>> i'm mark crumpton. this is "bottom line." the intersection of business and economics with a mainstream perspective. today, janet yellen says too many americans are still out of work. then, analysis of dr. yellen's remarks from former pimco ceo. we will great this summer's movies box office and look ahead to the fall. to our viewers here in the united states, and to those of you joining us from around the world, welcome. we have full coverage of the

stocks in stories making headlines today. peter cook focuses on the technology being news to hunt for the killers of american journalists. and willem marx takes on a two or of iraq's american-style village gone bust. her firsten gave jackson hole speech today. her focus, the u.s. job market. michael mckee is in jackson hole, and has details. >> this was a status quo speech, breaking no new ground. janet yellen didn't change the debate, but she outlined it. for the fed, the damage to the economy from the great recession makes it very hard to know where unemployment and inflation should be before interest rates go up. as she said in a speech, as the recovery progresses, assessments need to be more nuanced, because of the considerable uncertainty about the level of unemployment consistent with the federal reserve's dual mandate. most of the speech outlines

those nuances, the drop in the labor force but dissipation rate, elevated levels of part-time work, slow growth in wages, and inflation. recipe of themple federal reserve here. policy will be guided by our assessments of how far we are from our object is of maximum employment and to present inflation as well as our assessment of the likely pace of progress towards those objectives. she concluded by referencing the fed's most recent statement. if the economy picks up faster than expected, and it has been doing that, then rate increases could come sooner. if not, the phase gets low. nothing to see here from jackson hole. keep your eye on the economic data instead. get a live report from michael mckee in jackson hole at the bottom of the hour. and also, european central bank president mario draghi speaks at the symposium 2:30, new york

time. this is been a boom town in iraq. developers pouring billions into the segment -- into the sector in recent years. but the threat of the islamic state has put these ambitious expansion plans on hold. >> just a couple of hours from the iraqi conflict zone since this small slice of the american dream. kurdistan's first self-proclaimed subdivision. >> how much does one of these houses cost? around $3000. -- $300,000. he is a courteous but this time between virginia and iraq. see most of the developers in this area, even in lebanon or turkey, they start to

move to do business here. sank $6 million into this gated community, and received another $10 million for water, sewage, electricity from a private lending arm of the u.s. government. then, sectarian bloodshed hardly encouraged outside investments. but in recent years, the oil economy has helped reveal -- erbil develop at an impressive rate. >> the oil companies are important to improve kurdistan's economy. projects are supplied by family members of these will companies. businessreate cash and to the area. >> today, many of the cities cranes stand still, and construction projects have been placed on pause. decided to attack

the kurdish area, this makes people worry about the situation. they don't invest. in 2000 12, the most excellent the property sold for $6,000. local kurds, -- $600,000. local kurds wanted to rent the houses to employees of big companies like gas prom. >> when they are leaving, everything has been slowed down. >> the café here currently caters to far fewer customers. it leaves developers to debate kurdistan's future. >> businesses need political stability to run. then, we will be taking over business and the whole reason best region. >> but stability may not return for some time.

from erm marx joins me bil. can you jell me about the development -- is there regulation or government funding? >> i think it is fair to say toucht is a light regulation environment here. the city has been exploding over justast three years, even four years ago. so many more high-rise buildings you were seeing on the skyline. a lot of the funding for the the larger of a structure projects come from the government. but these businesses have made their money with the u.s. military was in this region. they started off supplying generators and building camps for them. they have diversified, and now they are doing very well as real estate developers. >> any of the businessman that you have met in kurdistan, that they expect that they would be facing this kind of situation? >> no.

