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 more money even

when there is budget turmoil. we need to invest more in cyber. with cyberthing is investments it is not so much the money, it is the people. people.nding good that is challenging. hiring those people and deciding what makes of uniform people, government people might industry people, that is more challenging even than the dollars. securitye is a cyber firm. we have a national security agency which ports to me. we have done it all during this. as the example you gave earlier of the joint chiefs of staff network shows we're not perfect. we are a long way and the perfect you emily: thanks for

joining us. it has greatly have you. that to you. mark: thank you. here with my colleague pimm fox. jim: we are joined by phil mattingly. could you give us your perspective on the topics that the defense rick perry was just speaking about? is the problem between the relationship between silicon valley in washington. there were two key components that underscore why he is there. one is mac or level technology. it worked very closely.

they feel like they have fallen behind. they believe there is this view that the pentagon is a slow your essay. i think that is why you see ashton carter heading out there. i heard the crest government. you hear them talking about the need to fall for cyber security. you need people that can't do this. people very skeptical of what the government is and what it has become. to help thel is bridge repair simulations and get is come back and help the pentagon advance. mark: when you talk about repairing the damage not from what happened with edward behemoth of seeming the defense department of

pentagon. what is the hope to get people to want to go to work for the --artment of defense to mark department of defense? phil: that has always been one of the techniques to work with the private sector. this is where he thinks he is different than some of his predecessors. he believes he is an innovator. he believes he can appeal to people. the bureaucracy will never go away. he is willing to get behind and invest in all who are trying to make out and do things differently and have an impact on what the pentagon is doing. there is the rod based push with

incentives. there is also the push that carter believes he can convey. imm: i wonder if this is directed at the industry itself. it is much as google, facebook, apple. -- they are ready have billion dollar to make that happen. next there is a feeling when you talk to folks that are affiliated with the technology industry that are inside the beltway that the pentagon is reliant on to answer contractors. [indiscernible] havee in the tech industry not shied away from that area they don't want to be out of the

people. to do is have meetings with the people out there at the top of these organizations and not necessarily bring them on board roman.owing or northrop tough risk across. it is a long road to get there especially with love the lack of trust right now but i think those are the people that he recognizes he needs to and he needs to connect with. mark: he was saying he was out there before he went back to the department of defense. are those relationships still solid? can he say i need to talk to you.

this is not so much about me and you but it is about national security and when your nation says they need your help they would like your help. >> that helps the process. national security officials are having a difficult time communicating. this goes on a number of levels. in the wake of the revelations it would -- was not just trust issues. in at the crux of the split. more than any other national security official currently am a ashton carter can pick up the phone, walk into a meeting and say not only do i's equal language but we have known each other before. he was not necessarily at the core of these officials when the revelations were coming out. he has little bit more again. the trust is an issue no matter

what. ashton carter might he the best liaison the have got to the community because of his past experience in the way he can speak to silicon valley. aboutif you're talking silicon valley where you're talking about a lot of young, brilliant people work for some of these companies out there and given the revelations because we have hit on that apple times before. it is a possibility that he may run into some oaks who say we know what happened with snowden. we believe edward snowden and we on not going to help you spy our own people. do think that secretary carter might run into some of that? >> i think it is a guarantee. it is not just among rank-and-file employees. executivesigh-level at all of these companies who believe that. one of the biggest inks happening behind the scenes right now is a fight over to elegy, over encryption

technology related to some of the operating systems. to find almostg a back door through some of the encryption technology and the top officials at these companies refused to let them do it and want come to the table. it is getting to the point where this will spill out into the open. not only is it hummable it will happen, i endear -- i guarantee o it will happen. he has to get people to believe the investments are for real and they are for good. he has a long road to walk. pimm: thank you. mark: let's take a look at some of the top stories we are following. makeare looking to

themselves less vulnerable by making a purchase on its own. it is working with anchors to hematology and oncology specialists. it is not clear how any deal will affect the pursuit. pimm: the ceo of avid life media has resigned. well all know that hackers broke in and exposed the debtor of 37 million users. mark: there is one place where general electric will not be moving had orders. some texas lawmakers are opposed to the export-import inc..

of financing.ce it might move from connecticut because of raising taxes. >> the head of the minneapolis reserve says it should not take steps based on market volatility. to us during the conference. >> we should be telling a coherent story that we are not about what happened on the last 10 days. we are trying to shape inflation and employment which is what the usual horizon is. we can have the right affect which is upward pressure is needed at this time. pimm: he is set to step down from his job next year. mark: the biggest part of the u.s. economy got off to a good start in the third quarter.

