matt: good morning. what a week we had. this is "market makers." i am matt miller. erik schatzker and stephanie will off. -- and stephanie ruhle are off. reassessing the markets in the week of volatile trading. many are waiting to hear commentary from central bankers where they are convening. moments ago, we heard from jim bullard who said the last 10 days should not change the fed's outlook. we are bringing new and incredible lineup of guest. we will hear from marty feldstein, the fed president -- the feds presidents of minneapolis and bls president erica groshong. groshen and we will be asking when they will raise rates and what to expect. time for the top stories this morning. in hungary, three people have

been arrested in the deaths of 71 migrants find -- found in a truck abandoned on a highway in austria. probablyy they suffocated and at least some of the victims were refugees fleeing violence in syria. , president george w. bush visits the site of one of the low points of his presidency. he traveled to new orleans to mark the 10th anniversary of hurricane katrina. the former president was criticized for his administration's response to the disaster. president obama was there yesterday and watched through the new orleans neighborhood that was one of the hardest hit. the president said new orleans is a model for resilience in the face of catastrophe. >> i am here to say that on that larger project, stronger, more , the progress that you have made this remarkable. mr. obama called new orleans recovery a work in

progress, saying the job is not to rebuild the city as it used to be but to rebuild it a new. defense secretary ashton carter is on a friend raising mission to silicon valley. carter wants to recruit top tech firms like apple and google to joint defense contractors. his audience is skeptical of the pentagon and weary of excessive surveillance and privacy violations. we will talk with the defense secretary in silicon valley at 1:00 p.m. eastern on bloomberg television. google is not backing down in the face of that antitrust complaint from the european union. in a formal response, google called the demands by the eu picture real -- peculiar and problematic. are some of the top headlines for you this morning. breaking news from julie hyman. what have you got? brazil's gdp, something we have waited for, we have seen a meltdown in emerging economies

related to commodities. the second quarter economy down 1.9% from the previous quarter, so a lot of expectation that we could be a contraction in brazil and indeed we did. quarterrter over declined, year over year it was 2.6 the klein. for quarter gdp, so if you look at the past year, down 1.2%. we are seeing the brazilian riyals decline on this news as application,-world economic implications of what we have seen happen in the markets, particularly the commodity. matt: skin has been a rough political scene there as well in brazil with people paying close attention to it. we want to get you to the top five things you need to know this morning. senior market julie hyman joining me. i will kick it off with number one. all eyes on jackson hole today as investors wait for any hints

of the timing of the fed rate hike. bloomberg is there, bringing you a number of interviews from central bankers and economist. brendan greeley joins me now. we just started -- we just heard from the st. louis president, what did he have to say? brendan: we did. the theme of this years jackson hole is hijacked by volatility. we are supposed to be talking about -- jims -- bullard has urged the committee for a while to get off the zero bound. that is the question, and this was his answer -- thehe key question for committee, and no decisions have been made, but the key question is how much would you want to change out the based on the volatility that we have seen in the last 10 days? i think the answer to that will be not very much because we certainly got lower interest rates in the u.s., longer-term interest rate that we would have

otherwise cap, lower oil prices, bullish are usually factors. on the downside, higher credit spreads, volatility, maybe a stronger dollar. those will probably roughly washout. brendan: that is his advice for the fed. volatility is not going to make that much of a difference and 10 days and not that big of a deal. he also said what he looks at how the committee reacts culturally, they just do not like to move during a period of volatility and we will have to watch it that is what we have in september. matt: it looks very early that, brendan. what have you got planned? brendan: it is very early. we've got a lot of said edesidents -- a lot of f presidents lined up today but i am most excited that the end of the day, we will talk to roger,

of the reserve bank of india, now i doalm right relatively well and unscathed by the downturn in china. matt: when you change the way gdp is measured, sometimes great things can happen. brendan greeley, to our. brendan: sometimes it all works out. matt: we expect a lot from brendan today. lets you from julie. julie: with number two, let's change to an economy where you can question the way gdp is measured. bank of america says the rebound in china stocks will be short lived because state intervention continue and to valuations are not justified. citigroup coming out of a recession call saying the leadership of not act quickly enough to avoid a major slowdown by implementing large-scale fiscal policies to stimulate demand. erik schatzker spoke with colin sent and who also said that the data in china signaled recession. >> i think it is important to recognize that it is not just

financial market distress. we are seeing a real contraction in the real economy. erik: but in july, something new and important happened. >> that first monday when oil prices created more than six percent or 7%, it was a wake-up call that something is changing. we see it in inventories in singapore, passenger car sales down 6.6% in the month of july, in electricity generation down 2%, in freight traffic contracting, i could go on and on. ofie: there's has sort become a sport in the markets. people trying to not look at the government numbers out of china, the headline numbers, but all the other little indicators. electricity usage, real carloads to figure out what is really happening. matt: it is interesting. he was jpmorgan's global head of commodity research. we also heard from negative america that they think the stock route will resume in china and also from citigroup that

they think china will respond to late to avoid a recession, so all of the big banks on the street now and some people who have split off to start probably very prosperous hedge funds are saying it is a real red fly to watch. we will continue to talk about that. number three, rising 16% in the premarket, billionaire investor carl icon disclosed a new activist of 8.5% yesterday. intends to hold talks with the company on a number of structural issues. the 16% gain today looks kind of lame compared -- julie: i mean -- matt: what was it yesterday? 29%, record gain. it did cut production yesterday. this year, and next, and we also saw the big snapback in commodities. commodities themselves and producers. it looks paltry compared to that

year to date chart with the 56. matt: you had a great chart up yesterday. did you bring that chart up that -mcmoran versus other commodities, and they are all doing better. julie: there it is. matt: there you go. hase: freeport-mcmoran performed under a percentage basis. matt: puts it into perspective. number four, julia jeffries? thee: jeffries is taking on chin as a result. according to people with knowledge, a team of distress that traders lost almost $100 million this year as the drought in oil prices after the value and lowered energy. this is a problem people have talked about. this high yield and that of the more distressed areas of the energy, companies -- matt: right because they had a

lot of high-heeled that and commodity countries have high-heeled that. number five, new york stock exchange owner is seeking income outside traditional sources. it is proposing a plan to generate income by licensing patents and boosting market data stream feeds. some say it could cause ire for its biggest customers. obviously, when you raise prices for stuff, people get really unhappy. if you raise them a lot in a short amount of time. julie: it's true. i had not thought about that much not being a market discipline myself, but these guys have monopolies on a lot of the data that they come out with, so -- matt: kind of. if you are looking at the new york stock exchange, yes, but they do not trade all the stocks in the country. julie: no, but you kind of need that information. fed, let's get back to the focused on any chance of a decision to hike interest rates

