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tv   Fast Money Halftime Report  CNBC  August 30, 2016 12:00pm-1:01pm EDT

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of taking a specific side but at least laying out stakes. >> certainly get more developments on that throughout the afternoon. thanks to david faber for sticking around. >> great to be here. >> approaching news. back to the headquarters, scott wapner and the "halftime report." guys thanks so much. welcome to the "halftime report." i'm scott wapner. we begin with a cnbc exclusive today. a short seller under fire and fighting back this hour against allegations of market misconduct. citron's andrew left, accused by regulators in hong kong of spreading false and misleading rumors a about a leading property developer in that country. left now facing a possibility of a trading ban there, and even having to surrender more than $1 million in profits made from the 2012 investment. andrew left is with us today live from l.a. andrew, welcome back. >> hi. how are you? >> good, thanks. to make sure viewers are clear
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here. the company in question is called china evergrand group. it's hong kong's second largest developer. you put out a report in 2012, i have it here, some 61 pages or so in which you say the company was insolvent, used bad accounting and said it was a ponzi scream ay mong other allegations. in rendering its decision last week, this hong kong tribunal said, i quote, mr. left consciously disregarded the risk his report was false and misleading as to material facts, reckless in conduct. what's your reaction today? >> i don't think it was reckless in my conduct at all. scott, look at that report. it's extremely well sourced. it's well documented. everything is right there. their accounting, in my opinion, was ponzi-like accounting, taking from one person to pay back the person beforehand. and right now looking backwards, it probably wasn't the best idea to write an article on, i think it's the largest property developer in china.
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that being said, you can't take away the truth. hong kong has made conscience efforts right now to curb short selling and curb any kind of criticism within the market that i was giving, and you know, i'm poud of the fact i stood by it, spent a lot of money on legal fees. the media has been fair and understanding the fact hong kong is trying to suppress my freedom of speech. >> you stand by your research. they say in part you had no knowledge of hong kong accounting standards. you never checked with an expert on the issue. that you admitted in an e-mail that was included in the report, which i do have, by the way in my hand, and i'll quote again from it. you apparently say, according to them, "i not have anyone in china doing any of the work. everything was pulled off the internet, and from company filings." so how do you reconcile that with the research you say you did? >> that's actually perfect. i'm glad that you said that, because everything was pulled
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from corporate filings. so if i take what's in corporate filings and put analysis to it, and that's my opinion, how do you turn around and sue me for that? nothing i put in the report was not public information. it was extremely well sourced. looking at all forms of information from all forms of media, not just corporate filings, but the fact i wasn't on the ground in china had nothing do with it. as a matter of fact, look what i wrote in that report, and subsequently what happened to the company and the types of financings they took on over the next few years, you'll see a lot of that is correct. most of it. what's most important is this -- when i put out a report like that, that might have 100 points to it. take 2 or 3 of the 100 points, namely accounting issue, call them debatable? of course you can. that's just the way accounting works. but then to go ahead and to form a whole suit around that, it's just not intellect actually honest for them to do that. that's what was done. that report had 100 different points in it, and they picked
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out a few that they thought could be easily tried in a court, and really accounting issues. that's what they stay focused on. >> will you appeal? >> that's up to my attorneys on that one, and let's just say i hope it's just not jousting. it i appeal i like to think i'm going to maybe in the court of appeal will be a bit more fair than the first trial was, but i'll have to discuss it with my attorney. >> making a boisterous case. you don't believe you did anything wrong. do you want to appeal? >> oh, of course i want to appeal. but -- you know, they say if you can't fight city hall, it's pretty difficult to fight hong kong city hall. and i just don't want to be in that situation. although, i do believe what i wrote was correct, but more importantly than being correct, what i wrote was sourced, documented and was my opinion. and in order to have a fair and open market, you must allow people to express their
