The banks are trying to keep employees from quitting. U. S. Special Operation Forces raided a location inside syria the summer, but foley and other hostages had already been moved. Of our top stories, bank of america is prepared to announce a 17 billion settlement to settle invalid overions investigations the improper sale of mortgage bonds prior to the crash. This will definitely be the biggest. Jpmorgan paid 13 billion late last year. Citigroup paid 7 billion last month. Bank of america is paying the biggest settlement so far based the mortgage related acquisitions. Merrill lynch had a hand in this. Inc. Of america acquired Merrill Lynch in the dark days bank of america acquired Merrill Lynch and the dark days of 2008. Forthey being penalized that now . A lot of it has to do with countrywide, the largest some prime subprime mortgage issuer. Countrywides stock was declining and it looked like it was a good deal of the time. Merrill lynch had a lot of mortgage bonds on its Balance Sheet when they acquired it. They are either being punished being doj by this or punished on the m a side of this. 17 billion is a lot of money. Where does it go . Any to the homeowners . Half of it is going to go to consumer relief. We are not sure how they will set that up yet. Word is the other half go . Right to the u. S. Government, dry to the Treasury Department right to the Treasury Department. Consumer relief. Doesnt actually get to the people or is it bureaucracy . That is something we will have to watch very closely. Government gets the right amount of money to the right people. How to suss that out has been a challenge up to this point. It will be continue continue to be a huge challenge for bank of america and the government. Questionst a lot of as to whether or not this works as a deterrent. We have breaking news. Family dollar board of directors rejecting the proposal from Dollar General based on antitrust issues. Scarlet fu is that the breaking news desk with more . The headline here, Family Dollar rejecting a proposal from Dollar General. That, they also reaffirmed the recommendation in support of the merger agreement with dollar tree. This is all part of the dollar store consolidation as they try to take on walmart. Family dollar rejecting a proposal to make a purchase from Dollar General. Dollar general shares are trading lower following this news. No trade on Family Dollar yet. The wars continue on who will take over the Dollar Stores. Thank you for bringing us that. , we learned that the u. S. Attempted and failed to rescue james foley back in july. Incident sheds light on one of the ways the Islamic State funds its operation, through ransom money. For more, i would like to welcome a brookings fellow who joins me from london and White House CorrespondentPhil Mattingly. Phil, first of all, tell us about this attempt. More than two dozen u. S. Troops set foot on Syrian Ground for what turned out to be a failed operation. Thats right. Than two dozen u. S. Personnel representing every branch of the u. S. Military, most notably special operations forces, did set foot on syria based on several streams of intelligence, including people i have spoken to. When they got there, they did not find the u. S. Prisoners, including james foley and two or three other americans. They found multiple Islamic State militants. A firefight ensued. There was a wounded u. N. U. S. Military personnel during the process. The u. S. Says multiple Islamic State militants were killed. It was a failed operation, but not a catastrophic failure. The administration did not want this out. Concern that the public distribution of this operation could threaten that operation or hostages that have been taken. , news outlets felt they had no other option than to report this late last night. Kidnappingon is this as a means of supporting islamic . Tate do other countries pay ransom fees . Extortions and other means in and the looted banks , as they managed to capture well as the antiquities being smuggled across borders, all these are means contributing to the gigantic financial machine that is funding isis and other al qaeda splinter groups. You mentioned gigantic funding. What kind of money does it take to run a Terror Organization like the Islamic State . Initially, it relies on support and funding from isis sympathizers from various countries. Over the past year and a half or isis hasperation of controlled Lucrative Oil assets. 60 of the producing assets in and they all reportedly nearly controlling seven fields in iraq. I want to go back to Phil Mattingly who covers the white house for us in d. C. We were saying earlier that the u. S. Does not pay ransom fees. Are there other countries who are willing to do so . There are. That raises Major Concerns within the administration. There is no coherent International Policy without to do with kidnappings. The u. S. And u. K. Do not pay ransoms. Six prisoners held by the Islamic State were released, they were from spain and france. They do pay ransoms. In the millions of dollars. The concern within the administration and within the Journalism Community is when there is no coherent policy. They set an expectation and but u. K. And u. S. Journalists and aid workers in more danger because the u. S. Simply is not going to comply. If there is a precedent set when and the u. K. Liance and the u. S. Decide not to do that, those individuals from those countries, there is a view that those individuals are put into more danger. Thank you very much for all of your perspective. Thank you very much. Moving onto the fed. In annual fed symposium jackson hole, wyoming is kicking off today. Investors are wondering if janet yellen is going to use the opportunity to push back against the idea that rates may rise sooner. Mike mckee is there in the dark because they are on an earlier time zone. You have already been talking to fed officials about this. What do you think we might here hear from janet yellen . What is really going to make news . The feeling seems to be that she is going to come out and talk about how labor markets still have a lot of room for improvement and maybe push back against the idea that they could raise rates sooner because the Unemployment Rate is coming down so quickly. Nobody has seen the speech. The generals have idea that she is not necessarily going to do that. These conferences revolve around a theme. Theme is changing dynamics in labor markets. It is