hall wyoming. on their minds? how to boost inflation and economic growth. matt: james bullard says u.s. economic fundamentals look good, despite the gyrations in the markets this week. does that mean a rate hike is coming? we will bring you his interview from jackson hole. mark: protecting the nation's military from cyber threats, and interview with the defense secretary ashton carter who is visiting silicon valley today. matt: good afternoon, i am matt miller. mark: i am our content. secretary carter will be sitting down with emily chang, so you will not want to meet up. let's start with a look at the markets. stocks have been drifting between gains and losses after coming off two days of huge upswings. you can see on the board that the s&p 500 and the dow

industrials are now lower. the s&p is down right now just over a 10th of a percent at 1984 , dow jones industrial average falling this afternoon as well, down over a quarter of a percent at 16611. nasdaq on this friday in the green. it is up just slightly at 4815. oil is extending this week's gains, nymex crude is up. look at that, up over 7% today. over 6% today,up trading at $50, $.50. you can take my terminal if you want, at the s&p, you're looking at just a one-year chart along with the 50, 10, 200 day moving averages. i am chatting with some people on the terminal about the

short-term averages crossing below the long-term averages. at the same time as we are seeing that, let me go ahead and pull up a chart of crude oil. see you cannot see it as well. let museum in on the last couple of days. you can see we have a huge game, a rise of 10%. it is very interesting we have the ominous death cross at the same time as crude rallies 10%. mark: we were looking at it earlier this week and it was below $40 a barrel, now back up -- matt: back up to 45.51. take a look at the bond markets. you can see a little bit of mixed trade. not much movement, but some selling on the two-year on the front end of the curve that which is most affected by a fed move. we are mixed signals out of jackson hole as well as to that. mark: jim rickards telling us in the last hour, he thinks the rate hike move this year is off the table. matt: jim rickards has been

saying that all year. takes to opposing opinions to make a market. many think the fed should have raised. he thinks they should have raised in 2010. a lot of people think it will happen in september. a look at currencies, that is what started it all. the euro, 1.11. the value continues to fall. yen for the dollar, falling as well. the pound, 1.53. the dollar strength pervasive today. let's get to some of the stories crossing the terminal at this hour. first off, president obama is using a webcast in an effort to about the nuclear agreement with iran. the israeli government opposes the deal signed by the u.s. iran and five other world powers . the agreement seeks to keep iran from building a nuclear bomb in

exchange for international sanctions relief, whether he can do that is the question. democrat tom carper is the 30th u.s. senator to support the deal , leaving the president just four votes short of preventing congressional republicans from blocking this deal with iran. mark: market surveillance may be affecting how americans view the economy. and simmer confidence fell in august to a three-month low according to the university of michigan's consumer sentiment index. a gauge of americans personal finances also dropped to the lowest level in three months. there's one place were general electric want to be moving its headquarters, the city of dallas. ge has dropped the texas city from the list. the reason? some state lawmakers are opposed to the export-import bank, the source of financing for some of ge's overseas sales. ges said it might leave connecticut because of rising taxes. apple confirming architect of its online radio station has

quit. in rogers joined apple last year and led the development of beatsone. it began just two months ago. a familiar sight above the world series and the nfl's biggest games, now the fabled goodyear blimp is retiring. don't fret, the company is rolling out new ships and they have three engines instead of two, capable of 73 miles per hour. they will he more maneuverable but still keep -- be cap to loft by helium. i am a big fan. always said it would be great if we shipped more goods by zeppelin. mark: why? matt: they move faster. the average speed of trekking shukman says eight miles per hour. if you could put them in a blimp, you could clear the highways for those of us who like to drive sports cars and make the world a better place. mark: more room for you on the road.