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opinions. >> i thought interesting in one of the releases that i saw, an organize call the securities and futures commission says that it would like to acknowledge and publicly thank the u.s. securities and exchange commission for its assistance in the investigation of this case. have you been contacted by the sec? >> as a matter of fact, in my initial meetings with the hong kong securities commission, the sec was there and did not take any action against me. which right there tells you. if as a u.s. citizen i was doing anything wrong, that they believed the sec, that they should be enforcing, they would have stepped in as well, but as far as i know, the only cooperation by the sec is, we used their offices for a few meetings. and that's where it stopped. >> you don't expect at this point once the tribunal has now sort of rendered its decision, if you will, that you could be contacted by the sec, or that they would take another look at this particular case? >> scott, i wish they would,
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because if the sec would let me go ahead, i would gladly spend the money to defend myself with this particular case in front of the sec, because i believe i would be judged more fairly and then it would clear the record and show exactly what happened in hong kong. >> it's interesting. you make the point of sort of what the role of short sellers should be in the market, and frankly, i've read multiple articles this morning in preparation for our interview where, and including, by the way in the "wall street journal," they short of defend the role short sellers play and this kind of decision is bad for free speech, et cetera, but at the same time, there are some folks today who do kind of call out the hyperbolic language that you use in your reports. will this particular instance cause you to rethink the way you put out your own reports for citron? >> this situation will make me
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rethink about writing about anything in hong kong. especially something that pretty much underpinning the economy of hong kong, property development. this will not stop the way i write, the way i've been writing for 15 years. what enables me to do, by maybe using language that's a bit more colorful than someone else it does draw attention to the report and then people look at the actual content within the report. maybe, that's just my style. to be more colorful. but if you look at that report, scott, you'll see it's extremely well documented. it's well sourced. and it comes from a place of honesty. >> talk about what your future would be when it comes to targeting or even investing in companies in hong kong. what about mainland china? will this force you to sort of rethink any investment that you would make in china? we're talking about a marketplace that's been long criticized for being opaque. >> well -- you know, i'm long.
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let's say i'm long alibaba. that's a u.s.-listed company, even though it's within china. i have zero plans on commenting on anything in china or hong kong in the future. but that doesn't mean i won't invest in stocks long and short that are traded in the united states that are chinese based. >> interesting. i know some people are going to hear you say, okay. so here you targeted a company in 2012 based in part on suspicions of accounting fraud, and yet now you're long alibaba, which other short sellers like jim had on this very program said is guilty of accounting irregularities. how do you reconcile that? >> well, first of all, it's nice that alibaba is trading as a significant discount to its peer, say amazon, because of a clod of ig regularities that could possibly be around it. i'm not discounting, there could
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be something wrong. in in fact something was wrong i believe alibaba unlike ofgrand could flow into it and not taking on the debt evergrand took on. that said, alibaba went public, i think, scott, two years ago this month. despite their growth, trading at the same price the day of ipo, i believe. despite the growth in merchandise and despite growth in their payment systems and the ali cloud. so i think once the scrutiny goes away from alibaba, if it ever goes away, the stock has increased very quickly. >> back to evergrand for a second before we talk more about baba and other stock positions you have. from what i saw, it looked as if you made $1.7 million hong kong dollars from this original trade back in the 2012 time frame or so. one of the possible punishments here, aside from potentially seeing you banned from doing any trading in hong kong, would be the surrender of that money. do you expect that that could be
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a possibility? would you be willing to give up the profits made in this trade to clear this matter up? >> i mean it is what it is. i went to trial. of course, whatever happens. i'll go ahead and pay any fine, whatever has to be done. i'm going through the process, and you know, i hope the market can appreciate the fact, i've never pun lished, i don't try to pubbish under a pseudonym, i don't hind from anything. in you want to sue me, here i am. they're out there and i expect backlash. this was backlash and it is what it is. >> have you continued to follow the company even though you're not in this trade? in january of this year moody's downgraded the company's debt further in the junk status? >> i took it off my screen. i don't want to know -- >> when did you sell these -- when did you close out the position, buy back the shares relative to the timing of when you put the report out?