it is a question i asked quite a few people that i have met over the last few weeks. no one said they would expect to see these guys in their doorstep. they were operating businesses outside of the city. within the islamic state 20 or 30 kilometers of their business made it very difficult for their staff. a lot of them were leaving, heading to turkey. trying to get those businesses back online becomes a challenge. it was a big surprise. >> based on conversations you have been having over this past week, what are the challenges of running a business in iraq currently, even when you discount the violence? >> i think one of the big problems is political uncertainty. we have that here for over a decade now. dealing with government projects in particular where you have to deal with different political parties. to figuret confusing out who you should be line offer

pandering to. trying to figure out who is going to be a person on your side, if you are going to invest a huge amount of money, will government pull a lot of money out from under you? they're having to invest in these projects with large files of cash. >> willem marx reporting live from iraq. good travels, we will see you here in new york. islamic is on for the extremist to brutally murdered american journalist james fully. -- foley. looking athas been the clues left behind. there is a trail to follow. >> absolutely. it starts with a video of james ley's horrific murder, and the militant who carried out the killing. says he french hostage may recognize that man. the hunt is on for jailer john.

to law enforcement officials, including a former cia case officer. he told me that technicians are going to be scrubbing a video for any metadata left behind. specifically, looking for a timestamp, and other identifiers on the equipment used to shoot the video and upload it. to know who may have download the video right away. they could tell them something as well. next they will focus on the production in the background of the video itself. they say the panorama cinema style shooting in broad daylight is most distinctive and bold on the part of the terrorists. they weren't worried about being spotted from the air. they weren't worried about a drone. that tells us something. buzzer --at and the the desert background, says to him that he was killed in syria. landmarks, weather

conditions, anything that can ident by the time and position of his murder could be important. that could be critical in the manhunt going forward. the biggest clue of all on the video is the voice. citizenis an american of your country. >> the british voice with a slight accent suggests a linguist -- to a linguist that this person is likely from london. this could be matched up against audio databases in the u k and the u.s.. it is not a shoe thing. -- a sure thing. the voice ine that the manner the video may not be the same person. >> the executioners face was covered. anything they can do with those images? >> difficult. but not impossible. he says intelligence analyst will go over every single inch of that image, the physical appearance in particular. no chance for a match, given the

distance from the camera. but the eyes could lead to a facial recognition match if british authorities have a passport picture in their database. maybe it could be a match on those guidelines. the a's can provide best the -- provide 70% of the info you need. >> how is his murder change things for the united states? >> we've not had a specific policy change. certainly change the debate here in washington. the tone coming from the administration -- an example, listen to chuck hagel yesterday about the imminent threat isil now poses to the u.s.. are beyond just a terrorist group. they married ideology, a of strategic and tragical military prowess, they are tremendously well-funded.

this is beyond anything that we've seen. again, the debate continues today, even the national security council spokesperson speaking in martha's vineyard in the last hour or so, being asked about whether the u.s. would consider airstrikes in syria to deal with isis. again, not ruling it out, but is not u.s. policy. >> peter cook, thank you. join us on monday, we will follow the latest on the islamic state and the air strikes in iraq. director ofner, special projects at the supergroup, and former cia case officer, will join me from savanna georgia. that's coming up on "bottom line." when we continue, we will discuss the fed chair janet yellen's remarks in jackson hole. ♪

>> janet yellen speech kicked

off the jackson hole some posing. her message -- or is still slack in the u.s. labor market. chief advisor to ollie ounce, and a columnist for bloomberg view. he joins me from california. what was your take away from chair yellen's comments today? did it do enough to satisfy the market, and to give transparency to the debate on the open market debate? ncyagain with transparen on one thing. as mike mckee said, that is a key input into the future of monetary policy. very good for working around the next corner and seeing how complex that is. the good for looking around corner after that, which has to

do with financial stability and the global applications of what the u.s. is doing. >> how much weakness remains in the u.s. job market, and what the economy needs right now to achieve maximum employment? >> the biggest weakness is the failure of wages to respond. as jenny ellen pointed out today, all other indicators are stunning to move. we saw that in the minutes that were released two days ago. what hasn't moved his wage growth. that remains the big puzzle if you like. it is important to achieve wage growth. in terms of how you do that, that is a big issue. i don't think monetary policy is enough. i think you need other policy, , andtural or in particular unfortunately, they are paralyzed by this function and commerce are now. >> you mentioned wages. if they do begin to rise at this

