Here at this hour, by the way. We also have both covered with a live report from iraq and our pros weigh in on just what the fed may do this week. Also, a very special and exclusive interview after the bell, traveler ceo jay fishman in a rare oneonone. He is widely viewed as one of the most respected and effective ceos in the corporate world. Fishman will weigh in on the state of his business, the overall economy and much, much more. You dont want to miss it. All right, we cant wait. In the markets right now, take a look at the dow. It is down about nine points. The situation in iraq is certainly weighing heavily on the minds of investors today. The fed meeting, which is looming, which begins tomorrow, is as well. The nasdaq holding on to a gain of just under four points. And the s p 500, we can call that flat on the day. Joining our Closing Bell Exchange right now is rob stein of Astor Investment management, joe tanias, kim forrest of fort pitt capital group. Wow, i got that right, finally. Thanks. And our very own Rick Santelli from chicago. Kim, sorry about that. Its okay. On that note, kim, ill begin with you. Okay. Whats weighing more on the minds of investors today . Is it the developing situation in iraq or is it the fed meeting, which is looming . I think thats a tie. Im probably more looking at the fed and their decision about how theyre going to discuss whatever theyre going to discuss. Thats a big focus for us. But also, the iraqi situation is very important, especially to anybody that drives a car. Joe, what happens if argentina defaults on its debt . You know, i think its a problem, clearly, but i would say that whats going on in iraq right now is probably weighing on investors minds just a little bit more. We continue to watch, you know, the risk premium in oil, and weve talked about this in the past. If oil prices really do go through the roof, that can have a Significant Impact on economic growth, not only economic growth, but also on the capital markets. We have merrill out saying in the worstcase scenario, oil could jump 30 to 40 per barrel, thats if isis heads further south into the country. How likely is that scenario in your view to play out . Joe, sorry. Go ahead. Thats okay. Its difficult to tell how this is going to materialize as far as the situation on the ground in iraq, but it is something that we continue to monitor. I guess you have to ask yourself as an investor, is it likely that you end up with a sustainable increase, a rise in the price of oil . You know, i think we look at these opportunities and say its going to create volatility, its going to create some dips in the markets, but so long as the underlying fundamentals remain intact, those dips represent buying opportunities. Yeah, rob stein, your thoughts are pretty interesting on the market. What you say, the summer could be time to set it and forget it. Even with the unknown of whats going to develop in iraq, even with whats going on with the fed and what they may do . Yeah, well, i think the feds being pretty transparent. The imf came out and lowered Global Growth forecasts, but nothing too surprising. I dont think its going to impact the fed. As far as whats happening in iraq, were much more energyindependent now than when the drama there was heating up a few years ago. The economys doing okay, not great, but enough to not concern myself if theres some shortterm volatility that creates a speed bump, if you will. And so, we dont see anything looking overly exciting, either, where you would need to reshift your portfolio as well. So, its kind of boring, right . A little volatility but nothing that would derail the expected return for equities between now and the end of the year, end of the First Quarter, and nothing overly exciting to want you to change on the positive side, either. So, im kind of a boring guest today for you, scott. But no, but you echo the markets there, rob. In fact, weve had 40 sessions in a row now where the s p has failed a post of plus or minus 1 gain. I think thats via goldman, and thats the longest stretch since 1995. So, actually, what youre saying is pretty historically important, because if this trend continues, you know, were going to each successive day that we have this oasis of calm be in further uncharted waters. Yeah, its kind of a good thing, though. You know, i think at the end of the day, the fed, the treasury, they like to take the tails off. You know, they dont want down 30, they dont want up 30. They want to kind of bore us into this slumber of being able to focus on other things, and its kind of working. So, you know, at the end of the kay day, stick to your knitting. Mike, i just want to ask about the word complacency and what the fed might do on wednesday, because even as were discussing this, if you tie together the article from Jon Hilsenrath from the journal a couple weeks ago, more comments today from the imf, is it possible in your view that the fed will try to sort of wake up markets here . Should we be braced at all for some kind of event come wednesday . Oh, sorry. We dont have mike. Well, Rick Santelli, let me ask you, then. Well, to me, everything youve said thus far disputes all the conclusions youre trying fog come to. Weve had so many days with a lack of volatility after a 30 gain. Thats abnormal. And the markets are abnormal because we have abnormally