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>> i legged into the trade. i think some things were covered within a few days. some were covered a little afterwards. once i saw that the stock wasn't going any lower and pretty much the market didn't care about the information. but it was a -- >> stock down, according to what i read 20% when you published the report. how much of the gain did you book on the publishing of the report? >> i didn't get anything close to 20%. i thy might have been 20% of the -- and recovered, exactly, and recovered the next, you know, the next few days. >> i do have, you just heard steve weiss ask you a question andrew. i do have a panel in front of me today as i normally do. the gang's all here, and they do, i know, have some questions for you. joe terranova, jon and pete najarian, open the floor up. jim? >> andrew, curious, you have such a wide hunting ground from stocks to short.
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why not just stay away from chine in? i understand a lot of accounting issues in china, between the rest of the developed world there must be so many targets to look at. do you think about just staying away from china? >> where were you in 2012? yes i do. in the future i plan on not righting about china or hong kong. recently put any other report about a company in japan. a fantastic short cyber dine and want no part of writing anything that has to do with china or hong kong. >> let's go back to baba a second. baba is suspected of having fraudulent accounting. as a matter of fact, the sec is highly is spacious, why they're investigating them. also rumored -- not rumored but known to trafficking counterfeit goods. got all the hallmarks of being very, very troubled. even merchants in china talk about issues with their, you know, their one-day big sale. bill $$14 billion of sales which
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everybody is suspicious of, and, in fact, every company in china serves basically at the whim of the chinese government, including alibaba. concerned with the red flags, yellow flags to even own alibaba? a peace offering, which controls -- i'm not totally anti-chinese. here, i own baba, or something you really believe in? i get what you say, being relatively cheap and discounted amazon. that's never a reason to own a stock, as you know, if it's rotten to the core, which boba may be. baba may be. >> investing in china is a complete different animal than investing in u.s. i've learned this over the years, over being wrong and right many times. part of it is understanding the fact while baba might have some hair on it, might have a lot of hair on it, if it has not been
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completely shaven down yet it can easy grow into what it can be. alibaba, you can't every discount the future of the commerce in china or the united states. much more, no competition with walmart or retailers, omni channel retailers, you have alibaba. alibaba could easily grow into any problem its had in the past. if the problems were there. i'm not going to discount the fact of, yes, there are problems. yes there are many red flags, and that's why the stock's $96. the exact same price where it was two years ago. >> andrew -- >> despite amazon, i think, if you go back two years, amazon's more than doubled. >> let me move on to another stock which you mentioned last on the program. had you been short facebook with a part of a thesis that said, how much better can the story really get? the stock had a nice run.
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everybody likes mark zuckerberg. they believe in what the business is doing. are you still short facebook? i don't have a position on facebook right now. although i believe facebook will become a tremendous short once the engagement numbers slip, and i think we'll see them slip. every piece of research on facebook has an asterisk on the bottom and everything based and engagement levels. so in the next few years i don't know what quarter it's going to be, i believe we'll see the engagement numbers missed. also scott, important to note. when i said i was short 235 facebook, turned around, destroyed estimates. stock up 1%, 2%. what if they name, in line? we have a stock market. it's a market. a market has to generate new buyers and sellers every single day, and part of the thesis on facebook, the short thesis, was, who's left to buy it tomorrow? and that's, i still think a
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problem for the stock. nothing to do with mark zuckerberg or the company. it has to do with the people remember apple. three, four years ago. i mean, four years ago, a matter of when apple's going to hit 1,000. not if. all of a sudden one day apple went from this growth stock to a value stock. and for the next two years just went lower. so nothing's to say that can't happen to facebook also. >> andrew a good place to leave the conversation for today. i really appreciate you join me live in l.a. see you again soon. >> have a great day. great. >> citron's andrew left. we reached out the sec, securities and exchange commission and deshriclined to comment. and evergrand, did not hear back from them. if we do, we'll let you know. breaking news on ag stocks. don chu following the action. >> stories earlier about possible talks tweeg agrium and potash.
