joe: we are moments away from the closing bell. >> i matt miller in for alix steel. joe: stocks rebounding, have the best days of the year. copper surged the most in two years. but the question is, "what'd you miss?" the china factor. china's way over global markets persist today as the late rally in shanghai, stocks and equities in europe higher. alix: plus, puerto rico's giant

debt mass -- today is the deadline for the government's plan to fix it. will it be enough, and will there be a ripple effect? >> and they are back. so-called liar loans reemerge. are we back to the bad old days? let's take it off with the market. i have been hesitant all day to cry massive rally and put on some sort of celebratory had. we had our second worst week of the year. last week. but at the end of the day, it did turn out to be a pretty massive rally. i think you could call today at pretty massive rally. obviously we still have a lot of work to do. but it was one of these days with the market rallied, it there was nod on, midday scare, and got kicked into high gear late. it has the second best day of the year. gains, all 30 dow stocks higher.

matt: no one i have spoken to has been willing to call the bottom. even if they are bullish long-term. is hesitant and cautious in the near-term. i want to take a deep dive into -- terminal to look at something not so pretty. it tells you something about the world economy. this is russian gdp, came in this morning at negative or point percent. the reason why this matters if it says the backdrop for the entire world. emerging markets, commodity countries. -- it is what has been roiling markets. it's an ugly chart. the tdp dive is not quite as bad during the financial crisis, but that's pretty bad. matt: it has been worse, obviously. it's only russia, to be fair. joe: it's not that we are opposed to it, is just indicative of the global turmoil that is shaking targets everywhere.

matt: but europe had a pretty good gdp revision. if you take a look at my deep chart, i havedive put it into u.s. terms. european gdp is always quoted in quarter over quarter. instead of .3% growth -- for us that sounds like nothing at all. they had 4/10 of a percent growth. they are getting closer and closer to 2%. year-over-year growth of 1.5%. it looks almost as good as what we are experiencing. i know we had 3.7%, but let's average it out. we're looking at about 2% growth here in the u.s. they are looking at about one percentage point less. joe: i want to bring in our guest, senior equity strategist at wells fargo. huge day in the market. we had a major dow surge, all the indices up well over 2% coming off last week's friday decline. is this it, are we out of the woods now? can you say with this rally that

the volatility we've seen over the past 2.5 weeks or so is gone? guest: i wouldn't be quite so hasty. i'm hopeful. certainly our price target, 12 months out, we think stocks will 22.b back to 22 broadly we think fundamentals , are still intact. but there was a lot of technical damage done in late august and we have yet to really recover. matt: what do you mean by technical damage? you mean like charts, and is this an upside down w formation? guest: what i would say is, the chart would tell you, get above 1975 and further above 2000 on the s&p. you cannot really call it all clear. the fundamentalist in me says actually we're seeing some signs of pretty stable growth globally. we haven't really had anything change our earnings targets and forecast and the market itself got a lot cheaper over the last month. it looks like a good opportunity to continue to put money to work.

those two things are conflicting right now. until the technical and fundamental line, i have to say my view is remaining relatively cautious short-term with an eye toward that longer-term. matt: i'm learning something about gina. do you believe in this technical mumbo-jumbo? joe: this chart we had up, it the snp plunged below the moving average, an extraordinary drop. lots of factors people are citing. china, the federal reserve. to what do you attribute fundamentally this volatility that we have seen? guest: a few things happened. for the last year we've seen oil prices fall, more than 60% now. that's something that doesn't happen usually outside of a recession. each of those cases, two cases stocks experienced at least a , 10% correction, so we were due considering decline in oil

prices. we also have some nervousness around the fed. it's not unusual for the markets to trade in a volatile and sideways pattern leading up to that first fed rate hike. usually the market falls between 8% and 10% with the first rate hike anyway. then you have the china risk and the emerging markets risk. it was not until this summer with the china meltdown, the financial market meltdown in china that we started to pay attention to the emerging market financial crisis, because china is the second largest economy in the world. even though it is an emerging market, it has some pretty profound impact. matt: china was the second-biggest market until this year. now i don't even know if it ranks in the top three. so they're are really having big problems there. if you look at the vix, the technician in me worries about

anytime the vix has a huge spike and cannot seem to come back down. we have not been above 25 for this time since 2011. pull up a terminal a look at this. one year were above 25, we barely go -- maybe it's easier if we put it on a five year scale. is this going to recover? are we looking at volatility until the fed makes a decision? guest: i think we have to get through the fed decision before we see volatility calm itself down. the put call ratio exploded over the last month or so and has yet to come back down to more stable levels. i think quite frankly until we get to the first fed high, until -- hike until we get more days , under our belt of stability out of china until we know what , the longer-term outlook is for prices, we start to get more economic data following through on demand accelerating,

it's just going to take a while to find our bottom here. this spike lower in character looks a lot more like 2011 that any of the other spikes lower with had so far this cycle. joe: with the asian markets and a lot of turmoil, there's been a lot of talk about the late 1990's all over again. you've done some work on that showing some parallels with 1998. what do you mean exactly? the biggest similarities, one, it was an emerging market led financial crisis. no financial crisis is the same. this will not be 1998 all over again, but it was an emerging market driven crisis. two, it followed a 30% gain in the dollar. more than 50% contraction in oil prices. almost the same exact numbers we had in the dollar and oil prices over the last year. that happened in 1998 as well. three, the characteristics of the intermarket trend looks similar to 1998. energy stocks led the decline in

