♪ alix: we are moments away from the closing bell. i'm alix steel. joe: and i'm joe weisenthal. ♪ [closing bell] alix: u.s. stocks closing higher today after three days of losses. the dollar also rose, and treasuries weekend. joe: the question is, what did you miss? a small dafor stocks, amid growing worries. should we worry? our expert thinks otherwise. alix: apple wobbles, we have two charts the company should fear. joe: and opportunities in oil.

times may be tough, but we an activist investor thinks that money can still be made. alix: you could call this up number wednesday. pretty much stocks closing relatively flat, but volume is all up 22% extra volume. i would not have expected that looking at a flat market. joe: i would not have expected that either. other big story, market implied odds of a rate hike in september now over 50%. big surge in the last two days. we got good economic data. this morning. we had comments from the atlanta fed president signaling september. this feels like it's on. alix: two days ago that chart was down to 38%, now it's up to 52%. joe: yes, 52% in two days. mentioning that good economic data, diving into the terminal, i wanted to mention the isn service report.

a monthly measure of the services industry. on the chart it is the white line. now, this is a 10-year chart. highest level in a decade. the service industry in the u.s. is on fire. what is interesting to me when you compare it to ism manufacturing. thanks to the strong dollar we have exporters, manufacturers have been weakening, sliding. it has not been a great year for them, but the services sector, more insulated from currencies and on a tear. alix: 70% of the economy as is? joe: yes, and it is funny because it gets more attention in the media, and services should theoretically be more important. alix: i want to take a deep live -- dive into my terminal to take a look at strong spanish data. you are looking at the service industry as well for spain, jumping to 59.7 in june. right round here, close to a six-year high. we did not even have to go back that far. pretty exciting.

there was also a rise in new orders and job creation, the fastest pace in eight years. ok, unemployment is still at something like 22%, but these were two very positive signals. joe: new home sales this morning, housing transactions in spain are red hot. you know they have that election coming up. so -- alix: does austerity actually work? does this put the anti-austerity parties on the sideline? the eco-data is not bad. joe: prosperity people like to point to this. alix: true. joining us now is a chief equities strategist at citigroup, and in a recent report it was said "narrow u.s. stock gains are hardly a signal that something is amiss and share prices are due to decline ." e broadly thanks for joining us. >> i said that people presume that they are due to decline. alix: the data is not showing that they are due to decline. >> exactly. joe: this shark -- this chart shows it below the moving average.

>> sure. joe: what are we looking at here? what does it tell you? >> when you get to extreme highs, the market tends to be hitting it slows. essentially too many stocks are way down already. essentially too many stocks are way down already. the most recent one, last you october, can see a spike there. it just tells you that we are not in an environment -- and everyone keeps talking about the narrowness of the market, that there are just a few names that are actually driving it. that has actually been true for three or four years. but you have had a lot of rotation in there. if you can go back in time, late 1990's, mid to thousands, it was all tech. then housing related. today you would say that health care is one of the leading chargers. we had a client call is up and say that the market is 2% off the all-time highs, yet if i look at the s&p 500 the

constituents, probably 80% of them are higher, how is that possible? i said, well, you are comparing it. where is the market versus three weeks ago? you are comparing those constituents to where they were a week ago, five weeks ago, 50 weeks ago. it just depends on which company, and there is just a a lot of rotation. alix: one of the charts i look at a lot, 52 week highs, standing around 101. what does this chart wind up telling you? tobias: when we look at it in the past we had not seen much predictive power. that's the most important element to us. i am not interested in -- in observations of the markets. i am interested in observations of future trends. that is much more important. i have even heard many people say -- five out of five, this outcome occurred. statistically, thoroughly insignificant. it is anecdotally interesting, but if you can look over 50 or

then you get probabilities of outcomes. joe: what data does have good predictor power? tobias: some of these things are more propriety -- more proprietary to our work. it's not about whether evil are excited or depressed. but rather it is about the nine , different factors combined with a single factor. multi variable factor as opposed to a single factor. joe: literally? tobias: i can tell you what is in there. it won't necessarily help able. people try to replicate it, but they do not know what we have done in terms of the special sauce. we look at money market close. we look at survey work. investors intelligence. the american association of individual investors. put/call ratios. how deep in your pocket are you willing to dig to actually buy that protection?

we build all of this down together. 12 months from now, the norm or the average is 74% of the time the markets are higher. if you look over history. so anytime someone comes in and says that based on our analysis there is a three quarters chance or a 75% probability that this will play out that's like a , random shot, throwing at heart and hoping for the best. alix: interesting. in the commodities world, is it a supply driven issue or demand driven issue? tobias: commodities in general are about supply. they are not really about demand. demand growth is pretty incremental. if you have economies of scale. let's say you have built a new mine. you might bring on 10% new capacity with only 3% in the first year, in terms of demand. alix: to that point, looking at capex, over the last 20

or 30 years -- tobias: people call it the super cycle to support on the other signed the -- the other side the growth in the demand of markets. nothing wrong with that. the problem is that emerging market demand is not growing as quickly as people would have hoped. something that they have been indicating for two years, three years. this is not a big shock to everybody. partially you get what i call the cascading effect. so mining related emerging economies. peru, southchile, africa on the energy side, they are now suffering from the declines of the commodities price. there is that secondary practice outside china. yet china tends to be the factor is really driving commodity prices today. it has been for a while. we look at what people call dr. copper. copper prices have historically been tied to u.s. industrial activity. that has broken down over the past 10 years. it is much more tied to chinese industrial activity.

