the san francisco fed saying they are pretty hawkish that rates are going to increase and the market reacted to it. then there were others calling for rates to stay lazy -- stay near zero and the markets reacted to it. some saying they were data-driven and some saying there were no formulas. even today, we seem to have a new person each day giving their thoughts about future rates. with rodave a problem questions and a variety of viewpoints coming from fed members, but what it is causing his confusion and instability in the market today every time someone has something to say, feeling like they have to walk in front of a microphone and make a comment. do you think there is a problem here and how these markets are reflecting every time one of these fed members opens their

mouth by hundreds of points? i'm not sure most of them know what they are talking about. say congress would purposely created a system with a large monetary policymaking committee where there would be a diversity of views so we did not groupthink type of mentality. moment 17 at the members who come to the table with a range of views. >> you are comfortable where we are today? ms. yellen: we have guidelines for communications because it is important to explain to the public what our policy is about. >> can i see a copy of that guideline? ms. yellen: the guideline says everyone shares a joint

objective of explaining the committee's decisions. they can explain their own views but should be explaining that they are not speaking for the committee, that they are speaking for themselves. >> you raise rates on december 16 by a quarter of a point. the markets closed, the s&p 500 closed at 2073. yesterday, closed at 1851. feel responsible for this decline? the immediate market response and for a number of weeks to the fed decision was quite tranquil.

decision that i believe had been well communicated and was expected and there was very little market reaction. the turn of the year, we began to see more volatility in financial markets. some of the precipitating factors seemed to be the and chinese currency and the downward movement oil prices. i think those things have been the driver's and have been associated with rotter fears the market about the potential for weakening global growth with spillovers to inflation. >> let's go back to oil prices again since it is not your policies crossing the market decline. told us last year that the drop in oil prices was a good thing for the economy and for the consumer.

that is what you said one year ago. since then, we have seen thousands of jobs lost and oil companies in bankruptcy and consumers not spending their gas savings. do you still feel the same way about oil prices? clearly declining oil prices have had some consequences. there has been cut back in drilling activity. >> a year ago, he said it would be good for the economy and good for consumers. ms. yellen: on balance, i would still say it's true for the united states. we are a net importer of oil despite our production and the gains to households from lower oil prices average about $1000 per household. whether they spend or don't spend those gains, those are substantial gains.

what has been dominant so far has been the negative consequences on spending from the cutback on drilling. banks in america are overregulated or under regulated? recognize: i regulatory burden is a significant issue for many banks and it is something we will do our very best and have been working to mitigate, particularly for community banks that are vital to the health of their communities. but i think to the larger banks would havere systemic consequences, it is critically important to make sure that they hold more capital liquidity and are held to higher standards to address the threats they oppose to the financial stability of our country in the global economy. yous it fair for me to say

believe smaller banks are overregulated and larger banks are under regulated? ms. yellen: i don't want to say as a blanket matter that committee banks are overregulated. i do think we need to do everything in our power to look control to simplify and regulatory burdens. >> one more question. in a recent "wall street , the odds of a recession have climbed to 21%. that's double of what it was a year ago. what are your thoughts on that? ms. yellen: as i mentioned in my testimony and my answers this morning, we have seen global economic and financial development that may well affect the u.s. outlook, financial

conditions have tightened, and that can have consequences for the outlook. i think it is premature at this point to decide exactly what the consequences of those shocks would be and it depends in part .n whether they persist that is something we will be looking at closely going forward. >> thank you very much for being here. schumer: thank you, madam chair, for the good job that you do. i'm glad we have another daughter of oakland doing well. i see we have some people in the audience for a -- from a group called set up. i welcome them. although people wearing new york city beanies left just before i spoke. tell them hello.

some of the shirts say "let our wages grow" and that is apropos to my first question. i was pleased to see wages grow 4.5%. they came back. hello, new york city people. grew 4.5% in the month of january. i hope recent data we have seen ,s a sign middle-class incomes that their incomes are growing again because wages have been stagnant for too long. to be honest. given the fact we are in a deflationary environment globally and our own inflation rate is continuing to run well below the fed has to percent target, i'm concerned further movement by the fed to raise rates in the near term could snuff out the embers of real wage growth before they are even given a chance to catch fire. if you believe the flat and decline of wages is the number one problem our economy has

raised and that it's harder to get into the middle class that has been for a long time, you make that a high priority, which i do and i know you do. going forward, do you still believe given the room for growth in the labor market, considerable evidence of consistent wage growth is still important for you to see for the fed considers raising rates further? and secondly, will the fomc be cautious in his decision-making so as to protect against the prospect of a wage growth before it even gets going? congress has assigned us maximum employment and price the ability objectives. our focus is on inflation and trying to achieve a 2% objective for inflation. the behavior of wages, first of substantial seen

improvement in the labor market and at the time we raised rates, we expected that improvement to continue. fully expect that as that occurs that wages would move up at a somewhat faster pace. schumer: we've just begun to see it. we have not made up in the loss for wage growth in the last decade yet. growthlen: productivity has been extremely slow and the state of the labor market and pace of inflation are not the only factors feeding into wage growth. for the last eight orders, productivity in the nonfarm business sector has barely grown at a quarter of a percent and that is a substantial drag on wages as well. i would not say wage growth is a for changes in

monetary policy, but, it is something that is indicative both of likely inflationary pressure going forward. it's not a sure sign but it is relevant and it is also relevant in assessing whether or not we are at maximum employment. senator schumer: i see it just the other way. i'm less worried about inflation and more worried about slow wage growth, which has picked up a little bit lately, but if you look at the last decade or is last three decades, productivity is considerably further up and wage growth is. challenges isat tying the two together. i will just say i hope that you and the fomc will look at growth and wages. it's not the only issue, but it is a very important issue. another thing that is going on is the strength of the dollar.