1998 as well. health care consumer discretionary turned over viciously as the market corrected. so there are a lot of similarities to 1998. it is something to learn from. matt: we have a chart that goes back to like the dawn of time and it shows the late 1990's. pe values, you can see the big spike. this goes back to 1972 before any of the three of us were even born yet. you can see it looks like everest there. guest: and that is a couple of things to note. on the fundamental side, the broad market looks a lot better than it did in 1998 four longer-term focused investors. the pe is substantially lower. the earnings trends, as much as we complain about earnings, earnings are a lot stronger than they were in 1998. we had five consecutive quarters of negative year-over-year earnings growth.

in response to the dollar and oil prices here today, we have had one and we may get two. matt: so you would not have -- not have liked the tech sector at the end of the 1990's. are at least the beginning of the 2000. i loved it, but i was just reporting on it. you have the semiconductors in green and the i.t. services in purple. they look like they are negatively correlated. yout: yes, usually what want for attack is semi-leadership. tech is semi-leadership. when semiconductors are leading you get a longer-term payoff for technology. what we had so far this year was pretty substantial underperformance of semis. semiconductors suddenly started to outperform the broad market. we could see a much better outlook for technology at the end of the year.

joe: so what keeps you up at night? you're fairly optimistic, but what would keep you nervous? guest: literally is my four-year-old. but figuratively, what i worry about is if were on the precipice of a turn in the long, 30 year bull market for bonds, how do we navigate that environment going forward as investors? most of us like you said, we are , not working in this business without that bond bull market as our big tailwind. that's going to be one of the biggest secular challenges that our generation of investors faces over the next 20 or 30 years. joe: gina, thank you for coming on. matt: when we come back, oil is not the only business being killed. another commodities prices drop by more than a third last year. it could be putting american fishermen out of work. we will tell you what it is, when we come back. ♪

matt: i'm matt miller, in for alix steel. joe: i'm joe weisenthal. before the break we asked what commodity has seen its value drop by more than one third from the past year. joe: the answer is shrimp. americans eat more than any other seafood. every commodity diving everywhere you look. matt: because demand grew so much, production grew even more. joe: there is a glut. matt: but that is good, because shrimp is great protein and protein is in high shortages in other parts of the world. feed the people. joe: puerto rico has a $72 billion debt problem. today's the deadline for the government to come up with a plan to take back the debt. -- payback the debt.

it will include revenue spending predictions for the next years. kate smith is a municipal bond reporter for bloomberg who joins us now. why is today such a big deal? kate: apparently the government -- governor is going to finally get a copy of what you were mentioning, i've year projections of revenue and expenditures. tomorrow it will be announced to investors in the press. but he is going to get -- that comes after a week long delay because of last week's tropical storms. matt: does this make the default strategy easier to map out? clearly they don't have the ability to pay this debt. does this mean they know how big the haircut is that they need? kate: they are figuring out what their revenues and spending is going to look like. that does not include any of the $72 billion they borrowed over the past however many years. only the actual spending on the island. from there they will say this is our surplus and this is how much we can spend on our debt service moving forward.

that's when they will start to say, we will cut this this will , be saved, that won't. matt: and the fact that they don't know that already is part of their problem. joe: i would imagine so. what about puerto rican bonds, they have been rallying lightly? kate: last week was what happened, they were able to come up with a structuring plan. this was probably the most distressed agency on the island, and they came up with a restructuring plan that gave investors $.85 on the dollar. by comparison these were trading , much lower than that. the expectations were very low. everyone was pleasantly surprised by that. they were thinking maybe things on the island were not as that. -- bad. joe: do we know some of the names that got big during the surprise restructuring that would give them so much more than they were trading. do we know any of the investors?

kate: actually, one of the one we have that is surprising, and we have a cool chart of who increased their holdings the most is goldman sachs. from last year to this year, they doubled their holdings in puerto rico. this is only from may. we have to wait for those investor statements to come out. matt: oppenheimer did well, franklin resources has reduced. these are the most important holders of puerto rican debt. kate: these are the largest mutual fund holders. some of these huge yields, upwards of 10% or 11%, they also got alternative investors interested. there is a large hedge fund contingent investing in the island as well. joe: we don't know if elliott, greylock, any of these guys have bought into it. kate: exactly. there are other ways to get involved as well. paulson bought a hotel earlier this year. matt: the famous billionaire

investor. k federated investors bought a : hotel as well. there are all sorts of different entry points. today and tomorrow people will be offloading the bonds. -- focused on the bonds. matt: very cold. thank you for joining us. bloomberg's kate smith covering , diligently the puerto rican debt default. joe: what major european market is showing a robust rebound in the housing market? the answer when we come back. ♪

matt: i'm matt miller. matt: joe: i'm joe weisenthal. "what'd you miss?" matt: we asked who is enjoying a surprising comeback in its beleaguered housing sector. the answer is spain. house prices rose more than 4%.