that is a look at some of the top stories we are following. let's get back to our big story of day, investors want to know the timing of a potential rate hike from federal reserve officials who are gathered for their annual symposium in jackson hole, wyoming. matt: of course, bloomberg is there. we have been hearing from top that officials. britain greeley had an interview with jim bullard earlier today. >> the story of china growth by the reportedly slower has been along for all -- around for a long time. hearing from ceos who do business in china that it looks lower than the official numbers. but still, i think that has been priced in the markets for a long time. it is not that big of a surprise i don't think. >> but what about inflation in the u.s.? are we going to see lower inflation? >> that effect is not that big because we just don't have -- our economy is big, we have a lot of other things going on other than trade with china. there will be a little effect, but not that big. >> yet made it clear you are in

favor of raising rates now, then we have market volatility which fed officials tell us -- in 2013, the fed held off on moving because they said financial conditions had tightened. your own stress index out yesterday hit a three-year high. does that give you pause about a move in the near future? >> financial stress index is up. of course, the vix is up. i'm not denying it is a volatile period. let me say this, u.s. fundamentals look good. labor markets look good. with strong reports on the economy. toond quarter gdp revised up 3.7. i think we have a good second half of the year coming. i think the u.s. outlook still looks very good and the key question for the committee is, how much would you want to change the outlook based on the

volatility that we have seen over the last 10 days? i think the answer is going to be, not very much. we have certainly got lower interest rates in the u.s., longer-term interest rates than we otherwise would have had. we're floor oil prices -- lower oil prices, so those are bullish factors. on the downside, yet high volatility, maybe stronger dollar. roughly washed out. you really have the same trajectory that the committee is going to be looking at that we were looking at before. so why would we change strategy, which was basically left off at some point based on the volatility? >> would you argue if you do move in september, gives confidence to the markets? >> i think it will be a good day when we make the first move. we have been at zero for 6.5 years and i think it will signal confidence in the u.s. market. let me just remind everybody, we're talking about a miniscule move off a zero and the

committee has a strategy of, you know, let's get going on this process but let's be very gradual. been hammerings this point, let's be gradual and data-dependent and we will work our way up slowly depending on how the economy performs going forward. >> we have talked a lot about the need to tighten a little bit, to move away from the current policy. you have been talking about different methods for doing that. it is not just about the federal funds rate, it is also about what is paid on excess reserves. what are some tools that the fed could consider as a look at policy next year? >> well, we have a clear plan. it is going to be interest on excess reserves at the top of the range. it is going to be reverse repo at the bottom of the range. basis point be a 25 range. we expect fed funds to trade in between these two. i think those three rates will move up in tandem. so i think that will work fine,

but we do need to see that once we get started on raising rates. banksr the last year, have been moving their excess reserves, about 200 billion leave the fed. does that say to you that will be a less effective tool in the future? >> 200 billion on the amount of excess reserves out there is not actually a big number, so it is funny to say that, but it's not. we are to have to use this method as long as we have superabundant reserves, and that is the way it is going to be. but i do think it will work. >> are you going to cap reverse repo amounts? if so, how much? a lot of people are worried, you're going to become the repo market. the private sector will dry up and everybody is going to take their money out of money funds and banks and put it at the fed. >> i think right around the time of lift off, probably not put any cap on it because we just want to see what happens. later on, we probably would make

the decision on that and try to limit the size. where we are going to come down on that, i don't know exactly. usk: brendan greeley joins live from jackson hole, wyoming. you and your colleague michael mckee had a chance to talk to the minneapolis fed president. one of the topics of discussion was inflation. brennan: of course. you get a wide freddie of opinions among the fed presidents. he used to be a hawk. he has grown increasingly dovish over his term. thatoint he made to us is the federal reserve tends to treat what should be a target of 2% as a ceiling. take a listen. right now we're sending the message that we are very nervous about ever exceeding our 2% inflation target. we are treating it like a ceiling. that means the credibility of getting back there is, i think, impaired.

sometimes when we're talking about the federal reserve, we think we're talking about policy that actually talking about culture. people within the system are culturally uncomfortable with ever breaching that 2%. you just played that tape from our interview with jim bullard this morning. he also talked a little bit about culture. after the cameras stopped rolling, he told us he had a suggestion for what the federal reserve should do. from his understanding of how the committee works, they're generally uncomfortable with moving in. of great volatility. and that is where we are right now, a period of great volatility. matt: it is funny he thinks being nervous about 2% and using it as a ceiling. i think people get the idea their nervous they can't get to 2% or definitely not in a sustained way. they can't make inflation happen, and that is what the problem is. brendan: that is exactly right and also what he said.

