good morning. it is 8:00 a.m. at facebook headquarters in menlo park, 11:00 a.m. on wall street. "squawk alley" is live. >> good friday morning. thanks for joining us on "squawk alley." with me for the hour, andrew ross-sorkin. what a treat to have you here at post nine. of course we have to begin with the markets, currently down slightly on this final trading day of a volatile week. could this just be the relative

calm in the eye of the storm? you can see how we're trading, dow down 73, s&p down five, nasdaq down 7 1/2 points. quite a breath of fresh air given the volatility we have seen. chad morganlander is portfolio manager and larry glazer is co-founder, managing partner at m mayflower advisors. we have been talking to you a lot this week. you have been talking about the global deceleration of growth. has push finally come to shove here? >> absolutely. look, expectations going into beginning of the year were for global growth of roughly 3.5%. we believe that's going to land perhaps around 2.8%. the united states is perfectly fine. we are growing around 2.5%, albeit we have not escaped velocity as of yet. nonetheless, that's where we are in the growth trajectory. when it comes to valuations we are fairly valued. so our expectation over the course of the next 12 months is a total return around 5%. volatility will continue so we

think in regard to the 500 it's 1800 on the back end. >> if global deceleration is the cause and the symptom is all this volatility we are seeing, how do you position your portfolio knowing the worst may not be over? >> let's face it. monday was the wild west on wall street and the machines completely took over. that breakdown of technology, the breakdown of machines, is what was the impetus for the volatility this week. retail investors were victimized all this week to the tune of $40 billion worth of outflows and $2 trillion worth of lost market value at the market lows. >> victimized because they sold? >> wait a minute. or victimized because of bad execution from the system that didn't perform, a system that broke. look, today, schwab's trading platform broke down. is that the investors' fault? absolutely not. the system isn't safe for these people. after all this victimization and all the problems, you get a

relief rally, a chance to prepare yourself for the on going volatility, for the next 1,000 point drop. you get to look ahead and there are some opportunities and some positives that come out of this horrendous week of market trading. >> you think there will be another 1,000 point drop, if not more? is that what you're suggesting? >> market volatility is here to stay. we are in a period presumably where the fed will change their policy. that is likely to increase volatility. don't forget, we have been in a period of suppressed volatility. i'm not blaming the fed. i'm just calling it as a fact. volatility has been way below average and that is likely to change if the fed changes its policy. you can make your own conclusions there. >> so he's spot-on. volatility over the course of the next three months will continue, as the fed tries to move towards normalization. we believe that perhaps 2016 will be liftoff. the federal reserve will be quite dovish over the course of the next several months because of this volatility, in particular, in the credit markets. on the high yield side. they don't want to contribute or

add fuel to the fire, in particular when it comes to the emerging market issues. they are concerned about a contagion effect, hence the reason why just sit on their hands and wait. >> nearly $18 billion came out of equity funds this week. net redemptions according to lipper. should we glean anything from that? >> no. i would look past that. that was just the general concern about the overall markets. every time the market takes a ride down there is a net redemption, obviously. what you want to look forward to as an investor, if you are a retail forward institutional is what is the global growth scenario going to be over the course of the next three to six months. we believe that it's going to continue to grind lower, unfortunately. >> all right. we will leave it there for now. chad, larry, thanks to both of you for joining us. >> my pleasure. coming up, the question on everyone's mind this week, will the fed raise rates in september. some tea leaves say maybe not but we will go straight to the source for some answers.

federal reserve vice chairman stanley fischer joins us live you in a cnbc exclusive interview. plus you know what's cool? a billion users behind facebook's monster growth. we will talk to carys swisher about that later on. as we go to break, take a look at some of the biggest tech winners this week. netflix up another half percent in this session. 13% this week. also up big, sandisk, intel, apple and facebook. we'll be right back. opinions. there's no shortage in this world. who do you trust? whose analysis is accurate? how do you make sense of it all? a simple, unbiased stock score consolidated from the opinions of independent analysts... is that too much to ask? nope. equity summary score, powered by starmine, will help you

