beautiful jackson hole wyoming summit for the two-day annual economic symposium. we will hear from the head of the klingon -- cleveland fed. hillary clinton cannot seem to escape the dustin controversy trailing her campaign. pimm: apple is curing up for a major product event that is scheduled for september the ninth. the company dominating the wearable technology market with its new watch. we will find out whether september 9 holes new products . -- holds new products. good afternoon, this is the bloomberg market day. aix: this is a such dramatic week. it is refreshing to see the s&p off i just two points.

yesterday was the friday of the summer. we're looking at stocks coming off of a huge two day rally. the biggest today move since the beginning of 2009. pimm: we have seen 6% moves in the s&p 500 of and s&p down this week. you need a little bit of a steady hand, or do not look at it to whether the volatility. alix: take a look at the vix. that has really personified the wild swings that we have seen. when youore we go to have i want to mention, because this is your big thing, oil. take a look at what has happened to the price of oil. this is intraday. this is in today. barrel,es up $2.77 a and it is 44, that is going to be a big move.

the volatility, the fear index. but for futures contracts of oil. alix: if you have a lot of volatility, maybe short and sweet. that is what is holding up the s&p. energy stocks for almost 2% despite the utilities and the health care being down. pimm: i just want to throw in the footnote of yesterday after the market closed, carl icahn to a significant stake, adding to people's interest in oil and natural resources. he also has a stake in another commodity, which is interesting as well. take a look at my terminal, despite what we have seen a two-year yield, once we heard some comments from the vice chair, can take a look at the four day timeline of the

two-year yield. yields how incrementally have risen over the last week. his commentsg that meant that september is actually help in play, and we would take a renewed global instability for the fed to totally take it off the table and most deals are reflecting that. pimm: a big selloff on the short end of the. you do not want to get stuck holding paper that is not going to be yielding with the short would be. that but it is impressive we saw the biggest four-day increase in yield since february. pimm: a big selloff in the two-year. alix: now headlines at this hour. the u.s. economy got off to a good start in the third quarter. 3/10 of a percent of the same as in june. meanwhile wages and salaries increased by the most in november.

pimm: market turbulence maybe affecting how americans view the economy. consumer confidence fell to a three-month low. of americans personal finances, it also dropped to the lowest level in three months. americans may be nor nervous about taking risk in any form. credits we says for the first both stock and, bond mutual funds have recorded outflows in back-to-back months. usually when moneys pulled out of the fund's it is pulled into bonds. according to people with knowledge of the matter, a drug company is working with bankers by a farmer policy expert. $2 million.valid at

there is no certainty that a deal would be concluded. it is also unclear how this would affect shares desire to acquire it. tox: burress posted completing a round of and raising for its business in china. it is attracting investors, including baidu and china life insurance. they put down 300 to $5 million for a show confidence. china is their biggest market outside of the u.s.. pimm: chief executive of the company that owns the old all three dating website ashley madison has resigned. he was that you executive of avid life media, and hackers exposed personal data of 37 members. now the company has been hit with a variety of lawsuits.

there is some speculation that the week's turmoil may make fed think again about raising rates in september. jamescussed all that with bullard. the key question for the committee is how much would you want to change the outlook based on the volatility that we've seen over the last 10 days i think the answer to that is not going to be very much. said that the u.s. economic fundamentals look good. those are some of your top stories at the moment. day two of the jackson hole symposium is underway in wyoming the theme of the gathering this year is inflation and monetary policy. pimm: michael mckee and brendan have been there following all

the events. earlier today he asked to federal reserve president loretto master how the united states is going to get back to the 2% deflation level. >> i'm reasonably confident, when you look at the factors factoring in the inflation forecast, inflation expectation has been relatively stable. we had growth above trend growth. we have labor markets for improving is continuing. now we have the sharks in terms of oil price shocks. an appreciation of the dollar, which is equally scary. the economy is doing better, and since it is on trend, i am confident we will get back to 2%. context of the fed. are we going to get back into deaths -- in time to justify a rate increase in september? we're going to be putting in new forecast at the september

