiner's come out other turnaround season, they will be buyers in the market. from a wti standpoint, looking at oil -- the bulls can defend this level. wrapping it up, we have to talk about opec. they are the leaders in setting the global oil prices when it comes. at what point do they say, we have to cut back supply and boost prices? >> we have a situation with opec. it is a diverse group of people. the last i checked, the saudis and iranians don't really like each other. there is the ying/yang. lower pricesstain in the interim if that will put pressure on iran.

enough, what opec means for the u.s. consumer is, 10 years ago when oil prices were shooting higher, it was great for me because i got to go to cnn every opec meeting. for got to go to vienna every opec meeting. now i get to go to pittsburgh. not that there's anything wrong with pittsburgh. you in studio.e thank you for explaining that to us. >> coming up, from hollywood hot wheels, and movie producer who was going to build his own cars. you can buy one if you have enough money. ♪

>> last reagan's car options have pebble beach failed to deliver new record price for the ferarri gto, maybe because of an action. they did not even produce a sale from steve mcqueen plus porsche. what does this disappointment mean for classic cars as a hot new asset class for investors? for the answer, we ask wall street's most noted car collector. he is building his own cars with a new company. thank you for joining us. it is a one off.

an internet legend. but you actually have two versions of this ferarri. whiche the road version is beneficial one and then i wanted to go racing, which fer rari wasn't so happy about, so i'm else a second car. realizedure everybody it has nothing to do with ferrari, i took the ferrari badge off of it and put our family badge on it on you tube. >> and you had a great time. i think you have challenged other cars, but they haven't accepted. >> this is correct. we did very well. we finished 12th overall, first in class. we actually won the fia alternate energies championship, which is pretty cool for a private little company.

so i challenged la ferrari and porsche 918 and mclaren to race us as a hybrid car. none of them showed up. so we decided, ok, we're going to build a basic sports car 2015g back to the ring in and try to win first overall. >> how did you get to where you are from liking cars to invest again cars to racing cars to building cars? that seems like more than just car love. >> i always loved cars. when i was a little boy, i rose -- i wrote my bicycle to the ferrari dealership 12 miles away. mr. kennedy allegedly hated children, but he would let me sit in the seat. eventually, he let me turn the steering will. one day when it was running, he said, kid, here, and he gave me a ferrari jacket to go home. i have always loved cars. i never bought cars as investment. i have not sold car for 40

years. i don't plan on selling any of the cars i collect. i think that is what happened at pebble beach. tree was thinks the growing through the sky, these things can only go up and up. when that happens, the market becomes a bit of a bubble. i think of what you saw at pebble beach was a little bit of sanity coming back to the market. i think great, unique cars have become art and will have incredible value. but i think some of the things that have risen because the great ones have risen, are due for a bit of a correction. >> you still love the gto's, right? we're expecting to see a $50 million possible price for that. for $34under the hammer million and change. did somebody get a deal on that? >> not at all. the gto's that of gone for $50 million or $60 million for

spectacular cars with great racing history. as they say, no stories. this was a gto, but it had a terrible crash originally. the driver was impaled and killed in the car. right after that, there are some people who think it is bad karma to buy a car someone was killed in. the car was certainly reconstructed from the crash, so exactly how much of the body and other components are original is certainly up to question. but i find the interesting thing was this. before the auction everybody said, this is going to break the records, 60 nine dollars or $80 million. what it sells for $30 million they say, oh, my gosh, this is a terrible thing. thes a trendsetting, end of bubble. that is not true at all. that is with a particular gto in the scheme of things was worth. it was a fair price for the car. >> does that help reduce the bubble risk you're talking about? >> i think it is still in the market. not so much in the market for

great cars, but in the market for cars where there are two or 3000 that have gone from $50,000 to $800,000. i think there could be big him of the correction in that part of the market. the key is this. you can't buy something because it is there are you read about it on the internet. you have to study these cars, drive them, live with them, have personal experiences with them. and you have to know exactly what you are buying and what you're not. i think pebble beach was a very good market correction that was needed. ortoo many hedge funds institutional investors that get in here that don't even care about -- >> don't value the actual car. >> let's talk about scg. the company you have made to build this new car. are you going to melt -- build multiple versions? is it just for your own racing experience? cameron is my wife's maiden