it has been critical in the interplay, so i want to get your specific thoughts. given the strength of the dollar and the influence of the global deflationary environment, with and one argue the dollar's strength has served as another increase to the federal funds rate? if you look at manufacturing, it's not doing well because of all of those issues. it seems to me efforts by the could raise rates further end up being a double when me to our economy because here you have the strength of the dollar hurting our export businesses, which are still vital to us and wages at it on to that. have you seen that the strength --the dollar has influenced has influence on whether you should raise rates further? strength of the

dollar is certainly something we take account of in deciding on monetary policy. i agree with you net exports have declined. it has been a drag on the economy and for that reason, that does factor into our thinking. it is one of the reasons we thank the so-called neutral level of the fed funds rate is low at the moment, but remember that in spite of that drag, and the impact it is having on manufacturing, the economy has continued to create jobs at a pace of 220,000 or more a month. so we cannot just look at sector impacts, we have to look at the overall performance of the labor market. certainly, the dollar and the drag it implies is a symptom and impart, a signal of the strength

of the u.s. economy in comparison with many others. senator schumer: which could possibly make things worse. ms. yellen: it is both things. >> thank you very much, mr. chairman and thank you for your leadership and endurance. we expect nothing less from a brown graduate, so i'm not at all surprised. to fix a when you try problem, you unwittingly create another problem. in dodd-frank, we were concerned about the bilateral nature of derivatives and so we have required on a clearing that form which creates a multilateral .ssue that in itself introduces the possibility of systemic risk and one of the lessons of the crisis was always be on the watch for

the next outline and take proactive steps to prevent it. in that context, the oversight council noted there are still a number of central clearinghouse platform issues. can you give us your comments about how close you are watching ? a constantng to be area of emphasis and investigation? ms. yellen: i completely agree with you, creating those central clearing platforms has importantly managed risk in the financial system. but they are a source of risk. thats been pointed out making sure they are appropriately supervised and operate subject to very high they arebecause

platforms that concentrate risk. this is a high priority for us. these platforms are supervised. the fcc has significant story here. backup authority. globally, there's a focus on comprehensive and strong supervision of these , so we are not ready to rest and say everything is done but we are focused on. >> internationally, it is very important because of the willingness of entities to arbitrage regulatory to move somewhere without the same oversight. you are trying in many ways, including margin requirements, to level the field internationally. is right.: that

>> issue of federal reserve bank presidents, we have talked about this. you have 12 that are due for reassignment to weeks from now. they will be elected by class b directors, who are elected by local financial institutions to represent the public. the class c directors are appointed by the board. there isu ensure that real public participation in this process? one of the impressions we had crafting dodd-frank was that there is an inside game in which those appointed by the banks were influential. how do you make sure there is a public purpose and public scrutiny of these directors?

the governance around this was established in the federal reserve act and we try to make sure the reserve banks and the boards adhere to that. the class cke sure directors appointed by the board are broadly representative of the public and all sectors mentioned in the federal reserve act. we have among federal reserve bank directors -- >> i have been rightly corrected --my intelligent staff presidents of the federal reserve bank. that's the focus of my question. ms. yellen: yes. the presidents are appointed by the class b and class c directors. we try to make sure that the directors more broadly are

representing not only business interests, but community interests and that there is sufficient diversity. the board is constantly attentive in its oversight of to the issueanks of diversity and representation on those boards and it has improved considerably. at that moment, i believe something like 45% of bank directors are either women or minorities. they are charged with making recommendations about appointment and reappointment of therve bank presidents and board of governors is charged with reviewing those recommendations and deciding. we will take that obligation seriously. we have a regular process, an annual process in which the board, through its bank affairs -- not bank affairs

committee, oversight of the reserve bank. we review each reserve bank every year and in particular, the performance of the president and the members of this committee discuss with the boards of director, the chair and deputy chair, the performance of the president. so there's ongoing monitoring of the performance of the president and feedback to the boards of directors on it. point toome to the review these appointments, we will act on the recommendations on the boards of directors, but we will have in place -- it's not as though we are just looking at it for the first time when we make those decisions. >> thank you, madam chair. >> i don't know if they save the best for last, but we are hanging in there.

,he first thing i want to say and it troubles me every time this happens. in your exchange with senator warner, when you talk about working people, the answer is always let's improve their job skills. training andm more then they will get a better job. someone has to drive a garbage truck. and they are well trained for those jobs, but those jobs do not pay a living wage. that is why sony people are frustrated. these jobs are not going to go away. whether it's being waitstaff at a restaurant or a cna in a nursing home were delivering pizza. carefulto be really when the response to wage inequality or income inequality is more skills for the workers. it doesn't focus the attention on the value of work and what we need to do to improve the

opportunities for people who work every day. i know you don't intend that but i felt like i had to get that off my chest. the challenge i have a north dakota is we are countercyclical. we are fundamentally a commodity driven state and commodity prices have taken a toll, whether in our agriculture sector or the energy sector. that has been exacerbated by a high dollar value. i had a gentleman asked me once, i can't figure out if a high dollar value is good or bad and i said let me help you with that , it's bad because we are fundamentally an export state. we are deeply concerned about currency manipulation and deeply concerned about the challenges of having to compete against other currencies in other and that has national and i think international ramifications. to point out in oil

production and gas production, 250,000 jobs and about 100,000 jobs in this country. and it wasuge hit that production sector, whether we are talking about agriculture or oil and gas. there has been so little attention to the challenges of commodity producers. people -- not people who invest in commodities, but the commodity producers. what is the fed doing to analyze the challenges for commodity producers and analyze what the increase in dollar value and potential currency manipulation means going forward to the production of commodities in this country? we are looking critically at commodities, their prices and trends. they are a huge global driver

for the united states. at the factorsly that are resulting in low commodity prices and trying to understand the extent to which low prices reflect supply or shifts in demand in various emerging markets. >> what impact do you believe the dollar value has had on profitability of commodity production this -- in this country? the strong dollar, when the dollar appreciates, it tends to push down oil prices. are -- theth you link you are suggesting is certainly there. economy inlobal which there is considerable in many parts of the world, including europe and japan. are adopting expansionary monetary policies

in order to bring inflation up to their desired target levels and to address weakness in their own economies. has a 4.9% unemployment rate and is far more advanced in and theess of recovery different cyclical positions of our economy, different economies are a factor that is pushing up the dollar. the dollar reflects disproportionate strength in the u.s. economy and that's a natural response to it. , the u.s.anipulation treasury is responsible for currency policy and it is they would not sanction. the g7 has spoken out against it, but would you believe the country's should be able to use tools of policy like monetary

policy for domestic and? >> one person's monetary policy is another person currency manipulation and we need to be cautious and how we characterize monetary policy in other countries least we not limit our access to tools we may need. ms. yellen: i think that is very important. the time you have remaining, and you have sat through a lot of hours here. i want to talk about something that has caused some concern in the fed organization, and that andost benefit analysis cost-benefit analysis of independent agencies. and portman have pursued a bill for a number of that which, in fact, asks there be an independent review of cost-benefit analysis of independent agencies. you have been subject to an

executive order that is advisory as near as i can tell and we are trying to figure out how we can get a second opinion on your cost-benefit analysis. that is an essential piece if we are going to do the oversight. i would just like a commitment that the fed will work with us to understand your need for independence, but please appreciate and understand our need for legitimate oversight and tools that help us with legitimate oversight. we are certainly willing to work with you on that but as your comment indicated, importance ofthe independence for regulatory agencies, that we not be subject to executive branch review. >> we have worked to try to figure out how to replace the reviewing agency and how we engage even to the point where we contract with independent economists to look at this