going to be very wonky. She is the kind of person who is into that kind of research. Propll hear more about theoretical concepts than actual developments in the economy at this point, that is the general feeling going in. A lot of people worry that we are going through change in the labor market, making it harder and harder for people to find good paying jobs. You look at the lack of wage inflation. That concerns janet yellen. It is a very topical time to be talking about employment. What might some of these big themes be . Do we anticipate hearing much on wages . You really put your finger on it. The Kansas City Fed would be extremely happy to be extremely topical. These are the questions everybody is asking. How much is cyclical . There will be a lot of talk about wages. Is going to become a why are this type ofing in environment . Why are people finding it harder to get a job . Cohorts oftain society finding it hard to get it done . To trytral bankers come to understand the issues, not to make policy. You wonder if theyre going to ask the question, what can we be doing as central bankers to try to get more circumspect in our work . You have roughly 8 Million People who are in parttime employment right now that want to be working fulltime, but cannot find a job. Yes. That is a question of probably has no answer out here. We will talk about it more in the next hour. She feels the fed cannot do anymore. This is not a Monetary Policy question anymore. The question of the labor force structure is fiscal rather than monetary. Janet yellen has to convince the not only her own fed officials. Mike mckee live from jackson hole, wyoming. Coming up, 30 quarters and counting. That is a long sales have been falling at sears. We will talk about that and the news about Family Dollar rejecting Dollar Generals bid. That is next. Ok. Family dollar has rejected the offer from Dollar General citing antitrust concerns. It remains committed to the dollar tree deal. Im joined by the ceo of the robin report. News the coauthor of the rules of retail, and which he talks about the rise and fall of sears. Dollar general has been so much in the news flow as late. Everybody wants a piece of the company. Do you see happening with the Dollar Stores . All, the three of them separately and aggregately have been a juggernaut putting enormous pressure on walmart. I do think a merger of two of will perhaps happen. Family dollar may be raising the ante. We will see. There are concerns about antitrust issues. Why . That was not necessarily a problem. But antitrust situation has not been raised in too major acquisitions and mergers in the past because of the economy we are in. They are trying to raise the ante. Wasnt there a concern that they would have had to sell about 700 stores to get the approval of regulators . That is a lot. That is quite possible they had 700 Underperforming Stores but they could target for illumination. Why do you think they are ejecting rejecting this bid it is quite possible they had 700 Underperforming Stores that they could target for elimination. Why do you think they are rejecting this bid . How does sears turn this around . There was a fascinating last chapter in the book. If people read it, they will understand what i am about to saying to you. Has been sinking like the titanic ever since Eddie Lambert took over. I dont think theyre going to turn it around. I think the consumer has walked out the door. Because there is unlimited selection, the consumer has gone out and will not come back. They have been nothing to improve the shopping experience. All Eddie Lambert has done is cut cost. Sears is neither highend nor lowend. There is no store experience. Aremajority of consumers moving toward one kind of retail arm or another. Anybody who is stuck in the middle, good luck. That is exactly right. Sears has been there a lot longer. Mckeever joining me, robin lewis. Thank you for joining me, robin lewis. Premarkething activity. We will be on the markets coming up on the halfhour. Have you used ups in the past year . Your personal data may have been hacked. you are watching in the loop. Im trish regan in for betty liu this morning. Service, ups, the latest company to have its computers hacked. Thousands of customers may have had personal data exposed this year. 51 locations, more than 100,000 transactions were affected. Hewlettpackard has posted its first sales increase in 20 quarters. 12 quarters. In moscow, a safety regulator ordered mcdonalds to shut down for restaurants. The reason . Violations of sanitation rules. There is speculation that it may be retaliation for western sanctions on russia. Icahnnaire investor carl is announcing his latest acquisition target, hurts. Hertz. He plans to have meetings with Company Management on how to improve performance. Hertz admitted that it no longer stood behind recent earnings reports and forecasts for the year. By more on this, im joined the associate professor at Harvard Business school. What can carl get done here . The most important thing that he gets done is to make sure that the board does not drop its focus on the problems. Hertz has a bunch of things going on. With the accounting staff, with brings pressure on the board that keeps its eye on the ball. The expectation is he is seats. To get some board how easy or difficult will it be for him to win those . It is not absolutely necessary. The Company Already announced that the lead director that they will have a newly director take charge. New lead director take charge. The company is probably well advised to talk to him and to be involved. These are not simple challenges that the company is facing. There is a credibility issue. Is replacing the ceo the best way to go . Im not sure. But it is certainly worthwhile talking to carl. There are two schools of thought. Some management immediately run to put in and do everything they can to fend that activist investor off and insulate themselves from anything he or she might do. You are advising that the management at hertz talk to carl. Why do you think that is right in this case . In most cases, i think. Poison pills do not achieve much. What is carl going to do . Lets say he gets 15 . The other 85 of shareholders that you have to get to go along. He cant really do much unless their message that they are advocating has meaning. Helpew is that it does not to hunker down and start fighting. It is much better to Start Talking and