meeting. but my view so far in looking at all the factors is that the economy can sustain an increase in interest rates. >> inflation parameters that the fed has is that? >> we're always looking forward. monetary policy has to be forward-looking policy. you do not want to wait until your goals are met to move off of the arrow. we have to be forward-looking. sager path, your oliver is important. again, it has to be a forward-looking policy, because you move it for the goals are met. we are the closer at full employment from what monetary

policy can do. there are some issues in labor markets, but it do nothing monetary policy is a tool to address those. >> we have a conference right , saying that an economic recovery gets extra for communities in different ways. i know that this is something that the cleveland fed has worked in lebanon. policy, if the literal of the -- level of federal funds policy, then what? >> we all want to see economic growth. we want to see development the labor markets. we want to create an environment where people can enter the labor force and actually get the skills they need to stay in the labor force. but those are longer run issues. it'd programs to help them. when the government programs to help, and we worked a lot unity

development groups to you people together. those are the kinds of programs that can help neighborhoods and communities to help people get the skills they need. i do not think policy is the tool that can address that. when you are in a recession monetary policy can help. making sure people have the skills for the modern workforce, that is something we can do much about. >> the monetary volatility that is having right now, do you agree that it is in part a consequence of fed policy? >> i think volatility certainly got my attention. the federal reserve is always looking at financial stability, the financial policy report, there is a section that talks about it. this is something which take seriously and look at.

is the cost of one of these monetary policy actions that we have taken. when you search for yield and , then are taking on this if you have a shock or negative, people rush out. i think that will be part of the conversation. >> is there a credibility issue for the fed in september? crediblek it is a institution. we want to set our policy based on what the economic data is telling us to do. i think that we are consistent with that. i think the discussion is going to be about the economic information in terms of our outlook and the risk to the outlook. alix: that was the cleveland fedf president. pimm: coming up, we will take you through the close.

pimm: this is the bloomberg market day. fluctuating and training in a narrow range today. we want to go to julie hyman. this truly feels like a vacation for stocks after the last five or six days of trading routes. julie: we have been bouncing negative and positive, but i do is say, it is a much narrower range that we have had recently. the nasdaq right now is up a little bit. and that is the key word, because you are not the these enormous swings that we have had over the last several days. the s&p on the dow remain in the red. take a look at my bloomberg terminal for what i'm talking about.

the army's ranges and swings we saw the sox past few days, and then today, the much more benign line throughout the course of the session. it is not over yet. we have to offer disclaimers because of what has happened this week. but as you look at this you see the big swings we saw going into today. i do want to point out one big move we're seeing today, and oil need and oil, up 6.5%. it looks like it is set for its biggest two-day gain since about 2009 oil really recovering from a very low base bounce, off a six year low. the recovery beginning yesterday and continuing today. that is going through energy stocks as well. can see these energy stocks, many of which have done dismally for the year are rebounding today along with oil prices. thelly, the latest on xalta, in talks to

ariad pharmaceuticals. shire is of a little bit, they have been gaining speed throughout the day, and then ad was the target of a potential acquisition. alix: thank you. pimm: let's take a look at some of the top stories crossing the bloomberg. u.s. officials are confirming a cyber attacker has been killed in a military strike in syria. convicted computer hacker is from britain and had been a high-value target within the islamic state group to the u.s.

-- had himd been on number three of the kill list of leaders. his death sends an unmistakable message. six british teenagers are accused of being part of the hacking team that has hacked corporate websites. prosecutors say the teams used paysites to flood the network with bogus data. the so-called flash crash has lost his bid for next vision delay. this is the first time he appeared in court since he was released on bail two weeks ago. those are your top stories. let's turn to politics now on the controversy that trails candidate hillary clinton.

her e-mail server, and questions about the clinton foundation, and former president bill clinton. john.joining us now is give us the landscape. the interesting thing that has happened with secretary clinton right now is we have spent a lot of time talking donald trump, her e-mail server, thefbi investigation, intelligence community, all the stuff that is going on. it is a huge problem for her. we do not know where stands right now, but it is not good politically. problem,nother massive and those relates to hers each foundation,r family and those things have come back into focus in the last 24 hours as some e-mails have been released in connection with a

