Down by just over 0. 1 . In europe, in the early trading, the dax is up by about 0. 4 . Ftse has bigger gains, up by 0. 6 . Green arrows across the board. Look at crude oil prices which yesterday late were a little bit higher after numbers came in indicating there was less of a draw down than expected in the United States. Right now wti hanging in around 45. It is a lighter day for your economic agenda. At 8 30 a. M. We get a report out, the august import price report. Despite the rather boring name, its actually a pretty important measure of inflation. Import prices are expected to have fallen last month. But the big corp praorate s is wells fargo. John stumpf appeared on mad money last night and told jim cramer he will to the resign though he does hold himself accountable for abusive account opening practices at the firm. It may mean some people say that you have to resign. Jim, i think the best thing i can do right now is lead this company. Today we made actually an announcement about Product Sales goals. You know, we never intended for Product Sales or any dynamic or any part of a Management System to be misinterpreted. Wells fargo was fined 185 million by the federal government and two other regulators. It is over allegations that staff there opened more than 2 Million Bank Accounts and credit card accounts for customers without their consent. All in all it was an efsht fort meet internal aggressive sales goals. Jim also asked if he heard from Warren Buffett. He said he talked to a lot of institutional and Share Holders but would not relay information about one specific conversation with any shareholder. I called Warren Buffett, he didnt want to talk. I tried. Buffett has not been public on the issue. He did say in 09, in an interview with fortune about wells fargo, the one thing he liked about them is that they were able to crosssell to customers. Im sure 99 of that is on the up and up, but 5,300 employees may have crossed that ethical line. Thats a lot of employees. Thats not a few bad apples. And they say its over a period of five years, a significant number of employees, it points to a lack of internal controls, management oversight and issues about what they were pushing. I dont think enough the federal government delivering alpha yesterday. Jack lew saying this is why we need doddfrank, look what the federal government has done. This was an l. A. Times thing. Kudos to the reporter there who for the better part of a year a couple years ago did good oldfashioned reporting. He reported this, the l. A. City government jumped on it and then the federal government piggybacked on that. There are questions about whether if this exists at wells fargo, does it exist at other banks cross selling . Also, even within the context of wells fargo, if the compliance procedures are not there for that, are there other issues within the bank . Thats what this gets into. The stock fell 3. 3 yesterday because of that. Stumpf has had a reputation of being good with risk management. Drill yabrilliant. And this raises all sorts of questions. I argued on power lunch 1 00 p. M. Eastern. I love that so organic. Totally canned. If theres 5,000 employees, you have to ask yourself why. If you look at the time period, and some viewers brought this out in twitter, if you look at the time period, the economy was in shambles. People were scared. You wonder how much of that played into it, i need to keep my job. People i know are getting laid off off. Its so bizarre this happened over five years. Theyre using it as a defense, it was only 1 at any point, but it happened over five years, you still didnt look into it . I did have some people on twitter, because we talked about this extensively, i wont report names or banks, i cant verify what they said, but a few people came out and said this happened to me at x, y, z bank also. One wonders. The scale of this was incredibly small on an individualized basis. People paying 14, 17, getting charged for accounts they never signed up for, which may be why it took longer to figure out because there was not some massive number from each one. But this is broad and across the board grand fraud. So then the question to me becomes, everyone says we want to hold people accountable. We live in a frenzied world, this is one thing that people love to take people down when bad things happen. What does accountable mean . Was does it mean towards john stumpf . No Movement Towards that. Doesnt seem like it. Last night in the interview with cramer, stumpf did said this is something that the board is looking at. He wouldnt comment more on that. By the way n an odd way, given how its almost an immaterial in this fraud, as we talked about yesterday s so lame in that it was not a profitability fraud. The reason the stock is down is for different reasons, its not the amount of money lost or what they think its reputational. Do you think it fell based on the lew comments partly about how this is an example . Well talk about this momentarily, but how this is an example of why we need a Consumer FinancialProtection Bureau . But the federal government is happy to jump on the back of this. This was the l. A. Times. In 2013, scott record who was reporting there, he uncovered it. The l. A. City attorney sued. So the federal government cant say, oh, we uncovered this big fraud. The l. A. Times did. Then the l. A. City did. The l. A. City attorney, mark fuhr. Warn buffetts famous phrase, if you lose money for the firm, i will be understanding. If you ruin the reputation, i will be ruthless. Hes a shareholder. But this is much more about reputation than money. Well see. He also has been in the Ratings Agency business. He has some experience with troubled brands before. Everyone is going to if you have a wide portfolio. It will be interesting to see how he reacts. By the way, welcome. Good morning. Thank you. I will try to properly introduce you. I think of you as the master of ceremonies for a big day yesterday. Giants of investing and policy had big warnings yesterday at the