understand his view. I would be on the phone trying to understand whether they. Greed carl has not said anything publicly on the specifics of what he wants. If i were in the leadership, i would be talking. It is interesting. We are starting to see a reversal. In the old days, they used to go to the poison pill. To your point, it does not necessarily do much. In recent years, a lot of ceos have taken carls phone call and worked with him to try to improve the company. For example, netflix with reed hastings. Carl was in that stock for quite a while and the stock rose to all kinds of new highs while he was there. You could make the argument that he really assisted and helped the Company Along or it was really good timing. Pain celestial hane celestial as well. They realized the poison pill was futile and they worked closely with carl icahn to improve the company overall. In a neweeing a Trend Direction overall. What is your research indicating . Do you think activists really serve the market for the better . Yes. There are activists of all kinds. They do want to hope the market and help the company. You see things like this spinoff that hertz has announced. Activists before. The spinoff and the buyback of shares to help companies, especially not for sale companies. It adds value to companies more often than not. Activists shun the spotlight on Something Like this. They can help the market and keep the boards on their toes in terms of monitoring. Definitely keeping them on their toes. A wild ride. Or think you for joining us. An initial jobless claims up for 298,000,coming in at down 14,000. Below the 300,000 mark. The survey had been forced 303,000. For we had a big decline. Were back below the 300,000 level. We have seen jobless claims come down on a weekly basis from a sixweek high. From 2. 5aims dropped million. , congresseek average likes looking at this because it is a less volatile measure, that ,750. Ased to 300 is year to date mean 318,000. We are well below the annual average this year. Of impact on the markets, not that much at the moment. This is the big moving one. We also have existing home sales coming out after markets open at 10 00 a. M. That will likely have a bigger move. Thanks so much. I want to get some more on these numbers. The fed meets today. Policy watchers in washington are watching anymore that closely. 298,000 is the number on the jobless claims. Coming out better than people had anticipated. Is that good news . Certainly. One of the greatest things that has been going on. Simply put, know what is getting laid off anymore. No one is getting laid off anymore. Consumers spend money because they dont have any fear of being laid off. That is an increasingly normal view for someone to have in the labor force right now. Confidence is a key component of Overall Economic growth. Interesting because labor is going to be a big theme this year at jackson hole. Thoughtspate hearing on structural changes. What are you watching for most carefully from janet yellen . It is pretty clear that she is going to be somewhat dovish relative to market views. , sheu look at janet yellen is clear that there is labor capacity in the marketplace. She thinks there is more the fed can do to help. Politically speaking, what else is she going to say . I have no power, i dont know that i can do it . It does not cost her to say that there was a lot of Spare Capacity and the fed should not should keep rates easy. To say there is a lot of spare labor capacity and by the time she gets to mid 2015 there probably wont be any and then she can justify the rate hike cycle. She is trying to justify what policy is easy now. But i think they should have hiked rates a long time ago. This is interesting. Why . Everything works with lag. There is a lag between the Unemployment Rate picking up and wages dropping. How long is the lag . You are looking at about a year. Ubs went through the breakeven for on a plummet for five months ago. Employment for five months ago. Four or five months ago. People are being paid a higher wage. You see some of it in the news over the last couple days. Junior bankers are being paid more. Up 20 . That is not one where people think there is a problem getting yet people are finding there is a problem getting the labor that they want. It seems as though time and time again, the fed is late to the party to raise or decrease rates. Historically and you say, they probably should have done it a few months earlier. Will we look back at this . We will be lucky to say if fewmonths rather than a months rather than a few years. I think they should have raise rates a year ago. Wow. We will talk more about this. Stick with me. Coming up, warning signs from missouri. A story from the newsroom. Business week says there were red flags. We will talk about all of that. We will be live from ferguson right after this. The protests in ferguson, missouri highlight the racial tensions in the city. A Legal Aid Firm has accused several municipalities of using discriminatory practices. It is the cover story of the most recent addition of bloomberg businessweek. Tost, i want to go live ferguson. Ferguson saw its first night of relative calm in quite some time last night. I know youve spoken to a lot of people on the ground. Do they feel as though racism is something that is just inherent in the culture of that town . That is something i have been hearing all through the week i have been here. People saying that Michael Browns death was a tipping point. It was the straw that broke the camels back. They believe they have been given harassment by police and various different people in ferguson. Just could not take it anymore after Michael Brown was killed. Hear people saying they feel as though they have been singled out and harassed because of the color of their skin. You have looked into this. There is a lot of research to suggest that the police are doing that. The report that i mentioned was prepared earlier this year before ferguson made the headlines. It found that blacks are stopped disproportionately for traffic file asians, disproportionate , disproportionate to their race. They are twice as likely to be searched than white drivers. , there aresearched only two thirds as likely to find contraband. Then they go to court. Whites, who tend to be higher income, can afford a lawyer. Get a movingo violation knocks down to a nonmoving violation. Come to Court Without a lawyer and