group called citizens united that has been asking for e-mails. her unusual work arrangement where she worked for the secretary of state, and also for the foundation. she had all of these different jobs. she was arranging meetings that caused some people to raise their eyebrows. approvalwe saw requests to make speeches in the congo, a non-say replaced for a meeting. they are all focused on the mill fbilems because of the involved in that makes everybody very nervous rate it has always been the case that donors and other who are supportive of the clintons worried that there would be another set of stories that would come out related to the intersection of her work at

the state department, the foundation, and its globetrotting activities, and then her husband's speech making. fore things have receipted a while, but no one in the democratic world would be happy who likes the clintons, would be letting those to come back and focus and cause another form of controversy to swirl around her campaign. pimm: joe biden? john: vice president of the united states. alix: opportunity for? i think at this point, for him, the question that everybody focuses on, can he said of a campaign, can he raise the money, how vulnerable is hillary clinton, is there an appetite for this? hise are all settled in mind. he thinks those are opportune for him to run, but the things that is not settled is whether the wake of the death of his son, degrees about that, the greatest families going through,

whether he has it in him to put himself through what would be a grueling endeavor. i think it is remote and endeavor -- a question about whether he has the heart to run or not. pimm: thank you very much. tune in tonight for it all to respect and they will be speaking with lindsey graham. ahead on the bloomberg market day, the apple watch, isn't dominating the wearable market? more coming. ♪

alix: it has been a wild week for the markets, and inverted the of the largest company by revenue in the world, apple, which hit a low on monday. pimm: they also have a new

product announcements set for september the ninth grade in the meantime we have an update on the apple watch. there is a new report that shows theas actually dominated world market. cory johnson is in san francisco. tell us, how successful has the watchman? cory: it has been a great success, and terms of sheer grow thet helped to overall wearables market substantially. 100% growth year-over-year, or so says idc. when you look at the numbers you can see this tremendous growth of the apple watch, but also one of the things that it really reveals is that the dominant business in the business of wearables is not absolute all it, 4.4 million units shipped in the second quarter overall. these guys are stealing market share from each other, or

is the wearable market actually growing in size? cory: it is absolutely growing in size. 200% growth year-over-year. furthermore, you can seattle come in there with a big chunk of that growth. most of the vendors in the arena of wearables are growing, carmen is a company that i do not pay enough attention to. cityare based in kansas and genetic and the coastal attention that other businesses do. they focus on runners and cyclists and outdoor activities. not only has the business grown quite a bit, but the of lost market share with the overall growth of the market. the big loser in this, and year-over-year basis, interestingly, was samsung. it first mover when it came to the digital watch, smart watch space. but losing substantially in a year-over-year basis. while everybody else was growing, and apple growing the

most 02 something gigantic, samsung has seen massive shrinkage. pimm: the apple watch is going to be available at all the stores. that will change the numbers in the future. cory: presumably it will add to the sales. the sale of the watch was hampered by availability in the early days, as we often see with new apple products. as an expanded in more geographies and outlets, that can only help them. ironically, today is the day that a lost my joawbone. alix: tragic. you are leaving me. we will be right back. ♪

alix: a welcome back to the bloomberg market day. top headlines this afternoon. florida is now in a safety emergency as a tropical storm approaches. erica's already blamed for four deaths on the island of dominica.

it is now pelting puerto rico with rain and the storm could reach florida by monday. a hurricane hasn't hit the state in 10 years. former president george w. bush is marking a 10th anniversary of hurricane katrina by returning today to new orleans. he talked about the region's recovery after the nation's most expensive natural disaster. he spoke earlier at a high school, the same school he visited on the very first anniversary of the storm. >> today we celebrate the resurgence of new orleans schools. we honor the resilience of a great american city whose levies gave -- levees gave out but whose people never gave up. alix: mr. bush is now in mississippi where hundreds of people gathered at a beachside park to salute emergency responders who worked during and after katrina. firefighters have been holding their own against the largest wildfire on record in washington state. firefighters battling the 450-square-mile blaze got help

from the weather as winds actually pushed portions of the giant fire back on itself. more than 1,100 square miles of washington state have burned. and the bodies of more than 100 my grants are being recovered from the mediterranean near libya. they drowned when their boat cap sized. and over in austria, three people are being held in connect with -- connection with the deaths of 71 migrants. the bodies were found in an abandoned truck near vienna. jubilation in sierra leone as the last known ebola patient leaves the hospital. her departure could mark the end of the country's epidemic. the woman most likely contracted the disease from her son who died last month. if she tests negative for 42 days, the world health organization will declare the west african nation ebola-free. and those are your top stories. investors are waiting for cues on the timing of the u.s. rate hike from central bankers, all gathered at jackson hole, wyoming. but would a rate hike in