however, spain's unemployment still stands at 23%, the second highest in the euro area after greece. matt: good place to move though, maybe. joe: a lot of people are. matt: and you would not have to lie about your income to get a loan over there, assuming you had income. the same toxic loans and that led to the u.s. housing bust. they are creeping back into the market here, but how safe are those aaa rated bonds? bloomberg's jodie shannon is with us. liar loans, we all remember. you do not even have to declare income or you just made up a number, did not have to prove you had a job. it's not as bad. guest: there is a twist in part , because those have essentially been outlawed in the dodd-frank. somewhere that we have something equivalent to liar loans, they require the lenders and banks to make sure people can afford the loans they are getting.

that is a new rule we have, you need to makes sure the borrower can afford the mortgage, which is a twist on how you lend money. usually it is the borrower who needs to make sure they can pay you back. you can get in trouble if you don't. but there is exemption for business purpose loans, if someone is buying a home they're not going to reside in and rent out. or you own a home and you're taking equity out to put toward your dental practice or to make different investments. all of that is exempt from the ability to repay regulations. matt: there are a number of similarities basically to the liar loans of the past. that you can use less documentation. guest: they don't even ask your income. if you're getting a loan for a business purpose, in the case of a rental, they say, what is this for? there's all sorts of things they can do. the one thing you've got to have , a big down payment.

interest only loans are also coming back. but with a better down payment and more documentation, the mortgage market is far away from where we were. don't give us anything to prove what you make, don't put any money down, all at the same time. joe: who is the onus on to confirm one of these loans being used for the stated purpose? this is a new law. there is no case law on what might end up going on in the courts with the ability to repay rule. in the past the exemption tried to be used after the government rolled out high cost loans, they may all sorts of disclosures. there are all sorts of lawsuits by private litigant saying you cannot just say this is if you're not actually verifying. but a lot of lenders i spoke to said they think that, if we get somebody who is signing a document, and many of them have it written out in their own handwriting and nine by them, it

-- signed by then, it will be ok. there's always the possibility the borrower comes back and says that was not me, my broker did that on my behalf. joe: for my broker told me to do that. guest: right. and then you get into a situation. we don't know how courts are going to treat any of this stuff at this point. in cases where you would be surprised they would want to go through these links to say i lengths to say i should not get foreclosed on even though i did not pay my mortgage. matt: for there any other signs that the old behaviors of the 2004 coming back? guest: we are starting to see private capital taking a lot more risk in the private market. it is also because the government has been offering a pretty wide box already. the fha is offering people three and a half percent subprime mortgages. private capital is looking at filling of the crannies, things like statement loans where the borrower doesn't have the income on their w-2, but looking at he

has this much money coming in every month and we will accept that. it might be people with low credit scores or recent foreclosures. it takes a long time to get back into government programs after a foreclosure, but during the crisis, a lot of good borrowers got foreclosed on. even right now. matt: i'll never forget a long romantic walk i had on the beach with erik schatzker in 2008 or 2009. soon, anothery bank is going to package subprime loans and sell them off in pieces. is that happening again? guest: it wasn't officially subprime, credit scores were above what is considered the cut off. but there were some subprime loans in there and there were , loans to people who had gone through recent addresses or did not have any credit scores at all. we saw that with a lone star affiliate. the big private equity firm. it's starting again. in a world where everybody

else's taking on a ton of risk in all sorts of other areas, maybe it's not the most scary thing for there to be a little risk coming back here because it's starting from such a measured place. matt: it's not entirely bad for people to get a mortgage a little more easily than it has been. guest: we are americans we all , have different profiles in who we are. there are people outside of the cookie-cutter boxes who will be served in one way. although once we get on this path, it could be a slippery slope. matt: thank you so much for joining us. joe: and we will be right back. ♪

matt: i'm matt miller. joe: i'm joe weisenthal. "what'd you miss?" matt: tomorrow's apple event, i'm sure you've been waiting as desperately as i have for the new stuff. i don't expect the new phone to be that much of a leap forward. joe: i'm not really that excited about anything. i don't know. matt: i'm super pumped for the apple tv. joe: something i'm more excited about, the jolt survey is out, janet yellen likes this report because it shows indicators.

it's a labor turnover survey. that is out tomorrow at 10:00. matt: very interesting stuff. i will watch you talking about that with my new iphone. joe: thank you for watching.

>> from our studios in new york city, this is "charlie rose." charlie: tim cook is here. apple.his ceo of he succeeded steve jobs in august, 2011. he joined apple against his better judgment. early 1998 apple in was there a different than the apple of today. the company have been losing sales for years and was considered to be on the verge of extinction. he has also said working at apple was never an any plans i found myself. but was the best decision i ever made.