disproportionately end up getting a moving violation, which costs them points on their license and they also are more likely to pay the fines which they cannot afford. They are more likely to go to jail because they are not paying. That is a spiral downward is taking momentum all on its own. You go to these courts in ferguson, a town of only 21,000. Courts are a big part of the separation. There is nothing in there that says they are specifically targeting blacks. Lacks of lower income. They tend to suffer far more from this behavior. The arch city defenders report this is before august 9 ferguson was one of the three towns. Is there much talk about that report on the ground in ferguson . I think people are talking more just about the content not being aware of the report being out. They definitely confirm what this report has found, which they say they go to court all a ton ofand they see black people who can get find and do not have a lawyer. He believed the criminal Justice System discriminates against them, as well as the police officers. It seems to be backed up in this report. This is not necessarily just specific to ferguson. No, it is not. We clearly have a National Conversation we need to have about race. My cover story tries to look at it both ways. It isy you can look at that Pew Research Center did a poll of all americans and asked them about ferguson. Do you believe this is indication for having a National Conversation about race . 80 of blacks thought so. 44 of whites thought so. Thirds of blacks thought Ferguson Police overreacted. One third of whites thought so. We are looking at things through very different lenses in the country. Yes, for sure. Thank you very much. To read the entire article, check out the most recent addition of bloomberg businessweek. Available digitally today and on newsstands tomorrow. Coming up, Small Businesses still having trouble getting loans from traditional banks. There may be another option. We will talk about that when we are back in two minutes. Central bankers to send on jackson hole, wyoming for their annual meeting. Banks have over increased overall business loans. Those two small firms are still 24 below their prelevel crisis. There is a fastgrowing alternative, online lenders. Bill is here. Bill cohen is here. Arent we seeing more banks willing to lend to Small Businesses . There is a pendulum swing. They had lowered credit standards considerably leading up to the financial crisis. During the financial crisis and after, they get all this scrutiny from the fed and the regulators. They cannot even conceive of making loans to Small Businesses unless they are aaa type credits. What is the market like overall . You look at the Mortgage Market and it is a syndicated market. Mortgages are repackaged and resold. It is a syndicated market. Thet different for smallbusiness business owner, getting a Small Business loan. Does it hold the loan on the Balance Sheet . Primera primarily, yes. Big wall street banks are in the business of syndicating big corporate loans, which is something that never used to happen. Now it is quite standard. For smaller loans, it is quite difficult. This intermediation that is going on through smallbusiness lenders is really exciting new development. This is were jerod comes in who runs a company that is designed to fill this void. Smallnot easy for Business Owners to get these loans. They turn to Companies Like yours. Right. We have built an online marketplace that connects Small Business owners which nonbank alternative lenders. These are lenders that have emerged to Service Businesses that have been declined by banks. We are a kayak for Small Businesses. What are the downsides . Are they paying much higher Interest Rates . April are definitely paying a higher Interest Rate than they would at a bank people are definitely paying a higher Interest Rate than they would at a bank. Interest rates started extraordinarily high because there was no alternative. Overork with a bank time, it is becoming more competitive, which is driven Interest Rates down. At what point do the banks start saying, this is a market maybe we should be in . Why not create a syndicated market for Small Business loans similar to what you have in the Mortgage Market and how would that affects folks like derek . Jerod . You may have trouble hearing me for a minute. You have something going on overhead there. [laughter] it seems like an opportunity. But its an opportunity, gets back to whether or not they can syndicate the loans because they do not want to hold them on their books. It will appeal to investors on some level. Time is on your side, but just for now. As you look at this market and people try to exploit this opportunity, what do you think it could grow into . I think it is about nonbank alternative lending. What it is really helping you do is grow nonbank alternative lenders. Do you think regulation is going to come along . I think it will and i think it should. We will event there. Thank you. Thank you. Bill, i will be talking to you about bank of america and the 17 billion fine. Richard haass will be responding to the murder of james foley with us. He did say on twitter that Islamic State is now a global threat. He is joining us in the next hour. Bloomberg television is on the markets. Futures are higher. We did get to positive results on jobless claims. 14,000 more than anticipated. We will be on the markets again for you in 30 minutes. Carl icahn is out with his latest. Andincreased stake at hertz how he plans to make changes at the rental car company. With central alive bankers. U are watching in the loop we will be back right after this. Welcome back. We are 30 minutes from the opening bell. You are watching in the loop. Futures are indicating that stocks will open higher on the heels of the jobless claims. Yesterday0 close points of tie two its high. A familiar story out of sears. The struggling retailer controlled by Eddie Lampert fell. Bank of america is expected to settle legal disputes with the number of states today and pay more than any other u. S. Bank in history for its mortgage practices. 17 billion. Does this mean that the mortgage crisis is really behind us . Another day, another fine. It is the biggest one. They are paying significantly more than citigroup who paid 7 , who paidd jpmorgan 13 billion. Bank of america has a lot of exposure to mortgages and mortgage bonds through its acquisition of countrywide financial in 2009, which is the largest subprime loan lender. These headlines just crossing right now. It is confirmed. Bank of america has agreed to pay 16. 