that is what alan blinder said, former rise to -- former vice chair said. the tools aren't there. not the way they used to. there are lots of theories on whether we're just going to return to the magical past were inflation will return or whether in fact we are in a new kind of economics and need a new set of tools. you are absolutely right, japan, europe, even the u.s. can't quite get to that 2% that has been a goal for a while now. mark: the other day we were talking about some activists who were roaming around the lodge in green shirts. can you tell us about that? anndan: i have to say, it is extraordinarily effective form of protest. they're not standing out in front of the lodge pulling signs, they're having nobel prize-winning economists like joseph stiglitz come and speak to them about what is going on. i just came back from an address about asjason foreman,

close to economic policy maker as you can get at the white house. he was talking about the upcoming sequester, the president support for raising minimum wages. he got a round of applause for that. if you really want to make policymakers pay attention to your goals, don't stand in front with signs, sit down, have a conference just like the kansas city fed is having. it is been amazing to watch. mark: brendan greeley has been covering the jackson hole symposium with michael mckee. thank you so much. he will be with us throughout the day here on bloomberg television, quitting a conversation with a benefit president dennis lockhart coming up in about an hour at 2:15 p.m. new york time. matt: coming up, exclusive interview with ash carter, sever security, wearable technology, government surveillance are all things that they're going to discuss. we will get a preview, next.

matt: welcome back. leading the way, that is not what is catching our attention. julie hyman joins us now to show us the story of the day. oil pricesing about continuing their search today. take a look, up 7%. really taking off more sharply around 10:00 a.m.. a little whilem ago, showing an increase of one in the number of rigs, but that doesn't affect the phenomenal driver.

it looks more like a snapback will stop the two-day gain in oil on track to be the biggest in 6.5 years time. 45.58. earlier this week, it was below $40 a barrel. it is been a rapid move. we're watching retailers. as oil climbs today, it caught our eye that walmart is trading lower. what are the worst performing stocks in the dow, certainly on a percentage basis am a down 2.2%. you can see its declines have been accelerating throughout the day. elsewhere, earnings reports, big lots is one of them. 2.8%. out with sales up the company raising its forecast for full-year earnings as well. shares getting a big boost, up 16%. in the other direction, the teen retailer,r -- teen down a percent. more than estimated. shares taking a dive, 25%. this is really on the heels of a meltdown already.

in general, the teen retailers have been struggling. struggles are a little worse than competitors. take a look. the three a's. all of them below about here is negative. this is the zero line in terms of comparable sales. we have seen a little bit of an uptick for all of them. american eagle the best. their apostle is the worst. declines, not just today but over the past several collapsede really their market cap. this is the market cap chart. back in 2010, it got as high as $3 billion. because of the decline since and, it is below $100 million today. teen retail has been a very top place to be. mark: julie hyman, thank you so much. matt: some of the top stories we are following at this hour,

baxalta looking to make itself -- according to people with knowledge of the matter, they're working with bankers to buy a us-based hematology oncology specialist valued at about $2 billion. the discussions are ongoing and no certainty a deal will be reached. it is not clear how any deals whyb would affect the pursuit, specially is a small size. hillary clinton's camp claims the former secretary of state has the inside track on claiming the democratic presidential nomination. her aides tell bloomberg she or he has commitments from more superdelegates, or 1/5 of what she needs. those are a couple of the top stories we are following at this hour. mark: coming up, an exclusive interview with u.s. defense secretary ashton carter. matt: he is visiting silicon valley.

emily chang will be speaking to him in 30 minutes. ♪

mark: the bay bridge in san francisco. welcome back to "bloomberg market day." teslas elon musk is going back to his days at paypal to the electric carmakers first incentive offer. if you buy a tesla models after being referred by the current owner, you will get a $1000 discount. matt: the owner will also get a $1000 credit toward a new car when he buys one. he had a similar referral service at paypal. dana holds lenses from san francisco. -- joins us from san francisco. no, it looks like we lost that.

