whether a rate hike is coming? betty: an index that tracks the momentum stocks like netflix just hit an ominous sign. we will tell you what it is. data secret no more, user hacked from ashley madison, posted online, deep in the dark web. ♪ betty: matt: good afternoon. i'm betty liu. and i matt miller. let's take a look at the markets. stocks are down across the board about 1% at session lows now with the dow jones industrial points.at 171

the s&p is down as well as the nasdaq, down nine/10 of 1%. emerging markets fueled global growth concerns, some companies fears.on the china led caterpillar, dupont, freeport. vietnam spook the market with -- theird the market with third evaluation this year with a wider ban on trading further down. and gold,ook at oil crude is falling to a six-year 2.6 2 the report that million barrels last week still held under $41 billion. a drop of $3.90 per barrel for nymex crude. below $49 perwn barrel. a quick check on the bond market as well. betty: that's right. treasuries are interesting enough. they are being bought up a little bit right now given some

of the risk off trade. treasuries and yields have been moreg in some say that signals may be coming from the fed and they may be raising interest rates. you might see the yield on the 2-year note rise to its highest level since 2000 11. finally in the currency market you are still seeing reverberations from the chinese decision to let the yen weekend, as matt was talking about. dong,stan and the vietnam you can see both of those related to global currencies. that's why you're seeing that spike there, devalued by about 1.4%. what does that mean for the dollar? if you take a look at the dollar as we go back over the last seven, this may seem like weeks and valleys here but it has been a pretty tight range and we have seen the dollar.

part of that has to do with the lack of inflation pressure. ,lso, the speculation that yes is or is not the fed -- when is the fed going to raise interest rates? are seeing the dollar trade in this pretty narrow range. our topt a look at stories. the fed has a 2% target for inflation right now. the economy is not cooperating at all. the cost of living in the u.s. is up in july. the consumer price index rose to less than expected. you'll prices barely rose and the cost of airfares, cars, and household furnishings all felt. matt: target beat estimates in second-quarter earnings with the-store sales better than street had anticipated. here is ceo brian cornell on the conference call. brian: we have become much more flexible in how we build demand. stretching our supply chain well

beyond its core capabilities. frankly, as a result some retail fundamentals have started to suffer. stores have been unacceptable so far this year. betty: -- matt: in the years since taking over he has focused more on act catalog and has cut cost. the world's second-largest home-improvement chain, lows, posted profits that missed analyst estimates. they been riding a rebound in home prices that lead consumers to spend more on houses, but that did not translate into sales this time. nonetheless the shares continue to rise on optimism. betty: another retailer, costco, being sued for harvesting shrimp with slave labor. a california woman has started a

class action for bringing shrimp from thailand. the company has not commented yet. concerns that hillary's e-mail .s surfacing among voters 56% think she was wrong to use a personal account. on the campaign trail in las vegas she was asked if she tried to clean the server. clinton: with a cloth or something? listen, we have turned over those servers. that is for the people investigating to try to figure out. but we turned over everything that was work related. every single thing. the survey showed that she still has a big lead over her rival for the democratic nomination, but it puts donald trump within six points of her in a hypothetical matchup. matt: jeb bush, getting by with a little bit of help from his friends.

coming from donors that previously gave to his brother or father. that is according to analysis of federal election records. it makes a lot of sense since all three are republicans. the top stories at this hour. much more coming up. the: in just one hour central bank will release minutes from its meeting with live coverage at 2 p.m. eastern time. matt: joining us for insight on what to watch for is michelle girard, a chief u.s. economist at rbs securities. it is interesting, economist are pretty set on it happening in september. only investors seem to be flip-flopping, from the looks of futures. one people expect a september increase? michelle: people were talking about it this morning and it certainly again the rum mosttors that we talked to

of them seemed to think that the fed would go in september. if you talk to the clients overseas, they have a broader perspective and are perhaps living in a different environment where they are more worried about deflation. overseas investors are a bit more skeptical. right, mostyou are in a stick investors are still on track for the fed hiking in september. betty: morgan stanley came out with a report either today or yesterday where they said that if they decided to raise rates you would see the two year yield go to a level that we hadn't seen since four years ago. why? it's the most telegraphed interest-rate increase ever. why would he see this disruption? i'm not- michelle:

sure, but i do think that markets will move. you can see in the markets short-termthat in interest levels for the fed moving in september, they are not fully reflecting the 25 basis point hike. if they were going to go, there .s that christ in even the people going for the likely federal all in september. we have been here before. we've been led here and then for whatever reason backed away. i'm not going to position for the rate hike cycle before i see it get going. that does depend on when we do see the move. only then will some people be spurned into action to position themselves for hiking every