consumer spending picked up in july. the same is in june. wages and salaries increased are the most since november. pimm: market turbulence may be affecting how americans view the economy. consumer confidence fell in august to a three-month low. personal finances also drop to the lowest level in three months. mark: the nationals who has revealed the gender of the surviving panda cub. it is a boy. she gave birth to twins on saturday. diedther twin, also a male on wednesday. officials say the surviving panda appears strong and healthy. the father is also the father of the other two cups. still ahead. we will be speaking with death -- dennis lockhart.

we will be right back.

mark: welcome back. mckee is there with dennis lockhart, the president of the atlanta federal reserve. michael: the morning session has concluded. there was a lot of theoretical talk about how you measure inflation and what central banks should do about that. actual policy question about what to do about inflation because it is too low at the moment. the forecast are that it will

start going up. the question is fast enough that you are ready to move now. face is whether i have to see tangible evidence. if i have to see that evidence in the data or whether i can rely more on the forces at work in the economy given me confidence that in time, inflation will rise to target. michael: there was a lot of talk this morning about the difficulty of missed and guessing where inflation is going to be 18 months out. >> at the moment it is even more complicated. inflation is going to be affected eye things like oil appreciationncy and such. it may be more difficult to read the true underlying trends at work.

say with thek and economy operating as it is in a very acceptable manner, the solid.ance is quite those forces of they continue and are sustained will produce price pressures that bring the inflation rate up to target. are we getting any kind of quick acceleration? >> it is hard to see a quick search of inflation. it is not impossible. i don't see the strength of the economy to be so strong that we are like the to end up with inflation rising at a surprising pace. move? the imperative to vice-chairman fisher said they are anxious to get going. >> we are anxious to get going with normalization. even the events of the last

couple of weeks, i think the risk factor has arisen that perhaps did not exist at the beginning of the month. i think it has to be considered an open question whether we move now or we wait a little while. if we wait is there going to be a penalty to the economy? >> i do not see that. to me the meeting here or there is not going to be a life or death kind of decision. >> one of the issues is the dollar and petroleum rices. is highest in dollars and do you have a concern about that? is perhaps economy

more isolated than other economies that have to -- that are purchasing in dollars but that is not their local currency. nowink right now between and the meeting in mid-september it is appropriate to start evaluating all of these developments of the last couple last few months including lower oil prices and market turmoil that would dollar.the appreciated all of these things have to be evaluated in terms of their affect on the broad economy. the main street economy. >> do you risk a credibility issue if you're seen as reacting to markets? argument. hear that if there is a decision made by the committee to wait a little while, we will hear that

argument. the handmaiden of the financial markets. that is simply not the way i think about it. i operate in my role as a policy maker. when i am thinking about is what is the outlook for the economy, and if there has been financial terminology -- turmoil, clearly that has to be taken into consideration. it is a factor to think about. before deciding what the outlook looks like. you -- the economy itself, the and mental the economy, do they justify a rate increase? >> the fundamentals a really solid as i said a few minutes ago. recent data suggests the trend is a very positive one. to the also say relative beginning of the zero rate

policy at the end of 2007 or the beginning of the recovery in 2009, we have come a long way. normal,omy is far more whatever normal is than it was at that time. i weigh both the distance that we have traveled as well as the current outlook for the economy. both of those to me i think would suggest that we're close. the timing is close. nearrate increase in the term, with that in part confidence to americans, to investors and give up used to the economy? >> i have heard that argument. there are some -- there is some basis for that argument. when we begin to normalize the signal will be that these are more normal. move, doest a rate

that have any kind of negative impact on the economy that you are concerned about? >> you can never say never. there are always unintended consequences. the way i think about it is we are calibrating the industry level to where the economy is and what the outlook for the economy is. and if we make that calculation pretty close to correct, we should not see unintended consequences. 25what would it the, with basis points be appropriate for an economy like this or should you be higher but you are constrained by what you can do? >> we start with 25 basis points. i think that is pretty obvious. the committee has communicated several times that the expectation is the path of interest rate rises going forward would be very gradual. >> the markets seem to have a

different view. why have they come together? >> there are some technical factors at work. we can indicate our sense of [indiscernible] and the question we are answering is assuming appropriate monetary policy, which should be the path, that is a circulation -- a circular assumption. the markets are weighing the probabilities and interest rate rise at one time or another. and placing their bets on the probabilities. it is not surprising those are different. the most recent data i saw is a 50% probability. be aseems to me to