analysis and get a second opinion. you are caught in the middle here by people who don't think you do enough and people who think you do too much. one way we can broaden support for the fed is broad and transparency. to elizabeth's point, tell us why you are making a decision if you think the living will is appropriate. tell us why you made the decision on cost-benefit and i know you have been interested in being more transparent without being disruptive to markets. i appreciate the difficulty of the lane you are in, but we need tools to do our oversight and we need them going forward. i look forward to working with you. this is not an idea that will go away. it is an idea that has been introduced over and over again and we would appreciate any input so we can accomplish what we want, which is not to set monetary policy begin us the

tools we need to do view -- to review what decisions you make. thank you, mr. chairman. i am done. >> senator shelby will return and he has three or four questions. the second round, i will ask a couple of questions and i think we can dismiss you. i want to ask about senator heitkamp's views on cost-benefit and all of are concerned about cost-benefit analysis and where it could take us as a nation. do, and we have talked about this before, when the president signed dodd-frank, leading financial services in this town -- that sounded an alarm to a lot of us that they to doall street was going everything possible to slow walk and delay and lobby and push back against any dodd-frank

implementation that we cared the reason we passed dodd-frank in this whole cost-benefit analysis idea -- i'm not questioning anybody's best way to the weaken dodd-frank, and it is the dream of wall street to slow it down even more. it is not just financial regulation. you have done good work. wishing the fed and the past have done more. generally, they are trying but this will undercut your efforts with the cost-benefit analysis. it will only lead to weakening out the safety rules, which has been a longtime battle. they would talk about the battle between the conservators any animators. the innovators wanted to move the country forward and

cost-benefit analysis just helps the powerful people in this town that resists any kind of regulation that makes people's lives -- whether it is safety regulators. i want to ask a question about that and about the letter. the question about cost-benefit. it sounds like a good idea. it is obviously, how do you calculate the benefit of role? it is so much harder to quality -- quantify the benefits, not even counting the slow walk it will require. by sent a letter out signed other agencies -- just explain why you sent that letter and make your case for why that is so important. concerneden: we were

that it would have a severe impact on an independent agency's ability to put out involveat would executive franch, presidential involvement. with you that it would cause significant delays in implementing regulations and probably result in unnecessary and unwarranted litigation in connection with rules. said, congress putting out rules very often in situations, congress decided there is a safety and soundness issue we wanted to a dress by imposing safeguards in a particular area. our job is to figure out how to do that when congress has already judge that the benefits are worthwhile. as you said, the financial

crisis took a huge toll, and amazing economic cost to the country and the global economy. it will try to save a safer and sound are financial system. with capital rules and cost-benefit analysis. there are cost benefits of reducing the possibility of .inancial crisis our job is to find the least burdensome way of putting out rules to implement what congress told us to do. the published advanced notices , take comments, look for alternative ways that we might approach promulgating a

rule and reduce burning -- burden and take it into account. it is not as if it is weighing benefit and costs involved. long is the process, typically? ms. yellen: the process can take years, especially when rules have to be put in place. we are coming close to completing the dodd-frank agenda of rulemaking but it has taken a long time and has been very actively engaged in trying to do this as rapidly as we can. >> it has taken half a decade , second half a decade plus, to do dodd-frank rulemaking. you guess what it would have taken?

ms. yellen: clearly would be much more burdensome. there is no doubt about it. i cannot give you a guess, but as you indicated, a safety and is very difficult. >> who would have wanted this to take longer? don't say what i indicated, but who in the country would have wanted the regulations to take longer? regulations.with >> let me shift to another question. i want to talk on -- about interest on excess reserves. to pay interest on excess reserves. i am concerned this is an

attempt by those opposed during defense turn let those monetary policy rules. what are the implications of repealing and limiting interest on reserves? ms. yellen: it is the most critical tool we have for monetary policy to adjust the level of short-term interest rates in the stance of monetary policy. if we were denied the ability to use that tool, let me say it is because we had that tool that we acknowledge we had that tool for the time it came to raise interest rates that was critical to the institution we made throughout the financial crisis to undertaker conventional policies including ande-scale lending programs

quantitative easing and large-scale asset purchases and acknowledge that when we make came,me -- when the time on excess reserves to raise the level of short-term interest rates, was critical in the decisions we made that i believe provided great support to the economy and caused us to recover more rapidly. if congress were to repeal our ability to pay interest on reserves, we would not be able to control short-term interest rates the way we did before the crisis. we would be forced to contemplate shrinking our balance sheet rapidly. i would be greatly concerned about the impact that could have on the economy on the economic recovery. for example.

it could raise mortgage rates and have an adverse impact on the housing market and we purposefully decided we would shrink our balance sheet in a predictable, gradual manner through diminishing or ceasing reinvestment to avoid the kinds onunpredictable impacts financial conditions that could come from rapidly selling off our portfolio. without the ability to control short-term interest rates, to using interest on excess reserves, we would be forced to contemplate those steps and i would worry about the consequences and finally, if i could take another second, i would like to point out that although we are paying banks interest on their accounts with us, the counterpart of those is large asset holdings

that we have on our balance sheet on which we earn considerably more interest income than we are paying to the banks, and that differential resulted in 2015 in transfers from the fed to the treasury and the american taxpayers of $100 billion for the last two ears. since 2008, and if our balance sheet had to shrink rapidly, those transfers would clearly diminish to far lower levels that were typical before the crisis. this was not something that would be a financial winner. our goal is economic performance. i think our top concern should the what would be the impact on the economy, which would be very negative but even in the

financial sense, with the taxpayer, it would not be a positive. >> thank you. mr. chairman. >> thank you. chair, i have several questions. i know it is a long morning, afternoon now. billently house passed would force the federal reserve and other regulators to consider what you call liquid and bonds.ble municipal liquidity coverage ratio. to a category, it is my understanding, currently includes securities, which are -- considered very legal and uniform structure. they proposed treating eligible thecipal bonds as level two assets for liquidity purposes. do you support the house bill to treat municipal bonds as level two assets and why?

or why not? i would not support the legislation to treat them as a assets. because this is a liquidity requirement to make sure banks have sufficient liquid assets to cover the kinds of outflows, in the stressful situation. cashost liquid assets are and u.s. treasuries. mortgage-backed securities, fannie and freddie, mortgage-backed securities and local, to a assets are quite asuid, but not as liquid cash or treasuries, which is why .e have downgraded them while we have proposed to include more liquid on municipal securities, they are not as liquid as those included in 2a.