she does have a story on bloomberg.com. is dana there? she is on the water somewhere. no domino, she is at work. dana, great story. as soon as i saw this morning, is it something that musk did? i don't recall the paypal referral, but does it work out for that company? >> it was hugely successful. i think one million people took advantage of it, and this was back in 1999. incredibly successful program for paypal. mark: tesla, when you talk about what is been going on with esther musk and -- mr. musk and being on the cusp of this, talk about this discount. won i saw this story i said, , are they try to get the cars -- matt: i have to break in your. as one of the few people in this office he knows anything about

cars, this is the prototype roadster that tesla came out with before it was even incorporated. ,e're talking about the model-s the current model, not the one that was built from a lotus. this is a very cool shot we're seeing of the model-x in the model-3 will come out. is this an attempt to get rid of some of the model-s's before the new units come out? >> i think it is twofold. there's a lot of anticipation for the x and delivery of that vehicle began in late september. they want to keep demand for the s high while the anticipation for the next model builds. secondly, i think tesla is trying to figure out its overall retail and marketing strategy. it is very expensive to open stores and to hire staff to staff a store. so if they can have some success doing viral marketing, why not try it? mark: has urban any resistance? >> some resistance from auto

dealers in certain states like virginia. the board that oversees auto dealers sort of question whether this is by letting some burdock provisions, so that a slightly modify the referral program in the state of virginia. i think will be interesting to see if other states follow suit. this is largely an effort to incentivize model-s customers for doing with our to do already, which is promote the car to their friends and family. mark: dana holding is from san francisco, her story on the terminal and on bloomberg.com. referral incentives. me.: that is it for i will see you back your 4:30. ♪

♪ ♪ ♪ get excited for the 1989 world tour with exclusive behind the scenes footage, all of taylor swift's music videos, interviews, and more. xfinity is the destination for all things taylor swift.

someone who has experience dealing with capital controls. as greece looks at capital controls, what can it learn?

>> that is for the greeks to ecide. we were dealing with foreign claims. you can use capital controls. you should not use them lately. they can work. >> how can you impose them so they were? grexit was easier.

-- >> it was easier. and then it was supported by the population because they knew [indiscernible] the exchangevoid rate would have had detrimental effects. >> if you are imposing capital controls it matters that you are a physical island. >> it would see difficult for countries like luxembourg. that is correct. some have tried to do that. overall it is important that you governmentent

putting trust in everybody. spent time at international institutions. there was a time when capital controls were seen as beyond the pale. it was seen as something that nice countries do not do. that seems to have changed at the imf. do think this is something that i country has to do? >> i would say it has changed a lot. -- it has been difficult. i would have liked to be in a situation where we did not have to impose this. it is one of the tools to do with capital inflows and outflows. it can work.

you should not deny it. thing is getting out of them. that is something you are walking through right now. you said that you are looking for conditions. what are the conditions that will allow you to lift them and what are the steps for lifting them so you do not see capital flight? >> we announced a plan for doing -- in june. we are taking very big steps this year. the banks deal with which are the biggest problem. about theking position that maybe 25% of gdp. about the trade.

and we have planned deal with both of these hope -- hopefully before year-end. in general. proceed that will be a condition-based process. are you comfortable having iceland be a poster child internationally, something that will krugman has cited as an nominal haircuts can actually work. >> we have to be very careful. haircuts not nominal on government debt. every pennynt has back and will continue to do so. there is not enough money in the

estate then there will be haircuts. in addition they have a lot of assets. they have grown because of our success. incensed they are overvalued from the standpoint of creditors. but it is not a haircut. that was a man who has experience with capital controls. mark: we will have a lot more from jackson hole. we will be speaking with dennis lockhart. president of the federal reserve rank of atlantic. let's take a look at some of the top stories crossing the bloomberg terminal. we begin with were sad stories

of desperate migrants dying while try to get to europe. the bodies of why than 100 migrants are being recovered from the mediterranean. they drowned when their boat capsized. up to 200 are dead. three people are being held in the connection with several migrants. greece's president has dissolved parliament ahead of elections set for september 20. the parliament will reconvene october 1. the economy grew slightly faster in the second quarter than forecast. the economy grew .9 of 1%. greece reached a deal on its third international bailout. there is jubilation in sierra leone as the net -- less notable location has left the hospital. her departure could mark the end of the epidemic. the woman most likely contracted

the virus from her son who died last month. if she tests negative for 42 days the world health organization will declare the country ebola free. kim jong-un sounds like he is ready to bear the hatchet with his neighbor. weekid crisis talks last with south korea brought the brink of back from the war. he's's they are on the track of reconciliation and trust. they held two days of marathon talks after exchanging fire across one of the world's most fortified orders. those are the top stories at this hour. u.s. defense secretary ashton interviewr exclusive on cyber security, technology and more is moments away. stay with us.