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it's been a huge week of market swings. dominic chu has a look. >> we told you before, a massive move if you count up all the intra day moves since last friday's big drop, we have dropped about, moved, anyway, about 10,000 points up and down throughout the course of the last week. here, remember, highlighting that 530 point drop, 588, 205, the up 619, up 369, we were in correction territory for all the major indices, we were out of it. let's take a look one layer down to what -- where the action was so far this week. if you take a look at the s&p 500's main sectors, so far we are almost flat on the day. over the last week, just about

fractional gains, three-quarters of 1%. the best performing sector over the course of the past week given all the volatility week to date, believe it or not, is energy. people are buying up some of the energy names. whether or not it's short covering or not remains to be seen. maybe it runs out of steam. still, energy and technology. technology's important. we always point it out, it's the single biggest sector in the s&p 500. as for the worst performing ones, utilities and telecom stocks. two of the more defensive sectors, the ones that are less economically exposed to what's going on overall in the markets, in the economy, vg lieverything that. they are also two higher dividend payers. you have two defensive ones that are really kind of dragging things down. it will play out a lot over the next week or so to see whether or not traders really believe this was a viable dip or whether or not there's more down side to come. back to you. >> thanks so much. busy week for all of us here in

the markets. we appreciate it. as he mentioned, tech up 2.7% this week. let's get to all the news in that sector. joining us is the co-executive editor at ricoh. good friday to you. >> hi. how you doing? >> first up, we have to talk about this major milestone for facebook. according to a post from mark zuckerberg, over a billion people used facebook in a single day. he says one in seven people on earth used facebook to connect with friends and family. he spoke with cnbc 11 years ago regarding the company's first few users and its first leg of growth. take a listen. >> when we first launched we were hoping for, you know, maybe 400, 500 people. harvard didn't have a facebook so that's the gap we were trying to fill. now we are 100,000 people. so who knows where we're going next. >> of course, that was among the last times we were able to speak with zuckerberg here on cnbc which is why we play that. what is the significance of the $1 billion milestone?

>> it's just a number. obviously it's an enormous number. i think it shows how much bigger they are than everybody else. it's an enormous number compared to any other service on the planet. then secondly, it's become a utility. when i first met mark, back then, he talked about facebook being a utility, which nobody else was talking about. they were talking about a portal or, you know, entertainment or things like that. but he wanted to create a company that was a utility. and he is now that. he has created that where everybody uses it every day and gets use out of it. so it's a really interesting number for them, and it's a great number and it just shows how far behind everybody else is. >> what about the next leg of growth from here? because obviously, they have grown so far, so fast, and so many people in the world use this service, but there are a few asterisks. of course, china is the big area that they need to go after and then there are questions about whether russia at some point could block facebook. how far do you think the company needs to go to operate in some

of these countries to build growth? >> well, you can't say there's not going to be competitors. you know, we chat and all the others in those countries are great services. if you use them, they're fantastic services. so there are going to be competitors just like there are in anything else. having a billion people is not a bad business in and of itself. the question is does it have to have everybody on the planet using it that's in the internet space. i'm sure they would like more users in china but it's a problematic area to grow into. russia, same thing. again, there's very good services there that people like to use. so the question is, can they stay innovative enough and keep their existing users happy while at the same time picking up users all over the place as people grow. that's the big issue. remember, mcdonald's, billions and billions served, and they are seeing troubles because of all kinds of secular changes. so the question is, they can get enormous but how enormous can they get one, and two, can they keep existing customers using it and excited by the platform. >> then there's this bigger

question of how important this daily active users metric is, because we have seen snapchat, also using this metric, basically to say it's not necessarily about the aggregate number of people who are signed up, it's how much they're using it, how much they're interacting with it. there's a sense that maybe twitter looks a little bit silly compared to a big number like this. >> yeah, exactly. twitter's not even comparable to this number. daily active users is a better thing because it's an indication that people are using it on a daily basis. like they said it's a utility. like you turn on the water, you turn on facebook. so you want a service like that where people feel they need to check it every day, they need to be part of it. it's your digital online address, your presence online. so i think facebook has done that effectively. one thing that really strikes me is that google really had the opportunity to do this. i remember back then thinking why isn't google your address on the internet. here, facebook has become that. it is your online avatar, essentially. >> next up, apple sending out its official invitations for its

next special event. it's happening on september 9th. this year's tag line, hey, serie, give us a hint. we don't expect many hints from apple, i'm sure you have insight. >> yeah. we have written, everyone has been writing about this. there is not a lot of secrets here. it's a new iphone. the s series. there will be some apple tv stuff. i don't think people are tremendously surprised about -- they are not introducing a massive new product. so i think -- maybe -- i think the exciting thing probably would be the ipad pro which apple recently signed a deal with ibm to do more business oriented stuff so i think you will see something there. but it's largely upgrades and this is the cycle where they have upgrades or changes and it's probably the iphone and the ipad pro are probably the most interesting parts of this. >> you don't sound excited. i'm trying to understand, you think there's going to be a muted reaction? when you get these sort of in-between cycles on the phone, the s version, what kind of sales can you expect from that?