name. she keeps her name. she did not want my name. who could blame her? what we're going to do is we have become a constructor. we're designing and engineering this car from the bottom up. terrific aerodynamics. it is going to be a very wonderful and fast race car. we will sell to do versions. a race car we've all resold one. -- a racecar, and we have already sold one. we have several pending deals. we will offer a road version. the base price for the car is 2.1 million euros and goes up there depending on your engine choice or if you go racing, it could cost 750,000 or even one million euros more. >> how many cars do you own? >> i'm not sure, but over 20. like asking to pick

between your kids? >> exactly. i love them all. >> i have to say, i've been following it in "road and track." i look forward to seeing your progress. are they making a documentary about this? >> the social media has changed this whole thing. we have a facebook site that when we race, we have one million people who go to that facebook site per day to watch as race and things. this is really how we tell our story. facebook, to the magazines, and a lot of press. this has brought our fans and sponsors. quick thank you so much for joining us. we will take a quick break. one travels, no like people in these countries. the places were citizens cannot wait to get out of town. i bet new york is on the list. ♪

>> it is a friday in august which means everyone has vacation on the brain. which countries are the most popular among tourists? it depends on how you measure it. scarlet fu shows us the numbers. where is the number one destination? >> let's start the countries in which you are literally surrounded by tourists. they tend to be countries with lots of visitors relative to their small population. any guesses? >> the first one when he feared ,duh. >> we already know. >> we don't to spoil it. vatican city. by the way, this is from 538 .com. 869 residents. five tourists every resident. these visitors don't stay for very long.

there are no hotels in vatican city. they stay for four or five hours and move on. endorra. --it is in the journeys between france and spain. where they do the mountain ride, climb of the tour de france. it is a very small country as well. you can stay there, but it is the kind of country you can walk through. of --is big in toros tourism and also a tax haven. >> and the bahamas. cheesyurious, it has a touristy place, but -- >> it depends on where you go in the bahamas. >> for the most part, you're looking at the cheesy hotels. >> plus a small population. when you look at the bigger countries by gdp, you get some more familiar names.

>> spain, first, really? >> i'm surprised you don't see israel. clearly, vatican city is a religious tourism issue. , the othernk mecca religious capitals would have a lot of tourists. i wonder if there aren't a lot of people in israel who are tourists, but also claim citizenship even though they live here in new york. >> a depends on when you enter the country if you are a visitor or -- passport. >> you can only go on the official data. >> i'm going to tweet nate silver and ask him what he things about israel and mecca. >> mecca is not a country. >> that is true. >> the u.s. was last. >> actually, it is number 13. i wanted to include the top six. >> but it is surprising to me.

>> on average, one half of 1% of people across the country is a tourist. >> canada beats the u.s.. >> they don't have many people there. right now, for example, erik is a tourist in canada. >> he doesn't go back as a tourist, i'm sure. >> he goes back as a resident? >> will work this out. >> thank you for bringing us that. we will be right back in just a minute. coming up, a trade-off you may improve your health but sacrifice a little privacy. the cofounder of the wearable device. >> do you have one? >> it broke down after i got it. ♪

cap beating estimates because bargain hunters are flocking to its cut-rate old navy chain. >> your privacy or your health? consumers say they should be up to where purposeful -- personal fitness data without the maker selling of personal information to third parties. >> goingnuts for nutella. higher prices for the popular hazelnut spread.