mark: welcome back. i'm mark crumpton. let's get straight to a check of the markets. julie hyman is standing by. jumping to the lows on the session on the major averages on this newly volatile environment. rising.he nasdaq the s&p almost to that level. now againstdropping the lows of the session. bloombergk at my terminal. you see a little more red on the screen than we did earlier. utilities and health care helping lead declines. we have seen yields higher. that spells bad news for utilities. energy continuing to climb and

it has been a standout for the week. this has -- as oil prices are rising. .nd the energy index that is the best week since february. oil has had a very strong week. the best since 2011. the best today gain since 2009. not sure if we have that oil chart that is again we have seen in oil for the week. risingtion to oil prices and driving some energy stocks higher if you kick a look at some of those energy movers on the week we have chesapeake marathon, transocean. these are the intraday gains we have seen as that in rising along with oil rices. these are some of the worst performers and that is true of oil prices themselves. if you look at chesapeake marathon and transocean he can see the state declines we have seen area these are among the

worst performers. chesapeake down 60%. let's take a look at oil. since we did not have it up here. we have had this substantial rally here over the past week. if you look in context it looks a lot less impressive. down about percent over the past year. from a six year low. perhaps someone on fundamentals. we did get a gdp that was better. maybe on outlook for better demand but also on the back of this very long decline. mark: thank you. let's take a look at the european market close. mark orton has details from london. week what an incredible for the european stock market.

it started with a 5% drop. one in anonymous all we experienced on monday. the us drop since 2008. the market rebounded tuesday, fell wednesday, rosen thursday. i will show you how the stocks 600 finished. the attention had been focused on china. authorities propping up the market ahead of this he national parade taking place at the beginning of next week. attention turning to jackson hole. will fed officials give cues are clues as to whether interest rates are heading higher sooner rather than later? here is look at the big equity movers on this friday's session. some big downward movers area this is the biggest letter of temporary work. down by 3%. a drop after a u.s. decision. more companies may be held responsible for labor law violations contract -- committed i contractors.

--ident estimates. and a french company, europe's worst performing stock. it is a french payment processing company said to have joined the race to buy the u.k. rival word hate. trend?break the zigzag it looks a gifted. the friday close was again, a small one of 20%. finish higher600 after two weeks of decline? it did, i .3 of 1%. mark: monday was the worst day and four years and a recovery on friday as the local rebound gathered pace.

zeb: confidence print -- prevailed. an increase in risk taking the head of a politically important september 3 military parade. people familiar with the matter say china resumed buying equities. bank strengthened the ones reference rate. of $5 trillion tumble has rattled investors worldwide. the devaluation sparked sharp swings. the cut interest rates for fifth time since november and lowered the amount of cash banks once set assigned. -- is set aside. tumbling energy prices are interfering with bank of japan's governor to briefly the world's

biggest economy. we will be king at the assessment of the pmi numbers. will have it -- a sense of how the impact is on australia. mark: let's take a look at some of the top stories. lifeompany ceo of avid media has stepped down. they have been hit with a number of lawsuits. have gone ahead go -- e bid for perry

perrigo. at some of the top stories. an exclusive interview with ashton carter. discusssit down to cyber security and more when we return.

mark: welcome back. i'm mark hampton. u.s. defense secretary ashton carter is in silicon valley today where he is meeting with tech leaders to talk about cyber security and improving cooperation between the federal government and the tech community. emily chang is standing by with secretary carter in mountain view, california. much. thanks so secretary carter, thanks for joining us. you have been very focused on rebuilding the bridge between the pentagon in silicon valley.