other meeting. they may be thinking about those steps now without actually putting them on until the fed pulls the trigger. from the sound of janet yellen, that would be a lot of increases. isn't it the case that this is only a nominal rate hike? we have had the fed tightening effectively over the past couple of years. basically the effective rate on short-term interest rates has remained low. in terms of whether that target rate is in particular, there's been no action, but that is where we start the normalization process. i think it is a significant event. i think you are right, the fed has telegraphed that it will be gradual. clear inas been pretty

their suggestions of that expectation that is somewhat reasonable. i think that that will be the case that most people wind up going with, once the fed does start to move. then the weston is -- to what extent have events caused them to deviate from that path? betty: before we go we are less than one hour away from the fed minutes. you are you -- were listening -- what are you going to look out for? are we going to get a surprise here? michelle: certainly the market is expecting that if the fed is indeed leaning towards a rate hike, they have got to signal that and these limits provide an opportunity for them to do so. move in the direction of a september rate hike.

if there was one thing to test the markets, to get them closer to a rate hike, they might conclude that the fed is not going to do that he does they did not set the table for a move. i actually don't think that we will hear much. i think the fed will continue to signal that it is appropriate to raise rates on the same path we have been talking about. the markets are definitely looking for signs that the fed thatgnaling to them indeed, they are getting ready to go. excellent.att: thank you so much, michelle. she is the chief u.s. economist at rbs securities. betty: still ahead, management shuffles on the menu at yum! brands. matt: we will break it out for you. k of c. stay with us. ♪

to thewelcome back "bloomberg market day." matt: i'm betty liu, here with matt miller. we have a look with -- a look at how the markets are faring with -- with ramy. ramy: some stocks are definitely seeing green. yum! brands being one of them. up 1.5%. they are seeing some recovery after a selloff after china devalued currency earlier this month. they have chosen a new ceo of their chinese division, the head of the company's kfc branch.

last quarter same-store sales had fallen 10%. so, this is good news here. for james smucker, a new analyst rating could be influencing the stock. this is their biggest intraday --e since the fourth, rating raising the rating from outperform to neutral, saying that they are seeing improving sales trends and that their price target now is $125. looking to energy, fun addison falling today. off the session lows. solare the cfo of the energy company. you can see that right here. today and analyst says that backs up it is going to be slow. one interesting thing to note is in my bloomberg terminal. this is the anr function.

despite the fall, we have two buys, one holding yellow, analyst's are still very positive. finally, gold is rising at the s at 2 p.m. because of the push into perceived safe havens. up gold stock price was 1.1%. today they have got a bit of those games. betty: thank you so much, ramy. let's get a look at the top stories this hour. the proposed rules on methane the u.s. could choke energy renaissance. the obama administration propose the first methane reduction in their administration. it is a more intense gas the carbon black eyed.

-- carbon dioxide. general motors is the first detroit automaker for chinese made cars in the u.s.. matt: san quentin is the oldest prison in california and also home to the giants and the a's. they recently gained attention when they invited a group of outsiders to play just one of the multiple games they play each season. in the past have played minor-league ace ball teams. it has been a tradition for nearly 100 years very a look at the top stories we are following at this hour. san quentin. ever been there? no, thanks for asking. never done anything to get in there. matt: i think that johnny cash way to show there. very famous risen. betty: the producer was just talking in my year.

this will shut you up. matt: what did she say? betty: ashley madison, have you ever been there? [laughter] matt: no, no. but you would find out if i had. we are going to look into the dark side of the hacking world and adultery, coming up. ♪

betty: -- matt: welcome back to the "bloomberg market day." betty: times up. hackers have made good on their promise to post the ashley madison data online. the dump was posted to what's called the dark web. a lot of people have drag

it up and put it on the regular internet. names, addresses, phone numbers and sexual preferences of cheating men. q the divorce lawyers. how did the hackers take advantage of the deep, dark web? tom, theow from d.c., first thing i want to ask is -- why are we only concerned about men? is there not a ton of information about the women actively cheating on ashley there is. well? tom: i'm not sure why they have not released that information. there was definitely a modicum of activism behind the initiation of the attack. the disclosure of the information to the deep web cybercrime community was done as retribution for the lack of proactive defense by the institution itself. betty: it's funny that you mention that. we were talking about that in our meeting earlier. that are other sites