and we have tried to recognize that while municipal securities are generally not very liquid, some are sufficiently liquid to include them in limited amounts but in category 2b. i think this bill would with our supervisory judgments about what constitutes adequate liquidity. >> we have talked about this up or many times and you have talked about it. there are two things banks need. capital and they have to have liquidity. you can have capital and no liquidity in a stressful environment and you can be in trouble. statement is dealing with liquidity. you do not want to weaken the banking system. you want to strengthen it. is that your basic premise? ms. yellen: absolutely yes. >> reform in the federal reserve, as a talked about in my

opening statement, currently, members of the board of governors do not have the ability to employ their own staff, instead relying on a shared staff of the board, which you have up. i understand your pose a policy that would allow a specific member of the board of governors and the federal reserve to toloy even a single person work exclusively for them. what are your reasons for opposing the policies? is it control or what? ms. yellen: i want to be careful. governors certainly are entitled and have substantial responsibilities and are entitled to adequate support and as chair, i have worked to make sure, and i think this is true, that each of the governors >> but you are before you were a chair. >> yes.

it was important to me when i was a member of vice chair. i took on staff member -- not someone i hired from the outside, but a staff member assigned to work primarily with me to help me with my particular work and most of the governors working staff members primarily or exclusively with undertakelp them their particular job responsibilities and i am not opposed to that. i have tried to foster it. we have pretty complicated agendas and a lot of work to do and we need help. >> if you were a member of the had nof governors and support staff, there is not a lot you could add to a debate crucialhe fed in a time. but if you had support, you

know, there are many voices down there and it should not just be one voice. it should be a healthy debate -- healthy debate even inside the federal reserve. >> of course there should be. staff provides support to all of the governors, including individualized needs. appropriate for governors who want to have staff work with them to have that ability. i'm not opposed to that. >> in the area of fed transparency, you said before that the fed is one of the most transparent central banks in the world but also, and these aren't also your words, there is always room for further improvement. policystand you oppose a that would improve fed transparency by shortening the delay and the release of federal open market transcripts from

five years to three years. five years to three? go ahead. only a few central banks released transcripts at all. we are the shortest, i believe the next shortest is eight years. when transcripts were first released, it was debated what the lag should be. even with a five-year lag, i was that fewer people were willing to engage actively with others in meetings, expressing their views , rather than lead from prepared remarks. let's say we have a reasonable degree of interaction in the meetings. the knowledge that we will be releasing transcripts in five years does lead to less

interaction in the meetings. we really need to be able to engage with one another, with give and take, where people feel protected, that their unvarnished views and exchanges with colleagues will not quickly to the public. we released very detailed minutes of those discussions within three weeks. fear that moving up of -- oflease, a verbatim verbatim transcripts, actually would not add so much, if anything, to let the public already knows about our policies , from detailed minutes of the discussions, statements, reports. that actually, there would not be much additional information, and it would stifle at the level of interaction that we have.

it is clearly a balancing act but that is my concern. >> i could see how a release of transcripts in five or three problems in cause the economy. a monitor a a policy and everything else. but five years, three years, i do not buy that. i believe, although i have said this to you privately and publicly here, i believe the fed should be independent. but i do not think you are totally independent or that we ought to know -- we should not be a member of the board of governors. i do not want to be a member. but on the other hand, we should know what you're doing and why. we need to know that immediately? probably not, for a lot of reasons. but we do need to know. and to move a transcript release from five years until three

years, that seems overly general it just generous to me. that is my view. reform in the fed structure in the area there, we have talked about this. when asked yesterday i believe in the house, about the structure of the federal reserve system, you said the current structure of the fed is something congress decided, after a long debate, and the weighing of the whole variety of considerations. that is true. now while this might be the case, i believe the federal reserve system was established by congress over 100 years ago. since then, the country has changed dramatically. changedomy has dramatically. as you are aware, the san francisco federal district now includes approximately 65 million people. this is the fed district. the minneapolis fed district includes just 9 million people.

chair, do you oppose instituting any type of review of the structure of the fed healthy study? why do you do that? is annoying that things are evolving all the time. course up: it is of to congress to consider what the appropriate structures of the fed. i'm well aware of the fact that history plays a great role deciding what the fed would probably be if we were starting from scratch, you would not have the 12th district with 65 million people, i think 20% of the u.s. economy having one federal reserve bank. and congress can, of course,

reconsider the appropriate structure. i simply mean to say i do not regard the structure rogan in the sense that it is failing to put in place good monetary policies, failing to collect the aboutation that we need what is happening in the economy to craft could policies. we do have, as congress intended, independent-minded people sitting around the table, crafting policies. the structure could be something different, and it is up to congress to decide that. i respect that. i simply me to say i do not think it is rogan the way it is. the way it is. they really good fed president for a number of years. ms. yellen: yes. thank you. >> we understand that. but the fact remains that since

1950, youess since have seen greater population changes in this country. where i come from, from virginia to texas in the border states, that is the most heavily populated area of the united states and is slated to grow even denser. is that correct? >> yes. >> look at the west. ms. yellen: of course. we had places like las vegas or bankiego who are reserve representation, growing faster than many places that do have branches. so yes, there is a historical that has left the federal reserve system in place where geographically no longer

distribution of economic activity. class when things change, don't you think we should be aware of that to change with it? ms. yellen: it is up to congress to decide if changes are necessary. i only mean to say that, for example, when i was the president in the 12th district, i was highly attentive to making sure that even though we have a very large district, that i was aware of developments all around effortion and make a big , a veryct information diverse part of our district.

>> we appreciate your time today. thank you. >> from bloomberg world headquarters in new york, good afternoon p ryan scarlet fu. alix: you listened to janet yellen testify before congress for a second day. scarlet: michael mckee is with us as well as brendan. headline youbig heard from the testimony? brendan: negative rates. there was a back-and-forth about whether she was prepared to use it. take a listen. ms. yellen: we previously considered them and decided they would not work well to foster accommodation back in 2010. in light of the experience of european countries and others,

we are taking a look at it again. add accommodation. we had not finished that evaluation. we need to consider the u.s. institutional context. it is not automatic. >> she went on and talked a little bit about how the structure of monetary funds in the u.s. exit more difficult to implement negative rates in other countries. the fact that she is saying again confirming this is a tool work considering this may -- there may be something they have to use. we have got the facts out and we are sharpening it and sends a single to markets and markets have been saying we do not see these four rate hikes in december and she said i'm happeneda lot has since december. she is aware of the changes. if markets do not see those four

hikes this year, she is sending a signal, if that is what you do not he, i will not dissuade you from it. do they not see a hike, they possibly see a cut. check it out. probability market the fed will hike on february 1 of 2017. that probability was over 30%. a staggering decline in that probability and the probability of a cut increasing. funds trading really does not tell you about what the fed will do. a is about as useful as political poll going into election season a long way away. bite hearings are little theater, a little bit psychotherapy. a lot of politics and very little information.