you have two more months. but will be tangible proof that your averages work in? -- outreach is working? >> 16 months is a long time and technology. i can start a lot even if it will go on as an hope it does. we making important investments in technology in partnership with silicon valley companies. i will announce a major initiative in the area of flexible integrated circuits which is an important thing. we will be making investments, harvard public partnerships in direct investments as we have for decades going back to the era jet engines and satellite medications. we need to be a technology leader. we can be a leader only if we

partner with folks out here. the other thing is people. i need good people who are dedicated to our mission. which is projecting our company and making a better world. they are looking for interesting problems. angst that are consequential. these are people who want to make a difference. there is nothing more consequential than being part of protecting people. are key technologies that you are not getting from current defense contractors? mr. clark: i find the defense department has gotten a little too bureaucratic. a little too slow for the case of left here. some of these will did not go up as i did.

our mentors have been part of the cold war effort. will of them, some are not weighted with what we do. some of our people have never understood the technology community. we need to get them to understand one another. we have so much to learn from the cutting edge out here. we do not build anything in the pentagon. we count on private industry and private initiative to create the technologies that next to the wonderful people in uniform make our military the finest fighting force the world has seen. we need that technology. emily: when are we going to see robot soldiers? when will we see self driving cars on the field on a mass

scale? havelark: we already drones, helicopters, undersea vehicles. true autonomy is another step toward. i just came from a briefing by a set of advisors have been studying the question of autonomy and autonomous vehicles. you will see them diving underwater and doing all sorts of things like trolling cyber networks to defend them. all these things will be done autonomously or in creative combinations in the future. we need to be part of that revolution. much of it occurs right here. that is another reason for my visit. emily: do you see a future of robot armies? >> i certainly see robots in the field. it will be a long time before humans are entirely removed from conflict.

we are going to want human decision-making and human responsibility when it comes to the use of force. emily: what about drones but now you have amazon and facebook and google making their own drones. do you think you can learn anything is to mark x and learning things about how to do logistics. we do a lot of logistics that may seem mundane but if you are fighting in afghanistan or iraq syria, we getting forces and found out. we learned something. something from management. we are spending the taxpayers money. we learned about efficient techniques as well as effect of combat techniques. emily: it was a sense of the severity of the recent hack system andhe e-mail

to what extent has that attack prompted you to ask silicon valley for help? >> it is a sign that we are not nearly where we need to be in terms of sever defense. we have known for decades that will beion technology critical. we have a lot to learn. the joint chief of staff network was not exploited in a dangerous way. it resulted from a very simple whole operator failure. someone opened an e-mail they should not have. it was fairly mundane. canif something that monday affect that important and network mother that shows you we need to be on the cutting edge of cyber defense. this is base for the cutting

edge is defined. if we are going to be there we need to do that in her ship with silicon valley. ; how much do you use e-mail and how have you protected your own systems? useslark: my stuff messages. we send obvious messages back and forth around the world. for myself i am very are full because i know that people would like to know what you do with e-mail if you are a national security official. i am extremely careful about it. the department as a whole uses e-mail and all kinds of other elect tronic aids all day. we need to check that because that is necessary in order to make our versus affect.

emily: that means you keep it short order not send that often mark mr. clark: in my former life i was on e-mail all the time you in this job i use a different way of operating. emily: how much have the revelations of edward snowden degraded the relationship and how much do you have to mend defense mark dick clark: that is another reason to rebuild bridges. therelationship between government and military community has had its ups and downs. the revelations raise two very important issues are you the issue of balance between privacy and national security. that is a serious matter and we can only result that it dialogue between those who know a lot

about that subject and have a stake in it and those responsible for protecting people who are in washington. this bridges orton to resolving that issue. another ring he did is cause harm to companies. issues the revelations against our company. even the chinese and the do unlimited surveillance and restriction of the internet in their own countries. he doesim cook has said not want to choose between security and privacy. what do you want from tim cook or mark zuckerberg humor >> we're trying to find a solution that allows and good people

everywhere and companies to use this technology in a way that is good or human mind. yourselfd to protect against terrorists and child photographers, and all networks, drug runners. there has to be a certain amount of public order as well as private freedom. that balance i do nothing we can straight. we can only straight by talking minde greatest leaders in in this field. emily: this is the last budget you have a big impact on. we talked about cyber security being a problem. mr. needs less money? clark: separate is need more money. we will provide