i love it. welcome to "market makers." >> the top business stories from around the world. janet yellen says the recent drop in unemployment probably overstates the improvement in the jobs market. in a speech in jackson hole, the fed chair gave no hint about when interest rates might rise. she said there is still slack in the job market five years after the recovery began. bank of america may not have to pay all of that record $16.7 billion settlement. they pledged $7 billion in consumer relief. the bank will get credit if borrowers get mortgage help from firms that bought their loans or bofa.ing rates from that russian aid convoy has crushed into -- crossed into ukraine and ukraine is calling it an invasion. ukraine says it let trucks in

order to avoid provoking russia. russia says it is food and water for silly and trapped -- food and water for civilians trapped. hostother special guest for the hour, we are pretty excited. bloombergf data for businessweek and bloomberg tv. basically, our resident data cruncher. for the audience, what do you do all day? we are both equally nerdy, but you are more data nerdy than i am. >> with all of the same storytelling you are doing, we talked about it during the day, but are looking at the numbers of it, less so much just the talking, storytelling. perfect example was yesterday with the family dollar, dollar tree, dollar general heating up. what did you do when he saw the headline? >> these three stores all have the word "dollar" in the name

but only one of the stores is actually a true dollar store and that is dollar tree. you can quantitatively look at their customer base and see how it is different than the other two stores. the post i put online yesterday shows some graphics on how the dollar tree customer base overlaps with high end stores. trader joe's, whole foods, barnes & noble. you can see the dollar tree customers overlap a lot more with these higher end stores. as opposed to dollar general and family dollar, which are almost identical. this gets into what we're hearing about with these stories. if dollar general and family dollar merge, they're actually just combining the same customer base. the dollar tree's customer is different. what is also interesting, despite the fact they only have products for one dollar, they don't have the lower end customers. they have the higher end customers who still go to whole foods. they just don't get everything they need at the dollar stores.

where is the other companies are more like walmart and editors. >> do they buy kale or bacon at whole foods? >> you can get both. >> i think one of your most interesting stories is looking at basically a heat map of where people buy the most bacon and kale and red states are clearly be bacon lovers and blue states are into kale. >> the twitter mentions of kale to bacon ratio connects closely to the states politics. it is so stereotypical, but you want to see the numbers in the graphics because you could not make that up even as a joke. >> here we have the actual graphic. it got a lot of play on twitter. you are really active. >> telling stories through numbers. is excited.

>> we talk as well. not only is he the data, he is also into auto racing and beer. >> i like the air. -- beer. >> we all three of what thing in common. let's stay on retail. up 4% today. signs americans are still on the hunt for bargains. the best performer in the company's stable of brands was old navy. eric may look deeper and find out they go to whole foods. gap and banana republic struggling? i would have thought banana republic is the hottest one, yet old navy is doing the best. because customers like a deal. they wanted a deal for a long time. old navy has been the best performer of the three for the last two quarters in terms of sales growth. expect that to

continue? >> i think that is a trend they don't expect to go away. it is a hard game for gap and old navy to play. they wanted something several tries, otherwise they will have margin pressure. old navy, it is a different model. gap and banana are trying to fight with the collections. then it just launched the new fall collection that has a lot of passion pieces, leather and faux leather. let's recall that pleather. >> let's look at all of their plans and what has performed well over the last quarter. he was kind of the only standout. sales and banana republic sales were flat. does this do anything further topline growth at the end of the day because it is so reliant on cheaper stuff? their model,at is i think, the clothing is lower quality so they were fatter margins.

as long as they keep selling product, it is great for them. plants iny other two the same level. with house every visit with a new creative director? you put a graphic of the shows gap sales much lower. brandede way more gap stores that old navy stores. you can't just offset the minus five and plus four. the minus five carries a much more weight. they're going into india, the cheaper market. >> i think that is the most exciting piece of the story we got yesterday. delhi.o mumbai and their opening 100 stores. talks 50. >> 50? it is a huge market. there's the potential for many more. >> that is a franchise model for them so it is a bit different. rebecca ve is bringing a new designs for the fall for gap, soft dressing trend because

denim isn't as hot right now. it is a scary time for them. glenn murphy, the ceo, is not happy with the performance of last two quarters and need to do something different. but there are new clothes coming in. >> online sales were 11%. with that in perspective. that is the holy grail for the retailers. >> they're putting a lot of .oney into their e-commerce they need to see that number keep going up. stores cost money. that employees. -- they have employees. they need to keep selling clothes. >> thanks so much. gap and retail for us for bloomberg news. >> a summer to forget for the ncaa, but the events the last few months of a memorable for anyone who watches college sports. >> it is friday, time to play the yearbook game. here is today's edition. >> i'm going to get it.