point. would inflation rises well? >> there are two times of inflation -- good inflation and bad inflation. wage growth in today's environment essentially good inflation. we do need good inflation in the system. the issue is when does it come and how quickly does the fed respond? >> janet yellen said if progress in the labor markets continues to be more rapid than anticipated, and interest rate increase could come sooner than currently expected. and further increases could be more rapid. what type of progress does the fed need to see before it starts to raise rates? >> she wouldn't be specific on that. and for understandable reasons. and even other federal officials, including the ones that spoke with us today, didn't want to be specific. there is a good reason. while the tone of the fed is

moving towards a more hawkish tone -- and we saw that today. there was a lot of disagreement within the fed as to the details of policy. no one wants to commit themselves to anything specific at this point. >> i'm speaking to the former ceo of pimco. what happened to the coordination wheezed to see from the world central-bank? some have lowered interest rates this year. but rates were raised in places like russia and south africa. is this a cause for concern? >> it is certainly a major change. i call the multispeed world of central banking. central banks are no longer on the same side anymore. in fact, just look today. this morning, janet yellen's main challenge was how quickly should she lift her foot off the accelerator. draghiw minutes, mario will be talking, and he has the opposite issue. how much should he step on the

accelerator, and when. we have these competing paradigms happening. i worry that because other policies are frozen, that will result in a lot more volatility in the effects markets, and more generally. >> speaking a volatility, let's continue on a geopolitical track. nato said it is seeing an alarming buildup of russian forces near ukraine. there was also reports of russian forces in ukraine firing artillery. you wrote a recent column about this as well. why should central banks be concerned about the situation there, and one of the global economic consequences of continued sanctions and said counter+++

>> they should be concerned for three reasons. first, they cannot argue that they shouldn't be more sanctions because this is a political issue. they are out of the game on that aspect. second, it is a queue mode of affect. you mentioned sanctions and counter sanctions. every time europe and russia take a step, they keep getting closer to something i could push both into recession. thirdly, this is the worst type of external influence on economy. it is stagnation. it slows down growth, and it contributes to bad inflation. central banks are right to be worried. but there isn't much they can do about it. >> we have about 30 seconds left. i must ask -- people here in the united states day -- say this is happening over there. how will that impact me? house innnot be a good a deteriorating neighborhood. the u.s. is linked to the global economy. --we are going to recession if you're goes into recession, we will feel it here. >> in what way?

>> lower growth, and the fed will be forced to reconsider. the fed will realize it hasn't got the right instruments for the task at hand. o, and ar ceo of pimc columnist for bloomberg view, joining us from california. always a privilege to have you on the broadcast. >> thank you, mark. >> and on the markets update, next. ♪

>> it's 26 minutes after the hour, which means bloomberg is on the markets. olivia sterns is standing by with the details. good afternoon. >> good afternoon. let's get you caught up on where stocks are trading this afternoon. the market is pretty much flat. by 2.5 points. still trading just above 1990 after closing at a record high yesterday, the dow also little changed. the nasdaq is in the green up by .2%. cellulite cure it. -- we want to tell you about coffee. craft controls the means the go out under maxwells coffee.

stock we are watching is dynegy. they sent our plant shares higher. the transaction will double, it is generating capacity. will be on the markets again in 30 minutes. more "bottom line," after the break. ♪

>> welcome back to the second " on-hour of "bottom line bloomberg television. thanks for staying with us. we are getting headlines from jackson hole, wyoming, where european central bank president mario draghi is speaking at the fed economic symposium. michael mckee is in jackson hole, and he joins me now live with the details. >> mario draghi much more direct about policy and the ecb's intentions fan janet yellen was in her address earlier here today.

