I am alix steel. Have you done the bucket challenge . I have not. I would not mind donating money. I do not see myself doing the bucket challenge. I challenge you. You are like the seventh person and i am still not going to do it. Going to existing home sales for the month of july. Scarlet fu in the newsroom with headlines. For the month of july economist looking for a drop. Instead what we got was an unexpected increase month over month. Existing sales rose 2. 4 from a month ago. In terms of an actual number, 5. 1 5 million, higher than what economists had been looking for. I was told 5. 1 five millions the highest level since october. Some good news on the housing front. We know the Federal Reserve had been siding housing and weakness, but concern is the slowdown as you look at the rotter economy. Another index is the leading index of Economic Indicators higher than anticipated as well. Again of. 9 . A gain of. 9 . Falling more than anticipated to below 300,000, a sevenyear low and existing home sales and leading index coming in better than anticipated as well. In terms of affect on the stock market, the major indexes moving to session highs and have come back a little bit. The games are fairly moderate. The s p 500 at a record high. Closing high earlier this month. The dow with than half of one percent to making a new high as well. I will take it there. S p, 1989. On the not only a great year but getting closer to the round number of 2000. Of meaning anything it does not mean anything but a nice round number. Moving on, housing markets will be one of the topics at the hole,eting in jackson wyoming. Gathering for the annual event tomorrow. All eyes on Janet Yellens first speech as fed chair. Michael mckee has been mingling with the movers and shakers and up probably wait before dawn. What are some of the different scenes we might seems we might hear this year . The main theme is academic, the changing dynamic, labor market. The fed and participants here to look at this from 10,000 feet but wall street will look to see talks about it in terms of when Interest Rates will change because she tied labor market very closely to the outlook or Interest Rates. As we see the economy gets better, a lot of people say Interest Rates will have to move rather sooner rather than later. That was a message i got from the Kansas City Fed chairman, the host of the conference, when i spoke with her yesterday. Getting closere to that. Of course the committee will work through this systematically in terms of the progress to do that. And my own view, some of the policy benchmarks that we have looked at our already signaling we should be about zero interest rate. Theill continue to watch economy unfold, but i think we are getting to a good point. Follow on to what happens is what happens when the fed starts to withdrawal on the do we see the market activity we have seen in recent months with getting close to the records . Is there going to be a lot more volatility . George thinks maybe not. Like so far between communication from the committee , the market has responded and the fed has not reacted to movements in data but kept a longterm focus. So far, so good. Phase, moved to the next our stance of Monetary Policy, there could you volatility. We have been at low for a long time so will be important to communicate and communicating how the path of Interest Rates will go. It will be interesting to see how the markets react tomorrow. Scarlet was talking about muted reactions to the Economic Indicators. Thats maybe because most investors are looking forward to what janet yellen will say. Reality the reality janet yellen will say anything different . Wall street will not actually be there but what will she say to them . That is the interesting question. Probably she cannot say anything different because not all whole lot has changed in the labor market to be you. We may hear her update us on whether she thinks things are improving more quickly but i would doubt it. This is not a place where she wants to make a lot of policy. Ben bernanke did. I think theyre trying to get away from that. Labor market wages, all of that on the market. Michael mckee in jackson hole, wyoming. Brian moynihan writing a very big check. Bank of america agreeing to pay 17 billion for misled allegations for misleading investors in the bond business. Geiger here with more on the settlement. We also have michael bowie, a andner at catholic ensign friedman to discuss the allegation. Owitz, benton and friedman. They have already paid 55 billion largely due to the acquisition of countrywide and some of it due to merrill lynch. This is the last big push for Brian Moynihan to get past the legal issues dating back to the financial crisis tom and i think there is a big sigh of relief that a lot of this is over for them. What about personal prosecution . Now we are done with the big banks, now we will go after the the former countrywide it other executives are now seems like going to be sued statute that a gives the government very broad thel ability to punish executives. It seems like they will do that. Not with jail time, with money. Talking about the former ceo of countrywide, andrew mizuho. There was an investigation against him. He has a 65 million settlement with the sec. This would be a much more powerful suit against him. The penalties they can impose are staggering. They can take any amount equal to any profit or gain he made or any losses to anyone else. To others would exceed anything he made. The strategy the department of justice is using for this is billion dollars for. Nd thank for america paying 17 at has a 10 year statute of limitations. It is a tool the department of justice has been using to reach back into the banks and pull out the fines. The criminal statutes are pretty much expired. They really cannot press charges on a lot of the individuals at this point. Mozilla would probably rather spend time in jail than heart with his honey. Will it really bankrupt him . It will be really interesting to see what kind of money when they filed this they are looking to get out of him. Does wrongdoing come with this . He did not admit wrongdoing. If he settles, they may or may not require wrongdoing. There is a precedence in the u. S. Case against countrywide. A case in the same statue but the small divisions that had a program called the hustle. What is interesting about that, it only went on for nine months and was a much smaller unit and , the person in these they find judgment was 1. 