65 billion to end the u. S. Mortgage probe. Eric holder will speak momentarily. We are waiting on him. Attorney general eric holder expected to talk about the settlement. Bank of america agreeing to pay 16. 65 billion to end the mortgage probe. This is the largest yet. Can we anticipate that some of this is winding down . Should investors be breathing a sigh of relief that the worst is now over . I would say yes. Chase,up, j. P. Morgan and bank of america, three of the too big to fail banks, have settled. There is still Morgan Stanley and deutsche bank. By and large, yes. The other settlements will not be nearly as big as these three. Where does this money actually go . Happened witht the bnp paribas settlement. The u. S. Government got 8. 9 billion. It said that a portion of that cops,went to new york where they were Getting Better carpets in their offices. About half of the settlement is going to the u. S. Government. Bank of america has to write a check to the government and that money is gone. The other half is going toward consumer relief. Depending on how that is structured, that should go to consumers that were heard in the financial crisis due to issues related to mortgages. Depending on how they set that up, it could offset for consumers. Those were really dark days back in fall 2008 one bank of america moved forward and bought Merrill Lynch. Are they being penalized for trying to help save what had become a disastrous situation . That is one of the arguments that has been made continuously, especially by Jpmorgan Chase and Brian Moynihan im sure made the same argument. We bought countrywide, we bought Merrill Lynch at the urging of the government. Jpmorgan chase bought bear stearns and Washington Mutual at the urging of the government. Now you are penalizing them. In the case of Jpmorgan Chase, the wrongdoing also occurred at Jpmorgan Chase itself and the wrongdoing occurred at citigroup. Im sure there is some element of this where they have evidence that wrongdoing occurred at bank of america itself, as opposed to Merrill Lynch or countrywide, and that is why, in large part, the size of the settlement is so big. It is pretty big. Three years of profits . About that. How do they rebuild from that . , they needed this to get behind them. This past week, the elevated tom montag to be the coo of bank of america. They are putting this behind them. This is something that wall street has to do to get these issues behind it. It started with Jpmorgan Chase. What once they got it behind and, the stock went up 26 , jamie dimon got a raise to 20 million. I dont know if the American People benefit from this. It all ends up covered up with the settlement, what happened in the bank. Is this a deterrent Going Forward . What is to prevent banks from doing Something Different but similar in the future . That is a conversation we will be having throughout the day. Thank you very much. And keri geiger. Moving and shaking this hour, we are talking about carl icahn who has a new target in his sights. It is hertz, the car rental company. He wants to meet with them and ly get a seat on the board. Shares are up 10 this year. Has not reported Financial Results this year. It says it can no longer rely on the past three years of financial statements. Hertz is one to keep an i on today. Coming up, the fed considers whether to raise Interest Rates sooner. Right now, in washington, we are waiting on u. S. Attorney general eric holder him and who is holding a News Conference about bank of america agreeing to pay 16. 65 billion to end its mortgage probe, the biggest fine a u. S. Bank has ever faced. Eric holder is live next. You can watch it also on our live event channel on bloomberg. Com tv. We are continuing our focus on the fed as we near the opening bell. Central bankers are gathering a jackson hole, wyoming. U. S. Policy makers may raise Interest Rates sooner than expected . Strong who has been a advocate for that, the Kansas City Fed president. Mike mckee spoke with her about her view on policy from jackson hole, wyoming. Function of how the economy performs. That is why the committee has been talking about it. How normalization will work. How we will control shortterm Interest Rates. That has been the discussion over the last few meetings of the committee. One of the controls, overnight reverse repos. There have been a lot of concerns raised. Are you worried they may have adverse consequences . They could. That has been discussed. Reason, you see in the minutes and effort to say we consider this during the normalization process and to be aware of what the consequences could be. What are you going to look for when it is time to raise rates . What indicator or indicators tell you the economy is ready . I think we are getting close to that. Worknk the committee will through this systematically in terms of the process to do that. Own view, some of the policy benchmarks we have been looking at for some time are already signaling that we should be above the real Interest Rates. We will continue to watch the economy unfold. To ank that we are getting good place. To wages have to go up first . If you look compared to last year, we have seen wages move up. I dont think that that should be the indicator. I think we will be looking broadly at how the economy is unfolding. Stafff the research my has done suggests that where wages are today relative to past times with similar slack in the labor market and we may not be so far off track. Atyou have been quoted worrying about asset price inflation. Farmland prices have started to come down. Farmland prices have cooled at a high level. Oft has been in the face projected declines in farm income. We will see. Thatld say more generally the issue around risk in the market is when you have an environment where there is a strong incentive to reach for yield. That is really what i look at broadly. I think it is important for policy to take things into account. Mike mckee joining me right now from jackson hole. Interesting that she is really coming out in favor of the fed moving more aggressively. What do you consider the real highlight their . Highlight there . The hawks are gaining a little bit of the upper hand here. It can mount it it came out in the minutes yesterday. She thought