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reopened at the top of this hour. those shares are still up markedly. potash up 10%. agrium up 5%, 6%, those levels are solid and where they were when the halt happened, although off their best today. keep an eye on this and all the other stocks catching a bid on the ripple effect here. back to you. >> doc, thoughts on this one. you've been following it all morning long. >> trading it all day. this is, of course, based on thing a grithe ing agrium potential people rumored the first 20 minutes of the trade today, judge, there was going to about deal. they halted the stock because it jumped too much. it hit the trading curves and so forth and then they reopened it and now have admitted that there have been talks. so this huntsman mosaic all of them, on fire today, and the volumes in the options imply that somebody thought something would happen this week if not today. >> just a week ago, a week ago monday, scott, august 22nd talking at the end of the show,
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final trade. looking at? telling you about cf industry. aggressively buying to the upside. this name is not a part of this but an ag name and lifting over $26 a share. >> we had the conversation about cf talking about what bill ackman would do with his money. possibly that's in this wheelhouse. an awful year. down 35% year to date. i agree with pete's in near-term, a phenomenal trade. jon mentions mosaic. i love them. seeing consolidation in the ad space, specifically, mosaic around a $30 million, $10 billion valuation cap. a name follow with pete and made money in cf, stay now in the ag trade and move some of that winning investment strategy into mosaic. that's going to have long life to t. and the monsanto deal. with monsanto pursued aggressively. gives you an idea how much there might be to the upside in some
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of these names and to joe's point a stock sold off 35% from the beginning of the year, cf at that time. there's potential there that there could be a series of deals. >> much better balance sheet, though, for mosaic. far more attractive to someone looking to come in and be an acqui acquirer. >> good stuff. just getting started. much more ahead on the "halftime report." >> announcer: one wall street analyst sees upside in the big mac. this note on mcdonald's is getting a lot of attention. our "call of the day" is next. plus -- hunting for yield through three letters much of the country still sees as evil. mbs. and tomorrow on "halftime report" -- legendary investors lee cooperman. see where he think's the market is going and where he's finding value. tomorrow on "halftime."
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we are back on the "halftime report." baird upgrading mcdonald's to outperform. the firm had a hold on that stock more than two years improving investor sentiment and dividend shifting to nor businesses among the reasons for the move today. our "call of the day." what do we make of it? all-day breakfast, home run. now down 7% over three months. what do you do with it today? >> a sharp decline since may. i wonder part of that, a nice recovery, and clearly changed. i wonder if it's an attraction
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to the dividend yield? trade for me, at least, fairly valued. i don't know if i get too excited. i still want to look at burgers, pizza, papa john's. jack-in-the-box on the backs of gadoba's. their everywhere. >> and still stores will roll it out. all-d all-day breakfast will continue to be a ponchts you buy the stock? >> no. i don't think the all-day breakfast is fluff to pull against the higher wages they have to pay here. yeah, kiosks and ways to address some of those wage issues, but overall, i think this is one of those people that's going to, one of the groups, anyway, that's going to suffer with higher wages. >> jim? >> got to remember at 19 times this analyst estimate for next year, that's pricey for mcdonald's on a historical basis. why is it at that xwlefl because
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of what you mentioned, joe, the dividend. one of the bellwethers for the dividend paying stocks people have been after all year, but there will come a point in time. >> 3% yield? >> 3.1% yield and frankly you can find higher yields in similar quality stocks. we all agree a fabulously run company and a great brand. issues with the price. wait a little longer to get a better price. >> the story played out at this point. a little trouble with comps last time reported. one of the reasons the stock corrected. not compellingly cheap. analyst missed it. knows he missed it. looking for an opportunity to get in. took it. best at market stock. i'm convinced the fed's going on september 21st. at that point i'm not sure dividend stocks work as much anymore. get more bang for your buck rather than in a $1 happy meal playing other sectors. >> raises a whole another conversation about, yes,
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dividend stocks may take a hit. utilities, telecoms, quality stocks still get them that pay a dividend. not everything will be thrown in the trash can. >> absolutely. hit by this company, it's still well run but an extremely competitive space. so i'm not playing. >> easterbrook understands the competition they're dealing with now and because of that, look at what their plan is, he wants to change the rate of change for mcdonald's. when you look at this analyst notice, the most important part, nobody brought it up. he didn't say today. not the bottom of the stock. a 6 to 12 month call talking how the valuation level could rise up based upon a couple metrix changing. a lot to the said for the stock. the way they buy back shares, return capital to the shareholders. 3% dividend yield, forget that corner point. i don't think it affects the stock. >> $2, by the way. on the price target. >> any stock at any time is 10%
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up and 10% down. slightly more than 10% up. not enough to get me in. >> you mentioned telecoms and utilities. down 4%, 5%. you believe a cyclical tilt to the market now, why sit there and wait 6 to 12 months in a mcdonald's when you can look at a different pro-growth type of stock? >> okay. up next, airlines taking flight after a management move. and abercrombie & fitch is sinking today posting another quarter of sales declines. is it beaten down now enough to take a hit on? more after the break.. you know that thinkorswim seamlessly syncs across all your devices, right? oh, so my custom studies will go with me? anywhere you want to go!