3 billion. The executive was on the lead penalize the million because the executive did not have money. That gives you an idea of the size of the penalties are enormous. It would equally consume everything he has. That was a case that went to the jury. I think if it does go to the dangerous is a situation for any individual involved with the financial crisis. These guys number of who blame for what happened. Executives bunch of that are now gone who say these were brought on by you. A jury trial can be really tough. To get back to bank of america, what do you think we will see as actual relief or consumers because that is a huge part of the settlement. Times thesea lot of things get buried back to the bank. Regulators do not even understand what is going on. How do you measure of relief to consumers and will consumers feel that . I think bank of america and the government will have to be really careful on how they set up the program and how transparent it is in terms of getting consumer relief to your everyday person hurt by the mortgage crisis. So the way they set this up, i think there will be a lot of eyes on how the consumer relief is set up. The same for citigroup last month. They had a portion going to consumer relief and there will be a lot of people looking to make sure those funds get dispersed to the right people. Thank you. Joining us on this very important topic. I am sure you will be with us the entire day. Timeout for the newsfeed. Family Dollar Stores rejecting at 9 billion takeover offer from Dollar General. The reason, antitrust regulatory board. They reformed support for lower prices from dollar tree. Now 30 quarters and counting. That is how long sales have been falling. Its the years reported a wider secondquarter loss. The seal has been selling and spinning off assets to raise cash. Arrays are bank of america and goldman sachs. 20 pay hikes to prevent junior staffers leaving for private equity firms and hedge funds. And citigroup considering smaller plans. Coming up, the war in iraq damages one of the most lucrative industries. We are there on the field and we visit the oil fields. The best paid ceo in america. His country has never hosted an annual profit. We will find out who he is. Iraq has the fifth Largest Proven Oil fields in the world. The chaos and a kurdish controlled north is starting to cut into production. Willem marx traveled to this area and disputed. What have you been finding . In my research all life wind up hearing about is how reduction is still relatively up to par in the region. Proper,e kurdish region that is true, they are still pumping oil. They have been tightlipped about how much theyre pumping because they do not want baghdad to know the exact amount. ,n the area i was in yesterday they are really struggling to get anything out. Are not able to export the oil. The major refinery is struggling. Getting gasoline is a big challenge. Are they successful and processing their own oil and shipping it out themselves . Again . Has isis been successful and refining oil and shipping it out themselves . Have been buying from small refineries. They have been taking the crude from the wells in the country. They are using truck to ship it north and sell it to the private buyers. We went down this morning to a local refinery opening up to thew and we talked investor. He said he will start producing 6000 Barrels Per Day to turn crude into oil. Fornd here is so high gasoline, kerosene and benzene. I have to ask you about your safety. You have been on the ground covering the events for a few days now. Efore that you were in israel obviously you must be close to isis forces at some time. Incident, jim foley do you feel safe . Are you taking extra precautions . Not particularly. Enclave. A very safe traveling down to the front line you get a little nervous but there are cap lines everywhere. Unlike james foley operating in a very lawless part of cereal when he was captured. You mentioned the oil fields are not really producing. What are local people doing for gasoline. What is the real issue . Parts of the iron he is the worlds fifthlargest world exporter, they are having to get products to fill a car. It means you are taking three or four more times than a month ago. People say this is obviously quite disastrous for them. Joining us outside of herb youll. We really appreciate your update. Interesting to look at the comes tohip when it oil. Quite contentious. People do not want to know how much is being produced or perhaps exported out of the region. Oilics dan once more revenue. Iraq says it is all their oil and will go a lot, to their able to receive from that. There are whole war started over this sort of thing and that is why it is so important to follow. Does not seem to have to much of oil price. The not affecting brent or nymex crude that much. A large reason is we had oil fields in libya come back online. Most analysts were caught off guard because of that. Been overtaking the geopolitical risk. We will continue talking about commodities because we have alix steel on set. We will be back in just a minute. Stay with us here on bloomberg television. Approaching 26 past the hour. Time for bloomberg on the markets. The s p 500 index hitting an alltime intraday high. Initial jobless claims last week calling under 300 thousand. Existing home sales of 2. 4 for july. Also, we are looking toward the fed, what will the fed say . The Economic News comes out positive. Every single time this morning. We have had a great run on the s p over the past few days and last week. Orck the nasdaq hardly down relatively flat. The nasdaq hardly down or relatively flat. Looking for janet yellen to talk tomorrow in jackson hole. I am sure it will be relatively the same. Looking at the Family Dollar store he, rejected more than 9 million offer from Dollar General in favor of a . 