rates should be going up and she dissented seven times last year. That is going to have wall street a little concerned at least until we hear janet yellen tomorrow. It is a view you are starting to hear more and more. Trouble is that eventually the fed will get it right. But by then it may be too late. You look back historically and they tend to be behind the economic curve. That is true. I put that question to asked her yesterday esther yesterday. We ares this inflation supposed to be worried about . Will shown is that it up relatively quickly. The transition mechanism is usually reserves. They get released into the economy as people start to borrow more. We have got to see people start to borrow more before it is a real problem. You have heard me say this before. Americans know that rates are going to go up at some point in the near future, might they be more incentivized to borrow now or by the house now rather than postpone . If you think rates are going to below indefinitely, there is no reason to do something today when you can do it tomorrow. Why take on that risk . We do have to leave it there. I will be talking to you throughout the day. Thank you so much. Mike mckee, our economics editor of Bloomberg Television. Generalw, u. S. Attorney eric holder is holding a News Conference on bank of america agreeing to that 17 billion fine to end its mortgage probes. You can watch this live on our live events channel at bloomberg. Com tv. We will be back in two minutes. President barack obama has claimed important advances in iraq this week. With the beheading of american journalist james foley, the white house now faces new tack asked from the islamic extremist groups. I am joined by the president on the council of foreign relations, Richard Haass. Good to see you. What needs to be done right now to prevent Islamic State from getting more of a hold in iraq . It is a regional and global challenge. Within iraq, i think we are beginning to regain the momentum , but it will take concerted airstrikes against isis positions. It will take arming and provisions for groups like the kurds. If we continue to do that, the momentum against isis inside iraq will largely shift. Hether the Iraqi Government will be able to pull itself to government together. They indicated we will be sending some personnel, roughly 300 ground troops. What that might be able to accomplish . It will probably feed intelligence. It will train. It will advise. It will organize the iraq your response. All of that is to the good. I think the bigger questions are about syria, the rest of the middle east, and globally. The problem in syria is that we do not have a partner on the ground. The question is do we start bombing isis inside syria . I would argue yes. The real question is, could you organize some kind of pan arab force . That might be a longshot, but is certainly worth exploring. The United States may have to do the income to ball thing of revisiting its policy toward the Syrian Government im saying, as bad as the serious syrian lesserent is, it is the of evils. It is only a local challenge that we may have to live with what we allow everyone to focus on isis. Are we seeing enough cooperation and coordination between our allies . It is coming slowly. There is a little more interest in doing things in the middle east. A lot ofeans have investment in getting involved. It is not a question of if, it is a question of when. Thousands of isis fighters have come from europe. Thes quite possible that person involved in the beheading of james foley was british. The bigger question is whether we can get the support we need from the arab governments, in particular the saudis. That is something the United States needs to focus on. I will have to leave it there. Richard haass, thank you for joining me. We are a few minutes from the opening bell. It looks like markets are higher on the heels of the jobless claims news. Welcome back, everyone. Good morning. You are Richard Haass you are in the loop. Here is a look at futures and the last moments before they open. The futures market is open and higher. The claims are coming in better than expected, the jobless claims. We will be on the markets again in 30 minutes. Lets count down to the opening bell. I have matt, olivia, and we have your top 10. We are always on the markets. Ups r 10, ubs number 10, ups. Hackers may have exposed personal data at 1 of its stores. The cannot say how many customers were affected. Number nine is hormel foods. It Beat Estimates on revenue and earnings per share. Revenue came in at 2. 28 billion. A lot more hormel chili. Oh yeah. Ergen, the pharmaceutical company. X about aoached phale potential bid. X about a potential bid. Number 8, 2 . 2 billion. Number six is kirkland. The plan to close 15 stores this year. The cfo toromoted the chief operating officer. Number five is sears. Loss. Ing a wider falling for 30th straight quarter. Antilabor calder is Eddie Lampert called a result unacceptable. I go there all the time. Craftsman tools. Want to keep them in my neighborhood. I want to support local stores. What happens when you need a craftsman tool . You have to order it on the internet. Hertz is the latest target of billionaire activist investor carl icahn. It needs some help. Number three, hewlettpackard. It posted its first sales increase in 12 quarters. The reason is a surge in pc sales, if you can believe it. Software fell or grew less during the period. Read the dollar to dollar store drama continues. The board rejected the 9 billion offering from Dollar General. They cited antitrust issues. Is everything and Family Dollar one dollar . No. Dollar tree. Dollar tree. The other one . Some of them are a dollar and some of them are just called dollar. Were moving onto the number one stock of the day, bank of america. Nearlyve agreed to pay 17 billion in a record settlement over the sale of mortgage bonds in the runup to the 2008 financial crisis. Eric holder is holding a News Conference right now in washington dc you can watch it right now on bloomberg. Com tv. We are seeing a little bit of upside at the open. Down. S claims numbers are we have a big fat day ahead of us in jackson hole, oilman. Our verio mike mckee is there. We have a big fat day ahead of us in jackson hole, wyoming. Our very own Michael Mckee is there. Along with olivia and matt onset is the equity Portfolio Manager at j. P. Morgan private bank. Opportunities stemming