alpha conference in new york city. Kate kelly, queen of the ceremony. I sort of cover it for us oddly. I did a panel. Lets talk about it. We have some great sound from yesterday. Lets listen to some key highlights. Its bad behavior. They were correct to take action against. How that flows through in terms of next consequences will depend on the facts. Theres talk in washington about rolling back doddfrank, about rolling back the law, changing the law that created the agency that uncover and took action against this this ought to be a moment where people stop an remember how dangerous the system is when you dont have the proper protections in place. I think the scarier things are really about politics. About scary erosion of the Pragmatic Center in politics. Diminished capacity to make sensible economic choices, things governments have to do, and the erosion in the policy tools available to help offset the effects of the next recession. The market environment will be always exciting. The question is whether youre adding value or not. I think most importantly, whether youre going to add value in a bad time. In other words, everybodys long. Everybodys almost leveraged long. Thats an exposure. So, i think that it depends how well you play the game. Andrew, i believe that was dalios answer to your question about his inflows. Just to remind our audience. They got 22. 5 billion in new funs between last year and this year. They started a new strategy thats a blend of the two flagships. One of which is way up, more than 13 , the other down 9 on the year. He basically said are you value added . Are you doing the best you can relative to the other guys . I thought he was humble about it. He went on to say, this is interesting for somebody who has been a champion of the risk parody model, thats trying to take some foresight and apply it to your portfolio. But he said i just try to stay six months ahead of the game or six days ahead of the game. You think of him as a longterm guy. I had conversations over the years where we will talk five years, ten years out. Here he is talking about six days and six months out. What does that tell us about the environment . Exactly. He also said i think europe is two steps ahead of the u. S. In terms of trying to apply Monetary Policy in extreme and creative ways. And maxing that out is the rest of that thought, to the point where its ineffective and they have corporates issuing bonds with negative yields. Im thrilled that brian is here, but i would love to have a debate with joe. Joe has been a big pusher on raising Interest Rates, and here are two individuals saying any Interest Rate hike will set this economy is so perilous, they couldnt accept there was any conceptually that you could raise the rate. I dont know what joes exact position is. I believe the fed i think the fed will raise rates next wednesday. I think they should raise rates. 26 of the market. I dont want to speak for joe. But i tried to make the argument to ray and tim geithner, also pushing washington to actually reform itself. Part of the issue is whether you believe that the fed has allowed congress to do nothing effectively. And that by leaving rates as low as they are im not sure i Want Congress to act either. They didnt buy that argument either. Its the down side risk, how much focus there was on that. Leaving rates so low for so long, leading to all these bubbles that inherently popped up in other places as a result. On that point, paul singer, who was one of the favorite guests from yesterday, he almost needed no interviewing, he spouted off on his extremely negative view of zero Interest Rate policy. But one of my panelists, who has had a great year a debt investor, he focuses on para trading, relative value. One thing hes done is short troubled Energy Stocks, like a chesapeake, and go long the credit, which he thinks is overly cheap even if the stock is overly expensive. He thinks were headed to a very negative place. So maddening, we have this world where everything because of negative yields has caused everyone to say that other things that are not negative look good by comparison. I went to a dinner that goldman ran, every person to a t agreed that this will end terribly. Im in that camp. But everyone also agreed it aint happening in the next six months. So heres another guy, this was another theme from yesterday. I brought up dalio and his humility. Heres a guy with 23 billion of new funds in a totally mixed performance environment, hes humble. There was a feeling across the board that its super hard to deliver alpha. Then you have a guy who says were headed to a negative place. Were in a lowgrowth environment. There was consensus on that. That will persist. Low an negative Interest Rates, its debatable how much they helped. Whether they could have done more or less at the fed. The bond rally is going to end at some point. We dont know when. It will be ugly. A lot of pessimism there, even though boaz is doing well and other debt investors made money in this environment. Two points on rates. The u. S. Consumer doesnt care about the fed, they care what theyll pay on their mortgage and credit rates. The tenyear year rallied 16 . The tenyear yield f were worried about consumer facing Interest Rates. The consumer will pay 16 more than he would have a couple weeks ago. But its still cheaper than a couple weeks ago. Thats the jamie dimon thought. The big fear, the big risk, the big unknown about a rate hike is not about whether a consumer will pay more, its does the multi hundred trillion dollar derivative market have the wherewithal to understand a rate hike or rate hike cycle. That broader domino effect. We had a guy on the show on power lunch, he used the term qu quadrillion. Im not sure i heard that term used. If the government is trying to limit the derivative exposure, theyre not doing a good job. Youre talking about an enormous market by notional value. Its all priced at the same assets. Other people argue you need to raise rates because it will spur business