september help the economy or hurt it? we are at jackson hole. over to you. reporter: you'd be hard-pressed to know it, but jackson hole is in fact a place where academic papers are presented and discussed. gita is very well known for her work on currencies and trade and she presented a paper today which i'm trying not to oversell, it really changed the way that we think about currencies and trade. i'm going to try and summarize the paper in the shortest way possible. it's really good to be in control of the dollar. guest: it certainly helps you have your own home currency as the main currency in world trade. and the dollar happens to be that. you do get some kind of insulation from exchange rate shocks arising elsewhere. because everybody selling to the u.s. is pricing in dollars and those dollar prices are not very

responsive to exchange rates. from one quarter all the way up to eight quarters. the pass-through into the u.s. is quite low. reporter: international trade prices are sticky. i found this fascinating because we're used to the idea or at least the academic discussion that domestically prices are sticky, which is, for example, why it's so hard for greece to become competitive. it means giving everybody a pay cut. but it turns out that internationally, in international trade, prices are sticky as well. guest: that's correct. if you look at international prices, and i've studied this quite carefully for the u.s., if you look at u.s. import prices, it's around -- it's about sticky for 10 months and if you look at u.s. export prices, it's sticky for about 12 months. but this goes even beyond the duration of price stickiness. even when you observe those prices changing, they don't seem to be very sensitive to exchange rates. which is why you can go two years out and see the pass-through into the u.s. is still quite low.

reporter: when we're talking about currency wars, it seems reading your paper that the idea of a currency war is a very simple analysis because it takes a long time for a devaluation to actually have an effect. but even more important, you have to draw a distinction between which currencies are being devaled. the stronger currency or rather the more commonly used current is yous, like the dollar and the euro and the yen, and the currencies not more commonly used in international trade. is that the right way to think about it? guest: that's absolutely right. i think an important point to note is when people think about currency wars, they first assume a lot of symmetry in the world. there is a common sense that if your currency depreciates, it makes you more competitive in the world markets, it doesn't matter whether you're the u.s. or turkey or india. but what we need to recognize is that's actually not the case. when the u.s. dollar depreciates, indeed it does make your exports cheaper on world markets but it doesn't do the same thing immediately for india or for turkey. everything india and turkey sells is in dollars and those

dollars prices aren't moving around immediately which means that for international buyers that are facing these dollar prices, the quantity responses are not going to be big. reporter: it's not possible then to look at the devaluations that have happened in aisha: aia over the course of the last month and say, these are competitive devaluations, they're fighting over trade. guest: some of it seems highly exaggerated. for instance, the chinese so-called devalition of 4% and the impact of that and it has been reported of that being a big move in terms of gaining competitiveness. that's a pretty weak argument. it's certainly true that chinese import prices will go up in union. but in terms of export disease in yawn. but in terms of exports it's not a big deal. reporter: let's bring this back to the broader conference. which is monetary policy. it's often said that janet yellen is central banker to the world. so the possibility of this rate hike or tightening over the course of the next year, given

your work, what affect is that going to have on the rest of the world? guest: the one piece i can talk about is going to be through the inflation channel. so as the fed raises interest rates, and that's also happening in anticipation of the interest rate increase, we've had a dollar appreciation. now, the implications of that appreciation for u.s. inflation itself is quite small. but implication of that for other countries, like say turkey or japan, whose currencies are depreciating relative to the dollar, are going to be far more significant. so i think that there is a bit of a symmetry here, which is that the impact on the u.s. itself is not that big but the impact on other -- especially merging -- markets would be very strong. reporter: thank you so much. it's really extraordinary work. when we look at the possibility of a strong dollar policy, we aren't supposed to or rather the fed is not supposed to look upon its effects on rest of the world. but according to the work that we're looking at right now, the