from management changes. What do you think about hertz . This story has had a lot of volatility around it. You have had challenges with respect to concerns around accounting issues in the past. Depreciation for cars. It is interesting to see people continuing to look at this. If you went to your Global EquitiesPortfolio Manager, to your boss, and said the results i have given you the last three years, im not sure about those tell you how cant well i have done in the first or second quarter, what would your bosses say to you . It would be a short conversation. [laughter] how is this guy still in a job . That is that i am wondering. How was the stock up 10 . Because people are hoping that he is leaving. One of the investors with a 3 for him toit is time go. And carl icahn just bought a 10 stake. When i look at what is going on when i look at what his on, i lookhas gone at employment claims and gdp. You are trying to find companies where an outside investor is putting pressure on it. You are looking at Management Teams. You are looking at the potential for a spin off. What if you are not successful . A lot of people said time warner and 21st century fox was going to happen. It did not go through. It could come back. , when you think about events you can participate in announced events. You are looking at classic arbitrage. You have something with greater certainty. When you play potential up 20 if you are are right and if youre wrong, you are down 15 . How many times can you be wrong and still have a job . That is where event are not necessarily clean or easy. That is where hopefully you look to someone who can try to handicap it. Are you functioning like an arm trader . We have generally been more interested in spinoffs and in a Management Team that has left. We are interested where they are trying to bring in new Management Teams or reposition value within. Is a messyitrage story, were you are participating in deals and you are saying, if im right i make x and if i am wrong i make three times acts. Three times x. Ben graham outlined this approach. One company that had a huge spin off this week spun off a 15 billion company. This brings me to the point that you are interested in energy. It is a popular play. A lot of guests on the show like Energy Stocks right now. See on the screen shows that Energy Prices in the face of all of this geopolitical risk in iraq and ukraine and libya, they have still fallen and that is a fundamental part of the equation. Doesnt the fact that Energy Prices are falling make you question your commitment . What has really been one of the big drivers to the recovery has been Energy Companies. Now Energy Companies want to do less spending so that they are becoming much more disciplined. Looking at cutting Capital Spending and driving different returns differently. Energy prices matter. You also start thinking about, can i return the cash to shareholders . You bring up energy and you look at the International Troubles we are facing right now and all of the turmoil. It is Pretty Amazing that the market has not seen more of an effect. Thats right. You would think. And in equities. Step back. You have seen a massive shift in where the Incremental Oil value came from. World where from a opec was the only place for Spare Capacity and now texas become Spare Capacity. Supply thatomestic will affect the price but not affect the price of brent. True. Shameless plug we are going to be talking about these things in market makers. Let me talk you about the International Tour mile we have seen. Let me talk to you about the International Turmoil we have seen. People are creeped out by iraq, ferguson, hertz. Of problems out there. You do not see it reflected in equity prices. Isa big chunk of investing what is the best relative use of a dollar . When i look at a 10year treasury, when i look at a 1 man bund yielding under and i look at where inflation rates are, i say, im not getting paid much in terms of your term returns in fixed income. The reason why those Interest Rates are so low is that people are so freaked out that they keep driving themselves into those vehicles. You could argue you are getting freaked out. Germany is not growing again. Their reported gdp last week. , there is ant constant interplay of what we are going to talk about the news on the front page and that is painful, that is horrible for the people involved, but then you have to step back and reflect. Does this affect the general trajectory of her earnings as something as large as the European Union . Does it reflect the earnings of the United States . We are coming up on the break. Thank you so much. Thank you guys. I will see you in a little bit. All day long. Look here in washington. U. S. Attorney general eric bank ofs speaking about america agreeing to pay 17 billion to end its mortgage investigation. Can watch it online a bloomberg. Com tv. Hewlettpackard is benefiting from a surge in personal computer sales. Is bloomberg west editoratlarge cory johnson. Revenue growth was driven by strong sales of pc. Who knew . We were all saying that the pc is totally dead. Fundamentally, the results of the quarter were a little bit better from a revenue perspective. Profits were down 29 . If you look inside of the results, you discover that the windows xp, microsoft said they will stop supporting windows xp. Admitted that it is over. Meg whitman went on to say that we believe we are through moneyback benefits. This was a onetime thing and they were careful to point that out in the discussion on the conference call. What else can the company do . If itoes she turn to next is not the pc to generate some sales . The fundamental question has always been, can they move into more profitable business . Can they take the advances they have and use the revenue and the profits from the printing from thein the revenue pc business to build a software business, to build acquisitions, to build hewlettpackard . We continue to see weakness in their software. The pc business goes up and the rest of the business goes down. They were careful to point out that what happened last quarter is not going to happen again. They had a lot of layoffs. 50,000 people losing their job under meg whitmans leadership. When this all of this restructuring their expected to end . That is the thing that gets me about this story. There is this extraordinary onetime expense, the extraordinary expense of restructuring has been going on for 15 years. Every one of the last 15 years, they have had restructuring. When people look at nongap results excluding restructuring, i dont know if that is the right thing to do. 15 years. You are absolutely right. 