he outlines the causes of unemployment talking about europe being struck by two recessions, one that began in 2008 with the financial crisis and a second one that largely involved the peripheral countries, greece, ireland, portugal, spain, and italy. unemploymenten rates up to see the kelly high the has to he warns do whatever it ecb takes, saying ,he risks of doing too little cyclical unemployment becomes structural, and that outweighs those of doing too much, and there is excessive price pressures. he is not worrying too much about price pressures are not because inflation has been falling precipitously. that brings him to another pledge for the ecb to do more, acknowledging the drop in unemployment. the governing council would use unconventional instruments to safeguard the firm anchoring of inflation expectations over the medium to long-term. these are not new comments for mario draghi, but it is strong

reinforcement of where the ecb is at this time. he says that as far as what the targetedlanned, there long-term repo operations -- he said, i am confident the package of measures we announced in june will give the intended boost to demand, and we stand ready to adjust our policies further. does not say when, but everybody knows they are working on additional lending packages and some short-term asset packages. he said those are proceeding nicely. he concludes that a very strong call for european governments to do more physical work to lower taxes and reduce structural issues, turn to build european economies on the fiscal side. he said there is a risk that monetary policy cannot do enough. >> michael mckee joining us live from jackson hole, wyoming, thank you. " with trish regan is coming up. she joins me with a preview.

>> we have a packed show with you. we will talk about central banks around the world. mario draghi, of course, in the fed. we will target of the relatively flat today. ebay saw big gains yesterday after the paypal news, following a report of carl icahn and his campaign that has encouraged ebay to do exactly that earlier this year. to see quite a push these split off from each other, ebay being one company and then another. >> and panasonic. >> yes, the chief technology officer from panasonic will be on. scoreboardstalling in sporting venues across the country. we will talk about the technology behind all of this. that is coming up at 3:00. >> all right, that is at the top of the hour. thank you. coming up, a u.s. court calls

argentina's latest move to settle its debt illegal. we will look at what argentina plans to do next to settle its obligations. "bottom line" continues in just a moment. ♪

>> welcome back to "bottom line. take a look so we the most notable newsmakers from this past week on "bottom line." time went through a long were the consumer denied themselves indulgences. i think that with job security, they are spending a little bit more. that is a positive thing. this is really one of the first good seasons we are going into thishe shopping period year. it looks strong. strong andmbers look we expect august to be even stronger than yeah -- last year. >> when you zero in on for some homebuyers, we think that that is a big reason why we are seeing a slower paced housing

recovery. clearly, 40% is where we would like to see that number. when we zero in on who are the first-time homebuyers, they're still largely the millennial generation who have a higher propensity to rent. >> in a gruesome act we saw today, it was intended to send us a message from this group, leave usic state, to alone. in fact, it sends the opposite message be it we cannot leave them alone. >> the economy is moving at different paces. if the labor market does have pockets of tightness but also areas where it needs to fill out, so i think the fed is communicating in the best way that they see positives and negatives, and they will move when it is appropriate. quite it is very important that we reform our laws, important for national security and for baby boomers retiring.

>> a look back at the most notable newsmakers from this last week on "bottom line." coming up, top summer movies -- we will look at the top grossing films of this summer and preview what will be hitting the big screen this fall. stay with us. ♪

time for today's latin america report. in valid and illegal -- that is what a u.s. federal court said about argentina's plan to pay holders of foreign currency bonds from local accounts. we have been following argentina's debt story. you said earlier this week that it is the gift that keeps on giving, and it certainly is. does the country have any options? like it can do whatever it wants in the sense that it is a country. it is very difficult for a judge to say that it cannot do something, which is what the

judge said yesterday. he ruled that the plan to pay bondholders locally in argentina is against the law, illegal, they cannot do it. the thing is, argentina can just go on and try, but bondholders can choose whether or not to participate. it is really about aiding the plan and implementing the plan. >> what were we hearing earlier again for am checking the headlines. something about argentina bondholders' plan to launch a waiver in one to two weeks. of course i'm going to ask you, what is that waiver? >> there is a clause in the bond contract that argentina says is the reason why it can settle with holders of its defaulted bonds in 2001. , andclause basically says the way argentina interprets it, that argentina cannot make a better offer to those bondholders without extending that offer to everybody that accepted about 30 cents on the dollar and exchanges.