>> i don't know. i was with someone yesterday who was very excited about the s. i'm not going to upgrade. i don't know about you. my phone is fine. i think that's usually the case is when there's these midcycles, there are improvements on the product. i have the 5s, if i recall, and the question is how many people will upgrade. i think the ipad pro is the most interesting. can they design -- microsoft has a very nice product there in the surface, i think. can they design a product that's more business oriented and really goose the sales of ipads. you know, obviously the last event they had, they had the watch, they had all kinds of music stuff, they have had lots of activity this year. so you're not going to see constant, you know, enormously hyped activity from them all year round. this is just, you know, minding the crops essentially, i think. >> samsung tried to leap-frog them by making their announcement in august instead

of later september. will that have any impact on the cycle? >> i don't know. i don't know. that would be -- i don't know. i don't know. i just think it's really, again, as i said, this is not -- this is one of those product upgrade things. it's important for apple to do, just like i said, facebook's got to keep innovating. apple has to keep innovating and keeping its customers happy. >> you're my boardroom intrigue person at apple and all over the valley. ian rogers, who was a senior person in their music program, the beats stuff, he just left. what happened? >> yeah. you know, it's not clear why he's left. apple confirmed it to us and to others. he left to do something in europe, some company in europe that he's doing that's different which is odd, because he always said this was his dream job. he was a key person here. this is not a good thing for apple music. >> but was it a sign there's a problem with the music? the music piece of this? >> i don't know. i don't know. he was the key man there. i think he's the quieter person,

you get dr. dre and jimmy, they're very much more, you know, not attention seeking but more famous, essentially. ian has sort of been the quiet really hard worker there. the question is what could have pulled him away from what he called a dream job. >> you think he's leaving on his own volition? >> i don't know. i think so. yeah. i think so. i don't know. i don't know. but it's problematic. i would have to say. signs of trouble. we'll see. >> we are going to look for more details on that. in the meantime, before you go, we want to mention code mobile is coming up october 7th and 8th in the beautiful half moon bay. what do we expect from that? >> well, it's interesting, we are focusing on three areas, wearables, cars and payments because we think those are the really key areas in mobile and how they are changing each of those areas. we have the ceo of fit bit, glenn lurie from at & t, google people, all kinds of people to talk about these big changes in those areas. i think cars to me is still the most interesting area in mobile. and the changing environment around cars.

but the idea of where wearables are going and payments, of course. apple just announced a whole bunch of new payment initiatives. there is all kinds of things happening around the phone. there is no such thing as mobile anymore. everything is mobile. so the question is how does it impact each of these areas as we move forward. we will be showing off some great stuff with our partners at the verge and others to show off some products and at the same time, talk to people about where the next step is, because mobile is starting to mature and the question is how is it going to impact each of these individual areas. >> so for viewers who don't necessarily know the background to these conferences, why did you decide to have a code mobile separate from the overall code conference? if there's no real definition or barriers around mobile anymore? >> yeah, we also have a code enterprise, a code media. there is some definition around it. mobile's harder because when you say code mobile it's like saying code air. everybody has to breathe it. mobile, when we started it, mobile was not that big a deal.

it was a big deal but walt and i wrote an essay at the time many, many years ago when we started code mobile that mobile was web 3.0, i think. everybody argued with us that it wasn't. but we felt like mobile was the big area. now the question is, you have to really define it and where it's going. obviously, look at facebook. the reason they have a billion users, mobile. >> right. >> that's the kind of thing that's happening. so you have to be thinking beyond where mobile's going is what's the next step. cars, people joke cars are the original mobile device. but cars are being massively impacted by this idea of mobility in a car, in a mobile environment. same thing with fitness. same thing with tracking. >> you guys are really good about thinking about the next step. we are getting ready for a lot of news to be broken from that. we appreciate it. have a great weekend. >> thanks a lot. coming up when we return, after a roller coaster week, we get a little bit of calm in the markets right now.