would disagree with one of the characterizations are she was asked about the acts of negative interest rates. does not mean they are sharpening it here janet yellen cannot go to capitol hill and say, things are terrible. she cannot go and say we are getting ready to impose negative interest rates. imagine what the market would be. she couches it in careful terms, yes, we're looking at these things and there are issues with the economy and we are watching that and then markets take away and i am sure you guys have gotten the same client messages i have, half of whom say she went up to capitol hill and was very dovish and half say she was very hawkish. >> it depends on how much you wind up reading it. what do you think about the characterization that she is not doing anything different than what she did a few weeks ago. >> i would agree with the statement. she declined -- that in the statement, she declined. i areally think mike and

saying roughly the same thing to complete the metaphor. negative interest rates, she got it out and they are taking a look at it. back on the law, they are not necessarily committing to use it. they might be contemplating it. the other thing that stood out for me was the exchange she had with senator corker from tennessee, where he says something i always wanted to say at the hearings, so much of what we're talking about when both sides talk about the way the economy is going, it is in the hands of congress and not janet yellen. they were talking back-and-forth about how they could increase productivity. he said productivity, that is really on the side of the die and she chuckled and said yes. she agreed and that is an important point. there is a lot congress could be doing that they are not doing. stephanie: to what extent did you say anything about what she did take the fed.

she came in to capitol hill this morning but she talked about the strength of the dollar being a little bit of a surprise and also oil being a surprise to the fed. has surprised everybody. alix steel is our oil expert. they keep ratcheting it down and the fed is -- those analysts are not oil experts either. they have been surprised by how low oil has gone because it looks like people are producing greater than a return. they are doing it to get the revenue and how do you account for that? the dollar they anticipated, they knew the dollar would go up. if you have the strong economy in the world, then capital will flow to you. they knew that would have been pyramid be they did not anticipate how quickly that or that the other central banks would be put into a situation with lower rates. the dollar is starting to come down again.

>> what is the biggest question we will know? what is the one thing we still do not know? >> you do not know what wall street's's impact will be on the overall economy. wealth disappeared. everyone writes stories about that. did that translate to a pullback in business spending? we have the bloomberg consumer comfort index coming in strong today. it does not look like it is having an impact so far. those are the kinds of things we do not know. it will take time to see what the overall effect will be. stephanie: final thoughts from you -- scarlet: final thoughts from you? >> something has come out in several things she has said where she points out it is demand, not necessarily just supply. we have talked but the supply of oil over the last quarter. that dynamic has changed. she said a couple of times we

are seeing a demand aspect to oil. that is her answering the question. that would have me a little spooked if i had assets in the market not just talking about something going on in the oil patch, but something going on in the global economy. about the actual economic consequences of what is going on in the markets right now. ms. yellen: the markets have been and we have been quite surprised by movements in oil prices. part, they reflect supply influences that demand might play a role. the extent to which it has moved mid-2014 is not something we anticipated. we have been surprised in part by those developments and they have played a significant role in holding down inflation.

>> there you have it. wondering about supply and demand. demand plays a role on the price of oil. that has got to have markets worried a little bit. thought from you, we noticed there was a gentleman sitting behind her wearing a green t-shirt. but id see the word wages could not see anything else. from the group called fed up, which some of the labor unions and people on the left have put together to complain about the economy. fair to lower wage workers and that wages have been stagnant for a long time. they confused the fed for somebody who could do something about it. they showed up in the last couple of years and janet yellen met with them. but she is really powerless to help them. it is not clear exactly why they are there other than that it is part of the theater. thanks so much.

note, a special starting at 3:30 p.m. eastern, an analysis of janet yellen'testimony. let's head over to the market desk where julie hyman has been tracking moves. we are off the lows. >> yes. to the sentiment, sort of all over the globe, that central stem the not able to tide of slowing growth, if that makes sense, tide of slowing growth. the dow has been a laggard all day today and financials are under sharp financial pressure as well. todits wiese today falling its lowest in european trading. if you look at the s&p over the course of the day and during janet yellen'testimony, the drop came at the beginning of the day. we pretty much stayed there. we are off the lows but not talking about a huge jump there.

we will see what happened as we continue on in trading. there is a little trending upward in the chart. i want to go back as well and look at how various asset classes have done since the rate increase in december. we are going back to december 15 the day before the rate increase. stocks have trended lower by about 11%. we have been well watching, it has also been trending in a similar direction. not down as much. it has declined this year. the 10 year yield was around before that decision. it is right around 1.7% now. quite a remarkable change. .he banks as well the s&p 500 down 24% since that rate increase. >> obviously, the money is going out of stocks and into things like gold, over 1200 --

a good rally. >> all this nervous is on the part of investors are i have been talking to investors a lot over the past couple of weeks. the trepidation and jitters have been increasing as the declines in the risk aversion we have seen in the markets and the volatility has persisted. gold, upe going into another 4% today. going into treasuries, which has been pushing down the yields on the 10 year to a remarkable degree. 1.63% today. really remarkable and the yen as well. we have been seeing that rally happening in the end. you see the dollars are lower versus the -- versus the yen again today. us aank you for giving snapshot of the market. the sec is turning its sights on boeing's accounting for -- accounting procedures. is investigating whether the aerospace giant accounted for

the cost and sales of two of its jetliners. the 747 jumbo aircraft. oftaking of the most off industrials now accounting for more than 86 points of the dow's 316 point decline. a financial reporting method known as program accounting. here to explain why this is problematic is matt robinson. explain to us what program accounting is. >> it is unique to the airline industry and gives a lot of in forecasting out expenses and costs. these are multiyear, decade-long programs to build aircrafts. it is a gap approved measure but if things start to change, you need to update it accordingly. the s&p is saying, since boeing has had issues with these two programs, did they up a -- update in a timely fashion? >> the idea this is based on sales forecasts, it is also

based on declining costs. that is part of the issue. why now? it feels like this has been there for decades. what was the trigger for this? >> we understand there has been a whistleblower that has gone into show this. the accounting method has been around since the 1960's. it has been criticized because it gave companies a lot of leeway figuring out where prices are going. it go from here? >> these cases specifically are this kind ofg conduct. for something like this, this is years in the making. you had one assumption here. there are a lot of gray areas for cases like this. >> you mentioned the dreamliner

or programs that had developmental delays. there are several hiccups. to what extent does that contribute to the scrutiny that it now faces? 2.6 billion had dollars right now in these programs. forecast that they monitored. it is unclear in this case. scarlet: thank you for joining us, matt robinson of bloomberg news. oil prices are falling because of a massive global glut it are we running out of storage for all that crude? arelet: lower oil prices not helping that stock or look at equity indexes once again alix:. theircapitals -- alix: capitals following today. ♪

alix: one big question every oil trader wants to know is when the u.s. runs out of storage. about 500 million barrels, the highest since 1930. are we running out of space? let's see what the numbers say. forecial thanks to -- helping. this is where all of the oil is stored in the united days. the main area is the orange area, which makes 13% of capacity. it is 55% of capacity. where are we right now?