5 billion offer from dollar tree. This is one of those things that say i wonder why . Probably something to do with management there. More money is more money. Fax dollar tree laterally has products under one dollar. , a broad discount store. Dollar general has the same story. They are both trying to buy the worst performer in the space. , guess am a shareholder who i am going with . You will go with the higher bid. Then you have concerns about your job, legacy coming future. Of course we have seen carl icahn push for merger. Coming up, time to get into junk bonds now . We will ask the fund,f the biggest hedge blackrock. Taking the plunge to fight way wes a change the look at charity fundraising. Welcome back to market makers. Happy little friday in honor of erica. Erik. Were in for eric and stephanie who are both out. Who knew there would be so much news in august . Investors keeping a close eye on iraq. Our next guest says geopolitical risk was the biggest factor in the junk bond selloff. As risk drives them out, is now the perfect time to the getting back in . Here is the head of credit of blackrock jim keenan. Let me ask you first what you news wethe conflicting are seeing . The credit markets tend to turn tail and run. The equity markets continue to rise. I think when you look at the correlation of the timing, they have moved in line. You saw a pretty big selloff in the market. Opel back in the s p market. Down eight 2000 was percent. The highyield market and outflows use all happened because of that. That is a reality that investors pay for certainty. The offenseisk of changing economic landscape cause a pause. Highyield landscape of 1. 5 over the past month. You have seen inflows coming in alongside equities. Use all the big outflow and then it was fighting a dip for that and then with all the inflows. Longing seem to be more full of fact. The reason why you saw a pullback has been somewhat of a pullback. The russian situation has pulled back a bit as theyve moved away. The fears of a reset or nearterm rate increase. The market has started to absorb or digest some of the fears and you see the risk on the market. There was not a credit issue, earnings issue. Has come back as those fears have somewhat calm down. Feeling that we should see smooth sailing for a while and highyield but there could be a turned down over the next six months, year . Still a lot of risk of the market. As you see the geopolitical risk and inflationary data, these things cause some level of volatility, the range of volatility will depend. They will not shake your face. What would be a trigger that would really tell you it is time to get out . Any of these events would change the economic outlook. That is where you change the spread. Recessionary data will cause a risk of the highyield market. I do not see that right now. Mike that come from the geopolitical risk or central bankers changing policy . Either or. One of the Central Bank Monetary decision and one will be more of a fiscal decision. Are the things. I think the Monetary Policy is a little bit more visible. We know the fed will start to pullback liquidity from the system. Timing is all in question. The geopolitical risk is a bit more uncertain because it can escalate pretty quickly. That is why the market has three had a greater degree of pause. One it comes to the credit market, is that the fed or more the ecb now . I would say the credit markets are the global economy. You can say the Monetary Policy has done a significant amount of avoiding avoiding deflation, which i would say would have caused a more significant risk of recession. When you look at the credit markets in general, as youve seen the Monetary Policy and fiscal policy come back, it has reduced the risk. Thisou are starting to see with regards to operational earnings. When you look at the equity markets, it has grown. The credit markets are driven on the same thing. The reality is credit is tied into the health of corporation to pay back the debt. We were talking to jack global, running up equities fund, and he said that reason you see negative yields in germany is not because of geopolitical risk that because there is no growth in germany. All of a sudden we find out things are not moving back to normal in europe. Does that worry you . Demographics, the world has so much leverage and continues to the leverage but the pace is important. You are seeing that in europe. They have other headwinds associated with that but you have not seen deflation. The ecb under mario draghi has been dovish. Differentat which is than what the fed has. At the same point, very slow growth. Deflationary pressures. That is certainly a risk. I would say when we mention the Monetary Policy and the fed decision, the ecb, all of that has to be important with regards to the scope. Am i too cynical and thinking we would not hear anything in jackson hole that would change your thinking on credit markets . I do not think you will see anything that will change the face of this. When you look at the credit markets, what sectors might you be avoiding . When you take away the more global macro picture, in a slow growth environment, you see winners and losers. There are sectors and place where there is excess capacity or more competition. Those that are mismanaged or have tougher Balance Sheet are more at risk. You see that in more consumer driven areas and restaurants and retailers. Companiesa lot of doing incredibly well. You see that in cash flow growth. Someone sitting at home saying i want more exposure to high yield, high risk credit, what do you tell them to get into . I would say in general you want to diversify. Were talking about an asset class right now that will produce five percentsix percent. In a world where it gets you five percent, high yield is still a pretty decent place to have a diversified portfolio. We still liked the asset class but we recommend people buy a diversified fund. Inc. You. Jim kanon joining us on market makers. Thank you. Seen them come in the famous and not so famous pouring a bucket of ice over their heads to raise money. We will see how much good they are