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that's what we're working on right now. ♪ energy lives here. back nears 12:30 on the east coast. a look at the market picture. dow down one quarter of 1%. s&p 500 a fractional loser, four points, 2176. nasdaq about the same down 9. 5,223. courtney reagan has the latest headline. >> hi there. what's happening at this hour. the agriculture department closed offices in five states after receiving anonymous threats. an agency spokesman is working with the fbi, federal and local
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law enforcement to determine whether the threats are credible. the six closed offices are in colorado, connecticut, maryland, north carolina and west virginia. the latest nbc survey national poll shows hillary clinton with a 6-point lead over donald trump. 48-42%. a bit narrower than an 8-point lead a week ago. fedex, shipping services and solutions offered to customers in all retail stores nationwide beginning friday. fedex teamed up with office max since 2009 and the relationship is being expanded to office depot. mourners gathered in the italian town ahead of the state funeral for some of the victims of last week's earthquake. this as italy observed a second day of national mourning. at least 292 people were killed in the quake. that's your cnbc news update for this hour. back to you. >> thanks for the headlines. trader blitz. abercrombie & fitch tanking today after reporting weak
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guidance and posting a 14th straight quarter of sales declines. ugly. look at that it is. bodes ill for the sector as a whole. started with retail earnings earlier in the month, positivity from the likes of macy's, nordstroms. >> jack: jcpenney. retail is toxic. stay away no matter how cheap. >> and airlines. outperformi outperforming. ray j, you own -- american, twice? >> not happy. a $14 million severage package even though he had none. talk about that later. >> nice. >> he was there a long time. was there and the airlines are unbelievably attractive. waiting for that new shareholder class to come in but i still own american airlines. own them all. fuel costs are cheap. unhedged. profiting from it. zika's hurting a little bit, but
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a good group. ual on the board now. >> that lb. slummer jay schlumberger? >> excellent. a phenomenal acquisition in international a while back combining hardware cameron has with the software, analytics schlumberger has. hall iburton has u.s. revenue. schlumberger the real opportunity. keep in mind, halliburton deal didn't work out. they needed that. >> hershey on pace for its worst day in 14 years. >> just do not -- one of those names, scott, back to june 9th. 10,000 of the july 100 calls were bought. from 75 cents to $17 in value. so gives you an idea. jon and i talking about it
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earlier and other trades for today. this one absolutely magnificent. people were looking for the name, thought somebody was out there. there was. mondalez, nobody knew the answer, hershey would say, see ya later. >> a slow start, things may be about to change in the ipo market. talking about the names that could be set to jump into the market, next. and hunting for yield. we break down an investment that's yielding almost 6%, but some say it brings up haunting memories of the housing collapse. "halftime report" back in two minutes. everyone said it's so hard to be a musician, but i can't imagine doing anything else. now that the train makes it easier to get here, the neighborhood is really changing. i'm always hopping on the train, running all over portland. i have to go wherever the work is. trains with innovative siemens technology help keep cities moving, so neighborhoods and businesses can prosper. i can book 3 or 4 gigs on a good weekend. i'm booked solid for weeks. it takes ingenuity to make it in the big city.