it is exciting. >> here it is. inentertainer, graduated 1987. send us your guesses. >> whole does that make him? >> i know who it is. stay with us here on "market makers." ♪

terms,ut it in football it is starting to look like fourth and long for the ncaa. the college board's organization has been taking it on the chin recently. which is more of a boxing term. from congress, even the big-name colleges that are members, the ncaa has been getting a lot of flak. the boylston to one thing -- money, and whether college athletes should be common said it. paul barrett just set down the president of the ncaa and joins us now. it has been a hot story.

we have been covering this every single day. has satthink anyone down with the president yet. ncaang down with the executives. >> it has been a long summer for the head of the ncaa. he has been on the witness stand in federal court, antitrust lawsuit accusing him of running an illegal cartel, before senate committee or he was pummeled by members of congress from both parties were demanding to know just what the purpose of his organization was. and then most recently in august, a federal judge ruled that the ncaa's ban on players receiving compensation for licensing their names and images was illegal. so new amounts of money will flow eventually to college football and basketball players. the existing structure of the when organization,

everyone an amateur, same rules for all the universities -- that is beginning to crack and the road. >> it sounds like it will erode into chaos. if you offer autonomy to some schools and not other schools, surely, it will be issues. a lot of people are just turning to call for dissolving the ncaa -- or i should say some people are calling for that, and there have been people who have been saying it forever. does it seem like they may be losing their grip a little bit on college sports? >> i think what is happening, you are seeing the demise of a myth. the myth that people go to college and incidentally a college basketball or football. that is largely over. you have some 65 schools in the big 5 power conferences. those schools are increasingly going to be candid, forthcoming about the fact the football and basketball teams are basically commercial adjuncts to the rest of the university.

how the rest of the some 1200 members of the ncaa react, that is kind of an open question. are we going to see the professionalization of ivy league football? i kind of data. you're seeing fragmentation, differentiation, a $16 billion your industry sorting itself out into a new forum. in the future, we will see what role the ncaa plays, if any. >> how much does the ncaa want to give in to these 5 power conferences? it is really about two sports and five conferences. that group has half the money and the other 1100 schools have the other half of the money. and those two sports have the majority of the money. how do they break it down? completely in play right now. the reality is, for whatever it has been, a couple dozen years,

what goes on at ohio state has for a little to do with what goes on at oberlin. >> but they're a lot more over lynns that are ncaa members. >> i'm not sure exactly about oberlin because i don't know about their teams, but i get your point. ask the point is, you're not going to see the end of sports being played on campus. that is going to continue. the question is, what you're going to do about the 2 big sports that are moneymakers. the moneymaking part of the ncaa is actually a bigger business in aggregate than the nfl. >> that is amazing. >> we're not going to be able to sustain the myth them of the happy story that all of this is going on just to keep sound minds and sound bodies. of this is going on as part a big sports and entertainment complex and now we debating how we're going to run a complex out into the future. >> what happens in the next six

months? >> football season is about to start and it will look just like last year's football season. you will see the power conferences, those 65 schools we have been talking about, kind of getting together and figuring out just what they want to do, how many thousands of dollars are they going to set aside in stipends for the football and basketball players, to what degree will they now allow professional sports agents to begin circling closer on campus and actually contacting, dealing with these guys? you will see a sorting out of just what the federal judgment when she said that players can now negotiate with broadcasters and with videogame members. it hasn't taken place yet. that will be sorted out behind the scenes. meanwhile in washington, the in or be will rule on the women are decision by regional official who said the football players at northwestern can unionize, get thiser facet of all of