out of a meeting in jackson hole. we have been speaking to top voices in the financial world about what the fed should do next. >> you cannot be the great house in a fluid neighborhood and ask -- and ignore the neighborhood, so the fed will look at the rest of the world. the fed will not want to add to financial instability, and i think because of that, the fed will wait until december. >> the fed has the so-called dual mandate price stability. in fact, the functional mandate is that an arsonist and firemen. , butgh its well intended somewhat maladroit actions, to manage and manipulate, the fed creates those conditions that lead to financial turmoil. >> one thing to be able to take risk, and i don't want it so extremely leveraged that we do have stress, the government has to come in and promise liquidity

and all these sorts of things. i think they are taxpayer burden. with a few ideas is michael service, chief global strategist and head of andvatives at region company. thank you for joining us. this sort of said guessing game, i mean, it is always what we talk about that lately more and more because of what is happening in china and global markets. you believe jim bullard when he says the fed should not look at what has gone on in market last 10 days? this -- if this was last october, he is right. volatility popped up to 30 past and the market caved 8% in the short period of time and by the end of the month, october, s&p 500 was up and we were back to fresh highs and it was normal. i think with that in the rearview mirror, there is a fair point. this volatility, i'm not saying -- don't they need to

completely revamp their economy in a way that is going to send shockwaves around the world? michael: sure, but that is not necessarily new news. way back to october, ebola was in the headline but what really lead it was the eurozone. itnkly, in many respects, was scarier than what is going on with china and i say that because back then, it was not clear how cohesive policy would be in the eurozone and addressing those problems. that was answered earlier this year by mario draghi and the very aggressive quantitative easing that the euro and ecb is undertaking. it happened last fall was actually pretty scary. sure enough, the market facilitated fresh eyes and s&p 500 and frankly, pretty decent rebirth of many eurozone economic sectors. we love to obsess over when it is happening, but regardless, you have to make

your investment decisions. have you been buying as we were seeing the drop? michael: when you wake up monday and a bomb is dropped on the financial markets, sometimes the best to do is stand back and wait to see how far it is falling. matt: you want to back it up. michael: you've got conviction, certainly, but i would say this -- yes, i'm still certainly very bullish on the markets. whenever get what is really different from monday morning versus two weeks ago, two months ago, six months ago, i don't think there is that much difference here. toward that point, jim bullard from the fed policy point of view, has a fair point. what is happening within the tape right now, it continues to take you back to monday and giving some credence. julie, shet to thank will run down and get in front of her market boards and we will hear a lot from her throughout the day in this busy week.

will stick with us and i will ask them how bullish he is because he did lower his s&p 500 target substantially. stay with us to find out what is going on. ♪

matt: it is friday and that means we are playing the yearbook game. this woman works in the realm of economics, graduated from fort hamilton high school, class of 63 -- of 1963 in brooklyn and that is all my producers are telling me. 3 ift me at matt miller197 you have a guest. we prefer a more creative answer than just the person's name, so try and think of something cool to say. i am back with weeden & co. chief global strategist michael purves.

you are still blessed for cut your target substantially. still hold a 2350 target with s&p 500 index? michael: i have been one of the highest. matt: the highest on the street. michael: yeah, and look, practically speaking, getting that many points between now and the end of the year is aggressive. i will likely be taking that down in the near future, but really the important question is, has my basic framework changed where pe expansion can continue against the backdrop of basically slow grinding interest rates and slow grinding inflation? u.s.elative stability in and for that matter global gdp, and i think all of those things are ultimately in play. , monday when we saw a huge drop down to 1867, were you

not easy buying with both hands? the did not strike you as an incredible opportunity, and oversold level at which you could just pick up and take up your shopping list and say, i have always wanted apple and it dropped 30%. i will take all that. michael: before i back up the truck, i like to wait a couple days on price action to see how things are playing out, but there were definitely oversold conditions when you woke up on monday and tuesday. many of the volatility metrics that and look at, i look at from the500 index options and vicks options and they were really mimicking extremes, not just from last october but from back in august of 2011 which was the last major volatility environment we had. one of the things i found interesting was how much to the point how much of the volatility metrics squared back to what happened severely in a

high of the volatility in august 2011. matt: you think we're going to mirror the recovery? october and august of 2011 were two very different situations and recoveries, but i amte is that, look, tactically bullish but i am also saying that what is difference between now and last october is that the ability to burst into fresh highs in the s&p 500, we have to take it at 2130, off the top of my head, that ability is probably not going to happen quite smoothly this time around. matt: will it be easier if the fed pushes out in interest-rate hike until 2016? michael: i think the markets have already done some of that for you. what i think you really need to clear new highs and get back to that sort of classic, yes you can buy this trend, is in a china and the fed to line up together. matt: thank you for joining us.

michael purves from weeden & co. stay with us. ♪

matt: china is sliding into a recession and the leaders are not prepared for the rapid weight it is happening, at least that is what citigroup chief economist said yesterday. he is not alone. a man to counter -- atlantic council says politics have been quite a part of politics -- of economics are some time and he joins me now. you think we will see a recession in china? i have heard that from a couple of big banks in the last 24 hours, almost a consensus by this time. it is a't know whether

recession or slowing, but clearly, the waters ahead for china are going to be choppy. china has fixed held at the first phase of economic growth, but the union did pretty well at that, north korea did well and maybe china has done better in those countries, but they are in a conjugated situation where they need to transition from the top down productivity or high productivity to low-end manufacturing an economy to a higher end for buying -- added economy and they are not prepared and their leadership does not really know how to do it. matt: i have noticed that we did not hear a lot about the central bank head, we hear more about xi controlling almost everything and behind every move. he is not a trained economist, he does not have a financial background, so it is like a politician is making all of these monetary policy and financial decisions. jaime: that is the core problem in china generally as i have been talking with others for years. that is that in china, ultimately, politics trumps

everything, so there are significant economic problems but they cannot fix those problems without political reform. they cannot to political reform is the party primacy core principle of china's modern government and that is why we see this back and forth. they recognize they need to have -- they need to use the markets to allocate resources across society and they have been saying that for two years, but every time when push comes to shove and they have to make a tough decision in support of the markets, they pulled back to of a older instincts top-down, more authoritarian economy, and not just does not work in the complex market economy. problem is such a basic that any middle school kid would say, how is that going to work coming from a communist dictatorship to a three market economy? that doesn't make sense and there are so many reasons why it would not work. jaime: it's to put our