reasonable assessment of the situation. publish an to assessment. >> i think we will see a moderate pace of growth. the second quarter we saw the most recent estimate was 3.7%. that is a rather strong rebound from the first quarter. i expect third-quarter to be less than that. slowing relative to the second quarter. year the run rate is between 2.5% and 3%. i think that is a reasonable rate of growth for this year. decide not to raise rates in said temper, would you the october press

conference in place to give yourself the option in the future? >> that is the chairs decision. i think a dress conference can be called on relatively short notice. think october is a live meeting. it is in play. the difference in a scheduled press conference is one that is called. i think we want at the timing of lift off to have the chair to have the opportunity to explain the committee's views and to give some context to the decision. i don't think there is a big difference between calling it is conference and one that is scheduled. >> thanks for joining us today. we will send it back to you in new york. mark: thank you both so much.

jim: markets have been trading off the lows of the day and that was around 1:30 p.m. s&p 500 lower by six points. industrial shedding points. mark: julie hyman was keeping an eye on oil. searching for a second day. oil is starting to see some strength as we head toward the end of this week. the last full week of august. jim: have a good weekend. we have much more coming up on the bloomberg market a. -- market day.

pimm: bloomberg market day. we want to go right now to our newsroom for some breaking news. the shares of air and

pharmaceuticals are searching right now. right now crossing the bloomberg terminal we are seeing tot they are to be in talks buy arias to boost they are on call offering. this may be happening. the drug maker has been fending off a $30 million takeover offer for itself. of the companys based in cambridge, massachusetts, iron out by more than $2.50, with over 14 million shares being treated. let's take a look at some of the top stories at this hour. candidate hillary clinton's camp claims that she has 1/5 of the delegates needed to wrap up the democratic presidential nomination. her aides told bloomberg that they have commitments to more than or hundred 40 -- 440legates

superdelegates. former president george w. bush is marking the 10th anniversary of hurricane katrina by returning to new orleans today. he talked about the regent recovery after the nations most expensive natural disaster. he spoke earlier at for an easter charter high school, the same school he presented on the first anniversary of katrina. today we celebrate the resurgence of new orleans schools. we honor the resilience of a great american city, whose levees gave out, but whose people never gave up. former president bush is now in mississippi were hundreds of people had gathered at a beachside park in order to salute emergency rescue crews and responders who worked during and after hurricane katrina. and the u.s. supreme court can keep protesters off its marble plaza without violating their constitutional rights to free

speech. first amendment rights. at the sidewalk and the majestic courthouse, and do not start to the laws is so. this verse two lower court ruling. the shareholders of violence have agreed to go over with a hostile takeover boot for the over-the-counter drug maker. goese of two pair shareholders. and it is a familiar sight all over the world and during the world series, the nfl's biggest games, the blimp, the goodyear blimp is retiring. company will be rolling out new year ships with three engines instead of two, and they will have the ability to cruise at freeways be approaching 75 miles per hour. they will be a little more maneuverable, but still carried aloft by helium gas.

those are your top stories at the moment. hourg up in the next half of the bloomberg market day we will look at the commodities markets for how they closed after a week of soaring and collapsing prices. also can look in a sweet deal for the american sugar farmer and they are compounding delays and a proposed trade agreements that affects 46% of the world's economy. for reclaiming marshlands lost after hurricane katrina. they are not all controversy. for months mexicans have been clamoring for more details about finance minister's purchase of a luxury house outside mexico city. no documents have been released digesting an unusual deal with a builder who has ties to the government, involving a half-million dollar check that

was not cashed until almost a year after it was drawn. on the other hand, the mexican president has said that he is moving past the allegations of corruption in his administration. our reporter joins us now. here is a look at what the president said in june with our bloomberg editor-in-chief. >> this is a topic we have already explained. andave controllers investigations. everything is lawfully done. this topic has created a lot of controversy, and there has been mistakes in public perception, but i've never tried to hide anything or do anything unlawful. describe forou people in some detail exactly what is going on. what is the who, what, where, when, and why? what is going on? auditorweek the public

wrapped of a six-month investigation with a report on home prices with the president, the first lady, and the prime minister. in his report he said that no laws were broken, no conflict of interest laws were broken. online posted documents that he had collected in his investigation of 60,000 documents. looking at the transaction by likece minister, it seems the proof of payment for this consistson to this -- of artwork that was valued at $190,000 in 2012 at a check that was issued in 2014 and went on cashed for about 10 months. this. finance minister in the position of trying to clear up the

circumstances of his home purchase. this was a occasion home two hours outside mexico city. trying to clear the circumstances to show that this some gift from a contractor seeking favors from the government, but was a full home transaction. the documents that we looked at raised additional questions about who may have given him the artwork, why the check went on cashed for so long, etc.. pimm: has the finance minister responded to this report? >> he has. he released a statement last night saying that the seller, , this waso the lender a seller finance transaction, he had an agreement with the seller that the check would not be cast until he was released from his mortgage obligations. mexico, justal in the way it would be unusual in the united states. but that is what he said to explain the circumstances.