these numbers were released theerday and these include transit oil is released. they are at high level. cushing is almost there the top. -- maxlook at math storage capacity, 9 million barrels to go. a little full but remember i told you we have oil in transit as well as pipelines and that is why looks maxed out. we are like 50 million barrels away from ask capacity. a little wiggle room but things are getting tight. where is all the oil coming from? imported and is basically traders are sending oil into the u.s. to be stored with a big spike up in the last few months. we saw a 14% decrease last week.

energy aspects also said there is about 25 million barrels of import that will hit the east coast in the coming weeks. if storage issure actually tight? this is the price difference between sweet crude one-month versus two months. it is telling you prices in one month are almost two dollars cheaper than in two months. $.50,he spread is about they store oil because they can make a profit waiting just one month to sell. the fact that this has alone up so much, it shows it might not be available or else someone would have used it. what happens next? insight here with some is dan from houston. what happens next? do we know? n: we kind of know and it is a little ugly. is filling up, it is

widening on the front month contrast, which makes crude oil cheaper and basically the market is telling you will we're trying to give this away, take out crude. what is happening now is refineries are doing it and converted it into a product glut. we are now starting to see a vicious cycle where defining margins are being hurt by low gasoline prices, which means refineries are slowing down, which means more crude is building, which means crude prices go down. refineries run more and more again and we get into a cycle. scarlet: he sent over something out want to pull up that takes a look at gasoline supplies. you can see that storage is pretty strong there. he wind up seeing refinery your point.ing to at some point, people will say forget this, i not buying your crude.

dan: exactly. earlier this week, valero stopped running as much crude as they could. earlier today, pbs energy, they did the same thing. they started cutting runs because they are losing money on the gasoline crack right now. class what happens with other countries if they cannot store more oil question markdan -- oil? dan: ships are expensive to rent. they cost money to move around in the ocean. it has to get wider and wider to incentivize storage. widespread's and that is the sort of market as to man heats up. scarlet: you have got to have

the oil prices lower to make sense. thank you. we appreciate it. ahead, how can twitter grow its user base? we will speak with the coo next. ♪

>> i do not know i did that? it says scarlet in the prompter. twitter is in real trouble. in addition to reporting larger than reported earnings, the social media site said it added no new users in the last quarter. spoke toemily chang twitter posse's coo in san francisco. they discuss the slow user growth issue. genuineser growth in has bounced back to our original inels and we are confident

the product work we have ahead and that will drive user growth to a sustained time of growth in the long term if we execute. products changes we put in place already, we made one yesterday where you can turn on a simple switch and get the best of twitter in your timeline, we think things like that, while definewill continue to what is an iconic product. >> how confident are you you can we can -- rick celebrate product growth? >> we're confident in the trends we're seeing. some of them are seeing already good science we talked about yesterday, da you in terms of as monthly active users. pastlly went up for the quarter.

make no mistake, product execution will drive user growth. we feel we have a good product roadmap and we are confident in the road ahead. ability to about his manage both jobs on the earnings call yesterday. i have seen him in action. from a product standpoint, he is unbelievable with the team. he has got a vision with the company. i am fascinated by him in his ability to execute at the company and he is doing a great job. emily: you live and breathe twitter and don't the engine for this company. deal with the incessant negativity that surrounds the company and how is it impacting more out? a lot of people have more people are looking. a massive set of determination at the company to prove the outside world wrong. we heard this on the is the side. theyuestion was, how will

monetize the business. if you look at 2015, we had a strong 2015 in terms of revenue growth. 60% year on year growth for 2015 quarter, wehe past announced revenue that was over 50% on a constant currency basis. questions about the ability to monetize and we prove them wrong and i looked at the next 5.5 years and it is a great chance to prove them wrong again. is glidinggrowth down. 48 percent last quarter. revenue growth seems to be growing dramatically. what will turn that around? >> what -- let me talk about that business. we have two categories of advertisers. big branded advertisers are people who run tv commercials and the like, and then we have a smaller performance advertisers. mostly inside of digital spend.

the brand advertisers business is the larger percentage of the business and the growth they're will come from growth and .udgets we launch video advertising on twitter. business is ae small set of the advertiser revenue. it is fast growing and we have a product driven approach ahead. emily: why are you having trouble with that? >> we started with the advertising business first. when we looked at this 5.5 years , wein terms of the business do not have to pay for them to the platform and we knew that if we could just make it easier to expand businesses on twitter. 90% ofthe super bowl, the television advertises also

running on twitter and 50% of the budget actually was running inside the video platform as well. chang and theily twitter coo. more of that interview on bloomberg west today. retreat are leading the here for insight, here is michael regan. gadfly is our fast commentary section. financials in the u.s. have in the leading edge but really most of the pain is in europe. we are feeling the second order of effects with it. the.s. financials, all of terrible stories in the news touched the financials in some way. deutsche bank and credit suisse, the credit risk there, the trust of default swaps are hockey sticks right now. to energy, debt is pretty tame and controlled.

there is a concern and worry that the credit cycle is turning outside of energy and the bigger provisions will be down the road for farias debt and various industries. credit ratings are being downgraded at a strict rate of industries. the big thing is the yield curve. everyone expected a steeper reserve. longer-term rates dropping below bad.hat is obviously .etter sign for the economy really at the middle of all of these concerns out there. >> they are no longer widow and orphan stocks. they trade below book and have .een doing so for so long

>> the stocks might be i have charted libor for three months. when you come inside bloomberg, it is really not that terrible. here forsaw a spike libor. it is ashley going down. actually going down. of all the regulations, capital ratios are so much stronger than they were in the last crisis. the fear necessarily of this nasty financial crisis. is going to blow up imminently. >> yes. knock on wood. never know. it is just the earnings power, it does not seem like it will be there. this volatility in the markets is very bad for capital markets business.