authoritarian systems that have moved toward premarket democracies. you look at korea, taiwan has good cases, so that our models for these transitions, but they have to happen. korea, theren and was political reform that paved the way for economic reform, and that is the problem in china right now. there is a block because of the nature of the political system. until that is removed, i think it will be difficult for china to make the kinds of reforms necessary. of ityou also hear a lot is causing economic problems. you stamp out the corruption and they do not sell as many ferraris, lamborghinis, and diamonds and for coats. aime: if you are going to stamp it out, you really need to stamp it out. this anticorruption campaign has really been about the appearance of corruption in my mind because of it was really about corruption, they would go after everybody was corrupt which is essentially the top level of the communist party to which

anticorruption campaign is about , using the name of anticorruption to centralize power around xi and colleagues. the deal was that they were promising is what led us through that and we will drive this very difficult economic reform and structural reform that china so badly needs and everybody recognizes, so a centralized power but they have not delivered on reform. watchit is fascinating to from afar, but it affects us through commodity prices and their import, export numbers. how important is it for the average u.s. citizen? jaime: it is important but not critical. we have a big diverse of five economy, but china is very important to global growth. the united states is plugged into that growth story, and a lot of our company, our biggest companies, are selling overseas, so china slows and that is starting to happen, the countries providing resources to china, including indonesia,

russia does not matter that much, but brazil and others that you mention often, all of those will slow. if the global economy slows, that is bad for the united states. matt: pleasure having you on. we were talking about the fact that they are goosing the market, it appears, to prepare for a parade. jaime: that is the crazy thing, they are buying stocks, working r&btrengthen their currency in advance of the parade coming next week which is ironic because they are commemorating the end of the second world war but the communist forces did not do much relatively of the .ighting so they should be having this parade in taiwan. matt: not even a real victory. thank you. senior fellow from the atlantic council. we want more information from jamie, so we will read will the next procession be made in china? the cover of bloomberg's business week on newsstands. you got to love the pictures of

all the bears. one of the most interesting covers and a long time. time for breaking numbers that we could have or will have which income which includes salary and investments. vonnie quinn is that the breaking news desk. you.e: thank we have numbers today. i want to point out that pc 1.2% and lower then the percent as the consensus. the fed is looking at that and clearly it slows. income came in on consensus of .4% but spending was not there, economist will looking for .4% and up .3%. they will look for a better start to the third quarter after those shoulder second quarter coming in at the .7% yesterday. personal income of four point -- .4% and people are not spending that oil dividend and the wages that they are getting, and

inflation is tamed. the seconding for reading coming out at 10:00 eastern and that will be important. market reaction wise, futures are deteriorating and treasuries selling, so the market not liking this. not a huge reaction. matt: thank you for that. i want to get to the top stories on the kick it up with one that vonnie was discussing, oil headed for the biggest weekly gain since april. west texas intermediate selling for more than 40 two dollars a barrel and it was 10% yesterday after a report that the u.s. economy grew faster than expected in the second quarter. general electric is preparing to sell off another finance unit. bloomberg news reports that wells fargo is the front runner to buy ge's railcar finance business. than $4t has more billion in assets and ge has been selling off their finance businesses so they can focus on manufacturing. andh korea's jim caldwell talkingr says they are

peace. they brought the two countries back from the brink of war and he says they are now on the track of we conciliation. donald trump may have settled the most pressing question, is that his real pair or is it to pay? the answer came out a rally in greenville, south carolina. upee.do not wear a to it is my hair, i swear. come, come. is it mine? >> it is. ? >> say it. "the new york times" accused him of wearing a toupee and he swears he does not. still to come, 10 years after hurricane katrina, louisiana is grappling with plans to rebuild the coastline. we had to new orleans for a story behind the controversial plan. ♪

obama walkednt through the new orleans neighborhood that was one of the hardest hit by hurricane katrina , visiting residents on street corners and he said the city's comeback is an example of what is happening across the nation that has moved from economic crisis time around. storm,year after the more than 150 square miles of louisiana's wetlands disappeared. the state is working on plans to spend billions of dollars to repair everyplace that marshland. some parts are very controversial. david gora reports. david: louisiana's coastal master plan calls for the state to spend $50 billion over 50 years to present the wetlands. [indiscernible] that would come from the

government, more than $6 billion will come from the bp oil spill settlement. [indiscernible] >> 18 miles? david: the state loses a --tball field for b football field for the coast every hour. >> you can see that it is just marsh. choppy david: marshland is the mainland's first line of defense. they need to make sure there is more bit. >> you can see the pipeline there. you are looking at probably a $140 million project. david: they are picking up sediment of the mississippi river and it takes 13 miles to create new marshland. another way to move sediment is called river diversions. there is criticism with folks shrimpers,re who are

fishermen, and they are worried about the installation of river divergence like the one behind me that allow the mississippi river to flow into the marshlands. that is one component of the master plan. one critic is fishermen george. >> if they do these large-scale projects, we will be out of business. david: rick is worried that new diversion will ruin the fishery and his livelihood. >> what are we traversing right now? david: that is about 30 miles from perimeter version built for hurricane katrina. -- from eight river divergence build before hurricane katrina. >> watch where we are going. ♪ we are about 15 miles from the dock. we are about maybe eight miles, 10 miles may be firm that a version -- from the diversion. david: rick flames that on the influx of fresh waters. he says he is more coastal

restoration but the government does not understand the fragile ecosystem. for louisiana will revise the plan in 2017 and the coastal authorities have read things -- authorities. matt: fascinating stuff. it is gore joins us from new orleans. are you in new orleans? talk about where you are in new orleans and what is going on? in st.i'm actually bernard parish, about 20 miles outside of new orleans in the community called braithwaite. it is a really fascinating place because it is on the frontlines lines of the debate on coastal protection. just about a quarter-mile from here is what they call the great wall, a 20 foot levee. this community happens to be sitting on the wrong side. if you look at the house behind me, totally destroyed, not by katrina but by isaac after the levy was built, a lot of water built up and ruined about 40

others in this neighborhood. you think about how the state plans to what will happen, a lot of modeling, calculus, but people who built this in a place that was not going to be protected by the federal and state government, and themselves without homes, unable to live in the buildings that they constructed. betty: unbelievable -- matt: unbelievable. i'm guessing none of it goes to them? david: it is an aspirational figure. the state wants to spend that much money but it could be more or less. they could spend more quickly or in a slower fashion. what is interesting about this community is that a lot of these homes have to be elevated to get that insurance i mentioned. if you are to drive around the area, you could see homes about two stories off the grounds on pylons, so what i was told about the reconstruction is that there will be money that will go toward homeowners to pay for that, so not just reconstructing marshlands, building new marshland, but money for

homeowners who live here. matt: are those among the other projects the government has? i'm assuming there is more than building marshland to protect the coast? david: we're looking at what to do about barrier islands that are farther out. there is more construction of these larger metal levies. it is fascinating because this is big business for new orleans. someone was telling me that she went to the netherlands, and they had some to do it issues, and some 4% of gdp has to do with moving floodwater. they came back here and began to create and expertise of their own and she mentioned after people from new orleans went up to new york to consult and you are seeing growth in that sector and the greater new orleans area. matt: thank you very much. it to the current 20 miles outside of new orleans. still to come, we will hear from famed economist marty feldstein as we refocus back on the u.s. economy at large. is it strong enough to withstand a rate hike?