repeated that he has never engaged in any wrongdoing. they transaction was ruled entirely legal by the controller, as were the home purchases by the president and the first lady. pimm: i assume that many of the are alreadyn mexico speculating about the future of the finance minister. what are they telling their readers? a big shoveling yesterday which had no effect on the finance minister. they are important, to step back at note that he is one of the most important economic policy from mexico. he is also very close to the president, and it would be unusual, looking at reason mexican history, and i couldn't history of the last few decades for a person in his position to get to the point where he was forced to resign.

however,th noting, that this morning after these additional details were revealed, that two opposition lawmakers call for additional scrutiny for the controller's investigation. it is possible that more attention could be paid to the transactions of the homes and to the details of exactly how these deals worked. thank you very much for that information and updating us on this story. coming up on the bloomberg market day we will be talking about a sticky topic for american sugar farmers. why the trade bill is causing a bittersweet debate in the industry. ♪

pimm: this is the bloomberg market day. i am pimm fox. how commodity prices are settling in the new york trading. i want to bring in alix steel. begin with the baker hughes rig count. i know you wait for this number every week. alix: are you mocking me? pimm: not at all. you have to look at it to find out about the popularity and the profitability of drilling for oil. one rig toers added u.s. oil fields last week, and that bid -- did boost activity. looking specifically at those rates that will be set up for fracking, we are looking at eagle ford adding six rights. the reason we see this divergence is because it lacks the oil price from two to four months so it cannot respond as quickly to the volatility we have seen a. and a lot of these recs,

they may have been on order previously, and they are moved around the country depending on where they need it. alix: and we have a lot of wealth that are drilled but not completed. that also deals with the production aspects here in the united states. these oilfields need so much to keep in place then you need to place does replace the brakes so quickly that any kind of find can be significant. this is one of the wildest weeks i've ever seen in the commodity. the biggest percentage gain since 2009. remember, we saw oil slide below w $40 an hour. -- $40 a barrel. you can really see the volatility that we have seen

throughout the last five days. in very riled rising the -- a very wild ride indeed. pimm: do you have people who are naturally involved in aisle, whether they are oil drillers, producers, something like that? is there not a report that says a lot of this is being driven by traders that has very little to do with supply and demand? alix: a morgan stanley no egos today that i love because it put into perspective what the traders are thinking. if you do get a look at the data here in terms of regulators, you are looking at net short speculative positioning as the most negative ever in the history of the data. meaning that you are seeing a record short and long have been falling. the short is the blue line, the longest day purple. and you can see that the net positioning has been in negative territory. morgan stanley's point with this

chart is any kind of positive headline could trigger a very big rally because there are so many shorts that would need to cover. pimm: it is a short covering rally, because the statistics do not reflect exactly what happened yesterday. if you have been caught short, and the price is starting to rise from you are going to take the profits. alix: an embarrassed headlines will probably be pricey at this point. and negative headline would not see that much movement. it will move significantly on a hot -- positive headline. pimm: you are still seeing more production, line because once you start the big projects you cannot turn them off. but morgan stanley things that the saudi production will come down after the summer season is over, as well as the rocket production cannot be sustained at these levels. that was part of their fundamental thesis, for why we

might see higher oil prices. pimm: any other terms? -- charts? alix: sugar. sugar as a commodity getting hit hard by the commodity price rout. things did not get any easier, because there is a trade deal looming. joining us now to explain all things agriculture is our washington dc bureau. please tell us, how does the u.s. sugar program actually work? what you're looking at is a program where imports are discouraged and domestic supply is given a priority. this is set by global treaty. it has the effect of keeping sugar prices in the u.s. artificially higher than world market. you can see the right now u.s. sugar is trading at the highest