effect on the rest of the world is outsized and it has a much larger effect on the rest of the world than it does on the u.s. back to you in new york. alix: great stuff. thank you so much. this week investors are dumping stocks at record pace. normally when stocks fall and investors panic, they sell stocks and buy bonleds. that didn't happen this time around. so according to credit swiss, investors aren't are exiting bobbeds, commodities, international funds as well. and john b.:ing me now is bloomberg market -- and joining me now is bloomberg's marketing editor. pick an asset class and it was sold, basically. joe: ya. this is an extraordinary week. you saw people basically dumping everything in sight. and i can't remember a week in a long time where i saw more sentences that these -- this was the biggest move since lamen brothers. whether it was a measure -- lehman brothers. whether it was a measure of volatility or outflows, people were just dumping everything and everything was volatile.

alix: that's staggering too if you take a look. i mean, i'm just pulling up oil, for example, because i love oil. if you take a look inside my terminal and look at what has been done, that is right over here, is the slide that we saw at lehman brothers. very catastrophic. and here you have a double dip slide for oil as well. that having a lot of knock on effects for the market. pull up anything and you'll see the same kind of chart. joe: there is this sort of look-big picture and obviously it's been talked about a lot this year, that up until very recently, stocks were doing very well while commodities were getting clobbered this week. at least the first half of the week it was sell everything. then the snapback has been almost as remarkably violent as the beginning of the week was. alix: what's fascinating when you sell stocks and bonds at the same time, it has consequences for the risk parity trade where you're forced to sell, when you have a grouping of asset classes, like commodities, bonleds and stocks. it forces you to sell when they move together when they normally don't.

joe: right. exactly. you have all these strategies that are premised on the idea that one does well while the other does badly and at a time when unusual stuff happens, the thing is, those strategies tend to be highly levered because it's a low volatility strategy typically. if one thing is going up when another thing is going down, the way to make money is with lots of leverage. when the traditional relationship blows up and you have these leveraged funds betting on the traditional relationship, it's blood on streets. alix: if you were to look back over the last 2 1/2 weeks, what do you feel was the single biggest catalyst for the snowball effects that we've seen in world markets? joe: i mean, i guess you have to go to the u.n. devaluation -- yuan devaluation because that got everybody started on this discussion of what's happening with china and everything. but i also have to say, i'm just not a fan of catalysts or ascribing a story to anything. yeah, there are factors, maybe the minutes spooked people for some reason, though i'm not sure why because they're sort of dovish. so i don't know why they would have spooked stocks.

there's the china stuff but we've been talking about that all year. so i think it -- you know, people were so complacent and so bullish and so one-sided in trade. and then everybody panics at once. it's almost more about human nature and human behavior than any given story in my view. alix: well said. we'll be documenting sort of what has happened over the last 2 1/2 to three weeks and give you some perspective on the market. coming up on "what'd you miss?." thank you so much, joe weisenthal. and don't forget, tune into our show in less than 30 minutes. we'll be detailing all of those moves. coming up, what defense secretary had to say about cybersecurity and our bloomberg exclusive interview. ♪

alix: welcome back. we want to you take you into the markets, we're 15 minutes before

he closing bell. the dow is now off by over 100 points. we are seeing a little bit of selling pressure pick up into the close. reporter: we are. i don't know that anybody can be surprised by anything at this point. not necessarily surprising we're seeing this. on percentage basis it's still not huge. but it is indeed characteristic of the moves that we've seen in the last hour or half hour of trading. really throughout the week. both down and up. that's just what's been happening with this up tick in volatility. here's the week still though for the major averages. there's still actually up on the week. the nasdaq's been the best performer consistently with that gain of 2% and even as the dow is down more than 100-points as we head into friday's close, it's still up about half a percent odge the week. so interesting here. take a look at the groups that have been driving it. this is today's chart. you see now more red than green. as we're heading toward the lowest of the session. but it's been consistent here. energy's the best performer today. up 1.3%.