we will head to jackson hole, next. ♪

a very important day in jackson hole, wyoming. renting greeley there and they need the sun to rise -- brendan greeley there and they need the sun to rise to shed light on the bears looking in the brush. i will hand it over to them. bears looking on wall street but will they be fierce enough not to push interest rates? chairman of the national bureau of economic research joins us and decides whether or not we have possessions and i want to start their because one of the points that fed officials make, if they are worried, if we did have another recession, not that anyone is forecasting, but they cannot do anything. he would like to get the fed funds rate up and that is one of

the reasons. fed would notthe be able to do anything if they toded or they could go back quantitative easing, but i do not see that as a serious part of the discussion at this point. i think there are better reasons for normalizing interest rates, take away the temptation. [no audio] soundlooks like we lost as the sun rises over jackson hole, wyoming. we will try to get it back, a little technical difficulty. stay with us. when we come back, marty feldstein from jackson's hole. ♪

welcome back. the sun rising on the

mountains as wall street hopes the central bankers cap it can shed light our interest rates are going. we are staying with martin feldstein from harvard university, the chairman of america's of national bureau of economic research. they determine whether or not the country is in a recession. we go back to the question i wanted to ask which was, do they want to move? essentially at zero, they are out of ammunition if we should go into recession. not predicting one, but if we should go to recession and china drags us now, the fed is powerless. i think that is right. even if they could do quantitative easing, which i don't think is on anybody's mind, interest rates at the long dead are so low that they cannot get much by doing that. the bernanke strategy of pushing up equity prices in order to get people to spend more, they have done that. that will go in opposite direction in the future, so

there is not much the fed could do. brendan: the volatility you see right now in the u.s., is that the direct consequence of fed policy? martin: i think it is because the fed policy was to push up equity prices by driving down interest rates at every maturity , so if interest rates were down, investors were rushing into the equity markets and i think that has pushed the price-to-earnings ratios way out of line. they are 30% above the historic average. if you take inflation-adjusted numbers, they are 50% higher than the average, so when you see that you think at some point that will break and it will come down. mike: you have seen these cycles come and go, do you think we are sort of overreacting to the fed and what it needs to do and the drop in the markets? i think the drop in the markets is going to keep

happening. it may not happen all at once and we may have got not at this most recent drop, but the price-to-earnings ratios are still very high and there is tohing that the fed can do sustain and out of line price-earnings ratio were excessive pricing for commercial real estate or other things. it was a strategy to get the economy out of the recession more forcefully. it worked at doing that. the question is, as we unwind that, as the markets get back to excessive prices, is that going to under mine the economy or is it just going to punish some investors who did not get out fast enough? mike: does that mean the fed should wait to see if it happens? martin: no, they have to get back to more normal interest rates so that when we take away these incentives for excessive mispricing. the focus of this

conference is inflation. when you look at the traditional relationships that have been broken down since the recession, the labor productivity to the business cycle, for example, do traditional models of understanding inflation still apply now? martin: i'm not have good traditional models. [laughter] goodm not sure we have traditional models. [laughter] i would say that the inflation is surprisingly weak given how tight labor markets are. you've got the unemployment rate college graduates at two .5%, you would expect to see more of the pickup in wages. the numbers that came out this morning tell us that wage and , just one month, but wages and salaries were up three times as much as they were in june. so that is a bit of positive news for the fed in terms of their desire to see evidence that it is moving into the labor

markets. there. that tired labor markets are going to push up inflation? martin: to worry about pushing up inflation for a guy who is worried about deflation when it was double digits, i do not see worrying about whether we are at 18422 as a big deal. i do not think that aspect of 2.2 as als -- 1.8 or big deal. i do not think that aspect of the goal is true or it is certainly not to now. the inflation part of their goal is really irrelevant. you are not facing the kind of high inflation you did in the past. if you get there, of course, it is the fed's job to prevent that. i would say that they have achieved what they need to in terms of getting the economy's unemployment rates down, and employment up, so they are able

to get back to normalizing. i cannot see any economic reason for them not to move. are they fighting the last war on inflation when they worry about it? martin: no, because it was about high inflation. when we had double-digit inflation in the early 1980's, that is what the fed ought to be worrying about. neither economists nor the fed is worried about deflation now. mike: thank you for joining us today. the sun is starting to come up and we are hoping it not only sheds light but brings warmth to our discussions. we will see you a lot today on bloomberg. matt: thank you very much. especially to marty feldstein. coming up in the next hour market makers," a continue with the fed lineup. we will talk to the cleveland fed president and the minneapolis fed president. stay with us for more. ♪

matt: good morning. welcome to the second hour of "market makers." i and matt miller. erik schatzker and stephanie ruhle are off. europeanres and equities are trading in the price of oil. very volatile trading, many waiting to hear commentary from central bankers convening in jackson hole. this hour, cleveland andpresident loretta mester minneapolis fed president narayana kocherlakota.

two interviews you do not want to miss and we will bring them to you live. i would get our top stories on the bloomberg terminal. the biggest part of the u.s. economy got off to a good start in the third quarter. consumer spending picked up in july, rose .3 of 1%, same as in june. wages and salaries increased by the most since november. there is also speculation that this week's market turmoil may have the fed thinking twice about raising interest rates next month. bloomberg discussed that with james bullard at the kansas city fed in jackson hole. >> the key question to the would youis how much want to change the outlook based on the volatility that we have seen over the last 10 days? i think the answer to that will be not very much. matt: james bullock also said that u.s. economic fundamentals to look good and that should be bolstered by the eco-data this morning.

defense secretary ash carter is recruiting today in silicon valley. carter once top tech firms such as apple and google to join defense contractors. carter's audience is expected -- is skeptical. we will talk with carter in silicon valley later today at 1:00 p.m. eastern on bloomberg television. teslas elon musk is going back electricys for the carmakers first incentive offer. if you buy a tesla model s after be referred by current owner, you get $1000 off and the owner look at the 1000 dollars discount to a new car when he or she buys on. it is similar service to paypal which he cofounded. those are some of the top stories. the focus in on some of main ones. after tumbling for weeks, oil reversed and surged the most in exit years. many reports suggesting gains were strong gdp.