and that is kind of the difference today. china industrial activity is still growing, but it is not growing as quickly. it is partially due to the large numbers. the bigger that they get the harder it is to generate 15%, 20% growth. joe: ok a question that we ask a , lot of people, what keeps you up at night? tobias: last night it was a particular sandwich that i ate, but we won't get into that. [laughter] tobias: in terms of things that i worry about the most, credit has been a historic driver for funding costs in business. if you look back at 2007, 2008, what you really saw was the subprime credit problems leaking into corporate credit problems, well business , investment is the cost of capital. the cost of capital goes up, they invest less than before. joe: thank you for coming by. alix: fitbit earnings are just out. we want to get to julie with more.

julie: edit looks like these earnings are blowing away estimates, coming in with $.21 per share, eight cents is what analysts had been anticipating. this is the first report from fit bit as a public company. they were trying to figure out what the company would report, but revenue also coming in ahead of estimates at $400 million. $319 million is what was estimated. and the ceo, james park said in , a statement that this is the highest quarterly revenue in the eight-year history of fit bit. that in the quarter there were , new features and services introduced and expanded brand awareness. probably not hurt by the company's ipo. that was on the stock has more june 17. than doubled since that ipo. i also want to talk about the outlook, which is quite notable here. it looks like the company for the full year is predict thing -- predicting revenue of $1.6 billion to $1.7 billion. analysts were looking for $1.4 billion. fit bit is outperforming here.

seeing a lot of demand for its products. remember, when the company had its ipo, the reporter the eye-popping market share of 85% of the fitness tracking market, so we will see of that number goes up even more. joe: thank you very much, alix: coming up, what is the worst performing in asia? buffeted in part by political scandal, and that answer after the break. ♪

♪ alix: i'm alix steel. joe: and i am joe weisenthal. you,e the break, we asked

"what'd you miss?" alix: what is asia's worst performing currency? joe: the malaysian ringgit. alix: this is surprising to me. joe: i want to add a personal note. i visited malaysia, i lived there for a year. it is one of my favorite places in the world. if you are thinking about taking a trip, it's phenomenal. with the currency this low, it's a no-brainer. alix: before investors have been selling malaysian stocks, so clearly foreigners are dicey. joe: but people should not necessarily take travel cues from what foreign investors are doing. perhaps. so true. cbs and 21st century fox, how are they doing with their earnings? julie: i don't know how many people are going to malaysia, but an awful lot of people watch tv and consume media. 21st century fox, people were waiting for news on their stock buyback. the company setting the buyback authorization at $5 billion with earnings beating estimates,

revenue missing estimates for 21st century fox. also the stock, i should mention, cells at 27%. shares are higher in the after-hours session. cbs also fell during the regular session, closer to about 5%. here we are seeing the company in terms of what analysts had anticipated for earnings. i thought the commentary in the statement was quite interesting and ironic. executive chairman sumner redstone said that cbs was at the center of the action during and it greenly exciting time in media. was not exciting today, was it? in terms of the stock performance. the fall schedule is creating a lot of buzz, and the company achieved solid pricing increases and the highest rates in the advertising up fronts. finally, someone who has gotten a lot of media attention is herbalife. that company has been targeted

by bill ackman, who targeted a a pyramid scheme , raising estimates and raising a forecast for the full year as well. those shares are up in the after-hours by 6%. alix: good stuff. thank you so much, julie hyman. joe: what'd you miss? well, apple is what you missed perhaps. , looking at the terminal here, average, wemoving have been talking about this a lot. traders like to look at this. this line is clearly sliced many the. what is interesting to me is something that happened yesterday. you can see a break in the line yesterday. there was a burst of trading activity yesterday after it sliced through the moving average. volume yesterday in the shift into stock was higher than it was a couple of weeks ago, so clearly, that level has engendered flatness. it is interesting that

apple was pretty flat today, because we had a downgrade that was brutal on the stock, taking it from a neutral to a by in the infrom neutral to way buy the short term with just one of the biggest factors really being about china. china makes up 25% of their iphone sales and they really inc. that they are topping out we have a chart showing how many iphones are being sold in china. down to 12%. they are basically losing market share to other players. bank of america saying that this only grows if there are new -- new users. joe: china has been one of the huge bull stories for the stock and they say that even in that market they have not been making improvements. i find it funny that these downgrades always come after the stock is diving. alix: always. always. joe: i'm not going to say anything, but i'm just saying. alix: he is saying something. the longer term implications is that it will impact apple