15 years of onetime expenses. At some point you start to say as an investor, enough is enough area what incentive could meg whitman have to report nongap earnings in this way . One because she wants to shine a light on the business that she thinks is the future of the company. The nongap earnings from the company do not reflect what is really going on. The gap earnings reflect what is going on. A quarter of for bonuses faced based on the nongaap earnings. There are rather perverse incentives that may be fueling some of this. Thank you so much. You can catch cory johnson on all the latest tech and media news everyday and 1 00 p. M. And 6 00 p. M. Eastern only on bloomberg west. The Los Angeles Dodgers games have been blacked out for most fans. Is threatening to undermine the merger of the two largest s. Ble network and, explain the situation what the challenges are. Sports fans in los angeles know the situation well. Got the rightsle to the dodgers games about two years ago. Ratesd of charging normal for original sports network, Time Warner Cable went to the other pay tv providers in the los angeles region, mainly universend dish, at t also, and said, we are going to charge you twice as much, almost three times as much, for the dodgers network. Why did they do this . Balked. Tv operators they said that is outrageous. If you wanted to watch dodgers games, you had to switch to Time Warner Cable. If you dont want to pay up, then you will become one of our cable customers. This may be a Sticking Point at Time Warner Cable sells to comcast. In essence, what happens when you do this . The next time a sports negotiation comes up, the other Regional Sports networks that are owned by Time Warner Cable are going to raise prices to match. Now what is going to be the comcast problem. Do you think it does jeopardize the merger . I dont. Tohink comcast will have unwind this problem from Time Warner Cable. I think it will be good news for dodgers fans. I dont see at any point this year in the struggle between Time Warner Cable and directv and dish, they said we are not paying Time Warner Cable because we are not lowering the price. You are probably out of luck this year. Moving forward, i think this will become comcasts problem and the sec may say, you have to come to a new agreement. Say, you have to come to a new agreement. Comcast may be incentivized to do that too. They may say, it makes sense for us to have a lower price so that we do not get hit in years to come by fox and other companies. Interesting. The dodgers fan will ultimately win, but maybe not this year. Great analysis and breakdown of that. Still ahead, a lesson in gender diversity. Why Silicon Valley companies should be looking to alibaba to solve diversity. That is next. An israeli airstrike on gaza has killed three of hamass top military commanders. The top military commanders wife and daughter were killed a day after Prime MinisterBenjamin Netanyahu warned that palestinian military leaders would be hunted down. Vowing revenge. Alibaba can give a lesson in gender diversity. Counts nine females among its 27 partners that control management. Oft is triple the ratio women at the Largest Companies in california. The american doctor who contracted ebola in liberia will be released today. Given antley was experimental treatment. That does it for in the loop. Be sure to tune in tomorrow at 8 00 a. M. Eastern. I will be back here in for betty. Michael mckee will be here. Youill have interviews absolutely want to see. Coming up today, i will be right back here at 3 00 p. M. On street smart. By carl banks. D see you then. The hour. 6 past a Bloomberg Television is on the markets. Im scarlet fu. We are 30 minutes into the start of trading. The s p 500 is breaking a new high. The dow is within three quarters of breaking a tie. Its high. Economic data is helping to set up the gains. Jobless gains fell more than expected claims fell more than expected. Here to discuss the stock market moves is mike reagan. Lets start with jackson hole. There are a bunch of economic bigwigs gathering there. What are investors listening for . Came outd minutes yesterday and there was a bit of a hawkish tone to them. On enough to move the needle when Interest Rates will start rising. It is generally believed to be the middle of next year. A lot of the comments i have are the i have heard people expect to be janet yellen to be more dovish than the minutes were yesterday. The minutes are a good chance for dissenters to express opinions. It is hard to gauge if it is the usual suspect. Most people are setting up for not a real hawkish slant from janet yellen. What are people saying about the extension of this rally . We are now at record highs for the s p 500, getting close for the dow. Away from a record for the nasdaq. The poster child for the last bubble. Still a decent chunk away. It would take another eight months or so at the rate it is going right now. Reason, the row numbers get a lot of attention. To argue any economical sense by round number matters. If you look at the last 50 , it isin the s p 500 kind of flattening out, even though we are at records. 2000 is still a fascinating number to me, i think. It is a yardstick. To break through that would be significant. Traders and strategist saying about positions . Is everyone waiting for the fed to clear the air on what is going to happen before they come back in mass . Volumes are always a little week in the summer. There has been a lot of talk about how the average daily value traded has been going down. Stocks. Re still trading the just have not been as many splits as there were. The value traded is still in line. People are waiting for the fed. Waiting for the fed to give some kind of senegal signal. Market makers is next. Live from bloomberg headquarters in new york, this is market makers. With Erik Schatzker and stephanie ruhle. Paying the price. Bank of america will sell out a lot almost 17 billion to settle claims it misled investors. The pipeline goes dry. Cutting off sales of the country most viable commodity. Lex the bucket list. Every time you turn around a celebrity is dumping ice on himself. Is this helping the fight against the dreaded three dreaded disease