we are looking at marginal across the board. the next big catalyst today is the european close. we bring you that, plus we have an exclusive potentially market-moving interview you do not want to miss. fed chairman stanley fischer has the ear of janet yellen like nobody else coming up in a few minutes. a new season brings a new look. a chance to try something different. this summer, challenge your preconceptions and experience a cadillac for yourself. ♪ the 2015 cadillac srx. lease this from around $339 per month, or purchase with 0% apr financing. no student's ever been the king of the campus on day one. but you're armed with a roomy new jansport backpack, a powerful new dell 2-in-1 laptop,

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the rally in crude behind yesterday's market gains, adding to gains again this morning. oil briefly breaking through $45 a barrel. let's get to jackie deangelis with more. >> it's a remarkable rally on the back of what we saw yesterday, that more than 10% move. interesting because when i came in this morning, traders were anticipating to see some profit taking, some selling pressure today. so this adds more fuel to the fact that we probably are seeing a lot of short covering in this market, especially as we head into the weekend. also, more confidence that the global situation with equities is easing a little bit and subsiding. crude prices are tracking right

now along with equities. they are not really looking at the fundamental side of the market which we have been focused on so long, and which is probably what pushed us under $40 a barrel earlier in the week. so the factors to consider here, let me break them down for you, bullish and bearish. in terms of the bullish side of the argument, a weaker dollar on a relative basis, also products are rallying today. that tends to take crude up. big draw on u.s. inventories this week. it wasn't necessarily seasonal or anticipated. also, the storms brewing in the gulf, you have to keep an eye on them to see what happens. the bearish factors on the other side, we may see another edition which probably doesn't add to the supply story in terms of reductions. also, iran saying that it will pump at any cost. also, calling for an emergency opec meeting. no formal announcement of anything like that but traders are mulling that idea. back to you. >> let's bring in simon as we count you down to the close in the uk and across continental europe. >> this move that we have in oil

has meant that a lot of the oil and gas service stocks in europe have rallied. more importantly, the heavyweight oil majors have rallied in europe. that's actually brought europe up to the flat line for the session overall. i just want to mention the data that came through today. uk gdp confirmed a 2.7% in the second quarter, very strong. also, the euro zone confidence index rising to a fresh four year high. so the market volatility in china not yet feeding through it would appear. let's have a look at where we are on the oil and gas majors that have risen through the session. sat oil is one of the top gainers in norway. it means for the week overall, the broad index in europe is flat but that's not really the story. the story of course is an august story and here, you see the s&p down just over 5%. importantly, europe is down 8.5% so this has been much more brutal for the europeans. into that argument now appears to be a major theme developing that the european central bank may become dovish on extending

qe, either increasing its purchases or alternatively, moving it beyond the september 2016 finish date. mainly because the euro has strengthened 4% on a trade weighted basis according to jpmorgan who put a note out on this but also because oil has bounced but look where we've been. we lost a quarter of our value on for example, brent. jpmorgan says that will continue to mean the risks of inflation in europe are to the down side. so this is the call from jpmorgan. it is now too close to call, they say, whether they will extend qe at the ecb because of the euro and oil. you may find that draghi stocks raising the dovish rhetoric on thursday to extend qe purchases beyond september 2016. jpmorgan says it is balanced now whether they actually will go further at either the october or the december meeting. in the meantime, let me take you briefly to athens, where the care taker government was today sworn in. obviously you have the snap

election there. it looks like alexis tsipras' lead in the polls is cut. he may be forced to govern as a coalition. he will win. he will be first past the post but not with a majority to govern. back to you. up next, a potentially market-moving interview you cannot afford to miss. that is federal reserve vice chairman stanley fischer will join us in a cnbc exclusive in just a moment. the s&p and nasdaq have gone positive. en i started at the sh, i noticed benny right away. i just had to adopt him. he's older so he needs my help all day. when my back pain flared up we both felt it i took tylenol at first but i had to take 6 pills to get through the day. then my friend said "try aleve". just two pills, all day. and now, i'm back for my best bud! aleve. all day strong