ashley madison owns about cheating women. that data was not posted. in any case, whether it is female hackers, male actors or whomever, why did they posted on the dark web? matt: that is one of -- tom: that is one of the most punitive things you can do. there is a phenomenon called sextortion that happens in asia for men who cheat on their wives . it is the part of the internet that you don't go to as an online individual. you basically send a calling card to the criminals of the world. here you go. have fun with this. store it for money to keep these quiet. most do not have access to that. of bloggers have dug it up for our entertainment as well. beyond the schadenfreude, are there real implications for

business? that peoplempany thought about investing in, whether or not they agreed with the moral implications? in fact, the owners of ashley madison wanted to do an ipo, right? tom: very much so. they wanted to launch it one week subsequent to that point, reputationall -- risk is real. hackers will bypass traditional security advocated by major standards organization. you have to move beyond that. especially if your premise is the cyber security of your users . you have to realize you are throwing down the gauntlet to the criminals of the world. matt: what about the accusations made by hackers that when you ask or or even pay $20 for a delete, that ashley madison did not actually white the server clean -- wipe the server clean,

as hillary clinton might say? tom: that is the point of activism. they are trying to force the company itself to enforce the security of their users. decided to put them on blast literally to the criminal underground of the deep and dark web. the lesson here is simple. your brand will be used against late -- against you. at this point, who is going to trust websites anymore that pretend to be private or secure if they do not invest in it? betty: before we go, matt said it earlier as a joke but probably it will be true, more lawyers will be getting more business as these names are revealed, but are there any other businesses that might benefit from this? including crypto currency? the crypto currency will benefit from the folks who want to walk outside the lines.

the major beneficiaries are the people in the underground and shadow economies of the world, to be quite frank. those who truly benefit from this are those who can provide security to individuals of the higher levels to protect their own computers from the subsequent attacks leveraged from this. remember if i have your personal information i can leverage campaigns against you under the belief of an attorney reaching out, per se, for identity theft monitoring. matt: thank you so much for joining us there, tom. let's get to top stories at this hour. the department of justice in south africa had planned to release oscar pistorius early from prison, but that plan is on hold. he was scheduled for released on friday. -- for release on friday. he was sentenced in 20 -- he was sentenced and has served 12

months -- 10 months. betty: a vehicle carrying water and parts to the international space station, launched early this morning following bret -- following weather-related delays. it will take five days to reach the station, arriving on monday. that is your look at top stories right now. matt: on that note, i sign off. please, don't leave me -- on that note, i sign off. matt: please, don't leave me. betty: we will handle this. investors may be losing steam. we will talk about the trouble with momentum trade. ♪

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matt: welcome back to "the bloomberg market day." i matt miller. top headlines at this hour, the third bailout in greece, clearing one of its last hurdles. the german parliament overwhelmingly voted in favor of an aid package. angela merkel lobbied to prevent too many from voting no. more fallout from the chinese decision to depreciate the yuan last week. vietnam has lowered its currency value for the third time this year. china has been vietnam's biggest trade partner. earlier we spoke with ivan chew about their economy. it has been one great big bet. some adjustment, some swing down

from 10% to 7% is not a huge deal. any economy will have a correction. i do see it that way with reported growth. matt: shares in asia's largest international headline -- airline fell the most in six years. they may be tempted to sell part of their gold reserves around the world, venezuela is mentioned. the country gets 95% of its export revenue from oil and they may have problems paying their debt, it is speculated. airlines in the u.s. are gearing up for regular flights to cuba. the obama administration is working on a deal to allow travel between the two countries. right now american airlines already flies 1200 charter

flights to cuba each year. thee are just some of stories we are following at this hour. coming up in the next half hour, pressure grows on brian, ceo of bank of america. can he keep his position after they had less dense a la results in the fed stress test? , grady -- tom brady is back in court. does he have a chance? we will get perspective from a sports lawyer. the most successful trading strategies this year may be coming to an end. the tracking of u.s. momentum stocks like apple and netflix, they sold. analysts at the bank warned that the strategy is showing signs of unraveling. for more we are joined by our bloomberg stocks reporter from london. thank you for joining us. first, let me ask about this index.

