alix: we are moments away from the closing bell. i'm alix steel. scarlet: i'm scarlet fu in for joe weisenthal. [closing bell ringing] alix: all three major indices closing lower this monday with energy down. crude falling below $50 a barrel for the first time since january. scarlet: but the question is, "what'd you miss?" the chinese plunge. china's stocks hitting the lowest level in three weeks. but are we missing the bigger story?

two killer charts that you can't miss about products bewildering the market. alix: and the valuation game -- with uber worth $50 billion, we ask experts where do you get these numbers anyway? we have to begin with the market. overall, you are looking at seven out of 10 industry groups in the s&p lower, and it's all about energy today. got taken out to the woodshed. down over 2% and because oil onces were off by another 4% this continued oversupply. although i'm getting notes saying everyone is to bearish on oil. scarlet: you have been talking about how brent is below $50 a barrel and nymex crude is at about $45. there seems to be no signs letting up with iran getting ready to bring oil to the market as well. alix: and you can't forget about apple. we just had a conversation about apple trading below its 200 day moving average and it makes up 13% of the nasdaq. 4% of the s&p.

that is significant when you are dealing with only a few stocks. alix: that is a big -- scarlet: that is a big mover for sure. i want to talk about the greek stock plunge. it was ugly. what is interesting that used it as a proxy for the greek start market -- stock market. and it turns out they were right. they sent it down 17% during the suspension, exactly the amount of the index fell today. today, the gr ek rose, but during that five weeks, down 17%. just to give you a sense of how badly it gripped greece positive -- greece's economy, or crippled it the pmi index for greece , shrank at a record pace in july. admittedly, manufacturing not a huge part of the greece economy, but the sheer magnitude of the

downfall, that big leg lower is a bad sign overall. alix: joe weisenthal said i've never seen a chart that ugly before. i want to take a deep dive into my terminal and look at what was moving markets today, and that was china's pmi. we talked about how bad the manufacturing number was and this is why. you are looking at new orders in the pmi, that's it indication of what the demand will be in the future. you looking at -- hold on. you are looking at it right around here at 47.2. that is at a three-year low. we don't hit that level until 2011. and this is the real concern -- future demand. that is the problem. scarlet: that is what drove commodities lower and that is over a globalll market sentiment. here's another way to chart the economic slowdown. barclays says look at the property.

it was a pretty steady increase up until 2013 and that was the turning point right there. there was a 7.6% drop right afterward. now it is down 58% in the first half of this year. why do we care? barclays,to commercial real estate makes up 25% of chinese gdp. so watch this space. the slowdown in the real estate sector seems likely over the next several years, but barclays is not looking for a crash. scarlet: -- alix: square footage. that is what i want to bring in. i want to bring in our guest, peter fisher. we are talking productivity. good news about the economy. productivity is slowing, but some bad news, productivity is slowing. confused? so are a lot of economists. welcome to the show. peter: thanks, it's great to be here. alix: when you look at that

chart, what are the two scenarios you see? peter: what has to be worrying for us all is the slowdown in productivity has to raise the question of how sustainable corporate profits are. the feds have to wonder whether corporations are not going to start looking for pricing power. fed is not worried about inflation right now but you can't see a slowdown of productivity that powerful without the fed worrying about it a little. scarlet: what are the biggest misconceptions when it comes to productivity? peter: that is a macro economist problem. that is not my problem. look how good earnings have been, that's -- why should i worry about productivity? there are reports that productivity is better than has been reported. i think we have to confront the numbers we've got and we have to address them. alix: is this a cyclical productivity rebound or a structural productivity slump? peter: we don't know. but the fed has to worry about it for its part and it has been a profound slowdown.

there is a worry we have to have after all of these years of aggressive monetary policy, low interest rates trying to stimulate investments. the longer that goes on, the weaker return on investment is. they are funding weaker and weaker deals, so you would expect to see a decay in the return on investment from more and more capital investment and maybe that's what we're looking at. it would be a really big worry. scarlet: there's certainly a case to be made for an interest rate increase sometime this year. wage growth is up. inflation expectations seem to have stabilized. there's a chart you highlighted in your report -- some people say it has even found a bottom. how does that fit in with signs that productivity is slowing down? peter: if companies cannot get more out put per worker, they're going to try to do it through prices and see if they can exert pricing power. that has to be with the fed is thinking about. but one of my big worries is that the fed will start raising rates and no one is going to

care. alix: why is that bad? they are not crazy. tantrum. peter: it will be nice because risk assets will rally but we will just pump them up a little too high. look where we are with commodity prices. look where we are with commodity prices. you were just talking about energy. you pump them up, they get too high, they come down. if you do that with all the risk assets, it may not be a pretty picture. scarlet: you mentioned profit margins. you had a chart in productivity versus profit margins and we see an enormous diversions right now. -- divergence right now. what does that tell you? peter: it tells me those profit margins may not be sustainable. it is not credible that they can stay up that high when productivity is staying down. either the productivity number has to be corrected upward or -- profit margin numbers have to keep coming down. we have had topline revenue growth for a long time now in the united states and whether they can keep sustaining that is