ipo's are getting postponed. debt offerings and that sort of thing. not a disaster type of scenario hopefully like we saw in 2008. it is just not a good earnings environment for banks. the leading edge and i continue to come back to the idea. thank you so much. calm -- fast commentary, you can search bloomberg gadfly on the web. >> check out what did you miss today. castleme, there -- air stock --we have got an exclusive see -- interview with the ceo. ♪

let's start with the

headlines. mark crumpton has those from the new deaths -- news desk. mark: broad international support for the u.s. plan to defeat the islamic state. the strategy was outlined before two dozen defense ministers before a meeting the at -- at nato. more than 20 nations are already helping fight militants in iraq and syria. a minnesota man is expected to plead guilty today force -- aspiring to support isis. they travel to syria to fight. nine other members of the group of already been charged. president obama is in california scheduled to headline four fundraisers. next week, a two-day summit with leaders of 10 southeast nations. in california, the president

will also make an appearance on the ellen show. kingpin could stand trial in the united states. -he couldrk times betrayto in brooklyn, new york. americanin several- cities including chicago and miami. his cartel was reportedly the largest supplier of cocaine to the new york metro area for years. dayal news 24 hours a powered by our 24 hour journalists. back to you. >> let's go to abigail doolittle live from the nasdaq with the latest. >> the nasdaq remains on the cusp of a bear market. earlier, two biotech ipos went off, raising a combined amount of 145 billion dollars. behind the strength at the nasdaq, and overweight, shares

are up sharply today after the company topped estimates for its fiscal second quarter in earnings and revenue. the company gave strong revenue guidance for the third quarter. investors like this. it is in contrast to some of the outlooks we have seen for other big tech companies such as apple and intel. inco said they saw some inuary but chuck robbins said do not think there is any sort of panic here. tesla. shares are up nicely after the company gave guidance for its model s delivery in 2016 that topped forecasts. the company expects production to grow year over year giving unit range above wall street forecasts. investors are clearly focused on those numbers as opposed to the 87% laws the company posted for the fourth quarter versus the $.10 profit investors were looking for. than 35 percent.

it will be interesting to see whether the strength can last. i am abigail doolittle. now, more bloomberg markets. ♪ scarlet: you are watching bloomberg. i'm scarlet fu. are watching.e the world's's second-biggest mining company is stealing commodity prices. we will look to the ceo. u.k. deal talks at the will be front and center. we will speak with one of the biggest supporters of stay -- >> changing its tune on compensation. the latest is just ahead. first, let's start with rio tinto, the world's's second-biggest mining company is seeing damage done. itl-year profit fell 51% and plans to reduce spending by $3

billion and slowdown on acquisitions. isat this stage, there nothing out there on the market that interest us. while were holding focus on developing our own assets. they came up short in the fourth quarter of the second largest bank in france posted earnings that missed estimates. profit fell at the investment bank and the bank set aside money for potential legal costs. >> the debate will be front and center during the summit next week. one of the biggest supporters in the eu explained the current climate. >> there is an anti-politics feeling at the moment. to westminster, to brussels. i get that. it.re right at the heart of we freely choose to be a member of it and i would argue we have a huge influence in it. the single market was created by margaret thatcher. i believe this position is more liberal and outward looking and

competitive than one we have ever had before and it would be supremely ironic for britain to lead -- leave the european union's red at the moment in which the european union is looking more and more like the british outlook. >> hsbc's policy and competition is changing up yet again. a global pay freeze less than two weeks after it was imposed. listenedaid the bank to feedback and decided to find another way to save money. the hiring freeze remains in place. >> adidas has raised its outlook for 2015. it sees growth in his reebok brand. adidas protects that revenue and operating profit will rise by double digits. the company reported full-year earnings that beat analyst estimates. this has been your global business report. alix: earlier today, sweden'central bank lowered its adjust rate further than zero to provide info --to provide inflation. scarlet: bloomberg surveillance

interviewed the governor on how much past the central bank it can go before the side effects outweigh the benefits. economy,, in this these work pretty much the way one would expect. at this level, it doesn't seem to be an issue. in terms of impact from a monetary policy sign, generally speaking, the rates have come down. the system seems to work. scarlet: seems to work. do you have a benchmark at which point you cannot go more negative because it does start hurting banks? early toat is way too tell. banks, comes to swedish the level is really good. at this level, it is not an issue. >> given the potential upward pressure on currency, how much does further easing from the ecb factor into your decision of lowering interest rates today?

>> we need to be careful so it does not depreciate to quickly, because that would make it harder for us to get inflation up. in a small an open economy like ours, we have to keep an eye on what is going on in the rest of the world. >> you felt pressure from the ecb? >> that is not the issue. i'm pretty sure on the ecb side, they do with a have to do to get inflation up in europe. small it open economy, what matters to us is what happens in the ecb in terms of the inflation rate. there inflation rate is low. then it was time for us to act. i'm curious about a central bank war. we like to criticize brazil about managing their capital flows. is your action today presumed to be getting out front of mario draghi, the beginning of a new bout of major central bank war

or battle to staunch deflation fears? tell whatcannot central banks are likely to do in the future. we took note of the fact that in our case, inflation came in lower. as far as we can judge, inflation is on the low side and other places as well. for these reasons, we felt it was time to act. >> stocks around the world may be plunging but one is staying in the green, air castle. shares are flying high after fourth-quarter earnings resulted well above estimates. >> the company which owns leases and sells commercial aircrafts all over the world and treated growth to the successful investments it has made in the past year which includes $1.4 billion in acquisitions. joins us nowe ceo

exclusively with more details. welcome. >> thank you for having me. >> you measured in the earnings report that when looking at the financial market turbulence, that reaffirms your approach to selectively limiting future capital commitments. futurees that mean for acquisition? >> the long-term trend for demand in our businesses is very good. despite all the economic woes, we saw a 6.5 increase -- percent increase in traffic. what makes it different in our space among the big leasing companies is we do not have big companies tied up for many years. >> you brought up oil prices. how does the strategy adjust as oil prices continue to fall. >> ticket prices are down so more people are flying. the industry put record profits

out last year, $30 billion. the picture is pretty good but the date -- there are big differences around the world, places like india that import fuel are doing fine. the u.s. is doing fine. brazil and russia are not. to -- our job is the type of aircraft you lease and can purchase as they go down? >> the current technology is more cost competitive as all the brittany fuel-efficient ones that cost more. >> comment on why you would believe there is a selloff in 2016. your stock is down 22% year to date. aercap is losing 70%. this is a lot steeper than the broader market. >> it is but it also ties into transport stocks and finance stocks. it is more generalizable. in our case, we decided to take