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welcome back to the "halftime report." after a sluggish start to the year the ipo market could be set for a comeback. bob pisani is at the new york stock exchange. half of what we normally see. when will we get a thaw? >> it should happen in the fall if the markets hold upu up. outperforming, twilio up 260%. talon's up 54%. two characteristics in common. first tech stocks and growth. several tech companies with good growth have a shot at coming public soon. those data center storage.
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a subscription service with managers, managing technology. and consumers that might qualify including elf beauty pap low-cost cosmetics company and yettie. high-end coolers. they're hot now. and strong brand names, not much in the name of top-line. good sample, makes auto motive radios. and what's not working? what's going to have a tough time? my group. biotech and unicorns. a big group. biotech worst performing sector in the year. after a huge stink we've seen around the epipen fiasco and drug pricing in general, a lot tougher time going public. the unicorns are a separate problem. uber, airbnb, snapchat, all have high private valuations. without earnings, it's going to be hard to support that in the public markets. i wouldn't look for any of them
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this year. scott, it's all about growth of some kind. back you to. >> bob pisani knows this better than anybody at the new york stock exchange. an interesting way to play this. >> i really think the way to play this, in the bracket banks, tom of the list, goldman sachs. the ipo market has been in starts and fits all year. if it really gets going, i don't think that's anywhere near estimates for goldman sachs. particular, goldman sachs is buying back a lot of share s slightly below book value. on a book value basis, 2.7 dividend yield up about 20% from the recent low but still off 7% from the start of the year. i think there's a lot to like for goldman sachs in the ipo mark. >> steve i don't know what to make what people should make about this. ends of the year. you've got the election. you have some people thinking the fed will go in september. other people saying the market's toppy. where are we in the cycle. lots to consider for any company going public.
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how should investors view this? >> there's been such a dearth of ipos. typical cycles just happened to happen over the last couple years. private equity whauants out. no exit. it will try to happen after labor day. you'll see the road show starting, then a two, three month window to have it. expect to see if the market holds up it will come. not an ideal, friendly market. however, what you've seen, you'll need to see catch-up in performance. amenable to take the hottest deals out there. i think it will still be challenging, but won't be for lack of effort. in terms of the market overall, look, the lead between clinton and trump has been narrowing. it was ten points. now it's six, we just heard. that's going to put people on edge, because i don't believe that most think trump is good for the market. not that they think hillary is, but the lesser of two evils. and so it's a very tenuous market. the question that i was having
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with some hedge fund managers over the weekend, is the market complacent? to me a slam dunk the fed goes september 21st, and it is now that i speak to, those people, a disastrous number on pay roll on friday. fed funds 18% moving up from 9% in terms of fed fund futures before yellen spoke. yesterday when i last looked, 79% predicting 25 to 50. >> more than the yellen statement, the fischer interview -- >> liesman's interview was phenomenal. he just -- >> moved the ball forward. >> yeah, yeah. >> one thing to have a statement and speech. another to have a live interview. >> the most coordinated fed speak leading up to yellen's speech we have ever heard. up next, hunting for yield in a place that still scares many americans. first, though, brian sullivan, what's coming up on "power"? >> thanks. und are the heat lamp on "power lunch," slapping apple with a massive multibillion dollar tax
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bill. what companies may be the next ones to have a big tax target on their back. plus a house call from america's doctor. the u.s. surgeon general is here. he will talk drug prices, zika and america's growing opioid epidemic. free food on sunday. will the plan bring bag cck chipotle customers? we'll talk about it next on "power lunch." announcer: "halftime report" with scott wapner is "the" place for market-moving interviews. >> you don't call a company a sewer because the company made a mistake. >> announcer: real money -- >> we are short both tesla and solar city. >> announcer: -- real debates. >> people think that globalization has hurt businesses. it's not. it is technology that's hurt businesses. >> competition is a good thing. i don't want to go back to a single marketplace. >> announcer: the most profitable hour of the trading day. >> i love this show! all i do is get to tweet about this show! i'm on the show. this is the greatest moment of my life! >> announcer: the "halftime report." weekdays at noon eastern.