the cofounder of infrastructure capital advisors who trades oil contracts and tells us that gains were also about something else that had little to do with a fundamental change. our forjoining us -- to joining us. what else are looking at the sides fundamentals of momentum? >> what most traders do when you hedge energy stocks, they look to a partial look at short oil. for instance, energy stocks are 60% correlated to energy and penalties are 40% correlated to oil, so when you have these selling crescendos, a lot of time, there is a shortcoming. once the short covering starts and you hit stop, people of commodity funds have stopped and in the 5% range, so what we saw yesterday as oil started to rally when the market opened, there was some covering and we hit up 5% and a crescendo after

the 10% level of the commodity funds and probably came in and recovered their shorts. matt: you know this because you are doing short covering yourself yesterday. jay: we were in our hedge funds, we have some small shorts on futures and we actually covered them in the middle of the night because the rally was so strong. the two-day rally and oil does a beta to market a correlation, it has declined recently, but we also think the and of the market crashing rallied hard sort of gender oil to rally and hit those stops, so it recovered some in the middle of the night and cover those thets once it resumed in opening of premarket. also in the mutual fund, more conservative, we have bought inputs and those became highly profitable and also there is the delta to them. we covered those shorts in our fund, so where energy stocks but if they are running, and people look at oil, they are linked.

matt: what is oil worth now? when you look at the supply and demand fundamentals, what is it really worth? jay: we think there by 2016 is likely to be $50 to $60 a barrel. what that is driven by is the fact that u.s. productions is highly volatile. if there is no new drilling, we estimate u.s. productions will decline by 20%. at lower prices, oil companies -- u.s. oil companies have left cash flow, so they have to .nvest less in fact, we would estimate that if prices stayed about $40, they were declined by over 32% u.s. oil production could decline up to as much as one million barrels per day. matt: three have different fundamentals here than opec countries that arej -- ajay: dramatically different depletingwells are

rapidly, up to 90% in the first three years, so if there is no new drilling, u.s. production declines rapidly. areaudi arabia, they shallow wells that deplete over 10, 20, 30 years and that makes us the fact of the new swing producer because of the fundamental physics. matt: do we also have similarities? obviously, we're are on a path to energy independence. opec and the u.s.? jay: we are on a path to energy independence. matt: and probably exporting. jay: and probably exporting at higher prices. i'm describing if you put a lid on prices. barrel and then u.s. drilling will rise dramatically. the dump -- the dynamic people don't fully think about is that these capital markets will not overspend free cash flow, so with lower prices, but treat

cash flow, particularly with constrained markets and they're doing declines with high prices and you see u.s. production. it is somewhat dependent on higher pressures because of -- prices because of shale wells and volatility. matt: it seems that the dollar hell of a lot to do at the price, so if you look at a 20 year chart for example, oil seems to move imperfect correlation or inverse correlation. y: the strong dollar has exacerbated the client because it is the price in dollar, so everybody sees higher prices on the dollar when it declines. that has been part of the dynamic. wouldk the main dynamic be the domestic increase in u.s. production and saudi arabia's reaction in the sense that they realized they cannot really help that production must they

step back. matt: supply, supply, supply. jay: exactly. i think that was the key dynamics but it was exasperated by the u.s. dollar. matt: thank you. we appreciate your time. are we going to talk facebook? re: moving sector facebook? -- are we moving straight to facebook? yes, i have paul sweeney. thatw there is a story facebook had one billion users in one day. paul sweeney of bloomberg intelligence research for media, what does that mean? is it a milestone? is it important for them? we always hear huge numbers in regards to facebook users. zuckerbergnk mark puts the news out there and it is a big number for basement. we think about facebook and they have 1.5 billion users. at any given time, they may have

900 5075 way people on a daily 75 million0 and people. if you are facebook, you sell your audience, and facebook has about one point 5 billion users and the second thing you sell to advertisers are engagement. how engaged are my users? how often are they on? how long do they stay? and therefore, how relevant will the ad message be that i sent to them? to be able to say you have one billion out of your 1.5 billion on wednesday, that shows madison avenue and advertisers that facebook users are engaged in there certainly attracted to advertising. have done,hares obviously, they had a rough week with everybody else, so taking out the last few weeks, the shares have done relatively well since the ipo. it is not like the double. date,it is up 50% year to

but one could argue it live, whether it is netflix, amazon, but i think over the long-term it has done well, primarily because they continue to do two things well. they continue to grow their user base and they really navigate, maybe better than most. the migration of internet ad spending from the desktop to the mobile environment, so now they get about 75% of all of their ad spending coming for mobile users and that is really the future. investors are willing to pay a premium for those companies that can really demonstrate that they can migrate into a mobile environment. it true that it is only dad using facebook for moms? the talk is that the kids are on instagram and really tiny kids are on snapchat. is that true? paul: that is to in my household. my teenagers say they are not on facebook that much anymore but usersat but 1.5 billion and going double digits every

quarter, this is really becoming a global platform. that is what is really relevant to i think facebook, to bring the global community together. one out of seven people yesterday were on facebook on the planet. if you are an advertiser, that is a huge audience and an engaged audience and that is what facebook sells to madison avenue. matt: thank you. bloomberg intelligence paul sweeney on that date facebook story. coming up on market makers," cleveland fed president loretta live fromns us jackson hole. a huge lineup and you don't want to miss and of it. stay with us on bloomberg television ♪ -- television. ♪

matt: it is friday and we are playing the yearbook game. this woman works in the realm of economics. she graduated from fort hamilton high school in brooklyn, class 1963, straight out of her

high school yearbook this picture. mattmiller1973, identified this woman and for bonus points, tell me what kind of car she drives. i would honestly like to know. i will turn back to our coverage with bloomberg's michael mckee and brendan greeley joined with another fed president. good news, the sun is rising and i saw the moose this morning, so i can top that off my list. we have with us loretta mester, the president of the cleveland federal reserve. this year is the topic at the conference of inflation. it used to be how to worry about inflation and now we are worried about getting inflation. you said you are confident we will get back to 2%. how will we do that? loretta: when you look at

factors figuring in and inflation expectations have been relatively stable. we have growth above trend growth, we have labor market improvements and we do have some shocks in term of oil price, commodity prices, and the depreciation of the dollar which are deflationary or disinflation factors, but in general, because the economy is better" is above trend, i believe and reasonably confident we will get back to 2%. in context of the fed, will we get back in time to justify a rate increase as early as mid-september? loretta: i am in the middle of looking at data, evaluating what is going on and we are going to be putting in new forecasts at the september meeting. my view so far in looking at some of all the factors is that the economy can sustain an increase in interest rates.