isause argentina said this the reason why they cannot settle and why they defaulted , these bondholders are taking it upon themselves to try and get rid of that clause from their bonds. to do that, they have to launch a consent solicitation and get 85% approval from all the bondholders. >>'s is having an impact on the currency, the peso, down 1.5% this week. it is the biggest drop since the government he valued the currency 15% back in january here at what does this mean for ordinary argentinians? >> the question is how much money will be coming and going forward and how much they will be using going forward as a result of a default, the fact that argentina will not settle with these bondholders. if money is going into the country at a lower rate because companies cannot borrow abroad, international lenders do not want to lend to them, especially

if they tried to break u.s. law by doing these local swaps, they can be difficult, especially if people locally start panicking. it is customary in countries like argentina where there is a very high inflation and there is to panic, people start a little bit and say -- wait a second, how can you support the currency that i have my life savings in and then demand a reserve like the dollar? >> where does this leave the president question what she was talking about this this weekend got very emotional. >> it depends on what side of the table you are on. u.s.ave u.s. courts and investors calling her an outlaw. she is breaking all sorts of rules, going rogue, if you will. to her, she is trying to maintain her sovereignty. how do hern is, people treat her going forward? do they think she will be ab with thein the economy way her plan is going?

if people take to the streets of protest, her future is not looking so bright. >> as far as her immediate future, what do the polls look like? >> right before the default, her pulse had bumped up a little bit actually. so that was kind of surprising your folks actually like the way she was dealing with -- >> standing up to the west. >> yes, standing up to the north. >> exactly. >> but then they came back down after the default. there is the question of crisis management. can they keep the exchange rate stable? we will be looking at the parallel market which the argentines can access the dollar at the official rate -- they cannot access it freely at the official rate. we will look it how the black market peso is doing it we want to make sure it does not go out of control. >> all right, covering the argentinian debt story -- see you next week. thank you so much. thes shift gears --

delusion of summer movies usually slows in the month of august, but thanks to the release of the guardians and the teenage mutant ninja turtles, they could come close to breaking the $1 billion mark this month. our senior media -- a senior analyst joins me now. always a pleasure to see you. looked to august narrow the summer to visit at the box office but it without question, this summer has been a disappointment in hollywood. what happened? what do your figures tell us? >> the figures show is that the summer movie season three weeks now in then 20%, and course of three weeks, between " guardians of the galaxy," and "teenage mutant ninja turtles," we have knocked that down. we after week, it has been tough

to compare with the very strong summer season last year. in the past few weeks, we have seen the box of his rebound. that proves that one or two these -- those movies made all the difference to knocked down that summer deficit. >> is a time for hollywood to redefine what is or is not the box office season? is it time for studios to start spacing release dates farther apart so movies do not eat into each other's' profits? it isolutely, and something that hollywood studios and analysts have been talking about for years. they're finally putting their money where their mouth is and actually putting releases in april, early april or may including "captain america" doing incredibly well. when the first "hunger games" movie released, that was in march. we had never seen the amount of

money it made in march before. over the next few years, i think we will see big movies, , defining the month, not the month defining the movie. you can do it anytime of the year and audiences will come out, when ever it is your studios have to space these movies apart so they do not cannibalize each other. >> the movies that were expected to rule the box office -- "godzilla," "transformers," and "x-men," they started strong but then faded. that is in the u.s., but why do they continue to do well overseas? what our data is international and worldwide. when you look at that part of the story, it is very strong. "transformers: age of extinction ," the first movie in north america this year to open with over 100 million dollars in its

debut weekend. that did incredibly well. but the international is vitally important. tomorrow,"e "edge of a do not open number one in america, but it opened number one globally and did incredibly well. this is a global business. when china, india, on -- australia, all these different mixed with theg bottom line, it becomes a global .tory quickly mention the success of "teenage mutant ninja turtles," the reboot of the popular children's cartoon, grossing $120 million in the u.s. and canada in its first 11 days released here at how do you explain the enduring popularity of this franchise? >> we're going on two decades of ninja turtles. earlier in the year when the marketing plan was getting whend up carbo people -- it was getting booted up, people