that's been true throughout the day. utilities, worst performers of the day, down 1.1%. that's true of the week as well. look at the week charts for energy and for utilities. i was just looking at this stat for utilities. it looks like it's going to have this group, it's going to have its worst week in six years for utilities. they really got clobbered and they already haven't done very well this year. energy meanwhile was up by about 3%, so good performance there. this of course was driven by the things that tend to drive these groups on a macrobasis. that is, we had oil rebounding this week very strongly. up 12% in the past two-day move is the largest in about six years' time. and the 10-year having its biggest increase in yield since the end of june. we tend to see utilities companies fall when rates are rising. so that was helped to drive it. in terms of the individual movers on the week, within utilities, also we saw a drop in pepco, after a d.c. regulator said it was going to block its

acquisition by another company. and the rate pressure as well. within energy you also of course had some action on the m&a front. in this case, not only did you have that rebound in energy prices, you also had that deal spurring that stock gain. so that's the week that was. we'll see how things end out on this friday. alix: oh, we with -- oh, we will. thank you very much. defense secretary ashton cart aer is in silicon valley today where he's meeting with tech leaders on cybersecurity. emily chang spoke with him earlier in an exclusive interview. she's standing by in california with more. first off, tell us about the event. reporter: hey, there. we're at the napa ames research sent where are all of these meetings with secretary carter are happening. right now he's in a two-hour meeting with tech leaders, including venture capitalists, with a bunch of cybersecurity c.e.o.'s. one of them told me he's met

with secretary carter four times in the last year. so that's a good example of just how hard the secretary is trying to rebuild this bring between the pentagon and silicon valley. the government used to be the place where the most innovative technology was happening and now it's really happening in silicon valley. he's very focused on recruiting, getting good people to work for the government and he's focused on scouting new technologies. we went in depth on the subject of google and google robots. i asked, what can the pentagon learn from google robots? when might we see these kinds of robots in military am acations? take a listen to what he had to say -- applications. take a listen to what he had to say. >> they're learning about how to do, for example, logistics. we do a lot of logistics. that may seem mundane to you but if you're fighting in afghanistan or iraq or syria, where getting forces and equipment in and out is vital, we learn something. we learn something from them in areas like warehousing and inventory management which may

again sound mundane but don't forget, we're spending the taxpayers' money and we're constantly trying to do it more and more efficiently. reporter: when might we see robot soldiers in the field? when might we see self-driving cars? the field? on a mass scale me? thinks that's happening now. but that there will always be a sort of human element on the battlefield, working in cooperation with these autonomous vehicles and robots, if you will. interesting challenges that the secretary is taking on here. by trying to bridge this gap between a defense department and tech leaders here in silicon valley. alix: absolutely. can you quantify or discuss the government sinking money into this kind of relationship and cooperation? reporter: so, today, for example, they're investing $75 million in opening a flexible electronics manufacturing hub in san jose, companies from apple to hewlett-packard to boeing are all part of this effort. they're going to be developing sensors that you can wear in

clothes, in uniforms, that can go on planes, or on ships, that's part of a $170 million public-private partnership, but one of the things i drilled down with him on was cybersecurity. obviously it's a huge issue. the pentagon itself, the unclassified email system of the joint chiefs of staff was recently hacked. so i asked, should the government be spending more money on cybersecurity? take a listen to when what he had to say. >> cyber does need more money. we will provide new money. even in an era where there's a lot of budget turmoil, which is a terrible thing, a whole other subject, in washington, we need to invest more in cyber. reporter: interesting, though, he said, look, it's not about money, it's about finding the best people to come work at the government in cybersecurity. they've had to overcome a lot of cultural and sort of moral issues in the post-snowden ear are -- era where the best engineers don't want to work for the government, they don't trust the government. that's what the secretary is staking on today. trying to change that mindset. by the way, i'm also going to be speaking with mark himself after

he comes out of this meeting with the secretary of defense. we will have that for you guys on monday. alix: awesome stuff. thank you so much. you can catch more of emily and her exclusive interview with u.s. defense secretary ashton carter coming up at 4:30 p.m. eastern/standard time. still ahead on the bloomberg market day, it's been a hectic tweak with the markets but it's not over yet. we have chief investment strategist at wells capital management joining us next as we do see the dow selling off a little into the close. ♪

alix: after a week of incredible volatility, the s&p 500 is headed toward its worst month in three years. joining me now with more is bloomberg editor, a very tired editor. and chief investment strategist at wells capital management out of minneapolis, minnesota.