low prices on capital because of Interest Rates. Complacency . Complacency cant be addressed by the fed. Complacency will leave with the fed. And in terms of iraq or the weather, i just dont see it. As a matter of fact, i see Interest Rates lets look at the s ps. Were what, 13, 15 points from our closing alltime high, and thats including the entire month of june, where iraq has crawled into it. Not saying it isnt important, but if you didnt know there was an iraq and you looked at stock prices or you looked at Interest Rates pretty much around the globe, you wouldnt think something was wrong. And if you look at crude oil, and we could argue about brent, but the crude oil contract gained what, a bit less than 4 throughout the entire iraq episode. To me, all of this says abnormal. The markets arent normal, i agree, but i think the reasons is where were going to have a dispute. So, mike balkin, whos finally with us from william blair, whats more on your mind these days . Is it the fed . Is it iraq . Is it Something Else . Well, you know what, i dont really focus on whats going on in iraq or over in russia and such, because i cant really control that. What were really focusing on is trying to find great Smallcap Companies out there in this low Interest Rate environment, easy credit and strong m a cycle. I think small caps are the place to be. You know, the old adage that size matters . Well, in this case, everybodys been talking about large cap. I think small caps where you want to be going into the end of the year. So, you think this correction that we saw in the russells over, then . I dont know if its over, necessarily, but i do think that we needed a little bit of a pause that refreshes here, and i think the valuations had gotten a little stretched. But im really excited about what i see from a lot of our companies into the back half of this year. And with the strong Earnings Growth coming out of small companies, thats where i want to be. Kim, were you trying to get in there . I am. Im very intrigued by Small Cap Companies myself, but im finding it really difficult to be able to buy them because theres just no liquidity. If you look at how much shares have traded, theyve just completely dried up, even as, you know, the prices have dropped. And that, to ricks point, is not the sign of a wellfunctioning market. If people were trying to get out of this, if the prices are decreasing, then liquidity should have been up, right . So, whats happening . And kim, what would you say about all this . How unusual is it in your experience for this little liquidity across the russell to be the case . Its very unusual, i think, especially, you know, where theres been such a change within the year about, with the prices. Wow. So, i just wanted to see if rick has some kind of thoughts on whats happening with the markets, specifically small cap. Mr. Santelli . I do as a matter of fact, ill tell you what, it isnt just certain sectors of certain types of stocks. Take a look at the cash markets of some of the biggest fixed income markets in the world. Look at italys cash market. Look at the japanese cash market. Sometimes the jgbs on the cash side dont trade until noon, and the italian cash market isnt trading in a liquid fashion either. The futures markets of all these fixed incomes are doing very good, but remember, fixed income, the cash versus futures trading card, we can create all the supply we want in the futures market. So, the answer is, is that the fed, by giving everybody a tailwind for free capital, has made a market that nobody wants to challenge. The longs dont want to get out of stocks. Why should they . So, i think you just have this unchallenged equilibrium in the markets that its going to take a fat tail to shake people loose to realize that central bankers will not be able to control this perfectly when normalizing Interest Rates begins to occur. Thank you, mr. Carney. So, joe, where do you want to be, then, to set yourself up for the second half, which were basically upon . Yeah, we are basically upon the second half, and i think, you know, everyones asking, whats that catalyst thats going to help move the markets a little bit higher . I suspect the back half of this years going to look very similar to what you saw in the first half of this year, meaning i dont think there is going to be that great catalyst thats going to help multiples expand. I think we are looking at a slow, yet bumpier ride ahead. I want to be focused on developed equities, and in particular, i want to be looking at some of the more cyclical areas of the markets, because i think that will unwind itself. Kim, one last question here, because you absolutely nailed it. The ft is out with a headline just in the last couple minutes, saying the Federal Reserve has discussed imposing exit fees on bond funds to avert a potential run by investors. Of course, moving ahead a little bit to think about what happens in a rising rate environment. But does this not speak to not only the issue that youve raised across stocks and that rick was just talking about in the bond market as well, but this very kind of talk could only exacerbate the situation from here . I think. I mean, a wellfunctioning market is a reacting market, and were not having that. As im only one of many Market Participants here, and what im looking for is some kind of