action on it. >> i want to get to that as well. you get lumped in with financial companies for better or for worse. give us your read on the selloff in finance related names and what it means in terms of your prescription on what it does next. >> we are a funny business in the sense that we are in the crossroads of landlords, a finance company in a sense. fundamentally as an investor. the assets we are investing in is in very good demand. it is a matter of being patient and disciplined. we are in a position where we do not have capital tied up and if there is more distress in the market, we will be a buyer and if not, we will buy our stock back. >> brazil represents about 10% of your in-service fleet. what are you seeing there now? we have the potential glibness coming up. what is your take on the

economy? >> it is bad and not getting better soon. customers are doing quite well. i have a lot of experience working in brazil for almost 20 years. airline is cutting back, no fare worse, and our two big customers is the airline in latin america moving order streams around, gently across different countries. the other one is brazil, which eat doubt of fourth-quarter profit, which is impressive. i you have had a rich history with brazil. seen blue men bust cycles before. where are we? >> what about south east asia? it represents toy 4% of your business. >> the currency is there faced a little trouble there last year. low fuelt to that was prices. when you look at our industry, we are in the middle of a lot of different macro economic forces and some of them mitigate the other. >> got it. thank you so much for joining us

today. the ceo of air castle. >> coming up, we will take a look over in canada, our neighbor to the north, and what happens as oil prices keep falling. ♪

i wanted to look at some of the biggest movers both on the up and down side today. on the downside first, the biggest individual declining stock in the s&p 500. for about $7.2 billion in cash and stocks. a lot of concern on the parts of analysts and investors about the

price being paid for. 92% premium over the closing price on wednesday. if you look at multiple earnings, it does not look quite as dramatic and some investors said this is a good strategic fit. we have been talking about boeing today. i wanted to talk about the stock. that is down 9%. responsible for a lot of decline we are seeing. his underperformance relative to ever -- other averages. we talked about how we are investigating boeing's accounting of its dreamliner and 747 jumbo aircraft. there plus side today, are stand us as well. cisco systems coming out with earnings that beat estimate shares, hanging onto a 10% gain. thatompany predicted sales may be some analyst estimates, there has been a lot of concern on the tech. stocks, triptravel

advisor, expedia, both are out with earnings. those stocks are doing well today. >> six we see into the year and the deals announced involving canadian companies have skyrocketed in the past previous week. pamela joins us now with more. let's start with the overall number. it is pretty striking. >> pretty striking, shiny number , counting thisn all up to her that it is -- that compares to the announced deals this time last year, 14.6 billion, blowing well past that. if you go back to the previous was $31.6in 2007, it billion. companies trying to find earnings growth somewhere in a slow global growth environment. looking at the acquisition strategy for one of them and that seems to be fueling this.

everyone we talked to in canada think this will go forward. perhaps a particularly good place for companies here to invest or investors coming into canada saying companies -- crisis is again repeat of the last two years. thebeing able to find topline growth. what have been the biggest contributors of all of this? week,spoke earlier this an area that is just super low growth, very difficult to find earnings growth. we see a land-based company buying up the power lines company in the united states. these are transaction values i'm giving you worth $11 billion. a reverse takeover, the american company taking over progressive waste come a canadian company, $7.8 billion. --e's buying up the canadian

this is very similar, a large hardware store with a lot of clients that are contractors and so on. those are the big and shiny ones. money for investment bankers and legal fees to be build over the course of next year, it looks like. thank you for giving us that some up. uber tv canada anchor. >> coming up, we will find out what his next and talk with the of akamai. ♪

♪ alix: welcome back. scarlet: online content reported itskamai best day in three years. alix: there are challenges, revealing two of its biggest clients reporting less on its servers.

here now to talk about the headwinds and opportunities is the ceo, tom. thank you for being here. these twoe issue is big companies make up 13% of your revenue. you now expect it to be six going forward. how long does that wind up dragging on your growth? >> not long. it wraps around quickly. the important thing is the other 60,000 customers are growing quite a bit. we have the potential for upside. in the media business with a large customers are, we grew 10% year-over-year and as we look forward to thousand 16 come a lot of major events come online that tends to drive traffic and new technology, things like for the special abyss, which helps to drive is this. cluster -- >> customers are more -- moving toward more do-it-yourself efforts. that.y few ever do i think our top handful of

customers have been doing it for a decade or more. we could be successfully against it. we will do ite with higher quality and at lower costs. on getting inting the space as well. do you feel the need at all to help cost-cutting and perhaps offer cheaper things to your clients to compete? isi think the media space always very competitive and we are a big market leader there. >> it seems to be getting worse or more competitive in the last few years. are doing itple themselves. >> i would not say so. it has been that way for a long time. media is only 4% of our business. people think of us as a media is any, but security rapidly growing part of our business that grew 50% year-over-year. our performance and acceleration services have grown quite well.

more and more transactions move on to global devices. you talk about plans to keep making acquisitions on the securities side. talk about timing. where are we in the security tech business cycle? are we at the point where companies want to preserve cash? rice wise, do you see value out there? or miss potential. our business growing 50% year-over-year, almost at a 300 million-dollar run rate. we are at the beginning of tapping the market. currently, we are defending websites against the tax year later this year, we choose employeeshat defend against phishing attacks, corporations against data exultation, and that is an even larger market. >> selloffs we have seen, does that create better opportunities as a result? inour stock gets caught up the marketplace. we are a highly profitable company and we have great potential for future growth.

i see a lot of potential ahead. do wind up looking at the overall economic environment and it is tough. it is hard for companies to make money in other places. it is hard for the stronger dollar. where is the weakest spot that you see? there and moreut content is moving online, which is good for us. the internet traffic continues to grow and has the potential to explode. transactions are moving to mobile devices. everybody has got to defend themselves against cyber attacks. in our space, there is a lot of potential for growth. scarlet: you are a doctor and cofounded the company in 1998 and served as a company's chief scientist for 14 years before coming ceo. what is the hardest part of spearheading a shakeup in the company when you are so emotionally tied to the original mission?

this is a big scene here for a lot of these companies. jack dorsey with twitter. we are not doing any shakeups. you can look at our ipo slides and we are still on the same path. you can think of occam my having a business. we're now getting focus into does areas, media and web. bringing sales closer to development sources. and now they want to double them. more ahead including a special "what did you miss". ♪

david: it is 2:00 p.m. in new york and 3:00 a.m. in hong kong. welcome to bloomberg markets.

from bloomberg world headquarters in new york, good afternoon. global stocks edging closer to a bear market with the dow falling over 300 points. investors begin to lose faith in central banks and fed chair janet yellen says the week stock prices pose a threat to the economy. one of the richest men in the world joins us to talk america mobil feared oil and stocks have developed an unhealthy relationship. desk.head to the markets a potential deal with kroger. julie: we have not yet confirmed this, but reuters reporting that kroger is bidding to acquire the fresh market.