tell us about the index that citigroup has put together. inyoung: this year at has done phenomenally well. it had reached the level where they were pointing out that things might be due for rotation. this is the first step, last week was the first week it decreased. matt: -- matt: we can see it clearly circled on the screen. analyst knew that it was due for rotation. is this cyclical? it tracked, long-term momentum and basically had been at the highest levels 2009.2009, early i think that you might remember the markett point

turned in the opposite direction and had a huge rally. they were looking at flow as well with concentrated trading in certain sectors, like biotech, technology. people were way short energy and crude. they thought that things were due for a pullback. recommending citi that investors do? is it still a safe that for a short time going forward? what's the prognosis? not just the citigroup investors. utility companies have pulled ahead since the second half of the year started. even apple has pulled back recently. now they are seeing sort of things come back with utilities and trade centered

around a smaller dollar and lower interest rates and shorting energy. they are sort of losing momentum have are having strong momentum and being chased by trend followers. in the u.s. we think of interest rates as poised to rise , but obviously around the world the picture is very different. right.: that's also another point they are making. if everyone is waiting for what the fed might do in september, right now it's august, volumes are low. traders are back at the desks after the strong trends in certain areas of the market. matt: how does this typically end? to the analysts analyze what happens when it turns around all of a sudden? inyoung: it's hard with momentum trades to call the end, right?

a lot of people might be expecting. apple, some people are saying that apple is overvalued, but it has done well since those times. it could go on for longer but they just pointed out that it was time for a pullback, which we were seeing. matt: thank you very much --oung: inyoung:, reporting ,hank you very much, inyoung reporting from linden -- london. ♪

welcome back. we want to get a check on the markets right now. , looks like it has been a down day for us, the europeans, the asians, the entire globe. good news is that we are paring losses from earlier in the morning. still, markets are down across the board. the s&p is down by 9/10 of 1%. overnight we did see a selloff in emerging markets that also hit europe and asia. here in the u.s. investors are nervous over the possibility of higher u.s. interest rate possibly by september. follow me into the bloomberg terminal. this is a look at the function function of the

s&p. you can see that almost all mode right in lost now. utilities have been going back and forth in the green. energy is the biggest focus downward at 2.9%. this has been accelerating all day. today oil has been retreating since its biggest gain in a week. right now look at that, down 4.8%. right now there is set -- there is speculation increased out which we extend that, have been talking about coming .ut of a rock -- iraq angola as well. over to gold, investment havens going the other way, at the since july 17. gold was up as much as 1.1% this afternoon. investors are pushing into perceived safety as you wait for those fomc minutes.

the commodity here is falling, down by nearly one point i percent. glencore sayss -- that sink denies selling from chinese hedge funds have pushed prices too low. . big factor is china its economy is slowing down and less copper for construction. finally, let's take a look at treasuries. treasuries right now around where we started on the day, yields had risen higher, around the 9:00 a.m. mark. investors pushing in here. the fed is what we are looking to and about 15 to 20 minutes time. about 15 to 20 minutes time. matt: in july they saw conditions for a rate rise nearing -- not sure if someone has broken the embargo, but i have seen things coming across that look like they are from the fed. i just sent a message to michael

mckee and i will get to the bottom of this. >> spillover from emerging markets, stocks on two days of gains declining on this wednesday session. those companies with exposure to china leading the declines. i'm talking the automakers. the miners. the european commodity producers trading at the lowest level against rotter markets since 2002. it's very much the case in europe following the emerging markets, which have of course fall into four-year lows. all 19 industry groups falling on this wednesday session. interestingly thomas china devalued its currency last tuesday, miners and automakers have stuck 10%. as you know, that is a correction. one market did rise on wednesday. the athens stock exchange, germany rubberstamping the third greek bailout in five years.

areat is over to the new for rubberstamping. at least part of the $86 billion bailout so that greece can pay the central bank 3.2 billion euros. that is the next important deadline. the big move is on the european stock market already, the worst performer this year, down 9% today at a record low. boss -- thenaire billionaire boss says that he this sharpased on slowdown in china. years,gest drop in four a profit warning with quarterly earnings missteps claiming .lunging in russia cost savings in western europe. the second-biggest lender in eastern europe has second

profits growing better than expected. that is the story in europe. back to you. moving to asia, southeast asia and assets remain under pressure. we have this report from hong kong. >> southeast asian currencies saw another volatile day. holding steady after falling on tuesday to the lowest levels since 2009 in the wake of the deadly bombing in bangkok. get sawsia the ring further decline as the country's political crisis weighed on that currency. vietnam's central bank surprised the market i devaluing its currency for the third time this year. they said they acted to prevent that impacts from upcoming interest-rate hikes. we are getting details on

the federal reserve minutes from the last meeting. look like most federal officials saw conditions for a rate rise. headlines came out early. mike mckee is here with us on set to tell us what we are seeing. it is all about inflation now. when they met three weeks ago they said that most conditions for policy affirming had not yet been achieved but they noted that conditions were approaching that point. what was missing? confidence that inflation would continue to rise toward its target. some members continued to see outside risk from declines in commodity prices. remember, this was before the latest leg down. addition, several noted that higher rates of resource utilization and tighter labor markets were not creating inflation pressures at the time.