investment. Thats a controversial statement but they say theres a lack of business investment, thats the biggest problem of the economy. The consumer has been keeping up their end, businesses havent. If rates rise, businesses will say we have to invest before rates go much higher. The other elephant in the room is Pension Funds. Finally the fed is waking up to the idea of punishing savers. You have Insurance Companies stop writing annuities becauseg return. If youre the fed of illinois, you may be going to the fed saying help us out. I thought one gentleman yesterday put it so well, he said as a pension fund manager, the benchmark weve had 23 place for a number of years now, 7 and change percent, is not realistic. They doing what they can to negotiate fees lower. But most of their investing is passive investing. In house. But hes trying to cut costs. Exactly. Which is telling. Lots of interesting material. Well talk more about it. Much more from the alpha conference throughout the morning. The nation of venezuela appears to have cried uncle ahead of that companys oil Company Announcing yesterday they will do a debt swap to avoid having to make hefty bond payments later this year and next year. Michelle carusocabrera getting up early to talk about this and why it matters. And with one of the best panels at delivers alpha yesterday. Thank you. I love praise. The head of the Venezuela Oil company, he went on television yesterday and announced they are going to do a debt swap. A debt swap, if you dont know what it is, i cannot pay you the money i owe you today, so somewhere down the road i will give you even more money for not being able to pay you today. Thats a debt swap, as opposed to debt restructuring which is we cant pay you, we will never be able to pay you everything, so lets negotiate how much less we can pay you. Heres the debt calendar. What is due when. Venezuela has 1. 7 billion due in october of this year. 3 billion in november of this year and other stuff coming up in 2017. 3. 6 billion in april, a billion in may and and another 3 billion in november. Del pino said it would reduce the cash flow out the door by half, and be capitalized by citco. When you say corporatalized, you mean citgo is up for grabs . Yeah. Theyre not putting house on the line. Its not bad for the creditors. But what if your a citgo creditor. Then its bad. There had been a number of bankers going down there. They had to do something. Did you see how small the payments are that are due for a country that produces that much oil, yet theyre running out of Foreign Exchange reserves. The socialists running the country makes it a message. They dont have Foreign Exchange to pay for medicine and food. Supply trucks coming in are getting raided. Its awful. Something was expected to be done. Critics will say you need to do a whole restructuring. You need to change the way you run the economy. The one other detail is these bonds would be due they would be due in 2020. So it doesnt give them that much breathing room. Just a couple of years. So we wait for those details today. Another sign of just how tough things are. Is that even legal . Can you usurp the citgo creditors . Thats a question. It depends on the clauses and various bonds. Lets see how much debt there is outstanding on that in the first place. Great to see you. Coming up, after our summer sleeper of a stock market, volatility is back. Stocks giving back mondays big gains, just one week ahead of the feds september meeting which is next wednesday. Your morning strategy session is coming up next. At boll and branch, welcome back. We are in roller coaster mode with major indexes seesawing for a third day in a row. Heres what blackstones ceo Steve Schwarzman said yesterday at the taalpha conference. People have been talking about this on television for so many years, that the fed may do something out of the boredom of it all. Were daring them. Right. Youre daring them repeatedly, eventually theyll give up and do something. 25 basis points will move markets only because you all have become a proxy for the markets. You wanted to move something. Or else theres no news. And but it wont make a difference to the u. S. Economy. Joining us now to break down this volatility is david bianco the head of u. S. Equity strategy at deutsche bank, and ben emmond from intelectus markets. This is the question we keep going around and around. Ben, you think the fed will raise rates . Brian is in the camp that says, yeah, he thinks it will happen. Are you . I think the market is right. The market is pricing 22 probability. I think markets have been right all along. It looks much more like a december opportunity. Do you think thats because they feel like they have the time . Theres no rush in doing it now . Thats right. I think what was said on monday was really well laid out. That we want to take some time with this. We need more time for data. This is the pattern. If you have evidence of one hike this year, that means you get one hike each year, and you need an entire year of data to justify that hike. Probably in the summer. The market looks at that, that may be what the market is expecting that we dont see something in september based on fed futures. But a december rate hike would not surprise anybody at this point. We dont expect a hike in september. I think the fed keeps us guessing all the way to december. I think they hike in december. Its not the fed so much thats causing this volatility. What is . Well, Interest Rates. It does seem like every time a fed official speaks, it swings the market one direction or another. Two things. We had this climb in longterm yields which was from european and Japanese Central banks saying they wont be as aggressive as previously thought. And investors thought longterm yields would never go up hurting utilities, tellcos and twell b guess nothing next year what the volatility will be. What is the new Leadership Group if its not utilities . I think the best place in this market is secular growth sectors, like healthcare