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we're back and on the hunt for yield. our next guest has ideas investors might find dangerous. with us talking mortgage backed securities through mutual funds. >> a wide product, but we do have mutual funds. >> good to have you on the show. you did see the movie "the big short."
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scares a lot of people. >> i did. that situation is different than what led up to the financial crisis. mortgage credit in 2008 was frankly a poorly underwritten over leveraged sector. kind of the epitome of the epicenter of the financial implosion. look at data today where the sector is today, it's a different animal. >> the idea of how to make money in the space for, let's say retail investors is how? with your funds? >> well, look, right? so mortgage isn't large. people throw in mbs. a $7 trillion marketplace, roughly guided mortgage credit, betting on the manager or investment billing to reunderwrite, mortgage credit. our perspective, opportunities in mortgage credit. finding managers and most fixed incomes shops. the ability to reunderwrite the ability to am i, are you, are we going to pay or mortgage or not. >> where would you say we are in the credit cycle? >> i read a story today i think
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it was in ubs out there saying we're at top of the cycle, nearing it. >> from a corporate perspective, again, we are closer to the end than even the middle. one of the reasons we get excited about mortgage credit, a relatively isolated insulated asset class. think about the credit fundamentals that backstop the collateral. housing, job growth, economy. right? u.s. centric set of dynamics that drive the value. outside of the traditional business credit cycle this particular eight class is relatively insulated. >> everybody has questions for you. >> the last couple of years credit investor, the attraction to being in cnbs, attraction to being a non-agency, because of the fed support. do you believe that continues as we move forward in the cycle that cmbs is the place to be and non-agency? >> yes. on non-agency. again, look at at least how we're investing our dollars and expression where we're finding value it is a very pure play on the nonagency residential- >> because the fed supports the
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agency? >> the fed supporting the component but look at the drivers of value on the non-agency side. right? effectively you're betting on home prices, job growth, u.s. economic stability and continued growth. argue, depending where you are on the political spectrum, growing fas enough, et cetera. supporting drivers and value buying in analyzing continues to be attractive. >> we look at, in our shop, at a lot of short duration funds seems they're looking at a lot of different circuits of the fixed income market. front and center, mortgage backed security also asset backed securities. aren't too different and stuff further afield, like emerging market debt. what's your take on being more pan global, whatever you want to call it, looking at other spectrums of the fixed income market? >> look we look everywhere. you know, our perspective is that there's enough opportunity to kind of at home isolated to the u.s., which is a market that has less uncertainty around it and especially eamericaing
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markets. a short duration fund, we have. if it's treasury, agency short-term corporate, you know, agency treasury short term structured credit. both mortgage backed securities. again, leaders in the ability to reunderwrite cash flows. taking liquidity risk, rate risk, identify the risk you want to take. big on credit risk. we believe certain sectors of the market mortgage backed you can understand the bets you're making. >> steve? >> so there's an issue with a rising rate environment. even though i believe we're going on the 21st, still in measured environment going forward, but it's called negative complexity. for viewers at home that don't know though terms it means -- >> there's a reason. >> there is. puts you to sleep. essentially you've got longer duration terms of you don't have pre-payments. >> sure. >> missing the up side in terms of the new paper coming out and
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higher yields that are being paid on the mortgage debt. so that sort of puts you in an underperformance situation relative to what you put out there by buying new coupons. how do you deal with that? in a mortgage poor follow port yoenchts our assets are trading that frankly sitting, waiting, have the borrowers pay off their mortgage. north of 6. right? sitting and waiting so to speak is attractive and frankly if we get prepayments a call option on the portal yo. >> you think the fed's going in september? >> no. >> at all this year? >> yes. you know, i think we're probably in the middle of consensus one time this year. i personally don't see them going before the election. >> what happens if they doughgo september? how does it impact your funds? >> if you believe the fed will raise based on the continued strength of the economy,
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effectively, immaterial event for us. >> interesting such a difference of opinion on both sides of the coin. those who think the fed will go. steve, all -- >> i can't understand how you see the i can't understand how see the other side. >> greg sees the other side. >> but that speaks to the confusion and the messaging from the federal reserve. one day you get one speaker says we want to go twice in the year. >> yes, but that's my point. >> but i made the point who cares what everybody else says other than janet yellen, the fed chair and stan fisher. stan fisher came right on this network and said probably two sounds great. >> my point is over the last two weeks there hasn't been a fed governor who hasn't said we're not going to go. so you've had lockhard, george -- >> how do you reconcile? >> i think they raise once this year and i think election relative to the u.s. is such a wild card while they state they don't allow kind of non-data driven perspectives to influence
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their decision, that's enough of a wild card i think they'll wait. >> good having you here. >> great to be here. appreciate it. >> greg parsons, semper capital, he is the ceo. that's why so many innovators are on the ibm cloud. like refinery 29, with nearly a billion views a year. or runkeeper, a training app used by over 50 million runners. or game developers whose popularity depends on launching new updates fast. helping to keep a company's success uncomplicated - that's what the ibm cloud is built for. [announcer] is it a force of success unnature?ated - or a sales event? the summer of audi sales event is here.