an open question, especially when productivity numbers are that weak. this goes back to what you were saying, the fed raising interest rates and no one cares. we have not moved off of zero interest rate policy yet. peter: that's a huge worry and it befuddles us all to think the fed has waited this long. we may get a final reaction in the equity markets. in most post-world war ii recoveries, the fed starts raising rates while the economy is accelerating, so you're getting top line revenue growth and the equity markets trade off a little bit when interest rates are raised, but the may rally because the economy is strengthening. pastif the fed waded corporate profits? scarlet: i know the fed keep you up at night, but what specifically makes it so that you can't sleep? peter: they keep telling me they are going to raise rates even

more slowly than i expect and i don't know what that means. i don't know how you tighten monetary policy unless you raise rates more than i expect. i worry that it could end up being like 2005 or 2006. they raise rates and nobody notices and the asset markets get overheated. alix: fascinating. they're going to fall down on the job, basically. thank you so much, peter fisher, senior director of blackrock investment institute. scarlet: let's get to julie hyman for results from aig. julie: aig coming out ahead of analysts estimates and returning more cash to shareholders. those are the two big headlines. operating earnings per share at $1.29 is what we expected. we did see a decline year-over-year in their core insurance assets. it has been selling off units to raise cash. the company saying it got $410 million in the quarter through the sale of stock in a consumer finance company.

spring leaf holding. they also raise 3.7 billion dollars in cash, so these are earnings related items. the company is going to be more than doubling its quarterly dividend to $.28 a share and it will be raising its buyback authorization by back by about $5 billion. shares are up a little bit in response to these earnings, but not much. shares have already risen year to date by about 14.5% and are trading near their highest since 2008. another stock i want to mention is twitter. the stock has closed at its lowest price since its ipo. we flagged it earlier because it was at an intraday record low and is closing low. 27.29 is the closing for twitter. it has been declining ever since we got the earnings news and the companies forecast and outlook disappointed investors.

scarlet: ugly. thank you so much. coming up, we showed you a couple of charts, but here's one that has economists around the world confused. alix and i will explain what is after the break. ♪

alix: i am alix steel. scarlet: i'm scarlet fu in for joe weisenthal. "what'd you miss?" alix: before the break, we should you a chart with puzzling economists. every economist could understand this is something to consider but nobody knew how big a deal it was or why it is happening. is it indicative of hot money fleeing or is is with the government wants to happen?

they went to activate foreign investment? scarlet: capital outflow is not the same as capital flight. with the dollar firming, some economists are saying this is companies being prudent and paying down their exchange lows and building up their currency denominated assets. alix: $200 billion -- that's not so bad. let's all be chill about it. scarlet: you are doing with massive numbers all the time. alix: let's talk about another big number -- $50 billion -- that's the number attached to uber's relation after microsoft reportedly invested $100 million. scarlet: but is it were really worth it? joining us is someone who literally wrote the book on the topic. he is the author of "the dark side of valuations." thank you for joining us. i want to start with a chart on private company valuations. this shows series a and series b

companies have risen over the past nine years but nothing like late stage companies which are the purple and orange lines. those are sharply higher. is this your uber and airbnb where we see a bubble? aswath: i'm not sure i would use the word bubble. i think we are capturing is a structural shift. 10 years ago, you had a private market and a public market. they never met. now there is a great line. i think facebook was the first company that kind of played on that great line. you can attract institutional money and public money as a private company. once you do that, the private andaying

not have all of the structure put on me as a public company. that is part of what you are seeing. alix: how do you wind up giving a $50 billion valuation to a company where we know very limited financial elements? for example we have revenue , coming in at $415 million, an operating loss of $470 million. that's all we know. that is based on information bloomberg got. aswath: the first thing i would do is take the word valuation out of this question. it is really a pricing. the way to think about it is you are willing to pay $50 billion if you can sell it to someone else for $60 billion. this is a here pricing game. most investors in this game have no idea what the value of uber is and they don't care. alix: why? what is the endgame? guest: the endgame is that you sell it to someone else. if they can go public at $80 billion, what does it matter? alix: whatever the market can bear?