return to normal where prices change with information and where the market moves with information. And i think we dont have that yet. That said, i still want to be a holder of equities, and i look every single day for mispriced securities, and thats my job. Rick, youll get the last word on this and what kelly was talking about. Well, ill tell you what, if youre not nervous about central banks, thinking theres going to be a tax or commission to get out of the position of the most liquid and revered fixed income Security Market in the world, that makes me much more nervous than i was five minutes ago. Do you expect that sort of thing to occur . I mean, if it gets this is corporate debt, not treasury debt. Oh, yes, its unintended consequences theyve created collateral shortages. They own boat loads of treasuries. They forced everybody into lessthanperfect securities and more risky positions. Now theyre worried about the world they created and how it will normalize. Theres no way any of this is smooth global Interest Rates are pretty weak, rick. Global growth and global Interest Rates are pretty weak. Im not sure Interest Rates are overly to keep low and theyre low on their own. Does that make any sense to you . You could argue that its a plus that the fed is thinking like that couldnt you, rick . Rather than being asleep at the switch, theyre thinking of all of the scenarios that could possibly take place within the markets. They cant think of all the scenarios. What youre describings called a free market. Free markets think all the scenarios, not janet yellen, ben bernanke, allen green span, draghi, they cant possibly, and theres no way theyll price it correctly on their decisions. Free markets need to price all the pieces, not bankers. All right, thats a good last word. Thanks so much. Thanks, everybody. Weve got about 45 minutes to go into the close now and the dows off about five points. The s p, though, has turned slightly positive. Its at 1,938 right here. Or is that 6 . 1,936. The nasdaq up about six. How would the potential collapse of iraq impact america . Michelle carusocabrera joins us live from iraq next. And later, travelers ceo speaks to me about insurers with better returns than the banks. What does that have to do with regulation . 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Mmm, some alarm clock you turned out to be. Mattress discounters all right, welcome back. Theres the picture on the street right now. Excuse me. Its a rough one. 45 minutes to go today, and as you can see, stocks have struggled to get anything going really from the getgo, including my speaking abilities, but were powering through anyway. There are so many issues buffeting this market right now, though. And about 100 marines and army troops being deployed at the u. S. Embassy in baghdad today. Our Michelle Carusocabrera is in iraq and joins us now with the very latest live from the country. Michelle . Reporter hi, there, kelly. Yeah, thats one of several Key Developments happening in iraq today. First, yet another city in the northwest of the country falling to the insurgent islamic rebels. At the same time, however, they have not been able to overtake baghdad as they promised they would late last week. So, thats a little bit of good news for the iraqi army and the iraqi government. One of the reasons why the world is so focused on this region of the world and the battles going on here is because iraq is a major producer of oil. Its a member of opec, and the second largest producer of oil within opec, second only to saudi arabia. This year iraq was pumping as much as 3. 6 Million Barrels per day at one point. You can see from this chart that were showing you that it actually had finally started to recover from the war years. I want to show you this map. So far, when you look at the Oil Production in the country, its in the northeast of the country, in and near kurdistan, where i am, and also in the south of the country, an area near basra. All of the fighting, however, has occurred in the northwest, about 50 to 100 miles west of where i am right now. So, thus far, the vast majority of production and almost no exports have been disrupted. Ben lando, the founder and editor in chief of something called the iraq oil report. Its an online magazine, he knows quite a bit about the situation and believes that despite whats going on, production could actually increase in the south. He thinks iraq could hit 4 Million Barrels a day by the end of the year as long as the fighting doesnt reach down there. Thats because many of the Major Oil Companies have done massive investments down south, theyve spent a lot of money, and to get that back, they need to keep pumping oil. Final Major Development today, secretary of state john kerry not ruling out working with iran when it comes to fighting these rebels in the northwest of the country. Iran and the United States see them as a common enemy. Just a few weeks ago, it would have been inconceivable that we would be working with one of the United Statess longtime enemies, but kelly and scott, that just goes to show you how the situation in iraq has really turned geopolitics on its head. Back to you. Yeah. Michelle, any insight into where you think we may be heading here and what those on the ground are saying right now . Reporter the vast majority of analysts that weve talk