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hello, everyone. here's your cnbc news update this hour. an appeals court has reversed a lower court ruling blocking the bulk collection of phone data by the national security agency. the controversial program has since been amended by congress. the appeals court says there weren't sufficient grounds for the injunction imposed by the lower court. national security advisor susan rice meeting with chinese president in beijing to lay the ground work for his visit to washington next month. she telling rice that he was looking forward to his conversations with president obama. austria's interior ministry says investigators have now found more than 70 bodies in a truck full of refugees that was abandoned on a highway. the original death toll was 51. the truck had come from hungary.

hawaii's kilauea volcano is active again. the lava flow has moved more than half a mile in 24 hours. it is now threatening a subdivision of homes some three miles away. pretty dramatic footage there. that's our cnbc news update this hour. let's get back to "squawk alley." let's take a quick look at the dow right now. it's briefly turning positive just moments ago. now the all-important question of fed policy on interest rates. our senior economics reporter steve liesman is at the fed's annual meeting in jackson hole and has a very special guest. >> thanks very much. i am here with a special guest, federal reserve vice chairman stan fischer. thanks for joining us. >> thank you, steve. >> what people need to understand, we have done this for many years but i think now people care a little bit more about what you say. >> thanks. >> let's start off with what

people i think are most interested in. earlier this week, bill dudley called the case for a september rate hike less compelling. would you agree with him? >> i think it's early to tell. the change in the circumstances which began with the chinese devaluation is relatively new and we are still watching how it unfolds so i wouldn't want to go ahead and decide right now what the change -- what the case is more compelling, less compelling, et cetera. >> i didn't get a chance to interview bill, so my question to you then is did you find the case for september previously to be compelling? >> there was a pretty strong case but it was, you know, was not a conclusion yet. it was a case. >> let's talk about some of the

factors that have been out there. first of all, how do you process the recent market volatility? some blame it fairly on the federal reserve and its policy and the hint that perhaps some accommodation could be taken away. do you connect the dots from fed policy and possible withdrawal to the recent market gyrations? >> no. i think there were things happening abroad particularly which had a significant impact and that's where i would start looking. >> you talked about the chinese devaluation. that combined with lower commodity prices and a stronger dollar, all of that, is it your sense that this would reduce u.s. inflation in the months ahead? >> well, if the relatively small depreciation which happened with the chinese devaluation, with the relatively small appreciation, it will have some small impact, but i think we've

still got to wait and watch and see what -- how this turns out. >> we got some pce numbers this morning, 1.2% on the core year over year. where is your level of confidence that we are moving back towards the 2% target? >> my level of confidence is pretty high. because we are looking still at a period in which we've had significant reductions in energy prices, oil particularly, and we've still got the changes in import prices working themselves through the economy. so we've got factors which will go away in awhile that are keeping the rate down. >> if those factors are transitory and you have confidence that they're transitory, should that then not stop you from taking action on rates, because you are confident that these will go away.

>> well, that's the case that those who want to move now make and others say be sure. we don't have a whole lot of inflation going on so we don't have to move immediately. those are the two sides of the argument that is taking place. it's not an argument, it's a discussion. >> do you see dangers of remaining at the zero lower bound too long? do you feel those dangers are increasing? >> we haven't seen much evidence of those dangers increasing. we are obviously watching them very carefully because we are being told all the time that they are there, but we haven't seen them in a major way. i think there's another case, this economy has come back to something close to full employment. several -- a large percentage of people believe that inflation will return to the target range, the target of 2%, and the

economy's working pretty well, in fact. you see that all the time, you see that particularly in the ability to absorb unemployed which has been going on steadily for six, seven years, that we're getting back to normal and at some point will want to show that by beginning to normalize interest rates. >> when you look at this market volatility, though, does it -- is the market volatility itself give you pause and influence the process of making that decision? >> if you don't understand the market volatility and i'm sure we don't fully understand it now, there are many, many analyses of what's going on, yes, it does affect the timing of a decision you might want to make. >> so it would be a process of letting things settle down a bit before you came the a

conclusion? >> yeah. but i think they could settle fairly quickly. there is that possibility. we will know that they have settled down when they settle down. >> it's sort of interesting the last couple days, you had this huge, i mean, our research showed that we moved 10,000 points in the dow but some of that was up and some of that was down. it seems like a lot of sound and fury, doesn't it? >> well, it was a reaction to something which had the potential to be very big, and which we're still looking at, china has become the second largest economy in the world. >> how does the chinese economic slowdown in your estimation, how will it affect u.s. economic growth? >> the direct effect is reasonably small on our exports. it's not very big. the concern is that there are a lot of countries influenced by trade with china. china is a major trading country. east asia particularly is