mike: so the inflation parameter that the fed said has been met close enough? loretta: i think you always had to look about moving forward, so we do not -- policy has to be afforded looking policy, so you do not want to wait until your goals are met in order to start moving off a zero. you have to be forward-looking so the forecast is important. how is your outlook for the economy? if you're reasonably confident, andh is one of the things factors that will be to lift up, they have to be proactive and that is the criteria we are a beginner. again, it has to be a forward-looking policy because you have to move before goals are met. brendan: how do you define what forward-looking this? we use the metaphor the whites of their eyes, but what does that mean in real terms? will it get back to 2% by march, june? when do we have to be confident to move?

loretta: i am reasonably confident that we will get back to 2%. i think the reason that dow jones turned again and it pushed out a little bit, in my forecast , i was saying that we get back to 2% by the end of next year, beginning of 2017. i push it out given what we have seen that those are transitory factors. again, the economy growing above trend, labor market elements continuing, and inflation expectations relatively stable, that means inflation is going to get back. mike: you look at inflation expectations, and you look at marketplace versions, they disagree with you. i'm putting more stock in the survey measures because of volatility in financial markets. can make expectations based on the market. you have things like life into treasury and movement of money, that makes it harder to infer inflation expectations from the market base measure.

when i am say that market expectation or inflation expectations are relatively stable, i look at more stock than survey measures. brendan: are we at full employment? loretta: i think we are pretty close or at from the view of monetary policy, i do think there are longer run issues in labor markets, but i do not think monetary policy is the told that would address those. mike: we have a counter conference right here with people walking around in green shirts and asking who is recovery? they're saying an economic recovery affects different communities in different ways and a note this is something the cleveland fed has worked a lot on. if not monetary policy at the level of the federal fund committee, then what? loretta: i think we are all on the same page of seeing economic growth, we want to see continued good developments on labor markets, we want to create an environment where people can enter the labor force and actually get the school they

need to stay in the labor force. but those are longer run issues. you need programs to help them. andeed government programs the fed works with a lot of community development groups to bring people together, a good convener of different parties, those are the kinds i can help neighborhoods and communities and help people get the skills they need. i don't think monetary policy is really the told that can address that. when you are in a recession, monetary policy can help but at this point, i think the longer run issue is making sure people have the skills for the modern workforce. that is really not something monetary policy can do much about. case onn you make a september 17 for not moving ahead with a rate increase? loretta: i think that will be the discussion at the meeting, right? we will weigh the pros and cons, costs, benefits, taking into account the information that every participant will bring to the table, so i will be very

interested in hearing how my colleagues evaluate the incoming information. we have said we are data dependent, well, to my mind that looks like we will look at the information coming in. in cleveland, we go out to talk to business people, directors, tokers, all of that plays in how you formulate your outlook. the data, statistical releases from the government is very important on financial markets. what we are hearing from our various constituencies, we will bring that to the table. brendan: other cons? think we are weighing what the implications of the recent volatility of the markets. you have to get behind what caused it. people are reassessing growth abroad and emerging markets. we are reassessing the inflation outlook in terms of sort of the and all of that will be brought to the table, and we will discuss it and will come to a consensus view on policy. brendan: when you look at

volatility happening right now, do you agree with esther george of kansas city who said it is in part consequence of the said policy, of inflating assets? loretta: i think volatility certainly got my attention. i think that is one of the that the federal reserve is always looking at, financial stability asset, monetary policy reports, there is a section that talks about it. i think it is something we have to take seriously and look at to see whether that is what is happening and that is always one of the cause of these excellent very monetary policy action that we have taken. that could form in the search for yield. when you get a search for europe, people take on risk that they may not be able to manage as well. if you have a shock or negative use of news, they rush out, so i think that will be part of the conversation. mike: is there a credibility issue for the fed in september? loretta: in terms of if we go or

don't go? mike: yes. isetta: i think the fed incredible. we went to set policy based on what the economic data is telling us to do. i think that we are consistent with that, so i think the discussion is going to be about what is the economic information telling us in terms of our outlook and the risk of outputs. , thank youta mester very much for being with us. back to you. we will see you in a few moments with more from jackson hole. mike,to live very much to brandon, and loreetta. we have much more with minneapolis fed president, narayana kocherlakota. ♪

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for any reason. many policies don't have one but you can get a lifetime rate lock through the colonial penn program. this plan was designed for people on a fixed income with coverage options for just $9.95 a month. that's less than 35 cents a day. your rate is locked in for life and coverage can never be cancelled. your acceptance is guaranteed. you cannot be turned down because of your health. call for your information kit and gift. both are free, with no obligation. matt:matt: a few minutes away from the opening bell. you can see the view from our roof. gorgeous. aoks like industry not to be

gorgeous day. mike regan is here with the three things you need to be looking at today. also, sam's tavon, managing director of u.s. equity strategy at s and p capital. thank you for joining us. mike, why do you kick it off with number one? mike: the rodeo. matt: is it always in order of importance? mike: yes. matt: read you coming to town. mike: federal reserve's annual supposing, maybe you have heard? matt: yes. said speeches and interviews going on. interesting take from our own columnist, el-erian who says the volatility we have seen in markets will push the first rate increase back to september -- december, but -- matt: i was surprised with how much conviction he says he does not expect. he says volatility should not affect economic output.

maybe we can play a clip from earlier today. >> the key question from the isth -- from the committee how much would you want to change out the raised on the volatility that we have seen over the last 10 days? i think the answer to that will be not very much. --e: i guess the question is is this volatility and not to affect the economy and change the fed calculus or is it just a flash in the pan and we will see equities recover soon? i think the volatility will be with us for a while. hadg back to 1945, when we august that was down by 5% or more, we were down by 80% of the time with an average decline of 4%. usually a bad august the gets about september, but that said, the volatility, is that really what will determine the fed? they are not looking to restrain economic growth, they're looking

to recalibrate with fed funds at zero. normally, it should be 1.4 percentage points above core inflation, so we are well below where it should be. matt: let's get to number two. debtsthis dress trading provide distress these days. aboute a story out today traders at jefferies who lost almost $100 million this year in distressed debt, mostly from a bankruptcy of samson resources. goldman sachs also having a hard time. the last between $50 million and $60 million. obvious you, the energy is a big part of the distress story. sam, what you always hear is that credit leads the equity cycle -- is that always the case? is there any reason to believe this case is different? sam: i think right now with the fed being on everybody's lips and worried about what is 8.4 move going to do, i like to see