they agreed to continue to monitor developments closely, with almost all members indicating that they would need to see more evidence that economic growth was sufficiently strong and market conditions have become firm enough for them to feel confident to move inflation to the 2% target. again, this was three weeks ago jobs, what happened with prices, oil and china. at the time some emphasized that the economy had made significant progress over the last few years by increasing the target rate for federal funds, confident that they would be met shortly. said jeffreyle lacher in july. behind the curve on inflation, financials ability and others said that if we raise rates

sooner rather than later it all on the economyce because they will see that we are confident on the economy. before another lake down on oil i see in china.8 -- matt: headlines here, a number of participants have already expressed concerns about china. this was before the devaluation. they had talked about the possibility of international developments hurting the u.s. economy and at that time the chinese stock market crashed. they put a floor underneath except for the last couple of days, but then we moved on to the devaluation of the yuan. it all has to do with whether the dollar holds down exports in this country. overallerall -- matt: it does not look like the federal is terribly worried about dollar strength.

that is not one of their main twin mandate. mike: what they are worried about is that inflation rise enough and job creation continue strongly. if the economy weakens, that will happen and what they are talking about is the possibility that a stronger dollar would weaken the economy. this was three weeks ago. another month to go before the next fed meeting. plenty of time to see some term -- turn. to see oil prices stop calling and stabilize. those sorts of things could have a plus on top of that. a jobs report in september could be very determinative. matt: we have got cpi gaining this morning at 1/10 of 1%. we were looking at 2/10 of 1%. what about the other data? what have we seen since three weeks ago to encourage the fed to stick to the course of

raising rates in september? essentially a mixed picture. there was a good jobs report of at threeent staying point 5%. once again, all indications are that we will probably see something similar for the month of august when the numbers come out on the worth of september. we have seen better manufacturing numbers and housing numbers. retail sales have been better. the confidence numbers have been lower. even during this meeting they discussed the fact that is this investment has not been strong. there are some mixed views on the economy in general. stronger, but not as strong as they would like. most economists that we speak to still expect them to increase rates in september. futures show more of the next picture. will these minutes change what economists are thinking out there? probably not, they will --

mike: probably not. they will wait for the delay based on these minutes and concerns over inflation. this comes on the back of a week -- cpi report -- weekend cpi report. the fed could change their minds based on any piece of data. suppose 300,000 jobs? 100,000 jobs? it will take everyone's perspective. matt: thank you for rushing to the set, michael. he got our report from the jobs and at leastrly one member wanted to raise rates already in july. we will bring you more on the fed minutes. stay with us. ♪

matt: welcome back. i matt miller. -- i'm matt miller. a big business opportunity in pet insurance when they realize that less than 1% of pets were insured. --is started pet planned inplan usa into the -- 2006. here is more on their journey from small to big. >> we had over $5,000.

[barking] ♪ [meowing] object --a massive massive opportunity. we had to raise some capital. we had to put in place the infrastructure. and then we launched the product in 2006. we decided to approach the largest pet insurer in the world. we wanted to become pet plan usa. lots of different breeds for cats and dogs. you need to understand the risks associated with those pets. they shared their data with us. it gave us a tremendous head start. we have a company with revenue close to $100 million this year.

we have got a great foundation to build on, but we need to create that awareness for pet insurance. establishing a reputation within the space. that involves going to trade shows. we will be telling people about the pet lamb, what's coming soon and why we are different. it took 10 years of talking to them, last year he became the exclusive insurance partner with aarp. suddenly we have 38 million exclusive members with its use of growth. we insurer over 160,000 pet. there are 109 million cats and dogs in the united states. less then 1% are insured. in england, close to 30% are insured. if we do that in the u.s. we are talking about tens of billions of dollars of premium. the sky really is the limit.

that was the cofounder and co-ceo, chris ashton. most participants say that conditions for a rate hike are approaching, but concerns remain on china. we will bring you the details. ♪

and will

matt: it is 11:00 a.m. in san francisco, 2:00 p.m. in new york and 2:00 a.m. in hong kong. scarlet: this is the bloomberg market day.

matt: good afternoon. scarlet: we have the federal reserve just releasing its minutes from its july meeting. released five minutes early this time around. matt: someone did. scarlet: michael mckee has been going through all the headlines. cannot call it breaking news now, but it does seem to be all about inflation at the moment. when fed officials met three weeks ago, most of the minutes say the conditions for policy had not yet been achieved. the conditions were approaching that point. confidence prices would continue to move up. inflationisks from to -- that is what the