demand and supply. i think in a sense, uber is an interesting company. it is a company i tried to value and got a lot of heat are trying to do it. it's interesting because it could be worth $50 billion. i am not one who rules out the possibility because it has a couple of things going for. it is nice to have competition as good as uber does. if you think about cab service, it can't get any worse. taking them out of the picture is going to be easy. is playing a regulatory arbitrage game and it's a game you know will and sooner or later, treating drivers as independent contractors. playing the insurance game of these are private individuals driving cars, that game will end soon. but the thing uber has going for it is a very aggressive management team. in this game, where you are disrupting existing businesses, you have to be aggressive and take on people head-on. on those grounds, i think uber

could be worth more than $50 billion. i'm not quick to rule it out. would i invested it at a $50 billion value? not really. if somebody else does it, it is their money. alix: how much do you think it could be worth -- back of the envelope calculation? judgment, i think it is closer to $20 billion or $25 billion. they have shown me things over the last year that i did not think they could do. uber eats and uber move -- starting to get into the moving business. you start to see them get into other businesses which increases the potential market. but that is my judgment and i'm not going to put the judgment on someone else. scarlet: uber is clearly a unicorn. how has the thinking on unicorns changed over the past few years? it seems like there is a bias to naming potential unicorns rather than admitting these companies are few and far between. aswath: i think that is a problem. i think the $1 billion number we

put on a unicorn has created a lot of gameplaying. i have posted on this on my blog about how vcs were playing that game and founders were playing the game of making a company look like it is worth $1 billion by structuring deals to give you that value. the way we come up with a $50 billion value for uber is we take microsoft's $100 million and get a rough estimate of the company and extrapolate from there. that is a dangerous game with these private businesses because the way that .2% is structure could make it .5% or 1% very easily. we don't know. in a sense they want us to talk , about them in this context. this has become part of the pricing game because you want to get other people into the pricing game. that is how you win the pricing game. you want people outside who say, i wish i had gotten it at scarlet: and we are doing their

50. job for them because we are talking about it. alix: and when we come back, all that glitters is not gold. what is the commodity valued just plunged? the answer will make him back. ♪

alix: i'm alix steel. scarlet: i'm scarlet fu in for joe weisenthal. this is "what'd you miss?" alix: we asked what commodity has recently dropped -- the answer is diamonds. polished gem prices have fallen to a five-year low. weak retail sales credit is a big issue here. it's causing serious pain for the likes of deboers. there might be supply response. scarlet: i think we need to bring the millenials in here.

millenial's not buying diamonds? alix: i don't know. if you want to pay up check out , these companies and their high price to earnings ratios. scarlet: companies like netflix and amazon trading at pretty ridiculous levels. our guest teaches at the stern school of business at nyu. by traditional metrics, amazon and netflix are terrible investments. but they have made anyone who has been against them look like fools. how do investors determine which companies are worth having nations for versus those that have to deliver immediately? aswath: i think traditional metrics are sign of laziness. that is because you have read and grandpa security analysis. you think every stock is a railroad stock. the reality is amazon and netflix are far from it. you have to dig deeper. i'm not suggesting these companies are correctly value, but looking at the pt ratio

tells you absolutely nothing about these companies. scarlet: what should we look at? aswath: you have to look at what creates the earnings in the first case. for facebook, it is their user base. they've taken the users they have and they have been incredibly creative about making money off those users. in contrast, you look at twitter -- it hasn't figure out a way to convert that user base into earnings. i'm looking at what they are doing to put the pieces in place to create those earnings and then i look at the price at which i would be able to buy them. alix: does that mean these companies would be good buys with those kinds of metrics? guest: at the right price. i will give you my sense of where i think these companies are good buys. for facebook am i think closer to $70. for twitter, we're getting close to the right rice because i think it $28 or $27, we are

getting to a price where becomes intriguing, not quite interesting yet. but there is a point at which it will be a much better investment than buying coca-cola or mcdonald's. scarlet: in the debate over pricing versus valuation, i want to get your thought on what is going on in china. investors have dismissed traditional metrics and economic fundamentals during the run-up over the last year and half. what is your take on how to value this market now that things are recalibrating? aswath: i think the chinese government got what it deserved. it created a market where it encouraged traders and drove down investors. that is what happens if you constantly create. you push them out at any cost. if you are an investor, you are going to walk away from the game. the chinese market is all mood and momentum. there are no economic fundamentals.

if somebody tells you the reason the chinese market is down over the last four and have months is because of economic fundamentals in china, they are lying. reality is it's a shift in mood that nobody can detect. it can't be stopped by government edict or putting pressure on investors. it has to come on its own. alix: what keeps you up at night? aswath: i'll be quite honest. i don't think about my investments at night. if you think about what's happening in the market and to your investments at night, i think there is something wrong with the portfolio you have created for yourself. alix: perspective. think about your kids and your family. thank you so much. can we come take your class? aswath: absolutely. ♪

alix: do not miss this -- you have australia and india they have central-bank decisions tomorrow. take a look inside my terminal for what you need to look at. australia exports on a yearly basis down 20% in the past two years. they cut at the may meeting, but watch out. ugly. scarlet: disney reports earnings tomorrow.

watch for the operating margin. it has been driven by the cable network. theme parks are in the high that teens. leaves disney with a margin in the high 20's range. alix: we will see you back tomorrow. ♪

>> from our studios in new york city, this is "charlie rose." scarlet: doris kearns goodwin is here. she is a pulitzer prize-winning author. "lyndon johnson and the american dream" was issued in 1977. book.being reshoot as a zachn signed the boating into law. he called it oe