a box or fails by the punchy expects and who does not expect higher rate? the real question is what has happened in the past? 94 -- in 1994, we had a doubling, and berkeley was down 4.2% in all of 1994 and up a 2.5% the year after. if you want to make a comparison, maybe make it to the summer of 2007. my vacation was messed up as i was watching financial tv. sorry about that. sam: that we went to all-time highs and that we rolled over, so hopefully, it will be a repeat this time around. mike: sometimes the boxes get bites in the year. matt: number three? two not to be a haven trade this year, $3.6 trillion market for state and local debt, up this year, one point 1%, which is better than treasuries and better than stocks at the

moment and better than commodities. again, it is this behavior and trade or what is this? see from thed also chart you just showed that treasuries were up 1% when communities were up 1.1%. in many ways, i think it is a flight to safety with volatility we have been seeing. if people say they want to focus on an area where they are more likely to get money back as a let's get some sort of a nice deal, then that is what makes them so attractive. mike: also interesting that puerto rico and detroit have spooked -- have not spooked investors. same: does that mean that kuan and america samoa our next? matt: don't forget kentucky. thank you. always good to see you. i went to get back to jackson hole for the annual federal reserve meeting. brendan greeley and mike mckee have been there all morning and they are speaking with important people. take it away. mike: good morning.

we are speaking now with kim jong-un -- narayana kocherlakota, the president of the minneapolis federal reserve bank. thank you. a lot of people talking about what the fed will do in september based on market volatility, but i want to ask you a question you brought up in an op-ed recently about fed credibility. if the concerned that fed moves too quickly, people will think that you are abandoning your patient targets and your inflation fight? inflation has been breading headline though. food and energy, it is low because of the pressure on gasoline prices. we strip that out and just look at court to get a better sense of where we think inflation will go in the future. the latest number today year over year is 1.2 percent. our target is 2%, so we are way below that. ithink most outlooks have

several years away from getting back to 2%, so that is your target, right? you will start to pull accommodation away at the moment but it does not look like you are engaged in a series are sick of that target. it is a challenge that other central banks, the bank of japan if we look back at history to the late 1990's, early 2000, it was the kind of movie they made that could be viewed as a mistake in terms of creating -- look at the challenge. models: inflation, most just had inflation naturally getting back up to 2% in two or three years. our models broken looking at inflation? do we need a new economics of understanding that? narayana: i think we have to understand that it is not automatic that we get past 2%. it is not automatic that we would stay at 2% back in the 19 is. the decisions the fed makes influence the credibility of where we will go in the long run. a lot of the measures i like to look at is a five-year forward

measures of inflation in market data, the difference between tim fons and normal treasuries. that gives you a feel of what paying and those that come down a lot. they are now below 2% and this is not the consumer price index which is high. separate theyou gyrations in washington the bond markets because of oversee events from actual inflation expectations in numbers? this is a great question and you don't want to move on a day by day basis but the pattern i talk about -- i started talking about this one year ago, really, -- this is a pattern that has been going on for some time. i think it is just consistent with the story i'm telling that the fed is talking about removing accommodations, removing in the form of tapering and in the context of low

environments. they can only conclude that may be the fed is committed to getting back to 2%. brendan: if we have not been able to do it and the bank of japan has not been able to do it, what is next to get back to 2% inflation? are two: i think there answers. one, you asked what the tools are and i will come to that in a moment, but it is not just about the toolbox but also about telling people what you will do with those tools in the future. monetary policy is not what you do at the moment in time but about the beliefs of the future response to economic conditions. i think right now we are sending the message that we are very nervous about exceeding our 2% inflation target, we are treating it like a ceiling, and that means the credibility of getting back there is i think in paris. the tools we have, i think staying low for longer is there, there are ways we can think about lowering it further. we are at 25 basis points and we

could go below and we have asset purchase tools. honestly, i think the toolkit is not as important as making a commitment clear to the public and to market this offense that we are willing to do what it takes to get back to that superintendent -- that time in a fashion. brendan: there is a politics that makes it different to treat 2% as a target. i cannot imagine -- i can imagine very well what would happen in congress if we ever got 50%. narayana: as you said, we are independent. [laughter] that congress in their wisdom said that the federal reserve to be an independent agency in a number of respects and i think we should use that independence to achieve price stability. mike: let me ask you this context -- what is the danger of deflation, and if the fed were to move 25 basis points higher, what is the possibility that that will have an effect on the path of inflation? narayana: my baseline look is

not a deflationary one. it is more what i called a lowflation environment where we stay below 2% for long period of time. the danger in that, it means long-term interest rates will stay low as well because one of the big influences on interest rates is the compensation that people mad for inflation. it could get stuck at 1%, 1.5% and that means interest lower. it puts a constraint on what we are able to do, and that puts deflation in the face of a shock much more in play. brendan: you are able to fight i have to ask-- you in the context of the financial markets, credibility comes into play as well. if the fed holds off and people see that as the fed responding to what is going on on wall street, don't you have just as much of a problem? narayana: i think that we should be telling a coherent story that we are not about what happened the last 10 days on wall street.

we are about trying to shape inflation and employment in the year to two years which is what our usual horizon or tools are. if we tell that story convincingly, then i think we could have the right effect which is an upward arsenal inflation which i think is needed at this time. the two credibility of this organization is about our ability and that we have to keep that in mind always. ,ike: narayana kocherlakota thank you for joining us. acta matt miller in new york. matt: thank you. i want to take a quick look at markets as we had down this morning. you can see the s&p 500 off point for -- all caps .4%. not much, especially after one of the two best day rallies that we have seen in recent memory. and our worstk month since may of 2012 after all of the volatility, mostly

down when you tell you that. we will go back to jackson hole when we come back. stay with us on "market makers." ♪

stocks are opening portrayed, trying to extend on their best today gain in more than six years but not doing very well. julie hyman joins us with a look at what is happening. is making thedaq best attempt at that, but not quite making it. right now, it is unchanged as the dow jones and s&p 500 all but not huge declines. still looks like we are setting up for an up week. the best-performing s&p 500 as yesterday is copper and gold. gain or record one-day the stock after announcing some production and cuts. today it is up again after close yesterday. an 8.5% staken

and pushing perhaps for more cuts as well as potentially seeking a board seat. we are seeing freeport-mcmoran extend gains after falling over the past years and push down by the prices of copper and gold, the main metals it mines. looking at big boss today with the company coming out with earnings that beat estimates following the trend of the off-price retailers that have been doing well. this is sort of an overstock retailer. stock is up by 11%, prompt comparable sales rising 2.8% for big lots. changes to the s&p 500, pall corporation is being acquired and exiting. these are going to be going in and blizzard will be going in after the close on friday, august 28, today. in and that will be after the close on stay, september 2. since we have a lot of the areas