churn. it is not clear at all. anyone who tells you they know how it is going to sort out is pulling your leg. this is an industry in flux. >> i was at electronic arts and they're not even making her ncaa game right now. but that is a's before they rush they rushuse before in. i think you'll see a proliferation of broadcast and video games, apparel, and other knickknacks. now that players, if the federal judge's ruling is upheld, now that players are basically commercial characters, they can go out and hire representation and sell those rights. we just had curled banks -- carl banks in the sports apparel business and he is saying, i'm looking forward to talking to some of these top college player so i can license their numbers and their sense of style for my products. is already several steps

ahead. >> how long do they wait before they decide to court? >> i think it could be a year or two. the courts do not move quickly. this case was first filed in 2009 and will he got the trial judge's ruling and august. the ncaa says they will appeal. it could take a well. on the other hand, it could surprise us and move quickly because these kinds of disputes can be resolved by out of court settlement. i think the ncaa would be well advised to potentially think about, how could we settle the situation and get a compromise rather than continue to fight in court? >> paul barrett, thank you for joining us. interesting, fascinating story that we could talk about four days -- and we have. >> coming up, who finds out how fit you really are when you switch on that wearable fitness device? we will talk to the cofounder of fit bit. ♪

>>: the ultraluxury bicycle. ultraluxuryhe bicycle. they can cost $10,000. there are increasingly in demand. here's an inside look at how they are made and what makes them so expensive full. -- so expensive. bicycles, there is an art to them, a beauty to them. adjustingly an interaction between the human body and the bicycle. i build custom bicycles here. i love it when someone walks in and says, i want this type of bicycle, go crazy.

let's see. what is my spiel? when people come here, we feel all in order form. we try to get down to what type of bicycle they want. this guy is going to have 1, 2, 3 lights on it. i can get the best components and mesh this person with what they want. as waist, arm, inseam him torso is considered in tubing selection and frame geometry.

my customers have been a range messengerfrom bike who is spending their settlement at kos cycles to wall street, lawyers, these types of folks. they want night -- nice things. -- leather tape with shellac. i love putting that stuff on bikes. i reset the had my bike stolen, so i am rebuilding myself a bike. i get people who say they don't want to write their bikes because it might get stolen or damaged. the answer is, you just kind of take that chance or you don't get to enjoy the thing. and you should be careful. [laughter] it feels good. >> fascinating. >> it actually makes me want a bicycle.

>> do you want to take the chance it will get stolen? i pulled of bicycle inflation in the last five years, has only moved up half the amount of regular u.s. inflation because people are not buying bicycles, they are just stealing them. as we saw on the graphic, 200,000. the price hasn't gone up that much, you can just get one for free. have you ever had your bicycle stolen? >> no. >> don't you need a key to operate that? >> in any case, i like the shellac and apartheid and i think i might wrap my exhaust with that. handlebar and i think i might wrap my exhaust with that. when bicycles were invented, the average distance of someone you married was five to 10 miles away when it was just one month. >> that is why i love you, who

knows that? the controversy over your privacy and those wearable fitness trackers. we will talk to the cofounder of fitbit. >> we are playing the yearbook game. tweet us if you know who this is. you better know. ♪

>> welcome to "market makers." imf alex deal. happy friday to you. big friday. i am matt miller in for stephanie ruhle. alix steel is in for. fitbit says it is always been company policy never to sell user data. fitbit will be venture data unless a user says or what ever share data unless these are says it is ok.