premium compared to the world place and about four years. what this means is if you are a hershey company, or coca-cola, and you are domestic resourcing or sugar, you to pay more for the commodity than some other countries. this is a great frustration. the cornn i think of lobby being very strong in d.c., sugar can in some ways hold more power. how does that happen? small group of dedicated growers that knows at this program is something on which they can put their success sugar is about 2% of u.s. agricultural production. it is about 30% of washington dc lobbying. when you take a look at the biggest donors list it is places like florida crystal. they really pay attention to what is going on in d.c.. because of that, when you have a trade deal, and countries are saying the u.s. needs to open the market, they are going to

have a lot of political resistance because plenty of lawmakers have support from the sugar industry. pimm: what about sugarbeet production, is that correct? >> you are looking at sugarbeet and sugar cane. pimm: how does that play into the presidential election cycle? >> it is interesting because the biggest can producing state is florida. and they have connection to all sorts of presidential candidates on both sides of the aisle. $500,000 industry gave to a super pac on the republican bush campaign. a profile defending the sugar profile to those who are opposed to government intervention.

florida, having a strong sugar support for the clinton candidacy, and hillary clinton is mindful of that as well. it plays on both sides of the l in many states. it does reach to the presidential level. not major u.s. crops. alix: what are the aspects to change this program? withe u.s. market floats more sugar, that will do damage to a commodity world that has held up. the u.s. flipping the world, it is cheaper world products flooding the u.s.. , ando has more free trade that has caused problems for the industry. australia is trying to push open the was mark's, but the question is how can they do that in the name of the tpp? pimm: thank you for enlightening is about this sugar program. our bloomberg agricultural reporter reported from washington dc. i also want to thank my, was

coming up, alex deal. coming up on the bloomberg ,arket day, hurricane katrina 10 years later, we will look at efforts to restore the states wetlands. ♪

pimm: this is the bloomberg market day. 10 years ago hurricane katrina made land all on the gulf coast. ofe than 150 square miles louisiana's wetlands disappeared in the year that followed. in the state plans to spend billions of dollars to repair or replace that marshland. some parts of the plan are controversial. david reports. >> the greatest threat is not the hurricane. >> the coastal master plan calls for the state spend $50 billion over 50 years. >> it was a little eye-opening.

>> some of them will come from the government, and six billion dollars will come from the bp oil settlement. >> we are in open water. 18 miles. before hurricane katrina, you have much more vegetation, you can see it is choppy, fragmented marsh. >> marshland is a man lands first line of the event -- first line defense. can see the pipeline there. you're looking at a $140 million project right there. >> they want to move it 13 miles to create new marshland. another way is to create river diversions.

businesses, are worried about the installation of river diversions like the one behind me that allow the mississippi river to leverage the marshland and that is one component of the master plan. one critic is this fisherman. >> when they do these large-scale projects, we will be out of business. >> he will reasonable hearts the fishery, and his livelihood. >> this is bio country. about 30 miles from a river diversion that was built before hurricane katrina. >> you see how thick and lush it is? now watch where we are going. we're about 15 files from where we were. we're about eight miles, 10 miles maybe from the bay area. there is no root system at all. >> rick lanes that on the influx

of fresh water, because he is for coastal respiration, and says the government does not understand this fragile ecosystem. louisiana coastal authorities says that the residents like rick will have a seat at the table. david joins us now with the issue of coastal protection is interestingly are important. totallyouse behind me empty, totally abandoned. so is every house in the neighborhood. that is thatr there is a levy, a 20 foot tall levy about a stone's throw from here. folks on the other side are in the federal flood protection zone. people here are not. thisshows how important fight for coastal restoration is. week you talking about

this number of $50 billion going to restore this wetland and marshland. what else will it be spent on? >> it will be focused on barrier islands. a lot of these houses are just built at ground level. a portion of the $50 billion budget would be toward elevating these houses. if there were another plus, they would be protected. number, while eye-opening, is aspirational. it could be left, bigger than that. they have a lot to do here. every five years it will be evaluated to jean -- see what nor needs to be done. pimm: what do the people who remain tell you about why they continue to stay? >> they say there family has been here for generations, the water is important to them. they cannot live anywhere else

despite the risk, they have no plans to move in they certainly have endured a lot, and there could be more in the future. pimm: how is hurricane katrina being remembered tomorrow? >> it has been a remembrance that has left it all week. president obama was in town yesterday, president george w. bush was in town today, promising to the people of new orleans and the gulf he would not forget them. president bill clinton comes through tomorrow. pimm: thank you very much. we have much more coming up on the bloomberg market day. ♪

pimm: it is noon in san francisco, 3:00 e.m. here in new york, and 3:00 a.m. in hong kong. alix: this is the bloomberg market day. pimm: we will be heading to the

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