associated with that. the question is whether interactions among those countries will amount jointly to something that would have an impact on us. >> stan, when we had a chance to chat in february, you were fairly blunt, sometimes you are, said it's time to raise rates. >> i said that? >> you said that. my guess is you wouldn't disagree. do you still feel that way? >> i think we're heading in that direction. what's happening in particular with the labor markets and we have to see if that continues when we get the data next week. it has been impressive and the economy is returning to normal. we are not certain we're there yet. >> so i think everybody's going to want to know in answer to maybe a more direct question, if you don't mind, which is september, when i hear you talking, is still alive as a possibility for raising rates. >> we haven't made a decision

yet. and i don't think that we should make a decision. we are dealing with something which happened about ten days ago, particularly the change in the circumstances. we've got a little over two weeks before we make the decision and we've got time to wait and see the incoming data and see what exactly, what is going on now in the economy. >> i think it's fair to push back on that, stan, and say it's a monumental decision. you haven't raised rates in nine years. should it really depend on the data in the next two weeks? >> well, we've got to take data into account. those are the only things we really have, that and our economic analysis. and if a decision is closed it will be influenced by data that come in recently. >> wouldn't you think there would be an overwhelming case one way or the other that you would be sure and confident that

there's this, you know, unimpeachable case that it's time to go forward? >> when the case is overwhelming, if you wait that long, you will be waiting too long. >> so it's always a bit of a confidence -- >> there is always uncertainty. and we just have to recognize it. we'll have to make a decision in the face of considerable uncertainty. but in the knowledge also that we are beginning a process that we anticipate when we do it will be relatively slow. and that the first move presumably will be from zero to 25 basis points to 25 to 50, which means that our interest rate will still be below the british rate. they regard it as doing quantitative easing, et cetera, et cetera. so we're not moving from a

wonderfully extremely expansive monetary policy to a tight one. we will be adjusting the knob slightly and will probably wait awhile before doing something else. >> what about concern that what the market would do is immediately price or bring forward the whole trajectory of rates so that rather than looking at just a 25 basis point increase, you are looking at a much larger? >> well, we have to consider all the possible market reactions. the market anticipates now a lower or at least recently, a lower part for interest rates than the committee does. we expect when this begins there may be some adjustment but we are doing our best to make sure that the market understands and everybody understands we do not intend doing a rapid rate of increase. we can't promise it won't happen. it will depend on the circumstances. but our assumption is it's going

to be gradual. >> that's a good place to leave it. stan fischer, vice chairman of the fed, thanks for joining us. >> thank you, steve. >> fascinating conversation. we have all been sitting here trying to read the tea leaves and read between the lines of what mr. fischer was saying. what was your take? >> my take was that there had been a very strong case for a september rate hike. the china devaluation basically changed that game. but he did say the data here at home have been impressive and that he's focused on the jobs number next week. chlg >> we will have to get steve back on later. i want to hear what he really thinks of this. i'm with you. i think there's a decent chance now that september is very much on the table and because he talked about if there's a snap back in terms of the data over the next two weeks and the predisposition beforehand to go there. it sounded like they were definitely going to go in september. the other thing i thought was fascinating, he said the market volatility does matter to him, but he said you can't wait for everything to be too calm because if it's calm it means

you missed the boat. very very interesting. i'm curious, we will see how the markets react to this. i would love to get steve back on. >> hopefully we can. we will have some guests a little later on to talk about exactly what we heard. we are seeing a very strong reaction in the market so let's take a look at that right now. we saw a spike in the dollar index, we saw a spike in the ten-year yield. you see the dow and s&p are still negative. s&p roughly unchanged. nasdaq is slightly positive. certainly, quite a reaction from fed vice chairman stan fischer. we will get a reaction from the former president of the dallas fed, richard fisher, in just a moment.

stan fischer obviously moving the markets. traders will break down what they think of what he said as this wild week comes to an end and they will also give you their game plan for next week. plus, stop worrying. we will tell you three reasons why you should embrace higher interest rates. and the halftime portfolio challenge heats up. the top two traders both making moves today as the battle for the top spot continues. that and more ahead on "the halftime report." >> the markets after federal reserve vice chairman stanley fischer giving his thoughts on a potential rate hike. >> i think it's early to tell.