this all has to do with health care costs. companies urge employees to become more fit and some give so theyices make fitbit can track their fitness. companies are required to basically pay for your health care. it is cheaper for them if you're not eating a ton of food, sitting around smoking cigarettes and not exercising. with this is the cofounder. james, i'm sure you don't want to get into the middle of this debate -- or do you? it seems to business is focused on something else than whether or not a company is taking data from an employee. , we take our users privacy very seriously. we do collect health data from our users, and that is all for the purpose of improving people's health. we are absolutely committed to your privacy and to keeping your data secure. a key part of our privacy pledge is that we will never sell your data and will only share your

data if you direct us to do so. >> james, i read your whole privacy statement online and it did spell that out clearly. however, if i let you to sell my data or share my data to other companies, it is then that company's privacy policy that my data now falls under. what is the risk there? >> we only share your data in very limited circumstances to third parties. for instance, when you purchase a product from us, we have to transmit some of your information to credit card company or the warehouse to ship your product. with those third parties are under very strict agreement to keep your data and personal information secure. ofwhat about the idea a lot companies are going to start asking their employees to wear these devices in order to get better discounts on their insurance? it might not be that you're selling the data, but they're being effectively coerced into giving the data to the companies. and risingare costs

health care costs are huge problem. employers are was looking for ways to lower their cost. we work cooperatively with the employers and employees and currently run programs in over 30 of the fortune 500 companies. all of the programs we run are entirely voluntary. employees are really happy and excited to use our products because everyone wants to improve their health. they want to become more active, eat better, sleep better. our products allow them to do that. >> who is in control of the data, you are the company? >> we have an agreement. the companies themselves are also very paranoid about this data. they want to protect it just as do. as the employee and we i think there's a lot of aligned interest on everyone's side. >> let's get back to the product. we could have this debate about your privacy and whether or not your company is using or data or whether or not the insurers

should have access to that data. with other people. but i want to know about the fitbit and how well it works to measure things like sleep or your exercise and your fitness activity. i feel like we're in the first generation of these wearables and we're on the cusp of moving to the next generation. what do you think about that? >> we're definitely in the early stages. if we go back to the employer context, employees on our programs typically and of becoming 31% more active after about 12 weeks. we felt very confident that our devices and services work really well for people. we are at the early stages. i think the next two years will see a lot of advancement in sensors were we're collecting much more detailed and useful information. these could be things like blood pressure, heart rate, stress levels, etc. in smaller and smaller devices.

see thee future as we next generation of these things, will it be more about the design like hooking up with some of these fashion designers or trying to reduce the cost another $10 or to squeeze more tech in the same priced item? >> i think it is accommodation of squeezing more tech into smaller and more attractive devices, but i also think to really make these types of devices mainstream, there has to be a fusion between fitness and technology. we just announced a partnership with tory burch where they've developed a line of pendants and bracelets for our products. it has had incredible reception. >> sounds like a good idea to me. he is talking about on a business sense. what is going to be your future, marketing to people like he or companies? >> with had a lot of great success doing what we're doing. we 70% market share in the u.s. someone whoience is

is not very fit and just looking for tools doubt them get off the couch i get more exercise, become more active. in the past when iphone was smaller, you can leave that in your pocket and the concert tracking your data. now we're single most tablet sized phones are giving you guys devices thatave can fit in your pocket or on your wrist whereas a phone could not do that anymore. >> i still see people try to stuff tablets in their pocket. that is a good point. i think there will always be a great use case for dedicated wearables. there will be a lot of future sensors and wearables that don't make sense of a smartphone. we are excited to be part of this new revolution of products. >> what are you going to be doing when apple unveils its own health monitoring system? what are you going to do to combat it? >> we have done a lot of good and correct things to get us a market share we have today. we have awesome products at a

variety of price points. affordable, simple to use, very effective. we are excited about our leadership position. >> with all do respect, he still has to sync to my phone. if i can buy a product that is overly connected my phone, maybe i go to that. >> the compatibility is a key aspect. the consumer data satisfaction. we not only support iphones, but over 120 different devices from ios devices to windows phones to android phones. >> james, do you know if your customers use iphones or android phones more? to then't go in breakdown exactly, but there's a lot of variety in the type of customers we have. >> james, ceo and founder of fitbit. we appreciate your time. >> hope you are hungry, because nutella lovers might feel the squeeze. rumors of a shortage and now higher prices. when will it end? >> and we will say what nutella