marginalized the movie. but it did really well and for two joe weakens in her role. there were not a lot of family films this summer, and this really filled the void. i think nostalgia plays a part with that. with the whole family and have a great time, it shows you michael bay has his finger on the polls of what audiences want with "transformers" and "teenage mutant ninja turtles hmmm, which he produced. it is about the popcorn movie experience which could also happen in august. it seems like the dog days, but now with films like "guardians of the galaxy" and "teenage mutant ninja turtles" doing so well, i think studios will do more and more movies in august. >> quickly, how is the ball locks off is shaping up? will be a lot of interesting movies out there. default is the bridge between

the summer and the holiday season. there is a world war ii drama with brad pitt that i think will do well. and we will have "the maze runner," and young adult apocalyptic movie. is at 5% down,e but we will narrow that gap. nd of the, we can be almost even with last year's record-breaking box office. joining us from los angeles. always a pleasure. thanks for your time. >> thank you. quite another check of the market movers is on the other side of the break. "bottom line" continues in just a moment. ♪

>> get the latest headlines at the top of the hour on bloomberg radio and streaming on your tablet and on bloomberg.com. that does it for this edition of "bottom line." yes when mark crumpton. thank you so very much for joining us. "on the markets" is next. have a great weekend. hour andt the

bloomberg television is on the markets. i olivia sterns that's good you caught up in the final hour of the session. a mixed picture across the benchmark indexes. the s&p and the dow in the red. the s&p within four points of its record close yesterday. the dow still holding above 17,000. the nasdaq up by about .25%. all this comes as we heard from janet yellen this morning, the much-awaited speech on the labor market, saying there's still remains some slack that she is still worried about. to test it is friday, and we're looking at the ongoing drought in california and subsequent water spending plan helping to lift water etf's up by 5% this month. but it is more complicated than it looks. we have our expert here to explain. ?ow does one invest in water we do not traditionally think of it as a commodity. it is not something you can trade on the cme.

how does this work? >> it is not like oil or natural gas. there could be someday futures on water. it is not out of the question heard it could be called the ultimate commodity eventually. as of now, this is like oil explorers where you go to the stock market and i call these the magic etf's. they take a little bit from that sector and a little bit from this sector. companies hope to go out and treat water, infrastructure companies, construction companies, and they are trying to refine water and make sure it is drinkable, and also managing wastewater. when you look at the etf's that track it, like the powershares water resources etf, this is about $1 billion which is pretty big. it is a long-term play. >> what is in that portfolio? what about 66% industrial, which is a little shocking. in thesector is utilities space. about 18% utilities.

these etf's are thing utilities for regulation, so let's go companies that have more profit and are working on newer innovations with water. that is what you are getting, large, made, and small. these etf's are mixed up with a lot of different companies across the board. going into one of the sectors in picking one or two tropes stocks, this one gives you about 30 stocks. and involve u.s. water treatment changes. >> i can understand why you would want to invest in water. i can understand why oil is correlated to the price of crude. but does a utility company, is the correlation of a utility company's stock have a correlation to the price of water? >> no, but as time goes on and water becomes more of a big deal -- the population is exploding -- governments will spend more on infrastructure to treat water and get it to people. you want more correlation to the government spending here these

companies will basically make money on that. there will be crazy ways in which water will be delivered. this first one is like the powershares but it is equal-weighted. if you want a little more zip, this one is dipping down into the small caps more than the powershares. >> interesting. >> $2 billion collectively for the market. i call them cooking with spaces, like little add-ons. >> you do not want to put your entire portfolio -- >> no. the good news is these do not have much overlap with big popular indices, so you'll not be overlapping your current holdings. >> and easy way to get to blue gold, as they say. thank you so much. "street smart" starts next. ♪

>> stocks little changed and looking for direction after janet yellen left investors and sure about the outlook for interest rates. i am trish regan, and "street smart" starts now.