funds that mimic the performance of the averages or benchmarks we tend toaverages, see stocks rise when they go into various entities. matt: blizzard? julie: yes. matt: they may call of duty which i love. i was going to ask about carl , we say potentially seeking a board seat and we see that every time he takes stake in the company. he always asks for a board seat. why don't we just assume he will ask? julie: unless he gets what he wants in the company without having to get that board seat. you. thank julie hyman, senior markets correspondent. when we come back, we will go to the beautiful jackson hole, wyoming. the kansas city fed conference. stay with us for more influencers. ♪

matt:

mike: welcome back to the kansas city fed's annual monetary symposium. i michael mckee with brendan greeley. we are with the commission of its. when we get the jobs friday, it is her numbers that everybody is looking at. it is our numbers that sometimes people are bit concerned about, including those at the fed. it has been a major issue for policymakers and investors alike. can we trust the numbers these days? not that people are fudging the numbers but that maybe we are mismanaging the economy? particularly productivity -- what do you say about that? role of the bls is to help americans make smarter decisions all across the board. by producing gold standard data. all of our methods are transparent and we have the highest response rate of any

survey anywhere in the private or the public sector. our discussions with everybody on how we do what we do and so, yes, i numbers can be trusted because they are based on the reports voluntarily given by firms and families across the country. all together in meaningful ways so that people can use them to make decisions. the think thef federal reserve has been doing this pain closer attention to the numbers behind that topline unemployment number -- what have we learnt since the recession about how to study unemployment? erica: that is a great question. we have a topline number because you have to have some way to summarize what it is that you are looking at. really complex and changing, so we produce a whole raft of other numbers, thousands of other numbers to help people get a full or picture. the more complicated the work people are doing, the more they

look below the top line to get the full picture, so the unemployment rate is a great example. official unemployment rate is one that we have been producing for the longest period of time, the most comparable internationally, but when number one not playing everything about the labor markets. you need to look alone that. chairman janet yellen has put ard of laborashbo indicators that she watches and other people watch other things. what have we learned about the labor market? we've had a lot of improvement that there are pockets of slack. can see this in the lack of wage growth, we can see this in part-time work where people prefer to be working full-time but it has not come down very much. we can see this in the duration of unemployment. there are still pockets of slack even though we have seen improvement in the top line number. mike: what are you doing with the issue of seasonality?

obvious to come you do not do the gdp numbers but you do the employment numbers. , theyst four augusts have been significantly lower and get revised up and people say, there are problems but how do you adjust for that? if things change in the economy, that makes it hard to measure. erica: we are always looking at those kinds of issues. we are putting out research papers, tweaking them, talking to people out in the world to tell us what they think they are seeing. i think the key thing that we have learned, those of us in the business have learned, is one month is not a trend. it is never a good idea to base a big decision really important decision on one just -- on just one month. there are any number of things that can affect one month. aendan: one month is not trend -- you should go around and tell that to every journalist.

that is something we could all her. erica: i say it often. [laughter] mike: erica groshen thank you for being with us. we will go back to matt miller. he always measures correctly using measuring spoons. matt: measuring spoons -- i have many of those. thank you. 600 point loss in one day, 600 aint gain the next, you need giant measuring cup for that. the chaos in the markets show etf's in their best and worst nights. investors traded over $160 billion worth of the shares. not everything went smoothly. here to look at what went right and wrong is air ball tina's, -- is eric. and julie hyman. i know there was a ton of trading in the etf's that makes a lot of sense, and that would be great for the industry, what was the worst light? how did they do poorly? erick: $250 billion exchanged

hands three tee up on monday, 50% of all equity trading, so a lot of absorbing pressure. they helped a great pressure from underlying stocks. julie: what is the usual? c: 28%, so below average. according to my calculations, the most in the security has ever traded in one day because it was a record for spy and spy is three times over the most traded security. a massive day. up rsp forught monday, a bloomberg function, go ahead and take a look at my terminal -- i now can see what the problem was. i had forgotten but a lot of them could not open up, right? a lot of them had real trouble trading. liquidity was an issue. that three things happened, peaches were not opening correctly, stocks were halted -- julie: and the regulation you are talking about is where you do not have this sort of premarket option an indication you normally have? erik paulsen food, you did not

-- eric: you did not have all the input you usually have to make a market, so they don't know exactly -- julie: what is rsp? matt: take a look again at my terminal. you can see basically there is a ton of volume later in the day, but if i zoom in on say the first hour of trading, it is so choppy. that is not what a chart typically looks like. eric: market makers white not spread to protect themselves and then what you need, that is the two thing, the third is you need a market order. usually a retail investor saying they want to sell at any price. that comes down and hits of it really low. that triggers all kinds of automated stoploss limit orders and away we go. you have this sort of her fixed on that can happen in etf's and on a normal day, too, but normally on really, really thinly traded products. this one was traded a good deal, so it is concerning. julie: is this signaling a

problem for ats etf's? goes i think the problem around to everybody. there is a difference between protecting yourself and putting up observe the school leaving altogether. and the investor -- maybe they are naive and should be more educated, and finally, the most important is the issuer. the name of the etf is the time -- as guggenheim and they need to take the lead, work with market makers, regulators, and work with educating investors on how to trade these things. i do not want to stop you because i can talk etf's all day, especially on etf riding but we had the yearbook game today. we found a yearbook picture for this woman who is incredibly important in the field of economics who went to fort hamilton high school in brooklyn, class of 1963. many people have treated me from fort hamilton high school -- one from her class -- and look, it

is fairly obvious, although i have a lot of esses for abby joseph cohen in, that is not it. do i tell the answer now? it is janet yellen. car she drove.at i don't think anyone knows. the most answered was prius. number two was tesla, number three was a suburban with the driver. julie: we should call the fed and find out. matt: someone suggested a ferrari. i don't think so. we will see you next week. ♪

>> it is 10:00 in new york and 3:00 in london, this is the bloomberg market day. >> i think it will be a good day when we make this move.

we have been at zero for six and a half years, and i think it will signal confidence in the u.s. market. pimm: not if, but when. james bullard welcomes a rate increase. details from bullard on market volatility and the cost of money from jackson hole, wyoming. lost&p 500 has gained and within 6% since stocks opened on monday. funds doingual question mark it cannot predict the stock market, but creators say it's software can predict sports injuries. rugby teams already use kidman labs. we will show you how it works.