is. >> who doesn't know what nutella is? that is crazy. we will be right back. ♪

>> we are going to crunch some

more numbers here on "market makers." and talk about one of my favorite foods, nutella, even though matt miller claims no one knows what it is. >> a lot of americans don't know what nutella is, it is a european product. but it was actually made by an american company based in new jersey. 1964. >> but it is part of german breakfast where americans have jelly with her toast. >> this is a hazelnut, chocolatey spread and there lies the issue -- hazelnut. >> 75% of the world's hazelnut come from turkey and there is been bad weather. there hasn't been as much hazelnuts, so the prices are going up and everyone thinks hazelnut equals nutella. what does that mean? we're at 10 year highs. it is about five dollars a pound

right now. what is interesting is that in any jar of nutella, haseltine -- hazelnut is the third ingredient behind sugar and palm oil. news, by thead way. >> there are a lot of issues around endangered species and deforestation of where they get the palm oil. >> are so much demand for palm oil, at least you deforestation and planting palm trees everywhere -- and leads to deforestation and planting palm trees everywhere. >> inching toward the bear market, sugar, down 16% since the and of june. to your point, those two ingredients matter more. >> there are only 50 hazelnuts for 13 ounce jar. we've seen a lot of rumors about shortages for food before that don't ask later not to be nothing more than hype will stop remember during the super bowl, they said chicken wings were going to disappear? that did not happen. for all we know, this could be some leaked story from them just

getting people to remember nutella and they should by some and fear that hazelnuts -- how much is it going to go up, $1? atwhen you're looking inflation in terms of products, you're looking at things like labor and oil because of transfer costs are much more relevant than the actual commodity cost. the commodity cost is about 11% of every one dollar on food you spend. >> look at this chart. in 2004, only $1.3 billion of nutella was sold. now, two point five leaderless. in 10 years, it is doubled in popularity. back then, you can only find it in the supermarket next to the real blue campbells baked beans. >> but it was still a billion-dollar product. don't be that for. it has doubled in 10 years, but that had a lot of endorsement deals. kobe bryant has endorsed it in the past. >> in the u.s. alone, sales are up about 6% in 2013.

to your point, it is -- it has 70% of u.s. chocolate spread sales in the u.s. >> but what are the other chocolate spreads? it is the only chocolate spread. >> hersey has one. >> there are rules on how much cocoa solids are in there versus hazelnuts versus the other ingredients. depending on where you go, it is labeled differently. >> looking at a potential hazelnut shortage and how that will impact nutella on the backend. only eric to bring up something that great. >> and the palm oil. we will take a quick break to regroup our thoughts and we will be back. >> the yearbook game. >> that's right. do we have the picture? tweet us if you know who this is.

i think it is pretty obvious. he went to high school in new york and graduated in 1987. ♪

money clip" coming up at the top of the hour. our economics editor michael

mckee is going to be speaking f, the veryn 101 pro guy who consume instant just convinced me to not be a doctor. >> what we have coming up? probably the most amazing insight and action. i don't know if anyone at home, but adam comes in early in the morning and ross of these insight and actions. he literally draws these by hand -- >> and colors them. >> do you have a blog? >> i will hold it up. i was trying it. i was trying to create the background of the mountains of jackson hole. that is what these purple -- >> i think it is pretty good. tighten, tor not to loosen or not to loosen. >> what we're going to talk about, and michael be interviewing a number of

economists, the disparity between what is happening in u.s. versus europe. think about gdp in this country, four percent. flat and europe. an opponent, 6.2% in this country, half of the unemployed mid-level. under plymouth in europe is still -- unemployment in europe is still 11.2%. it is two worlds colliding. >> i was wondering what mario draghi might want to say to janet yellen. please, please, raise rates. if the dollar can go up in the euro can go down, you give me some breathing room. i'm wondering what that conversation will be. >> that race to the bottom argument. if there euro would go down, makes her him products cheaper to the u.s. and the rest of the world. >> i don't know if you saw the yearbook picture we've been showing. who do you think that is? >> adam is not going to know. >> tiger woods. it looks like a young tiger

woods. >> i see the resemblance. more names than girlfriends, my friend says. >> michael mckee is coming up next. we will be back. ♪