the change of the circumstances which began with the chinese devaluation is relatively new and we're still watching how it unfolds so i wouldn't want to go ahead and decide right now what the change -- what the case is more compelling, less compelling, et cetera. >> joining us now to discuss more is richard fisher, former president and ceo of the federal reserve bank of dallas. fisher on fischer. mr. fisher, read the tea leaves. what was he saying? is he going in september or not? >> look, first of all i hope ancestry.com finds out that we're related. i actually had a cousin who was a rhodesian back then, one of the last members of the cabinet was stan was there. i admire him immensely. i thought he handled that interview like a classic central banker. he didn't commit to anything. i think he's right and i think -- >> right about what? tell me what he said. >> one thing he did say at the

end was that it's the agreement of the committee and it was when i was there until march that they would move very gradually once they started to move and not necessarily automatically. i think that's the key take-away. he did the right thing by being perfectly neutral. you know, he's out there in jackson hole. jacob frankel, one of his predecessors, governor of the bank of israel, another incredibly accomplished man, was saying publicly get on with it. so i thought stan fischer, even if he spells his name wrong at the end with a "c" did a very good classic central bankers' job. i would key off of him meaning that it will be data-driven, they will decide not based on short-term moves in the markets and i think president dudley, if you really look at what he said, he was quite balanced in his comments as well. >> you're not on the board anymore. you are allowed to tell us what

he really thinks. >> well, i'll tell you what i think. i think they should go ahead and move in september. the second quarter data, by the way, was so strong and we have just seen new personal consumption expenditures released two hours ago, very strong. the process is continuing. 3% glide path for the economy as mr. fischer said, vice chairman fi fischer, we're coming down in terms of unemployment. the inflation rates while low as steve liesman mentioned, if you look at the dallas fed, 1.7%. if you look at what was for g & p deflator for the first quarter is 2.7%. >> u.s. data are good but he said something that you have said before which is that this chinese devaluation may have backed the fed into a corner where september is concerned. what should we make of that? >> i didn't hear that. i think he was very clever the way he pointed out, he said a small devaluation and he also pointed out that the direct impact of china on the united states is not great.

it's the ancillary impact that floats to the other countries where it has a greater relationship. so i heard it as very balanced. i think september is still very much on the table. i think cooler minds have prevailed in terms of market volatility, seeing the down and then the up. and i think the one thing that was key to this interview is he didn't answer the issue, is it more compelling or less compelling. i think that's silly argument. the point is wait and see how the data unfolds and they will decide based on that data. september is still on the table and if the data are compelling, it looks like they will be moving either to october possibly. >> did you think -- >> or september. >> did you think steve's question was right, at this point in the game, after nine years of not touching the rate -- >> right. >> -- that it really shouldn't be dependent on what happens in the next week or two? >> it should be dependent on what's going on in the real economy and not just what's going on in the marketplace. >> were you surprised that he

said, though, that the market volatility does matter him? >> it is out of control, of course it matters, but i think he and others have signaled very clearly, particularly the chair, janet yellen, i can't say we anymore, will be moving this year and i believe the markets have begun to discount that what worries me this, if, indeed, the market volatility is a result of central bank policy in the united states, which i don't believe it is, but it it were, that just shows how addicted markets have become to what's going on at the central bank and i think that's trap. i understand fischer or janet yellen or charles evans, or me when i was there as a hawk, really wants to fall into. i think he made it clear. >> help wuss this, richard, the next two weeks, as they evaluate the data, what are the numbers that you, if you were back in that role, would be paying the most attention to? >> the employment numbers are very, very important. i think looking at all measures of inflation, including the trim

mean calculations by dallas and cleveland and so on, which i know that vice chair fischer likes to look at, so does the rest of the committee, and really trying to get an understanding of, as he pointed out, energy prices don't keep going down to zero. food prices have come down, but they have to keep moving in order to put downward pressure on inflation. whether or not we are moving toward -- in the direction, as he put, of the 2% intermediate term target, employment is strong. those are the two main things to look at. >> okay. richard, thank you for joining us. always great to see you. have a great weekend. appreciate the perspective, especially coming up right after other fischer. he is the most important fischer, but great to see him on tv. >> talk to you soon. in the meantime, when we return, you just did hear stanley fisher, is a september hike on the table? more on that and a lot more, in just a moment.