revenue. they see revenue growth decelerating a lot in 2016 to 4% as opposed to 28% in 2015. year on year. and take a look at this. you are looking at iphone revenue bouncing around 0%, flirting with negative territory in 2016. they are basically saying the upgrade cycle is over. that chart looks a little scary. ok, up ahead, the saying is diamonds are forever? or are they an industry in's -- in crisis? when we come back. alix: diamonds are forever, did you just say that? joe: that is what i said. ♪

alix: i'm alix steel. joe: i'm joe weisenthal. "what'd you miss?" before the break, we asked about why diamonds, of all things, are an industry in crisis. joe according to diamond exports : in the rapaport group, prices are falling sharply as market sentiment slumps to a level not seen since 2008. the big reason is sluggish demand from china. alix: ouch. ouch. joe: yes it always comes back to , china. speaking of gems, we are putting the spotlight on an investor who knows how to dig up a deep value. alix: joining us is david, part -- with livermore partners. thank you for joining us, david. david: thank you for having me. alix: looking at the world of energy, and you are trying to find a good opportunity. what is your criteria? david: it is a number of things. anytime we look for a company, it's really easy to say that companies are cheap, right? you know, a lot of people will screen things just purely aced on metrics, and what we will do,

we will look at metrics and then we will try to look deeper. find situations in which we see the metrics make sense and then we try to find the reason behind that. so for example, we own a company , called bolt. and that company if you screen , it, it looks cheap. but then let's say you actually invest in it. what is the plan? what is the goal? how are you going to unlock that value? will you wait for the market? or is there a way to proactively push that forward? joe: you mention that you have this company, volt, you are into power petroleum -- what are you specifically saying? when you say what is the plan further beyond the cheapness, what is it about these companies that you like? david: we saw companies that had $1 billion in revenue, yet the company's equity was flatlining for a long time to come. so the more that we looked, the more that we saw that the company was being wasteful with

its capital. they were not returning capital to shareholders. and at the same time, it seemed like the operating earnings of the company should be much higher. so in that particular actually, along with another hedge fund, came in and took a large position in the company. again, we opened dialogue with the company and with the board, as we always do, and we were getting a lot of pushback that company. we had an entrenched board, entrenched management team. people who don't like to be told what to do, essentially, so, unfortunately, in this case we , sent three letters to the board and got some attention there. and then livermore, along with another hedge fund, began an activist process where we looked to replace the board. and we actually ultimately did that, so six months ago, we

replaced the board. we had a brand-new board in place. we have a new cfo and ceo now. we were selling off non-core assets, which was part of our thesis and why we thought there was tremendous value here. and at this point we think that the company is well positioned. so now you have a company with $1.5 billion in revenue and operating margins can get to a normalized level. with that cash flow it should increase mightily. alix: with the companies that you are active in, what part of that thesis is the m&a takeout target? david: we don't buy companies thinking, hey, this can get bought. let's buy it. it is cheap, or we can make changes, but you always have to have an exit plan. with the big activist funds that get involved you always have to , have a plan in place and say -- what is my exit? staying here for 10 years? that could be a very viable solution. there is nothing wrong with owning a company for a long time, seeing it generate cash and have equity price appreciation. but, realistically, you know if , you are looking at more of a

five to seven year horizon, you want to have a view of how we are going to exit this investment? so in this particular case i would say that there is tremendous opportunity from the , and theategics numbers at large. they are definitely looking at the u.s. footprint. at the same time someone acquiring volt paying a normalized multiple will be seen under better operating conditions should war it -- warr ant a much higher valuation. we own about 3% of the company today. we continue -- continue to add to it when possible. alix: thank you. david, fascinating. you are the founding and a managing director of livermore partners. joe: let's go back to julie hyman. on fitbit.ate julie: the numbers looked pretty good, we have had a reversal,

though. it seems as though there was a fly in the point, the gross margin at the company. 47% as opposed to an estimate of 48%. much like disney, for example, which has done so well, fit bit with its 158% gain since its ipo, and you could argue it is gaining perfection, and any innge in the armor -- chink the armor, people are going to find it and right now they are selling off the stock as a result. alix: brutal. thank you so much, julie hyman. joe: we will be right back. ♪

alix: i'm alix steel. joe: i'm joe weisenthal. "what'd you miss?" alix: let's get to julie hyman at the news dekes -- news desk. julie: delivered in the second quarter, tesla has its most important number. also the model x suv remains on , track for third quarter start and they expect to produce over 12,000 vehicles in the third quarter, meaning that they are going to have to have a block buster fourth order to reach their goal of 55,000. so it really was pressure on the company. meanwhile, shares coming in at $.19. again, the number was really just the deliveries number.

that loss is a little bit smaller than had been estimated guys. , back to you. alix: thank you so much again, julie. putting the onus on the back half of the year for tesla to make those goals. joe: that is

announcer: from our studios in new york city, this is "charlie rose." president obama announced on monday the final version of sweeping legislation to cut carbon emission from the electricity sector. the clean power lance imposes the first nationwide limits on carbon dioxide from power plants. it is part of the president's domestic policy. president obama: you know, for the past six and a half years, we have taken on some of the toughest challenges of our time, from rebuilding our economy after a devastating recession