adam parker over at morgan stanley had a note out earlier today saying the drop in u.s. stocks is a temporary pullback and he's buying the oversold names on dibs. what do you think about that strategy? guest: well, i agree that this is probably not going to be a full fledged bear market. but i think it's not over yet. and i think, my guess is it's going to challenge us a little further yet. maybe go a little lower. i think the primary catalyst to this pullback is really not about china or oil prices, commodity prices, i think it was just the end result of a very volatile market that had built up vulnerabilities over the last few years. it became very highly valued. 19 times trailing earn aings at the top, for the first time in this recovery, investors had become calm and complacent to some extent about the future. this country faces an inflexion point where it's going into a period of full employment in the economy, a need to reset

interest rates higher, probably coupled with, you know, margin erosion and wage and price pressures to some extent. i think that the stock market needs to get to a different level, to form a better foundation to handle an economy that's going to have a different character going forward than it's had up until now. i don't know if we're there yet. i think if we just go right back up, i don't think we did much. if we stay down here, rechallenge the lows, maybe even break a little lower, i think we'll truly cleanse sentiment and we'll get to a valuation level that i think is much more sustainable for another run. i think we might -- alix: i was going to say, it's sort of what i hear in the oil community as well. you need to go lower before you can be healthy, in order to go higher. if you take a look at some of the stocks that really saw a lot f today, netflix, for example,

breaching a 50-day moving average, bouncing around those moving averages there. what do you hear? reporter: there were so many spasms in the market that possibly could have had nothing to do with fundamentals. obviously on monday there were a lot of issues with the actual pricing and the net asset value calculations of e.t.f.'s, that some people are pointing into to that as exacerbating the volatility. also a lot of volatility halts stopped stocks trading because they're moving so fast. some people are pointing the finger at that, saying that caused it. really just a lot of speculation about what is happening inside of these black box strategies. a lot of strategies that just are based on momentum or based on things that don't have anything to do with equity fundamentals. and i'm wondering if you have any thoughts on this, does that kind of spasm, that really has nothing to do with fundamentals, like we saw this week, does that cause its own damage to the market as far as sentiment and people's willingness to buy in

the dip? guest: it could. it certainly could i think it did earlier. look at the flash crash that we had a few years back. i think that created a lot of psychological damage. one thing i'd say, i think we've got a culture that's developed out of the 2008 crisis and the subsequent massive sharp selloffs -- each one of them was supposed to end the world and none of them did. as a result so many investors cashed out every time and got left out when it ran higher, that this time they're like, oh, i know what this is about, we get a crash, i buy, because i know it's going to go back up. and i think that might be to our detriment to some extent, that we've come that far. on monday and tuesday, when it was really crashing, there was certainly volatility and an escalation of vix. but you didn't see the outright panic of people rushing to the safe haven treasury, yields are higher today than they were when the market was above 2,100. you don't see a rush to the u.s. dollar. it's still down from where it was when this started.

and you don't see a rush to gelled. traditionally the assets that people -- gold. traditionally the as a ets when people move to when they're really panics. this is just a temporary refreshing pause, a buy opportunity. i think when we're done, there will be more panic, more fear that it's a bear market, less people saying it's a good buying opportunity. alix: all right. there we go. so clearly haven't seen that capitulation yet, according to jim paulson. thank you so much. mike, get some sleep this wednesday. jim. much more ahead on watt ath watt. we're going to be break -- "what'd you miss?." we're going to be breaking down every step over the last 2 1/2 weeks that would move the markets. we'll be right back. ♪

alix: we're moments away from the closing bell. i'm alix steel. joe: and i'm joe weisenthal.

alix: calm returns to the equity markets as oil advances for a second day. treasuries suffering the biggest weekly decline in nearly four months. joe: but the question is, what did you -- "what'd you miss?" is this china's hard landing? calm has returned to global markets but will beijing be spared? alix: all eyes on the fed. will the hike be delayed? we're going to report from the jackson hole. joe: and the brazil factor. this country is crucial and we'll take a closer look. alix: but first, we begin with the markets. i did not think i would be saying this on monday, but the dow jones is now up 1% for the week. after being down 1,000 points at one point on monday. unbelievable. joe: absolutely extraordinary week. there's just too -- an overwhelming -- we saw volatility everywhere this week. and today i think a lot of people were hoping for kind of a quiet friday. maybe -- i think -- we got it. we're down a little bit.