>> it is a who's who. michael mckee is in jackson

hole, wyoming with a very special guest, san francisco reserve president john williams. john williams did not see the speech, either, so we are given his first reaction to what janet yellen said. if you look at the way the markets are reacting, it seems to be a status quo speech. >> i think she did a great job of explaining the issues, describing the thinking going on at the federal reserve around the labor market, the improvement of the labor market and where we see it relative to full employment and really highlighted the difficult issues in trying to understand was is cyclical and what is trend. it is a very, very good tour de force of all of the issues we are facing. and will be facing in the next couple of years. >> it was an evenhanded, lengthy look at a lot of indicators besides job creation and unemployment that you're wrestling with. some of your colleagues have argued strongly there isn't that much information in this peripheral indicators. do you agree? >> one of the things we are

seeing now, a lot of coherence across indicators. job hires, employment gains, job vacancies improve. all of these things are moving together, so that is a good sign. there is this issue that some of the indicators are suggesting the labor market is not what a strong is the unemployed at rate. some suggesting it is a little bit stronger. we have to weigh the various evidence into basically figuring out where full employment is and how much progress we are making on that. >> you have to decide what interest level will bring about full employment. what do you want to see before vote in-- what aside to favor of changing policy? >> looking at how much progress we have already made toward our goals of maximum employment and 2% inflation, then where do i see how long it is going to take to get to those markers. i want to see further progress on the labor

market in terms of job gains and reduction to unemployment and i really do want to see more signs of inflation moving back to 2% and also some wage growth moving back up from about 2% now toward 3%. i really want to see some tangible evidence inflation is moving back to our goal. >> a lot of discussion about labor markets. she always seemed to downplay it as a decision point, given the level of inflation we have right now. >> inflation right now is below our target and has been for some time. my forecast is it will move back toward -- it is an important factor. one of the things that is difficult, it is hard to discern just from looking at weight or price inflation -- wage or price inflation. it is clear, unemployment is too high and inflation is still too low. it calls for very strong policy and i think that is been a big factor, helping our economy recover. i would not want to see a citing

policy into we made further progress. in hercited two papers speech from the san francisco fed. one on wages suggesting employers could not cut wages a lot during the recession. so now they're making up for it by holding wages down. is that the way you see it? that is the reason we are seeing people not get raises at this point? if so, when does it change? >> i agree with that. basically, you really don't see many wage cuts even during severe recession. the wage data may be a little distorted by that. signs that wages are starting to pick up and move toward something like the 3% to 3.5%. we still have a ways to go. the evidence we have seen does suggest we might start seeing some stronger wage increases as the labor market gets even stronger. i think that is a positive. it means more money in consumer

pocketbooks, more spending. one of the things the protesters here are arguing, if you raise interest rates, wages are not going to go up. is there connection between the two? >> it is hard to see the connection between wages and interest rates. to my mind, it is about, we want to keep job growth and economic uswth on a good path to get back to full employment over the next year or two, getting inflation back to 2% target in the next year or two. we are seeing improvement in the economy as we get closer to our goals. it will be time to start pulling back and letting the economy grow more on its own. it is still a ways off, in my view. >> you are one of the authors of the other paper she cited, adjusting long-term climate had difficulty coming back to the labor markets of that main dish might mean there is less slack. over the long run, those people buffer him sing higher wages because there is more supply.

how does that factor into the debate? >> one of the things we >> the people that have been on unemployment six months have been back to normal levels. what we are trying to do is work off the high rate of long-term unemployment, people unemployed for over six months, over a year, two years. we are seeing long-term unemployment come down. that is very good. what we emphasize in our paper is that maybe we are not getting as much downward wage pressure right now from the labor market. chair yellen talked about that in a balanced way in her speech, that these are temporary factors that may make the wage growth versus the slack kind of have differences, make it harder to read. the long run, long-term unemployed will get back into the labor force, jobs. i see that as