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we are heading in that direction. the -- what's happening in particular with the labor markets, have to see if that continues when we get the data next week, has been impressive and the economy is returning to normal. we are not certain we're there yet. >> the dow now moving down

following that exclusive interview moments ago with fed vice chairman, stanley fischer. the dollar, by the way, said we moved -- spiked on that news swim. here to react to all of this, global investment strategist at sharyl -- at charles schwab. jeff, what do you make of what he said? >> the market might be getting it wrong, in its initial reaction. certainly, september still on the table. as stanley fischer mentioned, maybe the recent volatility makes it perhaps a little less likely he implied. here is the important thing, he emphasized that the path and the pace is very clear here and this is important because stanley fischer, head of the bank of israel, raised rates too fast and too soon following the financial crisis from late '09 to the middle of 2011, raised rates from below 1% to 3 1/2% in a year and a half. they ultimately had to reverse every one of those hikes, take rates all the way back down to zero.

that wisdom stanley brings to the fed now of slow and steady. >> slow and steady and did he put a pretty fine point on it, elon. he said, first one will be zero to 25. second one will be 25 to 50 what do you make of that? >> yeah, well, i think that basically confirms what the market had been expecting all along, but what jumped out to me in his same just recently, he said he is not certain that the economy is actually back even though we are headinged in that direction. steve liesman brought up a good point, in february, you guys talked to him and janet yellen put out her first statement saying she expects interest rates to raise this year, you saw a very different picture in terms of inflation. you saw the eci had its biggest jump since the recession during the first quarter. you saw wage start to pick up and maybe some hope that you were starting to see these inflationary pressures, seeing inflation go toward the fed's target. what janet yellen also said in march, she would be uncomfortable raising the fed funds rate if some of those measures were starting to weaken.

that's exactly what we saw today you see core inflation at 1.2%. inflation is not going the direction of the fed want it is to be. you see wage growth also stagnating, that increase that we saw turned out to be just a blip. so there's not really a compelling case to actually move, much less putting china complete to the side. so, you know, in the absence of a strong reason to move, seems highly likely to me the fed will wait and make sure that the volatility that you've seen in the markets and the volatility you've seen on china will abate before it actually makes a decision to raise rates. >> jeff, just tell us this you said you think the mark it's not understanding this, listening to what elon had to say maybe they are not going in september, however, i should say the market is now down, continue to drop. i imagine with the dollar spiking on the expectation actually that now september's important table at least than we thought? >> i think how the market is reading this. what's more important, whether it is september or october is that stanley emphasized, aggressively, i think, the pace

is going to be very, very slow. we are going to hear from him tomorrow, of course, talk about inflation on that panel there is no inflation to speak of as we talked about here. that's the key. the fed wants to be early and slow, not late and fast in these rate hikes. i think a much more gradual pace of rate hikes speaks to better environment for equity. leave the conversation there. jeff, thank you for your perspective this morning, and elon, thank you. we will have to watch this whole situation. >> yeah. certainly, you mentioned the way the market is reacting to this. certainly, they are interpreting his can'ts in a hawkish tone. markets have gone positive and pulled back. the dow is off about 77 points. the s & p negative as well after being in positive territory. the nasdaq which had been positive most of the morning now down by just a quarter of a percent, but still notable. that spike in the dollar i think is really going tonight talk of the conversation throughout the afternoon because that is a big spike for the dollar index. >> we started the day and we said everything was calm and everything was collected.

>> then steve liesman came in. >> yeah. ruined that for us. >> all right. it is a big interview. we are going to be talking about it all afternoon that does it for us on "squawk alley" for now andrew, thanks for joining me. >> thank you. have great weekend. >> send it over to the "halftime report." ♪ they have me spinning round and round today with these market. welcome to the "halftime report." let's meet today's starting lineup. jim liven thal, josh grand, john berrian ander seraf setty. our game plan looks like this halftime hunger game, the competition heating up in our battle for trader of the year. john najarian just made a move that pushed him to the top of the leader board. icon's latest target, the billionaire investor a stake in freeport macmoron, is it a sign stocks are bottoming out? we