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the gulf of mexico. anthony, are you surprised to see oil down today given these weather concerns? >> i'm not, seema. when you look at the storm and the path it looks like it will make a right turn right before louisiana and avoid major production areas. these rigs are able to withstand a one to two category hurricane and this storm will be nowhere anywhere near that. >> jeff, what does this mean for oil? will it head back below $40 a level? >> seems a challenge to go that low. remember, nearly 20% of oil production is in the gulf of mexico and 50% of the refiners in the gulf of mexico. so if this storm does intensify into a hurricane, we may have some anxiety into the market, but remember katrina, no one expected that intensification of the week of katrina. hope it's not the same for folks in florida. >> all right. we'll be joined by a colorful commentator jeroen blokland on cnbc.trading nation.com.
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palo alto, joey, i'm going to you reports after the bell today. >> i gave up on palo alto trading around 1.43, i think stephanie bought it, i think that's a good sign. i think of the currency headwind in the report is going to be what's most interesting to analysts and investors. let's see if you can break out. >> fitbit, dr. j. >> we've got some strong upside speculation in this one, judge. >> unusual activity? >> well, for unusual i'd say -- >> isn't it always unusual? >> in fitbit tom jones is singing right now. >> i should be your theme song, you guys. >> should be. >> it's not unusual -- >> didn't mean you sing it. >> rather sing and dance. have you seen that video? >> it's wildly popular. >> oh, man. >> morgan stanley. >> i like this. as a matter of fact, earlier we were talking about the ipo market and goldman sachs and some of these names. morgan stanley is involved in the ipo market as well, but what i like most is the option activity we're seeing there today. they're buying some upside
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calls, the october 33 is very active. keep an eye on these names. banks are trading very well. bank of america was just at a high. i think morgan stanley's going to continue to go higher. >> wells fargo, weiss. >> wells fargo, there's my doctor impersonation. wells fargo, b of a, which i bought more of last week, xlf, it's going to keep coming. >> he's convinced. >> and particularly -- >> he's not complacent. >> come on, i'm talking here. give me my time. >> we can still hear you. >> given the skepticism about the rate hike it means that they're going to go even further. so i select the -- >> throw blackrock in there and asset managers, they're breaking out. >> actually, asset managers are more skeptical because of the massive fee pressure across them. they'll still go for now. just be careful. >> this feels like the first time we've been talking positively about the financial. feels like all year we've been saying down 10% on the year, down 20% on the year. but they've come -- >> maybe it's the first time
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you've been listening. >> ends up running in place though. now maybe there's more clarity on what people think the fed's going to do. banks have been up 10 out of 11 days. >> finally we're starting to recognize it. banks are saying a rate hike is coming. >> reits coming out financial sector on september 1st. here's what's on the menu, european union's pot o gold, why apple suddenly owes ireland $14.5 billion in taxes and why ireland is saying no thanks to the eu. a house call from america's top doctor, the u.s. surgeon general joins us to talk about drug prices, zika to america's growing ogro growing opioid epidemic. and an exclusive look inside the day of the life of hillary clinton. what eamon javers found as he pores through her daily

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